The Bombay High Court has held that limitation for challenging an arbitral award cannot be kept in abeyance merely because a party claims it did not receive formal notice from the court regarding the filing of the award, where the party was otherwise aware of the award. The Court accordingly dismissed a challenge filed by the Municipal Corporation of Greater Bombay (MCGM) after an 802-day delay.
The dispute arose from a road construction contract awarded by MCGM to Atul Raj Builders Pvt. Ltd. in 1991. Following disputes concerning execution of the work and alleged delays attributable to the Corporation, the contractor invoked arbitration. The arbitrator passed an award on March 28, 1996, awarding approximately Rs. 88.75 lakh, including amounts towards claims, interest and arbitration costs.
MCGM subsequently filed Arbitration Petition seeking to challenge the award. The Corporation contended that it had not received formal notice from the Prothonotary and Senior Master regarding the filing of the award under Section 14(2) of the Arbitration Act, 1940, and therefore the limitation period had not commenced. The contractor, however, contended that the Corporation had received notice in August 1996 and was otherwise aware of the award.
Justice Arun R. Pedneker considered the Supreme Court authorities on when limitation begins to run for an application to set aside an award. The Court ultimately preferred the approach that furthers the objective of arbitration namely, speedy resolution of disputes and held that limitation does not necessarily await formal court notice where the party is otherwise aware of the award.
The Court noted that the award itself recorded the parties’ consent to extend the arbitrator’s time to make the award and that the Prothonotary and Senior Master had also issued notice to the parties. MCGM had not clearly established when it first became aware of the award. In these circumstances, the Court held that the 30-day limitation prescribed under Article 119(b) of the Limitation Act could not be treated as remaining suspended until formal court notice was received. The 802-day delay was therefore held to be fatal.
Despite finding the petition barred by limitation, the High Court examined MCGM’s substantive objections to the award for completeness. It reiterated that a court exercising jurisdiction under Section 30 of the Arbitration Act, 1940 does not sit as an appellate court over the arbitrator and cannot ordinarily re-appreciate evidence or interfere merely because another view of the material may be possible.
On the contractor’s claims relating to measurements, rates and delay, the Court found that the arbitrator had relied on the measurement book, joint measurements and documentary material, and rejected MCGM’s attempt to reopen the factual findings. The Court similarly declined to interfere with the award towards loss of profit, overheads and reduced productivity, holding that the Corporation had not established a permissible ground for setting aside the award.
The Court, further noted that arbitration petition was barred by limitation and hence, rejected the request for stay in view of the substantial delay.
