Section 37 - Arbitration, 1996
Section 37(1)(a) - “effect doctrine”
Arbitration and Conciliation Act, 1996 - Section 37(1)(a) - “effect doctrine” - In point of fact, the “effect doctrine” referred to in Essar Constructions v. N.P. Rama Krishna Reddy (2000) 6 SCC 94, is statutorily inbuilt in section 37 of the Arbitration Act, 1996 itself. For this purpose, it is necessary to refer to sections 37(1)(a) and 37(2)(a). So far as section 37(1)(a) is concerned, where a party is referred to arbitration under section 8, no appeal lies. This is for the reason that the effect of such order is that the parties must go to arbitration, it being left to the learned Arbitrator to decide preliminary points under section 16 of the Act, which then become the subject matter of appeal under section 37(2)(a) or the subject matter of grounds to set aside under section 34 an arbitral award ultimately made, depending upon whether the preliminary points are accepted or rejected by the arbitrator. It is also important to note that an order refusing to refer parties to arbitration under section 8 may be made on a prima facie finding that no valid arbitration agreement exists, or on the ground that the original arbitration agreement, or a duly certified copy thereof is not annexed to the application under section 8. In either case, i.e. whether the preliminary ground for moving the court under section 8 is not made out either by not annexing the original arbitration agreement, or a duly certified copy, or on merits – the court finding that prima facie no valid agreement exists – an appeal lies under section 37(1)(a).
2021 SCeJ 249 CHINTELS INDIA LTD. Versus BHAYANA BUILDERS PVT. LTD.
Section 37(1)(c)
Appeal under section 37(1)(c) would be maintainable against an order refusing to condone delay in filing an application under section 34 of the Arbitration Act, 1996
Arbitration and Conciliation Act, 1996 - Section 37(1)(c) - Appeal under section 37(1)(c) would be maintainable against an order refusing to condone delay in filing an application under section 34 of the Arbitration Act, 1996 to set aside an award.
2021 SCeJ 249 CHINTELS INDIA LTD. Versus BHAYANA BUILDERS PVT. LTD.
Held,
A reading of section 34(1) would make it clear that an application made to set aside an award has to be in accordance with both sub-sections (2) and (3). This would mean that such application would not only have to be within the limitation period prescribed by sub-section (3), but would then have to set out grounds under sub-sections (2) and/or (2A) for setting aside such award. What follows from this is that the application itself must be within time, and if not within a period of three months, must be accompanied with an application for condonation of delay, provided it is within a further period of 30 days, this Court having made it clear that section 5 of the Limitation Act, 1963 does not apply and that any delay beyond 120 days cannot be condoned.
9. We now come to section 37(1)(c). It is important to note that the expression “setting aside or refusing to set aside an arbitral award” does not stand by itself. The expression has to be read with the expression that follows - “under section 34”. Section 34 is not limited to grounds being made out under section 34(2). Obviously, therefore, a literal reading of the provision would show that a refusal to set aside an arbitral award as delay has not been condoned under sub-section (3) of section 34 would certainly fall within section 37(1)(c). The aforesaid reasoning is strengthened by the fact that under section 37(2)(a), an appeal lies when a plea referred to in sub-section (2) or (3) of section 16 is accepted. This would show that the Legislature, when it wished to refer to part of a section, as opposed to the entire section, did so. Contrasted with the language of section 37(1)(c), where the expression “under section 34” refers to the entire section and not to section 34(2) only, the fact that an arbitral award can be refused to be set aside for refusal to condone delay under section 34(3) gets further strengthened.
The reasoning in Essar Constructions v. N.P. Rama Krishna Reddy (2000) 6 SCC 94, commends itself to us, being on a pari materia provision to that contained in section 37(1)(c) of the Arbitration Act, 1996. [Para 19]
Union of India v. Radha Krishna Seth and Anr., 2005 SCC OnLine All 8400, does not state the law correctly.
State of Maharashtra v. Ramdas Construction Co. 2006 (6) Mah. L.J. 678 cannot be said to state the law correctly as it does not advert to the decision of this Court in Essar Constructions, and is against the interpretation of section 37(1)(c) of the Arbitration Act, 1996 given by us above.