Chintels India Ltd. vs Bhayana Builders Pvt. Ltd. on 11 February, 2021


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Supreme Court of India

Chintels India Ltd. vs Bhayana Builders Pvt. Ltd. on 11 February, 2021

Author: Rohinton Fali Nariman

Bench: Rohinton Fali Nariman, Hemant Gupta, B.R. Gavai

                                                                           REPORTABLE

                                    IN THE SUPREME COURT OF INDIA

                                     CIVIL APPELLATE JURISDICTION

                                     CIVIL APPEAL NO. 4028 OF 2020


         CHINTELS INDIA LTD.                                         …Appellant

                                                    Versus

         BHAYANA BUILDERS PVT. LTD.                                  …Respondent




                                             JUDGMENT

R.F. Nariman, J.

1. This appeal arises out of a certificate issued under Article 133 read with

Article 134A of the Constitution of India by the High Court of Delhi in the

impugned judgment dated 04.12.2020. The question raised in this appeal

is whether a learned single Judge’s order refusing to condone the

Appellant’s delay in filing an application under section 34 of the Arbitration

and Conciliation Act, 1996 (“Arbitration Act, 1996”) is an appealable

order under section 37(1)(c) of the said Act. After considering, in particular,

two judgments of this Court, the High Court held:

Signature Not Verified

Digitally signed by R
Natarajan
Date: 2021.02.11
17:28:09 IST
“18. We have considered the rival contentions. Though, as
Reason:

observed by us in the hearing on 5th November, 2020, in view
of BGS SGS Soma JV supra having referred to the grounds

1
under Section 34 in entirety and not confined to Section 34(2)
only, we were inclined to differentiate between a case of return
of an application under Section 34 on the ground of the Court to
which it is presented not having territorial jurisdiction, on the one
hand and rejection of an application under Section 34 on the
ground of having not been filed within the prescribed time, on
the other hand, but in view of the Supreme Court having been
approached against Ramdas Construction Co. supra, expressly
holding an appeal as the one before us, to be not maintainable
under Section 37, and having dismissed the appeal with a
speaking order, though not expressing any opinion on the
maintainability of the appeal, we consider ourselves bound
thereby and hold this appeal to be not maintainable.

19. We may however observe that Section 37(1)(b) also, while
providing for the appealable orders, refers to Section 34 in
entirety and not to Section 34(2); though BGS SGS Soma JV
supra has held that the order which is appealable thereunder is
an order testing the arbitral award on the grounds set out in
Section 34 but in our humble opinion if the intention of the
legislature was to confine the appeals only to grounds under
Section 34(2), nothing prevented them from, instead of referring
to Section 34 generally in Section 37(1)(c), referring only to
Section 34(2). We are of the view that sub-section (3) of Section
34
, by use of the words ‘but not thereafter’, as interpreted in
Union of India Vs. Popular Construction Co. (2001) 8 SCC 470,
restricts the power otherwise vested in Court to condone the
delay beyond thirty days, the same also creates a ground of
time bar for refusing to set aside the award and is part of the
self-contained code for setting aside of the award; thus, refusal
to set aside an award on the ground of the said time bar, would
be a refusal within the meaning of Section 37 and appealable
under Section 37. There is also merit in the contention of Mr.
Rajshekhar Rao, Advocate for the appellant that refusal to
condone the delay also entails affirmation of the underlying
order. Mention in this regard may be made of Section 27 of the
Limitation Act, 1963 which, though in the context of suit for
possession of any property, extinguishes the right to property at
the determination of the period prescribed for instituting the suit
for possession thereof. However we need not discuss further
since, as aforesaid, we are bound by the dicta in BGS SGS
Soma JV and Ramdas Construction Co. supra.

2

20. We may also consider another aspect. By reading Section
37
as not permitting an appeal against refusal to condone the
delay in applying for setting aside of the award, the persons
aggrieved by the award are left with no remedy but to approach
the Supreme Court by way of a petition under Article 136 of the
Constitution of India. The refusal to set aside the award may not
necessarily be by the Commercial Division of the High Court but
may also be by the Commercial Courts of the country. No other
remedy would be available to the persons aggrieved by the
award, against the decision of any Commercial Court in the
country refusing to condone the delay in applying for setting
aside of the award, leaving such persons either with the option
of accepting / remaining bound by the award even if having
excellent grounds for setting aside of the same or of
approaching the Supreme Court under Article 136 of the
Constitution of India, thereby putting an avoidable burden on the
Supreme Court which, as per the scheme of the Constitution of
India, was envisaged to hear limited number of matters entailing
constitutional issues and not to hear matters of condonation of
delay. Though undoubtedly the scheme of expediency and
limited judicial intervention is ingrained in the Arbitration Act but
at the same time it cannot be forgotten that the Act nevertheless
provides remedies against the arbitral award and it is felt that to
vest the order, of any Commercial Court in the country refusing
to condone the delay in applying for setting aside of the award,
and which delay can be for varying reasons as diverse as the
social, geographical and economic conditions prevalent in this
country, and not even providing any opportunity to the High
Courts to have a look therein, would be a very harsh outcome.

21. Thus, while dismissing the appeal as not maintainable,
being bound by the dicta of the Supreme Court in BGS SGS
Soma JV and in Ramdas Construction Co. supra, we grant
certificate under Article 133 read with Article 134A of the
Constitution of India to the appellant.”

2. It may be noted that the learned single Judge of the High Court dismissed

the application for condonation of delay in an application filed under

section 34 of the Arbitration Act, 1996 to set aside an award dated

3
03.05.2019 vide its judgment dated 04.06.2020, and consequently

dismissed the section 34 application itself.

