Introduction
A question arises whether an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”), should be deemed a formal or a fatal defect when it lacks a certified copy of the Award, despite having received the award. Section 34 of the Act stipulates grounds to challenge the arbitral award made under Section 31. On 19 December 2023, a 2-judge bench of the Hon’ble Delhi High Court in Union of India vs M/S Panacea Biotech Limited (“Panacea”) analyzed the stance of this question and has answered, holding that the non-attachment of the arbitral award when challenging it under Section 34 of the Act is a fatal defect, rendering the filing non-est. This article stresses the essential requirement of submitting arbitral awards with Section 34 petitions, citing recent legal precedents. It underscores that the failure to submit the award is a fundamental flaw, rendering such filings non-est. It concludes by proposing an amendment to specify the documents required for a more transparent and efficient arbitration process.
Integral Role of Attaching Arbitral Awards in Section 34 Petitions
The importance of submitting the Award along with the Section 34 Petition becomes evident when considering Section 39 of the Arbitration Act, 1940, (“the 1940 Act”) which allows for an appeal against an order either setting aside or refusing to set aside an Award. In this context, Section 41 of the 1940 Act, mandates that the form and contents of an appeal under Section 39 must align with the provisions of the Civil Procedure Code, 1908 (“CPC”) as established in the case of Superintending Engineer and Ors vs B Subba Reddy. Order XLI Rule 1 of CPC states that “the memorandum of appeal shall be accompanied by a copy of the decree appealed against and (unless the Appellate Court dispenses therewith) of the judgment on which it is founded.”
It is crucial to note that such a specification is absent in the Act where the applicability of the CPC has been expressly excluded under Section 19(1) of the Act. Unlike the 1940 Act, the Act does not prescribe any particular procedure or accompanying documents for filing objections against an Award. However, prevailing legal principles have been applied over the years to ensure a proper and valid filing. Consequently, any defects in the filing should not render it so inadequate that it loses its character as an application/petition under Section 34 of the Act as opined in the Panacea.
In the case of Vidya Drolia v. Durga Trading Corporation (“Vidya Drolia”), the Supreme Court explained that the party intending to object to an award is first required to file an application under Section 34(1) indicating the objections “along with the copy of an award” and other necessary documents, which are required as proof to satisfy grounds provided under Section 34(2)(a) and (b) of the Act.
It is pertinent to note that the Apex Court in Chintels India Limited vs Bhayana Builders Pvt. Ltd (“Chintels”), observed that an application must also be in compliance with Section 34(2) & (2A) by “setting out the grounds on which the application is made.” Further, the pre-requisite of “filing a copy of the impugned Award” along with the Section 34 Petition has been emphasised by the Delhi High Court in Executive Engineer vs Shree Ram Construction. The court, in this case, held that a “signed copy of the award should accompany the Section 34 Petition, and failure to do so would be fatal and would have the effect of deeming the filing to be a non-filing.”
Further, the Division Bench of the Delhi High Court in Oil and Natural Gas Corporation Ltd vs Joint Venture of Sai Rama Engineering Enterprises & Megha Engineering and Infrastructure Limited (“Oil case”) had observed that though Section 34 of the Act does not prescribe any particular procedure for filing an application to set aside an award, it definitely has to set out the grounds on which the application is made. It was also held that the application has to be “accompanied by the impugned Award” as it would otherwise be impossible to appreciate the grounds upon which the award is challenged.
Moreover, in the case of Brahmaputra Cracker and Polymer Ltd v. Rajshekhar Construction Pvt Ltd, the single bench of the Delhi High Court emphasized that a Section 34 petition serves as a challenge to the Arbitral Tribunal’s award. The court ruled that “a petition lacking the accompanying arbitral award cannot be considered a valid challenge under Section 34, constituting a fundamental defect.” This is because the award serves as a crucial component of the filing process and is susceptible to being regarded as an indispensable requirement. A Section 34 Petition, which does not include the reasons for challenging the award or neglects to attach a copy of the award, cannot be reasonably interpreted or acknowledged as a properly initiated action under Section 34 of the Act, the court opined.
The failure to file the award is recognized as a substantial flaw and is acknowledged by the Oil case. Therefore, as analyzed consistent legal precedent underscores that the omission of filing the award along with the Section 34 Petition is a critical defect, rendering such filings non-est.
The Crucial Imperative: Understanding the Significance of Attaching a Certified Copy of the Arbitral Award in Legal Proceedings
The submission of the arbitral award within a Section 34 petition is not a mere procedural formality; rather, it stands as an indispensable prerequisite for the court to fully comprehend the nuanced grounds presented by the challenging party thereby unable to decide whether the Petition merits Notice to be issued or not. Without the presence of the Award, it becomes challenging to assess and consider the objections raised, especially in determining whether they fall within the purview of Section 34(2). Consequently, submitting objections without the contested Award makes the entire objection incomprehensible for evaluation under Section 34 of the Act.
The Award is indispensable for the Court to progress, implying that the Court’s further proceedings are contingent upon the filing of the Award. The initial step can only commence upon the submission of the Award, and, consequently, the effective filing date is deemed to be the date when the Award is filed in support of the Section 34 Petition. Until then, the filing is considered invalid. Consequently, the non-filing of the Award constitutes a fatal defect, rendering the filing as non-est, as opined in Panacea.
The attachment of the award is a vital element that elevates the transparency of the proceedings, providing a solid basis for the court to assess the validity of the objections raised by the party seeking to challenge the arbitral award. Without this essential element, the objection becomes shrouded in ambiguity, making it incomprehensible for the court to consider under Section 34 of the Act.
Conclusion
In conclusion, the recent decision in Panacea underscores the critical nature of submitting a certified copy of the arbitral award with a Section 34 petition. This requirement is not merely procedural but is considered a fatal defect, rendering the filing non-est. The analysis of legal precedents, including Vidya Drolia, Chintels, and others, consistently emphasizes the indispensable role of the award in comprehending and evaluating the objections presented under Section 34.
Given the existing lacuna in the Act, regarding specific procedural requirements for filing objections against an award, it is recommended that an amendment be considered. The authors suggest that Section 34 of the Act should be amended to explicitly specify all the documents required to be filed at the time of challenging an award. Such clarity will not only streamline the legal process but also contribute to transparency, ensuring a more efficient resolution of arbitration-related matters in courts. This proposed amendment aims to save both time and resources for the court while promoting fairness and clarity in the arbitration proceedings.
Author(s)
Arjim Jain
Student at NLU, Odisha
Shruti Asati
Student at NLU, Odisha