“Every Day's Delay” Rule Not Pedantic, Bureaucratic Delay May Be Condoned: Himachal Pradesh High Court

The Himachal Pradesh High Court on 22 May held that Courts must adopt a common-sense approach while considering delay condonation applications filed by government authorities under Section 34 of the Arbitration and Conciliation Act, 1996, and that bureaucratic decision-making processes may constitute sufficient cause where the explanation is bona fide.

A Division Bench comprising Chief Justice Gurmeet Singh Sandhawalia and Justice Bipin Chander Negi allowed the appeal filed by the State of Himachal Pradesh and another authority, set aside the Single Judge's order refusing to condone delay, and restored the State's Section 34 petition challenging the arbitral award for adjudication on merits. The judges observed:

“Besides 'Every day's delay must be explained' does not mean that a pedantic approach should be made. The doctrine must be applied in a rational common sense pragmatic manner. The explanation offered in the case at hand, though involving bureaucratic procedures, when examined in the aforesaid perspective reflects a genuine and bona fide cause for the delay in filing the objections under section 34 of the act.”

The dispute arose from an arbitral award dated 20 February 2023 passed in favour of Garg Sons Estate Promotors Pvt. Ltd. against the State of Himachal Pradesh and another authority. The State received the signed copy of the award on the same day.

Thereafter, the authorities forwarded the award on 11 April 2023 to the office of the Superintending Engineer, HPPWD, Rampur for further action. The file subsequently moved through the Engineer-in-Chief's office, the Legal Cell, and the Law Department before the Government communicated its final decision on 3 June 2023 to challenge the award.

The State thereafter filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 after expiry of the initial three-month limitation period but within the additional 30-day condonable period prescribed under Section 34(3) of the Act.

On 22 October 2024, the Single Judge dismissed the State's application for condonation of delay after holding that the authorities had failed to satisfactorily explain the period between 20 February 2023 and 11 April 2023. Aggrieved by the order, the State of Himachal Pradesh and another government authority filed an appeal under Section 37 of the Act before the High Court.

Before the Division Bench, the State argued that the delay resulted from the impersonal nature of governmental functioning and the bureaucratic procedures involved in processing the decision to challenge the arbitral award.

Garg Sons Estate Promotors Pvt. Ltd. opposed the appeal and argued that the State had failed to explain the delay of nearly two months after receipt of the arbitral award. It further contended that routine bureaucratic inefficiency could not constitute sufficient cause for condonation of delay.

Referring to the Supreme Court's decision in Shivamma (dead) By LRs. v. Karnataka Housing Board & Others, the Bench reiterated that Courts must examine whether the explanation reflects reasonable diligence despite the complexities involved in governmental decision-making.

The Bench observed that routinely condoning bureaucratic lapses would defeat the object of limitation laws enacted to secure finality and certainty in legal proceedings. At the same time, it held that limitation provisions under Section 34 should not be applied with rigidity. It observed:

“While examining the explanation offered, the Court has to be conscious of the impersonal nature of the governmental functioning (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal), bureaucratic methodology imbued with the note-making, file-pushing and passing-on-the-buck ethos, the hidden forces that are at work in preventing an appeal by the State being presented within the prescribed period of limitation so as not to allow a higher Court to pronounce upon the legality and validity of an order of a lower Court and thereby secure unholy gains."

The Court also noted that no irreversible rights had accrued in favour of Garg Sons Estate Promotors Pvt. Ltd. before expiry of the 120-day statutory period available for challenging the arbitral award.

Holding that the State had shown a genuine and bona fide explanation for the delay, the Court condoned the delay, set aside the Single Judge's order dated 22 October 2024, and remanded the matter for adjudication of the State's Section 34 objections on merits.

Accordingly, the High Court condoned the delay.

Appearances for petitioner (State of HP and Another): Advocates Navlesh Verma, Ayushi Negi.

Appearances for respondent (M/s Garg Sons Estate Promotors Pvt. Ltd.): Advocates Suneet Goel, Vivek Negi, Rajesh Kumar.