3. Shri Rajshekhar Rao, learned Advocate appearing on behalf of the

Appellant, has relied strongly upon the judgment of this Court in Essar

Constructions v. N.P. Rama Krishna Reddy (2000) 6 SCC 94, which

was a judgment delivered under section 39 of the Arbitration Act, 1940.

His argument is that since section 39 of the 1940 Act is in pari materia with

section 37 of the Arbitration Act, 1996, in that an appeal lies where a single

Judge refuses to condone delay, resulting in an order refusing to set aside

an arbitral award, the ratio of Essar Constructions (supra) would apply

on all fours to the same provision contained in section 37. This being so,

he argued that it is clear that refusal to condone delay would result in a

refusal to set aside an award, an appeal against such order being

maintainable under section 37 of the Arbitration Act, 1996. He also

strongly relied upon the judgments of this Court in Chief Engineer of

BPDP/REO Ranchi v. Scoot Wilson Kirpatrick India (P.) Ltd. (2006) 13

SCC 622 and Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2011) 8

SCC 333 to buttress his submission that section 39 of the 1940 Act was a

pari materia provision to section 37 of the Arbitration Act, 1996. He then

4
relied upon judgments of the Madhya Pradesh1, Bombay2, Karnataka3,

Delhi4 and Calcutta5 High Courts to argue that an order refusing to

condone delay stands on a completely different footing from an order

which condones delay, as the latter order cannot be said to impart any

finality to the proceeding, as, when an order condones delay, it cannot be

said that the court has refused to set aside an award as it may ultimately

set aside the aforesaid award on the grounds mentioned in section 34(2)

of the Arbitration Act, 1996. He further argued that the judgment of the

Allahabad High Court in Union of India v. Radha Krishna Seth and Anr.,

2005 SCC OnLine All 8400 and that of the Bombay High Court in State of

Maharashtra v. Ramdas Construction Co. 2006 (6) Mah. L.J. 678 did

not state the law correctly and ought to be overruled by this Court. He

argued that where a right of appeal is granted by statute, a dismissal on a

preliminary ground is nevertheless a dismissal of the appeal, since it

cannot be heard thereafter. He also argued that a right of appeal, once

1Bisleri International Pvt. Ltd. and Ors. v. Sun Petpack Jabalpur Pvt. Ltd. and
Anr
. 2009 (4) M.P.L.J. 514.

2E-Square Leisure Pvt. Ltd., Pune v. K.K. Dani Consultants and Engineers Pvt.
Ltd. 2013 (3) Mh.L.J. 24; Jayshri Ginning & Spinning Pvt. Ltd. v. C.A. Galiakotwala
& Company Pvt. Ltd
. 2016 SCC OnLine Bom 5067.

3M/s Crompton Greaves Ltd. v. M/s Annapurna Electronics and Ors. ILR 2015
KAR 4199.

4Harmanprit Singh Sidhu v. Arcadia Shares & Stock Brokers Pvt. Ltd. (2016) 234
DLT 30.

5 Damodar Valley Corporation v. Sanjay Singh Rathor 2018 SCC OnLine Cal 4014.
5
granted, ought not to be limited by statutory interpretation where the words

used are capable of a wider construction. In particular, referring to the

language of section 37(1)(c) of the Arbitration Act, 1996, he argued that

there must be refusal to set aside an arbitral award “under section 34”,

which includes section 34(3), under which a court may refuse to condone

delay in filing an application under section 34. Coming to the two Supreme

Court judgments referred to in the impugned judgment, it was his

contention that the focus of this Court in BGS SGS Soma JV. v. NHPC

Limited (2020) 4 SCC 234, was on a completely different question,

namely, as to whether an application to set aside an award under section

34 should be returned to the proper court dependent upon where the seat

of arbitration was located. It was only in the course of discussion relatable

to this question that this Court approved certain observations made in the

decision of the Delhi High Court in Harmanprit Singh Sidhu v. Arcadia

Shares and Stock Brokers Pvt. Ltd. 2016 SCC OnLine Del 5383, in

which a learned single Judge of the Delhi High Court allowed an

application for condonation of delay, a Division Bench then holding that an

appeal against such an order was not maintainable under section 37 of

the Arbitration Act, 1996. He contended that it is only in this context that

paragraph 17 of BGS SGS Soma (supra) approved of the observations

made in Harmanprit Singh Sidhu (supra), inasmuch as it cannot be said

that the Court has refused to set aside the award under section 34, as it
6
may yet do so if any of the grounds contained in section 34(2) are made

out. So far as this Court’s order dated 12.04.2017 in State of Maharashtra

and Anr. v. M/s Ramdas Construction Co. and Anr. [C.A. Nos. 5247-

5248 of 2007] is concerned, he argued that this Court did not go into the

maintainability aspect at all, but ultimately dismissed the Civil Appeals on

the ground that the District Judge, Nagpur had held that the period of delay

being beyond four months, the court had no jurisdiction to entertain the

application for condonation of delay or the application on merits under

section 34 of the Arbitration Act, 1996.

4. Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf of the

Respondent, strongly refuted the fact that section 37 of the Arbitration Act,

1996 is in pari materia with section 39 of the 1940 Act. According to him,

section 39 of the 1940 Act is materially different, and concerns itself with

grounds that were made out under section 30 of the said Act, which

grounds were completely different from the grounds that could be made

out under section 34(2) and (2A) of the 1996 Act. Therefore, Shri Rohatgi

argued that section 37 needs to be interpreted on its own terms, and that

consequently, this Court’s judgment in Essar Constructions (supra)

would not be applicable. He relied strongly upon section 5 of the Arbitration

Act, 1996, by which it was statutorily made clear that judicial intervention

is to be minimal in the arbitration process. For this purpose he also relied

upon the Statement of Objects and Reasons for enacting the Arbitration
7
Act, 1996. He then went on to state that section 37 of the Arbitration Act,

