Supreme Court clarified that the limitation period for objections to an arbitral award commenced from the objector's awareness of the award, rather than from formal notice, under Section 14(2) of the Arbitration Act, 1940.
The Supreme Court Bench of Justice Pamidighantam Sri Narasimha and Justice Sandeep Mehta reviewed an appeal on Friday and held that formal notice of the filing of the arbitral award under Section 14(2) of the Arbitration Act, 1940, is not strictly necessary to commence the limitation period for filing objections. Knowledge of the award’s existence, conveyed through other formal court actions, is sufficient to trigger the limitation period.
The Supreme Court considered the appeal involving the interpretation of Section 14(2) of the Arbitration Act, 1940, and the commencement of the limitation period for filing objections to an arbitral award. The case stemmed from a long-standing dispute between the appellant and the respondents over payments related to a work order for construction services. An arbitral award was eventually passed in favour of the appellant on 31.05.2022. Subsequently, the appellant filed an application under Section 17 of the Act, seeking judgment in terms of the award, but the application was dismissed by the lower courts as premature. The key issue was whether the limitation period for filing objections commenced from the date the respondents were formally notified of the award or from when they became aware of its existence.
The Supreme Court analyzed the provisions of the Arbitration Act, 1940, and relevant precedents, including Nilkantha Sidramappa Ningashetti v. Kashinath Somanna Ningashetti and Food Corporation of India v. E. Kuttappan. It held that formal notice of the award under Section 14(2) was not strictly necessary to trigger the limitation period. Instead, knowledge of the award's existence, as conveyed by an order of the court directing the clearance of arbitrator fees and indicating the availability of the award, was sufficient. The Court emphasized that a literal interpretation requiring formal notice would defeat the objective of expeditious dispute resolution underlying arbitration.
In this case, the District Court’s order dated 21.09.2022, directing the respondents to pay the arbitrator’s fees and notifying the award's availability, was deemed adequate to constitute "notice of the filing of the award." Consequently, the limitation period for filing objections began on that date, and the appellant's Section 17 application filed on 10.11.2022 was valid, as no objections had been raised within the prescribed 30-day period. The Court criticized the respondents' reliance on formal notice issued on 18.11.2022, noting that such an interpretation would unfairly allow delays contrary to the spirit of arbitration law.
The appeal was allowed, and the Supreme Court set aside the judgments of the lower courts, affirming the appellant's right to seek judgment in terms of the arbitral award.
Ms. Madhusmita Bora, AOR, Mr. Pawan Kishore Singh and Mr. Dipankar Singh, Advocates represented the Appellant.
Mr. Debojit Borkakati, AOR, Mrs. Anuradha Gayeen Saikia, Advocate appeared for the Respondents.
Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines, Press Releases and more.
Click on the Citation/Link to access these resources
Comentarios