Limitation To Challenge Arbitral Award Starts On Postal Delivery To Party Not Email To Lawyer: Patna High Court

The Patna High Court has recently ruled that the limitation period to challenge an arbitral award starts only when the party itself receives a signed copy of the award by registered post, and not when a signed copy is merely received on the email of the party's lawyer.

"Thus, a conjoint reading of sub-section (5) of Section 31 and sub-section (3) of Section 34 would make it clear that the reckoning point for computation of the period of limitation is the date on which the party making the application had received the arbitral award.", the court said.

A division bench of Justice Rajeev Ranjan Prasad and Justice Praveen Kumar was hearing an appeal against an order of the District Judge, Patna. The District Judge had dismissed a challenge to an arbitral award on the ground that it was filed late.

The arbitral award was signed on April 25, 2022. The appellant challenged the award by filing an application under Section 34 of the Arbitration and Conciliation Act, 1996, which allows a party to seek the setting aside of an arbitral award.

The District Judge dismissed the application, holding that it was filed with a delay of 33 days beyond the maximum period that can be condoned under Section 34(3) of the Act. Under the law, a challenge to an arbitral award must be filed within three months of receipt of the award, with a further grace period of up to 30 days that may be condoned for sufficient cause, but not thereafter.

Before the High Court, the appellant argued that the District Judge had failed to correctly apply the scheme of the law. It was pointed out that Section 31(5) of the Act requires that, after an arbitral award is made, a signed copy must be delivered to each party.

The appellant submitted that the limitation period under Section 34(3) can begin only from the date on which the party itself receives such a signed copy of the award.

It was further argued that simply receiving a signed copy of the award on the lawyer's email, and the lawyer later forwarding it to the client along with legal advice, does not meet the legal requirement of proper delivery under Section 31(5).

The respondent opposed the appeal. It argued that sending the signed award by email to the appellant's lawyer should be treated as valid delivery and should trigger the limitation period.

The High Court examined whether delivery of a signed copy of the arbitral award to a party's lawyer through email could be treated as delivery to the party itself for the purpose of starting limitation.

The court noted that the arbitrator had directed that signed copies of the award be sent to the parties through registered post. Copies were also forwarded to their respective lawyers by email.

There was no dispute that the signed copy sent through registered post was received on 1 June 2022.

Rejecting the respondent's contention, the Court held that mere receipt of a signed copy of the award on the lawyer's email, and its subsequent forwarding to the client with an opinion, cannot be treated as compliance with the statutory requirement. The Court observed:

"We cannot stretch the meaning of the provision or substitute our own opinion in place of the wisdom of the legislatures as contained in sub-section (5) of Section 31 of the Act of 1996," the court said.

Accordingly, the High Court set aside the order of the District Judge dismissing the challenge on the ground of limitation and directed that the application be heard afresh on its merits.