1996 in fact carries out this object. He stressed that this object was

reinforced first, by the non-obstante clause contained in section 37(1); and

second, by the fact that the grounds of appeal contained in section 37 are

exhaustive, and makes explicit that an appeal shall lie only from the

following orders “and from no others”. He also stressed the fact that the

word “namely” makes it clear that it is only from the orders set out in

section 37 that an appeal can be filed. He went on to argue that an appeal,

being a creature of statute, has to be read as the statute provides without

expanding any of the words used. According to him, section 37(1)(c) is

clear and without any ambiguity – the expression “under Section 34” has

to be read with the preceding words “setting aside or refusing to set aside

an arbitral award”, and when so read, it is clear that the refusal to set aside

the award can only be on merits and not on some preliminary ground which

would then lead to a refusal to set aside the award. He relied strongly upon

the fact that this Court in BGS SGS Soma (supra) had approved of

Harmanprit Singh Sidhu (supra), and stated exactly this in paragraph 17

thereof. He then strongly relied upon the judgment in Union of India v.

Simplex Infrastructures Ltd. (2017) 14 SCC 225 for the proposition that

whether delay is or is not condoned, the same result ensues – it cannot

be said that by condoning or refusing to condone delay, an arbitral award

either gets or does not get set aside. He ended by saying that in point of
8
fact the Bombay High Court Division Bench judgment in Ramdas

Construction Co. (supra) was the correct enunciation of the law, and that

we should accept this enunciation and overrule the judgments of the other

High Courts.

5. Having heard learned counsel for the parties, it is important to first set out

section 37 of the Arbitration Act, 1996 which is as follows:

“37. Appealable orders.—(1) Notwithstanding anything
contained in any other law for the time being in force, an appeal
shall lie from the following orders (and from no others) to the
Court authorised by law to hear appeals from original decrees
of the Court passing the order, namely:—

(a) refusing to refer the parties to arbitration under section 8;

(b) granting or refusing to grant any measure under section 9;

(c) setting aside or refusing to set aside an arbitral award under
section 34.

(2) Appeal shall also lie to a court from an order of the arbitral
tribunal—

(a) accepting the plea referred to in sub-section (2) or sub-
section
(3) of section 16; or

(b) granting or refusing to grant an interim measure under
section 17.

(3) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or
takeaway any right to appeal to the Supreme Court.”

6. Since we are directly concerned with section 37(1)(c), it is important to

advert to the language of section 34 as well. Section 34(1) reads as

follows:

“34. Application for setting aside arbitral award.— (1)
Recourse to a Court against an arbitral award may be made
9
only by an application for setting aside such award in
accordance with sub-section (2) and sub-section (3).”

7. Section 34(2) and (2A) then sets out the grounds on which an arbitral

award may be set aside. Section 34(3), which again is material for decision

of the question raised in this appeal, reads as follows:

“(3) An application for setting aside may not be made after three
months have elapsed from the date on which the party making
that application had received the arbitral award or, if a request
had been made under section 33, from the date on which that
request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was
prevented by sufficient cause from making the application within
the said period of three months it may entertain the application
within a further period of thirty days, but not thereafter.”

8. 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 – see State of Himachal Pradesh v. Himachal Techno

Engineers and Anr. (2010) 12 SCC 210 at paragraph 5.
10

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.

10. In Essar Constructions (supra), a judgment rendered under section 39

of the 1940 Act, this Court was faced with the same question as is raised

in the appeal before us. In order to appreciate the ratio of this judgment, it

is necessary to first set out section 39 of 1940 Act, which reads as under:

“39. Appealable orders:- (1) An appeal shall lie from the
following orders passed under this Act (and from no others) to

11
the Court authorised by law to hear appeals from original
decrees of the Court passing the order:

An order –

(i) superseding an arbitration;

(ii) on an award stated in the form of a special case;

(iii) modifying or correcting an award;

(iv) filing or refusing to file an arbitration agreement;

(v) staying or refusing to stay legal proceedings where there is
an arbitration agreement;

(vi) setting aside or refusing to set aside an award;

Provided that the provisions of this section shall not apply to any
order passed by a Small Cause Court.

(2) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or take
away any right to appeal to the Supreme Court.”

11. The question which the Court was required to answer was set out as

follows:

“5. But was the Civil Judge’s order dismissing the respondent’s
application under Section 5 at all revisable under Section 115
of the Code or did an appeal lie from it under Section 39 of the
Arbitration Act, 1940? The answer is of moment as the powers
of an appellate court are wider than those available under
Section 115. Section 39(1)(vi) of the Arbitration Act, 1940 says
that an appeal shall lie inter alia from an order “refusing to set
aside an award”.

6. To arrive at a conclusion as to whether the order passed by
the Senior Civil Judge, Kakinada was an order “refusing to set
aside the award”, we have to consider the facts.”

12. After setting out the order of the Senior Civil Judge, who refused to

condone delay in filing an application for setting aside the award, the Court

then held:

12
“11. The outcome of the order in effect was that the prayer for
setting aside the award was refused on the ground of delay.

12. The “effect test” was applied by the High Court of Andhra
Pradesh in Babumiyan & Mastan v. K. Seethayamma [AIR
1985 AP 135] which said:

“In the light of the rulings in G. Gopalaswami v. G.
Navalgaria
[AIR 1967 Mad 403] and the decision of the Bench
in CMA No. 612 of 1977 dated 3-4-1978, the legal position may
be enunciated as follows: The order refusing to condone the
delay in filing the claim petition has the effect of finally disposing
of the original petition. Such an order can, therefore, be treated
as an award and hence it is appealable.”

