Arbitral Award Sent To Last Known Address Is Valid Service; Limitation Runs From Attempted Delivery: Bombay HC

The Bombay High Court has reiterated that an arbitral award dispatched to a party's last known address amounts to valid service in law, even if the party does not actually receive it, and the limitation to challenge the award begins from the date of attempted delivery.

Justice Sharmila U. Deshmukh held that, “Once the signed copy of the Award is shown to have been dispatched to the last known address of the Applicants, the same is sufficient to raise the deeming fiction under Section 3(2) and to draw an inference under Section 114 of Evidence Act,” rejecting the contention that limitation had not commenced due to non-receipt.

The ruling came in a challenge by the partners of Akshar Enterprises to an arbitral award dated December 20, 2021, rendered under the Mumbai Centre for International Arbitration in favour of Mahindra & Mahindra Ltd. The petition was accompanied by an application seeking condonation of delay on the ground that the petitioners had not been served with a signed copy of the award.

The petitioners argued that since they had never received the signed arbitral award, the time limit to challenge it had not begun. They claimed that they became aware of the award only when execution proceedings were initiated and that they later obtained a copy from the arbitral institution.

Opposing the plea, Mahindra & Mahindra Ltd. submitted that all communications during the arbitration, including notices, procedural orders, and hearing links, were sent to the petitioners' email address. It argued that the petitioners were fully aware of the proceedings and that the signed award had been dispatched by registered post to their last known address but was returned with the remark “closed,” which amounted to valid service in law.

Accepting this, the court held that the requirement of delivering a signed copy of an arbitral award must be read with the statutory principle that a communication is deemed received if it is sent to the party's last known address and delivery is attempted. The court emphasised that allowing parties to rely on non-receipt despite avoiding service would defeat the object of limitation law.

The court noted that the petitioners were aware of the arbitration proceedings, as reflected in their reply dated January 11, 2021, which expressly referred to the arbitration and the appointment of the arbitrator. It further recorded that emails relating to hearings and procedural steps were sent to the petitioners, and records showed that certain emails, including hearing links, had been opened and read. Despite this, the petitioners chose not to participate in the proceedings and did not inform the arbitral tribunal or the respondent of any change in address.

“A party who despite being aware of the arbitration proceedings chooses to remain passive and permits the arbitration to proceed and conclude, cannot be permitted after a period of three years, to raise a specious plea of non receipt of Arbitral Award under Section 31(5) of Arbitration Act without bothering to inform the Arbitrator or the other party about the permanent closure of the operations and the changed address for purpose of service,” the court observed.

It further held that once dispatch of the award to the last known address is established, a presumption arises that the ordinary course of business has been followed, reinforcing the conclusion of deemed delivery.

Rejecting the contention that the award had not been served on the firm, the court held that service upon its partners constitutes valid service upon the firm.

The court clarified that while earlier rulings require delivery of a signed copy of the award to trigger limitation, those decisions do not apply to cases where a party, despite being aware of the proceedings, fails to update its address or avoids service.

In that context, the court distinguished State of Maharashtra v. ARK Builders Pvt. Ltd., noting that it did not deal with such a factual situation. Holding that the award was deemed to have been delivered on January 4, 2022, the court found that the challenge filed in February 2024 was clearly barred by limitation.

The application for condonation of delay was rejected, and, consequently, the arbitration petition was dismissed.