Allahabad High Court rejects appeals challenging Gorakhpur court order under Arbitration and Conciliation Act

The Allahabad High Court has rejected the appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996, questioning the order of the Commercial Court, Gorakhpur rejecting the applications under Section 34 of the 1996 Act for setting aside the award.

The Division Bench of Chief Justice Arun Bhansali and Justice Vikas Budhwar passed this order while hearing an appeal filed by Executive Engineer Drainage Division.

The appeals purported to be under Section 37 of the Arbitration and Conciliation Act, 1996 have been preferred along with a delay condonation application supported by affidavit for condoning the delay in preferring the appeals questioning the order of the Commercial Court, Gorakhpur rejecting the applications under Section 34 of the 1996 Act for setting aside of the award.

D.K Tiwari, Additional Chief Standing Counsel who appears for the appellants on the strength of the averments contained in the delay condonation application submits that the delay caused in filing the appeals is unintentional, bona fide and due to procedural formalities and since the award itself is illegal, thus, the Court may condone the delay and hear the appeals on merits.

Suresh Singh, counsel for the claimants-respondents while countering the submission of the State Counsel for the appellants submitted that the explanation given in the delay condonation application for condoning the delay is neither satisfactory nor conceivable particularly in view of the fact that challenging the award dated 18.2.2017 of the Arbitrator, application under Section 34 of the 1996 Act was filed before the Commercial Court, Gorakhpur after an enormous and unexplained delay of more than four years, nine months and after rejection of the said application on 8.6.2022 time barred appeals have been preferred before the Court.

The Court observed that,

Record reveals that the Arbitrator had pronounced the award on 18.2.2017, an application under Section 34 of the 1996 Act was preferred after a period of more than four years, nine months before the Commercial Court, Gorakhpur on 19.11.2021 which came to be rejected on 8.6.2022.

As per the averments contained in the delay condonation application legal opinion was sought on 6.8.2022 from the office of the Chief Standing Counsel, High Court, Allahabad. After obtaining the legal opinion, the Executive Engineer Drainage Division, Siddharthnagar, appellant had sent a letter dated 24.8.2022 to the Superintending Engineering, Gandak Flood Circle, District Basti seeking permission for taking appropriate follow up action.

On 13.9.2022, Superintending Engineer, Gandak Flood Circle Basti wrote a letter to the Chief Engineer, Gandak (Irrigation Department and Water Resource Department, U.P, Gorakhpur) for obtaining permission to file arbitration appeals.

Thereafter, correspondence was made by Chief Engineer, Gandak (Irrigation and Water Resource Department, U.P, Gorakhpur with Chief Engineer Level-1 (East) Irrigation and Water Resource Department, U.P, Gorakhpur vide letter dated 29.9.2022 for obtaining permission for filing appeals from the State Government.

Further correspondences were made on 19.10.2022 and thereafter, on 8.12.2023 permission was granted to file appeals and the Executive Engineer, Drainage, Siddharth Nagar, appellant sent a letter to the Chief Standing Counsel, High Court on 6.1.2024 for filing arbitration appeals and thereafter, the concerned officers contacted the office of Standing Counsel on 8.1.2024 and the appeals has been preferred.

“Perusal of the explanation taken in the delay condonation application seeking condonation of delay in the opinion of the Court is nothing but a usual, stereotypical explanation with respect to placing the files from one desk to another in a routine manner. There is nothing on record to suggest that due diligence was exercised to ensure filing of the appeals within the time provided under the statute. It is also not the case of the appellant that they were not aware about the passing of the award at the first instance and rejection of the application under Section 34 of the 1996 Act as the appellants were represented before both the forums. An additional factor also needs to be noticed that in all the cases the application under Section 34 of the 1996 of the Act was preferred after approximately four years, nine months and once the same being an undisputed position, it is highly inconceivable that the appellants were not aware about the fact that appeals were to be preferred with due promptness as per the limitation provided under the statute.

Even otherwise also the appellants have no case particularly when as per Section 34(3) of the 1996 Act the limitation period for preferring an application challenging the award of the arbitrator is 90 days with a grace period of further 30 days only.

Here, as already noticed in the appeals in question, the application preferred under Section 34 of the 1996 Act was after an approximate period of four years, nine months, thus, in view of the judgment in the case of Bhimashankar Sahakari Sakkare Karkhane Niyamita Vs Walchandnagar Industries Ltd (Wil) 2023 (8) SCC 453 the delay cannot be condoned”, the Court further observed while rejecting the appeal.

Though while rejecting the delay condonation application seeking condonation of delay in filing the appeals, the Court would have closed the chapter, however, the Court found that the proceedings have been conducted in a reckless manner which is other than bona fide. The explanation set forth in filing time barred appeals as well as in preferring application under Section 34 of the 1996 Act does not inspire confidence as the grounds taken for condonation of delay are thoroughly insufficient. Since the matter involves monetary aspects that too from State Exchequer, thus, promptness and diligence was required not only at the stage of filing of application under Section 34 of the 1996 Act for setting aside of the award but also at the stage of preferring the appeals before the Court. Since the bona fides are lacking which not only needs to be checked but introspection is to be made at the level of the officers and the functionaries of the State Government who are on the helm of the affairs, the Court said.

Accordingly, the Court directed the Principal Secretary/ Additional Chief Secretary, Irrigation, Uttar Pradesh to conduct an inquiry with regard to the lapses committed by the erring officers/employees who were under responsibility to prosecute the proceedings and consequently to take action strictly in accordance with law.

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