13. Again a Division Bench of the Assam High Court
in Mafizuddin Bhuyan v. Alimuddin Bhuyan [AIR 1950 Ass 191]
has said:

“Whether objections to an award are dismissed on the merits or
they are dismissed on the ground that they are filed beyond
time, the Court by dismissing them in effect refuses to set aside
the award, and an order refusing to set aside an award is clearly
appealable under Section 39.”

14. In some High Courts, no separate application is filed under
Section 5 of the Limitation Act and the prayer for condonation
of delay is included along with the prayers made for substantive
relief. Courts have entertained appeals from an order
dismissing an application on the ground of limitation. Thus,
in State of W.B. v. A. Mondal [AIR 1985 Cal 12 (DB)] where an
application under Section 30 of the Arbitration Act was
dismissed on the ground of limitation, an appeal was
entertained. (See also Damodaran v. Bhaskaran [(1988) 2 KLT
753].)

15. The procedure appears to have been approved by the
Supreme Court in the case of Union of India v. Union
Builders [AIR 1985 Cal 337 (DB)] where on an appeal to the
Supreme Court from an order dismissing an application under
Section 30 on the ground of delay, the appeal was remanded to
the High Court to be disposed of.

13

16. The position should be no different in courts where a
separate application under Section 5 of the Limitation Act is
required to be filed. If the various High Courts’ decisions noted
earlier are correct, then the application under Section 5 being
dismissed, the application under Section 30 would
consequently also have to be dismissed although this might be
a mere formality. The end result would be the same.

xxx xxx xxx

21. Section 39(1)(vi) of the Arbitration Act, 1940 does not
indicate the grounds on which the court may refuse to set aside
the award. There is nothing in its language to exclude a refusal
to set aside the award because the application to set aside the
award is barred by limitation. By dismissing the application
albeit under Section 5, the assailability of the award is
concluded as far as the court rejecting the application is
concerned. Ultimately therefore, it is an order passed under
Section 30 of the Arbitration Act though by applying the
provisions of the Limitation Act.”

13. The Court ultimately concluded:

“25. Reading Section 39(1)(vi) and Section 17 together, it would
therefore follow that an application to set aside an award which
is rejected on the ground that it is delayed and that no sufficient
cause has been made out under Section 5 of the Limitation Act
would be an appealable order.”

14. It will be noticed that so far as the present question is involved, section

39(1)(vi) of the 1940 Act is in pari materia to section 37(1)(c) of the

Arbitration Act, 1996. This was in fact held in two of the judgments of this

Court. In Chief Engineer of BPDP/REO Ranchi (supra), this Court when

considering a similar question held as follows:

“5. Section 37(1)(b) of the Act is in pari materia with Section
39(1)(vi)
of the Arbitration Act, 1940 (in short “the old Act”). The
provisions in the Acts read as follows:

14

1996 Act
“37. (1) An appeal shall lie from the following orders (and from
no others) to the court authorised by law to hear appeals from
original decrees of the court passing the order, namely—

***

(b) setting aside or refusing to set aside an arbitral award under
Section 34.”

1940 Act
“39. Appealable orders.—(1) An appeal shall lie from the
following orders passed under this Act (and from no others) to
the court authorised by law to hear appeals from original
decrees of the court passing the order:

An order—
***

(vi) setting aside or refusing to set aside an award:”

15. Having so held, this Court then referred to and followed the judgment in

Essar Constructions (supra) and the judgment contained in Union of

India v. Manager, Jain and Associates (2001) 3 SCC 277, ultimately

holding:

“8. The decision in Popular Construction case [(2001) 8 SCC
470] did not deal with specific issues in this case. In that
decision it was held that in respect of “sufficient cause cases”
the provisions of Section 34(3) of the Act which are special
provisions relating to condonation of delay override the general
provisions of Section 5 of the Limitation Act, 1963 (in short “the
Limitation Act”). The position was reiterated in the Western
Builders case [(2006) 6 SCC 239] and also in Fairgrowth
Investments Ltd. v. Custodian
[(2004) 11 SCC 472] . There can
be no quarrel with the proposition that Section 5 of the Limitation
Act providing for condonation of delay is excluded by Section
34(3)
of the Act.

9. But the question in the instant case is not about the
applicability of Section 5 of the Limitation Act, and the question
really is whether the appeal was maintainable. The High Court
15
did not consider this aspect. The appeal is clearly maintainable.

Therefore, the order of the High Court is set aside. The High
Court shall deal with the matter and examine the respective
stand on merits treating the appeal to be maintainable.”

16. Likewise, in Fuerst Day Lawson Ltd. (supra) this Court held:

“37. These general principles are culled out from the decisions
of this Court rendered under Section 104 CPC and various other
Acts, as noted above. But there is another set of decisions of
this Court on the question under consideration rendered in the
context of Section 39 of the 1940 Act. Section 39 of the erstwhile
Act contained the provision of appeal and provided as follows:

“39.Appealable orders.—(1) An appeal shall lie from the
following orders passed under this Act (and from no others) to
the court authorised by law to hear appeals from original decree
of the court passing the orders:

An order—

(i) superseding an arbitration;

(ii) on an award stated in the form of a special case;

(iii) modifying or correcting an award;

(iv) filing or refusing to file an arbitration agreement;

(v) staying or refusing to stay legal proceedings where there
is an arbitration agreement;

(vi) setting aside or refusing to set aside an award:

Provided that the provisions of this section shall not apply to any
order passed by a Small Cause Court.

(2) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or take
away any right to appeal to the Supreme Court.”

(Insofar as relevant for the present, Section 37 of the 1996 Act,
is very similar to Section 39 of the previous Act as quoted
above.)”

