Busy Schedule, Travel Not 'Sufficient Cause': Karnataka High Court Refuses To Condone Delay In Arbitration Appeal

The Karnataka High Court has recently refused to condone a delay of 85 days in filing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, holding that a busy schedule and travel do not constitute “sufficient cause."

Holding that the appeal was barred by limitation and also devoid of merit, the court dismissed the appeal filed by L Vivekananda against Handy 101 Solutions and Service Pvt. Ltd. and its promoter Peter Pushparaj, thereby upholding the Commercial Court's order and the arbitral award, which had rejected Vivekananda's claim for Rs. 35 lakh under a Share Purchase Agreement.

A Division Bench of Justices Anu Sivaraman and Tara Vitasta Ganju observed, “As stated above, I.A.No.1/2023 has been filed by the appellant/claimant, which sets out that the reason for the delay was because the appellant/claimant had a busy schedule and was travelling out of station and could not instruct his counsel."

The Court further reiterated that “the expression 'sufficient cause' is not elastic enough to cover long delays, which are beyond the period provided by the appeal provision itself.”

The dispute arose from a Share Purchase Agreement dated March 30, 2010 under which Vivekananda invested Rs 10 lakh for a 20% stake in the company, with an option to exit at the end of five years by selling his shares back to the promoters for ₹35 lakh.

However, he exercised this option only on 1 August 2018, well after the agreement had expired on 30 March 2015.

He thereafter initiated arbitration seeking recovery of Rs 35 lakh.

The arbitral tribunal, by its award dated 31 January 2022, held that the exit option was time-bound and had not been exercised within the stipulated period. It found that the agreement was valid only for five years and had not been renewed and that the claimant had failed to act strictly in terms of the contractual clauses governing the exit option. The claim was accordingly dismissed.

Vivekananda's challenge under Section 34 of the Act was dismissed by the Commercial Court on September 28, 2022, which held that the tribunal's interpretation of the Share Purchase Agreement was a plausible view and did not warrant interference.

He then moved the High Court under Section 37 of the Act.

However, the appeal was filed beyond the prescribed period of 60 days, with a delay of 85 days. He sought condonation of this delay on the grounds that he was busy, travelling, and unable to instruct counsel in time.

The High Court refused to condone the delay, holding that these reasons did not constitute “sufficient cause” and that the appeal was therefore barred by limitation.

It further observed that even on merits, no interference was warranted, as the arbitral tribunal's interpretation of the Share Purchase Agreement was a plausible view that could not be substituted by the Court under Sections 34 or 37 merely because another interpretation was possible.

The court held that the interpretation adopted by the arbitral tribunal was neither patently illegal nor contrary to the evidence on record and reiterated the limited scope of interference with arbitral awards.

Accordingly, the appeal was dismissed both on the ground of limitation and on merits. 

For Appellant (L. Vivekananda): Advocate Sampath A.

For Respondents (Handy 101 Solutions and Service Pvt. Ltd. & Peter Pushparaj): Advocate Vasanth V. Fernandes