Govt. Must Prove How Election Duties Prevented Timely Filing Of Arbitration Appeals: Delhi High Court
The Delhi High Court on 15 October held that government departments cannot justify delays in filing arbitration appeals merely by citing reduced office functioning during the 2024 Lok Sabha elections without explaining how the elections prevented timely filing.
A Division Bench comprising Acting Chief Justice Nitin Wasudeo Sambre and Justice Amit Sharma refused to condone delays of 119 and 132 days in two appeals filed by the Department of Land Resources against Mukesh and Associates, which challenged orders dismissing the Department's challenges to an arbitral award of approximately Rs. 11.24 crore arising from a watershed management consultancy contract.
Relying on the Supreme Court's decision in State of Maharashtra v. Borse Bros. Engineers & Contractors (P) Ltd., the judges observed:
“Further, the only reason stated for condonation of delay in filing in both the appeals, as stated hereinabove, that government offices were not functioning to its full capacity due to the Lok Sabha Election 2024, is completely vague and cannot in any manner justify the delay in filing both the appeals.”
“There is no explanation for each day's delay and no plausible reason is forthcoming as to how Lok Sabha Election 2024 prevented the appellant for taking necessary steps for filing the present appeals within the limitation period,” it added.
The dispute arose from a consultancy contract dated 10 July 2015, under which Mukesh and Associates was engaged to monitor and evaluate the Integrated Watershed Management Portal (IWMP).
In July 2017, officials identified procedural irregularities concerning the award of the contract while preparing for a meeting of the Consultancy Monitoring Committee. An inquiry followed into how the consultancy firm secured the contract despite questions about its competence and compliance with prescribed procedures.
Mukesh and Associates invoked arbitration in March 2018 following disputes between the parties. On 10 January 2020, the sole arbitrator awarded the firm Rs. 11,23,95,709, along with future interest under the Micro, Small and Medium Enterprises Development Act, 2006, until payment.
The Department challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. A Single Judge dismissed the challenges through orders dated 30 January and 12 February 2024.
The Department subsequently filed appeals under Section 37 of the Arbitration Act, seeking to challenge both orders. It attributed the delay in filing the appeals to the deployment of officers for election duties between January and May 2024, which allegedly prevented them from giving timely instructions to counsel. It also cited the High Court's summer vacation and difficulties in compiling old records to explain the subsequent refiling delays.
Mukesh and Associates opposed the applications for condonation of delay, pointing out that the initial filings contained only 24 and 26 pages, respectively, and omitted essential documents, including the arbitral award and the orders under challenge.
The Court verified with its Registry that both documents were missing from the initial filings made on 11 May 2024. It therefore treated the filings as non-est and considered 10 June 2024 as the effective filing date.
Applying the 60-day limitation period for appeals in commercial arbitration matters, it calculated delays of 119 and 132 days in filing the appeals, along with separate refiling delays of 11 and 71 days.
Further, the Bench held that the failure to submit essential documents with the initial filings demonstrated a lack of bona fides. It noted that “in the present case, the very first filing being non-est, as observed hereinabove, on account of non-filing of the impugned order and arbitration award, shows the lack of bonafide in filing the present appeals.”
It also found that the Department had neither explained each day's delay nor established how election duties prevented it from filing the appeals within the limitation period.
Accordingly, the High Court dismissed both applications for condonation of delay and consequently dismissed the appeals, leaving the orders rejecting the Department's challenges to the arbitral award undisturbed.
Appearances for petitioner (Department of Land Resources): Advocates Rajesh Gogna and Simran.
Appearances for respondent (M/s Mukesh and Associates): Senior Advocate Ritin Rai, Advocates S. Santanam Swaminadhan, Abhilasha Shrawat, Kartik Malhotra and Shivani Choudhary.