16

17. It then referred to an argument of counsel that there would be no material

difference between the provisions of section 39 of Arbitration Act, 1940

and section 37 of the Arbitration Act, 1996 vis-à-vis section 50 of the 1996

Act, as follows:

“43. Mr Dave, in reply submitted that the words “(and from no
others)” occurring in Section 39 of the 1940 Act and Section 37
of the 1996 Act were actually superfluous and seen, thus, there
would be no material difference between the provisions of
Section 39 of the 1940 Act or Section 37 of the 1996 Act and
Section 50 of the 1996 Act and all the decisions rendered on
Section 39 of the 1940 Act will apply with full force to cases
arising under Section 50 of the 1996 Act.”

18. So far as section 37 of the Arbitration Act, 1996 and section 39 of the

Arbitration Act, 1940 were concerned, this Court agreed with counsel’s

argument, but disagreed with the submission insofar as section 50 of the

1996 Act was concerned, as follows:

“52. Having regard to the grammatical use of brackets or
parentheses, if the words “(and from no others)” occurring in
Section 39 of the 1940 Act or Section 37 of the 1996 Act are
viewed as “an explanation or afterthought” or extra information
separate from the main context, then, there may be some
substance in Mr Dave’s submission that the words in
parenthesis are surplusage and in essence the provisions of
Section 39 of the 1940 Act or Section 37 of the 1996 Act are the
same as Section 50 of the 1996 Act. Section 39 of the 1940 Act
says no more and no less than what is stipulated in Section 50
of the 1996 Act. But there may be a different reason to contend
that Section 39 of the 1940 Act or its equivalent Section 37 of
the 1996 Act are fundamentally different from Section 50 of the
1996 Act and hence, the decisions rendered under Section 39
of the 1940 Act may not have any application to the facts arising
under Section 50 of the 1996 Act. But for that we need to take
a look at the basic scheme of the 1996 Act and its relevant
provisions.”
17

19. The reasoning in Essar Constructions (supra) commends itself to us,

being on a pari materia provision to that contained in section 37(1)(c) of

the Arbitration Act, 1996. We may only add that the reasoning of the

aforesaid judgment is further strengthened by our analysis of the additional

words “under section 34” which occur in section 37(1)(c), and which are

absent in section 39(1)(vi) [the pari materia provision to section 34 of the

Arbitration Act, 1996 being section 30 of the Arbitration Act, 1940].

20. In point of fact, the “effect doctrine” referred to in Essar Constructions

(supra) 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

18
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).

21. Likewise, under section 37(2)(a), where a preliminary ground of the

arbitrator not having the jurisdiction to continue with the proceedings is

made out, an appeal lies under the said provision, as such determination

is final in nature as it brings the arbitral proceedings to an end. However,

if the converse is held by the learned arbitrator, then as the proceedings

before the arbitrator are then to carry on, and the aforesaid decision on

the preliminary ground is amenable to challenge under section 34 after the

award is made, no appeal is provided. This is made clear by section 16(5)

and (6) of the Arbitration Act, 1996 which read as follows:

“16. Competence of arbitral tribunal to rule on its
jurisdiction.—

xxx xxx xxx

(5) The arbitral tribunal shall decide on a plea referred to in sub-
section (2) or sub-section (3) and, where the arbitral tribunal
takes a decision rejecting the plea, continue with the arbitral
proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an
application for setting aside such an arbitral award in
accordance with section 34.”
19

22. Given the fact that the “effect doctrine” is part and parcel of the statutory

provision for appeal under section 37, and the express language of section

37(1)(c), it is difficult to accede to the argument of Shri Rohatgi.

23. We now come to the judgment in Simplex Infrastructures Ltd. (supra).

In this judgment, what was argued before this Court is set out with

reference to the Division Bench judgment under appeal as follows:

“11. The Division Bench of the High Court, however, made a
fine distinction by holding that the judgment of the learned
Single Judge of condoning delay in filing of the petition under
Section 34 of the Act was without jurisdiction and not in terms
of the provisions of the Act. It is not possible to countenance this
approach. The Division Bench, in our opinion, was not right in
observing that the decision in Tanusree Art Printers [Tanusree
Art Printers v. Rabindra Nath Pal
, 2000 SCC OnLine Cal 217]
being of a Special Bench of three Judges of the same court,
was binding, in spite of having noticed the decision of this Court
in Fuerst Day Lawson Ltd. [Fuerst Day Lawson Ltd. v. Jindal
Exports Ltd
., (2011) 8 SCC 333] — which is directly on the point
and was pressed into service by the appellant. Neither the
Division Bench of the High Court of Calcutta which dealt
with Modi Korea Telecommunication Ltd. [Modi Korea
Telecommunication Ltd. v. Appcon Consultants (P) Ltd
., 1999
SCC OnLine Cal 19] nor the three-Judge Bench which
decided Tanusree Art Printers, had the benefit of the judgment
of this Court in Fuerst Day Lawson Ltd., which is later in time.”

24. In stating that the Division Bench was wrong, as a judgment of a single

Judge condoning delay in the filing of a petition under section 34 cannot

be said to be without jurisdiction, the Court then held:

“12… On a bare reading of this provision, it is noticed that the
remedy of the appeal has been provided only against an order
of setting aside or refusing to set aside an arbitral award under
Section 34. No appeal is provided against an order passed by
20
the court of competent jurisdiction condoning the delay in filing
the petition under Section 34 of the Act as such. The Division
Bench in the impugned judgment, therefore, rightly noted that
remedy of appeal against the impugned order of the learned
Single Judge was not otherwise available under Section 37 of
the Act.

13. In our opinion, the issue is squarely answered against the
respondent by the decision of this Court in Fuerst Day Lawson
Ltd. [Fuerst Day Lawson Ltd. v. Jindal Exports Ltd
., (2011) 8
SCC 333] In that, the judgment of the learned Single Judge
dated 27-4-2016 [Union of India v. Simplex Infrastructures Ltd.,
2016 SCC OnLine Cal 12045], was passed on an application
purported to be under Section 34(3) of the Act, for condoning
delay in filing of the petition for setting aside the arbitral award.
Hence, the remedy of letters patent appeal against that decision
is unavailable. The question as to whether the learned Single
Judge had rightly exercised the discretion or otherwise, could
be assailed by the respondent before this Court by way of
special leave petition. But, certainly not by way of a letters
patent appeal under Clause 15. For, even if the learned Single
Judge may have committed manifest error or wrongly decided
the application for condonation of delay, that judgment is
ascribable to exercise of jurisdiction under Section 34(3) of the
Act. In other words, whether the prayer for condonation of delay
can be accepted or whether the application deserves to be
rejected, is a matter well within the jurisdiction of that court.”

25. This judgment does not in any manner militate against what has been held

by us. In answer to the question as to whether a single Judge’s judgment

condoning delay in filing an application under section 34 was without

jurisdiction, this Court correctly held that such an order is in exercise of

jurisdiction conferred by the statute. This judgment therefore cannot be

said to be an authority for the proposition that, as the converse position to

the facts contained in the present appeal before us has been held to be

not appealable, it must follow that even where delay is not condoned, the
21
same position obtains. This would fly in the face of the reasoning

contained in this judgment, as well as the reasoning contained in Essar

Constructions (supra), which has commended itself to us.

26. We now come to this Court’s judgment in BGS SGS Soma (supra). As

correctly pointed out by Shri Rao, the question before this Court in BGS

SGS Soma (supra) was a completely different one, being set out in

paragraph 1 of the judgment as follows:

“1. Leave granted. Three appeals before us raise questions as
to maintainability of appeals under Section 37 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as “the
Arbitration Act, 1996”), and, given the arbitration clause in these
proceedings, whether the “seat” of the arbitration proceedings
is New Delhi or Faridabad, consequent upon which a petition
under Section 34 of the Arbitration Act, 1996 may be filed
dependent on where the seat of arbitration is located.”

27. In answering this question, the Court first went into the interplay between

section 37 of the Arbitration Act, 1996 and section 13 of the Commercial

Courts Act, 2015, holding that section 37 of the Arbitration Act alone

provides grounds for appeal, section 13(1) of the Commercial Courts Act

providing the procedure thereof. In the course of discussion, this Court

then referred to a judgment of the Delhi High Court as follows:

“16. Shri Chowdhury also referred to another Delhi High Court
judgment reported as Harmanprit Singh Sidhu v. Arcadia
Shares & Stock Brokers (P) Ltd
. [(2016) 234 DLT 30], in which
a learned Single Judge of the Delhi High Court allowed an
application for condonation of delay in filing a Section 34
petition. The Division Bench, in holding that an appeal against
such an order would not be maintainable under Section 37 of

22
the Arbitration Act, 1996, read with the Commercial Courts Act,
2015 held:

“10. Coming to Section 37(1), it is evident that an appeal can lie
from only the orders specified in clauses (a), (b) or (c). In other
words, an appeal under Section 37 would only be maintainable
against (a) an order refusing to refer the parties to arbitration
under Section 8 of the A&C Act; (b) an order granting or refusing
to grant any measure under Section 9 of the A&C Act; or (c) an
order setting aside or refusing to set aside an arbitral award
under Section 34 of the A&C Act. The impugned order [Arcadia
Shares & Stock Brokers (P) Ltd. v. Harmanprit Singh Sidhu,
2016 SCC OnLine Del 6625] is clearly not relatable to Section
8
or 9 of the A&C Act. It was sought to be contended by the
learned counsel for the appellant that the present appeal would
fall within Section 37(1)(c) which relates to an order “setting
aside” or “refusing to set aside” an arbitral award under Section

34. We are unable to accept this proposition. By virtue of the
impugned order, the arbitral award dated 10-9-2013 has not
been set aside. Nor has the court, at this stage, refused to set
aside the said arbitral award under Section 34 of the A&C Act.
In fact, the appellant in whose favour the award has been made,
would only be aggrieved if the award were to have been set
aside in whole or in part. That has not happened. What the
learned single Judge has done is to have condoned the delay
in re-filing of the petition under Section 34. This has not, in any
way, impacted the award.”

17. The reasoning in this judgment in Harmanprit Singh
Sidhu commends itself to us, as a distinction is made between
judgments which either set aside, or refuse to set aside, an
arbitral award after the court applies its mind to Section 34 of
the Arbitration Act, 1996, as against preliminary orders of
condonation of delay, which do not in any way impact the
arbitral award that has been assailed.”

28. It is well settled that judgments are not to be construed like Euclid’s

theorems (see Amar Nath Om Prakash v. State of Punjab (1985) 1 SCC

345), but all observations made therein must relate to the context in which

they were made. In that case, the Court put it thus:
23
“10. There is one other significant sentence in Sreenivasa
General Traders v. State of A.P
[(1983) 4 SCC 353] with which
we must express our agreement, it was said:

“With utmost respect, these observations of the learned Judge
are not to be read as Euclid’s theorems, nor as provisions of a
statute. These observations must be read in the context in which
they appear.”

We consider it proper to say, as we have already said in other
cases, that judgments of courts are not to be construed as
statutes. To interpret words, phrases and provisions of a statute,
it may become necessary for Judges to embark into lengthy
discussions but the discussion is meant to explain and not to
define. Judges interpret statutes, they do not interpret
judgments. They interpret words of statutes; their words are not
to be interpreted as statutes.

In London Graving Dock Co. Ltd. v. Horton [1951 AC 737, 761]
Lord MacDermott observed:

“The matter cannot, of course, be settled merely by treating
the ipsissima verba of Willes, J., as though they were part of an
Act of Parliament and applying the rules of interpretation
appropriate thereto. This is not to detract from the great weight
to be given to the language actually used by that most
distinguished Judge….

In Home Office v. Dorset Yacht Co. Ltd. [(1970) 2 All ER 294]
Lord Reid said:

“Lord Atkin’s speech [Donoghue v. Stevension, 1932 All ER
Rep 1, 11] … is not to be treated as if it was a statutory definition.
It will require qualification in new circumstances.”

Megarry, J. in (1971) 1 WLR 1062 observed:

“One must not, of course, construe even a reserved judgment
of even Russell, L.J. as if it were an Act of Parliament.”

And, in Herrington v. British Railways Board [1972 AC 877
(HL)] Lord Morris said:

24
“There is always peril in treating the words of a speech or a
judgment as though they were words in a legislative enactment,
and it is to be remembered that judicial utterances are made in
the setting of the facts of a particular case.”

11. There are a few other observations in Kewal Krishan Puri
case [(1980) 1 SCC 416] to which apply with the same force all
that we have said above. It is needless to repeat the oft-quoted
truism of Lord Halsbury that a case is only an authority for what
it actually decides and not for what may seem to follow logically
from it.”

29. The context in which paragraph 17 of BGS SGS Soma (supra) was made,

was a context in which an application under section 34 would have to be

returned to the Court which had jurisdiction to decide a section 34

application, dependent upon where the seat of the arbitral tribunal was

located. In this context, it was held that a mere preliminary step, which did

not lead to the application being rejected finally, cannot be characterised

as an order which would result in the application’s fate being sealed once

and for all. The Court’s focus was not on the language of section 37(1)(c),

nor were any arguments addressed as to its correct interpretation. As a

matter of fact, Harmanprit Singh Sidhu (supra) itself went on to hold:

“13. In sum, the impugned order does not fall within the category
of appealable orders specified in Section 37(1) of the A&C Act.

Therefore, even if the provisions of Section 37(1) are read with
Section 13 of the Commercial Courts Act, the present appeal is
not maintainable. This, however, does not mean that the
appellant cannot take up the ground that is sought to be urged
before us if the decision in OMP 294/2014 (under Section 34 of
the A&C Act) goes against him. In other words, if the arbitral
award is set aside in part or in whole and the appellant is
aggrieved thereby, he may prefer an appeal under Section 37
of the A&C Act on merits as also on the ground that the delay in
25
re-filing ought not to have been condoned. This is in line with
the scheme of the A&C Act of not, in any way, stalling the
proceedings thereunder. For example, under Section 13(4) of
the A&C Act, if a challenge to an arbitrator is not successful, the
arbitral tribunal is required to continue the arbitral proceedings
and make an arbitral award and, in such an instance, as
provided in Section 13(5) of the A&C Act, the party challenging
the arbitrator may make an application for setting aside such an
arbitral award in accordance with Section 34. In other words,
recourse to a remedy for an unsuccessful challenge to an
arbitrator is deferred till the stage of the making of the award.
Similarly, under Section 16, an arbitral tribunal may rule on its
jurisdiction. In a case where the arbitral tribunal rejects a plea
with regard to its jurisdiction, it is enjoined by Section 16(5) of
the A&C Act to continue with the arbitral proceedings and to
make the arbitral award. Section 16(6) stipulates that a party
aggrieved by such an arbitral award may make an application
for setting aside the award in accordance with Section 34. Here,
too, the unsuccessful party, who challenges the jurisdiction of
an arbitral tribunal, is asked to wait till the award is made. The
remedy of questioning the decision of the arbitral tribunal with
regard to the arbitrator’s jurisdiction in such a case is not
extinguished but is merely deferred till the making of the arbitral
award. In similar vein, in the present case, the remedy of
challenging the decision of condoning the delay in re-filing is not
extinguished but is deferred till the final decision of the court on
the pending Section 34 petition.”

30. Obviously therefore, an observation of this Court torn out of its context

cannot be said to conclude the issue that is now before us.

31. We now come to the sheet anchor of Shri Rohatgi’s case, namely,

Ramdas Construction Co. (supra). In this judgment, a Division Bench of

the Bombay High Court held:

“9. Sub-section (3) of section 34 of the Act provides that an
application for setting aside may be made after three months
have elapsed from the date on which the party making such
application had received the arbitral award or, if a request had
been made under section 33, from the date on which that
26
request had been disposed of by the arbitral tribunal, provided
that if the Court is satisfied that the applicant was prevented by
sufficient cause from making the application within the said
period of three months, it may entertain the application within a
further period of thirty days, but not thereafter. This provision of
law expressly reveals that the legislature has provided a specific
period of limitation for filing an application for setting aside of
the award and simultaneously the Court has been given
discretion to extend such period only by thirty days, and not
beyond the said period of thirty days. The provision is very clear
in that regard. However, the scope of enquiry under sub-section
(3) is restricted to the cause for delay in filing the application but
it does not relate to the merits of the application for setting aside
of the award. Being so, an order which is to be passed in
exercise of powers under sub-section (3) of section 34 of the
Act cannot extend to the subject matter of the application for
setting aside of the award but has to restrict to the aspect of
delay in filing such application only. Such an order is not
contemplated to be an appealable order within the meaning of
the said expression under section 37 of the Act. It is very clear
from the fact that section 37 refers to the orders dealing with the
aspect of setting aside or refusing to set aside an arbitral award.

It does not refer to the proceedings preceding the enquiry in
relation to the issue of setting aside or refusing to set aside an
arbitral award. The subject-matter of delay in filing an
application and the condonation thereof relates to the
proceedings preceding the enquiry for setting aside or refusing
to set aside an arbitral award. Once it is clear that section
37(1)(b)
does not contemplate any order passed in such
proceeding relating to the matter preceding the enquiry in
relation to setting aside or refusing to set aside an arbitral
award, such an order cannot be considered as an appealable
order within the meaning of the said expression under section
37
of the Act.

10. Undoubtedly the impugned order while rejecting the
application for condonation of delay, clearly observes:

“Consequently, application under section 34 of the Arbitration
and Conciliation Act, 1996 for setting aside the award is also
rejected being barred by time.”

27
In other words, the Court has not dealt with the application for
setting aside of the award on merits and the same has been
disposed of solely as a consequence of rejection of the
application for condonation of delay and there has been no
enquiry as regards the rights of the parties on the issue of
setting aside of the award. The appealable order which is
contemplated for the purpose of exercise of appellate
jurisdiction is the one which deals with the merits of the case in
relation to the claim for setting aside or refusing to set aside an
arbitral award. As already stated above, the appellate powers
under section 37 are not in relation to the proceedings which
precedes the enquiry regarding setting aside or refusing to set
aside an arbitral award. Being so, the consequence of the order
of dismissal of the application for condonation of delay cannot
itself amount to an appealable order under section 34(1) for the
purpose of appeal under section 37(1) of the Act.”

32. This judgment cannot be said to state the law correctly as it does not

advert to the decision of this Court in Essar Constructions (supra), and

is against the interpretation of section 37(1)(c) of the Arbitration Act, 1996

given by us above. We may also add that this Court, in dismissing the Civil

Appeal against the aforesaid judgment, held:

“1. The appellants before this Court, in the first instance,
impugned the award rendered by the Chief Engineer on
30.06.2005, by preferring an appeal before the District Judge,
Nagpur. The District Judge, Nagpur, declined to entertain the
appeal on merits, as he found the same barred by limitation, and
as such, the application for condonation of delay was dismissed.
The District Judge, Nagpur in his order dated 23.12.2005
recorded as under:

“17. In nut-shell, what emerges from the material placed on the
record is that the applicants or in other words, party making
application under Section 34 duly received the award on
4.7.2005, but approached this Court on 18.11.2005. Time in
between 4.7.2005 and 18.11.2005 was consumed in taking
administrative decision. Beyond statutory period of limitation of
three months, further period of thirty days can be condoned, but
28
not thereafter. On 4.11.2005, entire period of four months
elapsed. In this view of the matter, this Court has no jurisdiction
to entertain the application for condonation of delay and for that
matter, application under Section 34 of the Act.”

2. The order dated 23.12.2005 was assailed by the appellants
before the High Court. Having remained unsuccessful, the
appellants have approached this Court. The primary issue, that
emerges for consideration is, whether the dismissal of the
application filed by the appellants under Section 34 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as
the ‘Arbitration Act’), by the District Judge, Nagpur, was justified
in law.

3. So far as the issue in hand is concerned, having heard
learned counsel for the rival parties, we are satisfied that on an
earlier occasion, the same proposition came up for
consideration before this Court, and stands declared by this
Court in State of Himachal Pradesh vs. Himachal Techno
Engineers
(2010) 12 SCC 210. In view of the legal position
declared by this Court, on the subject of limitation under Section
34
of the Arbitration Act, we are of the view, that the order
passed by the District Judge, Nagpur, calls for no interference.”

33. The order of this Court does not in any manner touch upon the reasoning

of the Bombay High Court. On the contrary, this court refers to the

judgment of this Court in Himachal Pradesh Techno Engineers (supra),

which as has been held by us hereinabove, makes it clear that Section 5

of the Limitation Act is excluded by section 34(3) of the Arbitration Act,

1996 and that no condonation of delay can take place beyond the period

of 120 days. It is on this ground, citing the learned District Judge’s order,

that this Court did not interfere. Consequently, it cannot be said that this

Court approved of the judgment of the Division Bench of the Bombay High

Court. Likewise, the reasoning contained in Radha Krishna Seth (supra),
29
does not commend itself to us. Both these judgments therefore do not

state the law correctly and stand overruled.

34. Shri Rohatgi referred to the Statement of Objects and Reasons of the

Arbitration Act, 1996 and in particular clause 4(v), which reads as follows:

“4. Main objects of the Bill are as under:

xxx xxx xxx

(v) to minimise the supervisory role of courts in the arbitral
process;”

35. Shri Rohatgi then read section 5 of the Arbitration Act, 1996 to us.

According to him, in furtherance of this object, section 37 was enacted

giving a limited right of appeal. He argued that an appeal, being a creature

of statute should not, therefore, be enlarged beyond what is provided by

the Legislature. Section 5 of the Arbitration and Conciliation Act reads as

follows:

“5. Extent of judicial intervention.—Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene
except where so provided in this Part.”

36. This section does not take Shri Rohatgi’s argument much further, as after

the non-obstante clause, the section states that no judicial authority shall

intervene “except where so provided in this Part”. What is “provided in this

part” is section 37, which therefore brings us back to square one.

Undoubtedly, a limited right of appeal is given under section 37 of the

Arbitration Act, 1996. But it is not the province or duty of this Court to
30
further limit such right by excluding appeals which are in fact provided for,

given the language of the provision as interpreted by us hereinabove.

Thus, this last argument also has no legs on which to stand.

37. Consequently, the question of law is answered by stating that an appeal

under section 37(1)(c) of the Arbitration Act, 1996 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.

38. The appeal is accordingly allowed. The impugned judgment of the Division

Bench under appeal is set aside, and the matter is remitted to a Division

Bench of the High Court of Delhi to decide whether the Single Judge’s

refusal to condone delay is or is not correct.

39. The appeal is allowed in the aforesaid terms. All pending applications are

disposed of.

…………………..………………J.

(R. F. Nariman)

……………..……………………J.

(Navin Sinha)

……………..……………………J.

(K.M. Joseph)

New Delhi,
11th February, 2021.

31



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