“Non-est” filings entering the arena of arbitrations

Picture courtesy- Economic Times

On an infrequent Saturday, the 7^th October 2023, the Delhi High Court bench comprising of Suresh Kumar Kait and Neena Bansal Krishna, JJ., heard final arguments on the unique issue of whether a delay spanning from 50 to 55 days in filing and re-filing, respectively, of an application u/s 34 of the Arbitration and Conciliation Act, 1996 [“Arbitration Act”] leads to non-est filing.

Union of India filed an appeal before the Delhi High Court u/s 37 of the Arbitration Act read with S.13 [1A] of the Commercial Courts Act, 2015 challenging the Single Judge’s decision of dismissing their application for setting aside the award granted by the Arbitrator. The Single Judge held that the application was a non-est filing since it was not accompanied by a copy of the assailed award and the same was attached to the application after 50 days beyond the limitation of filing prescribed u/s 34 of the Arbitration Act. Furthermore, a few more pages were added to the application after 55 days of limitation of re-filing.

NON-EST FILING vs. RE-FILING

The High Court of Delhi crystalized the concept of non-est filing in the case Ambrosia Corner House Private Limited v. Hangro S. Foods [2023 SCC OnLine Delhi 517] by stating that the law on what can be considered as a non-est filing for purposes of Section 34 of the Act is no longer res integra, which means that this concept is now no longer an alien to arbitration proceedings. It held that a more liberal approach is to be adopted by the Court while considering whether the filing should be treated as non-est. In this case, the petitioner committed an error in not filing the documents in a separate folder as prescribed in the Delhi High Court (Original Side) Rules, 2018, which was condoned by the Court.

In the case of Oriental Insurance Co Ltd vs. Air India Ltd. [2021 SCC OnLine Del 5139] the right to prefer objections to assail the Arbitral Award under S. 34 of the Arbitration Act, though extremely limited, is a valuable right; the same cannot be denied unless the party concerned has clearly failed to file the objection petition within the strict period of limitation prescribed under the Act. Wherein the limitation of re-filing is not prescribed, the type of shortcomings indicated in a petition is a major factor in determining the date of initial filing.

In the case of Ashok Kumar Parmar vs. D.C. Sankhla [1995 RLR 85], it was observed that the emphasis should be on the nature of defects found in the plaint. If the defects are formal or ancillary in nature not affecting the validity of the plaint, the date of presentation would be the date of original presentation for the purpose of calculating the limitation for filing the suit. On the other hand, if the defects are of such character that would render a plaint a non-plaint in the eye of law, then the date of presentation would be the date of re-filing after removal of defects. This observation was upheld in C. Sankhla vs. Ashok Kumar [1995 (1) AD (New Delhi) 753].

For instance, an application might be perfect in every way, yet certain documents might need to be retyped because they are unclear. It cannot be argued that the court lacks jurisdiction to excuse the delay in re-filing in a situation like this, where the original filing occurs within the 120-day window given by S. 34(3) of the Arbitration Act, but the subsequent filing occurs after this time.
ANNEXING IMPUGNED AWARDS

S. 39 of the Arbitration Act, which allows an appeal against an Order setting aside or refusing to set aside an Award, clarifies the importance of filing the Award with the S. 34 Petition. Order XLI Rule 1 Code of Civil Procedure [“CPC”], is one of the requirements of CPC, and S.41 of the Arbitration Act, 1940 mandates that the form and content of an appeal under S.39 follow those provisions.

Notably, the Act, 1996 omits such a specification; in fact, S. 19(1) of the Arbitration Act expressly excludes the applicability of the CPC. The Arbitration Act does not outline this process or the supporting documentation required for the submission of objections to an award. Nonetheless, throughout time, the guidelines for an accurate and legitimate filing have been implemented as fundamental legal precepts. Accordingly, under S.34 of the Arbitration Act, filing faults cannot be of a kind that render the file so dreadfully deficient that it loses its status as an application or petition.

In the case of Ministry of Youth Affairs and Sports, Dept. of Ports, Govt. of India vs. Ernst and Young PVT. Ltd. [O.M.P. (COMM) 377/2018], the Delhi High Court comprising of the Single Bench of Mini Pushkarana J., adjudicated a similar issue of whether the petition would be considered non-est if the impugned arbitral award and statement of truth in support of the same are not annexed within the prescribed limitation period.

The appellants therein contended that the Arbitral Tribunal passed the Award in its favor by upholding the submissions made by it in respect of its claims, however, the Arbitral Tribunal erred in not reflecting in the concluding para of the Award, the relief/amount with regard to one of the claims raised by the petitioner for Rs. 2.82 crores.

The Court noted that although the re-filed iteration of the petition contained the challenged award and spanned 1785 pages, the original filing would be considered non-est since it lacked the impugned award and statement of truth. The Court ruled that a non-est filing would not halt the statute of limitations for the purposes of Section 34; rather, the limitation would end only on the date the petition is properly filed. The Court further stated that minor procedural errors like bookmarking would not render the fling non-est after the petition and the necessary documentation were filed.

LEEWAY IN TERMS OF DIGITAL COPIES

With the advancement of digital methods, Courts, Arbitrators, Advocates and other important mechanics of this legal profession are displaying fluency and leniency with regard to digital files and attached copies. Gone are the days, when several days were borrowed by advocates from the Courts in order to submit verified copies of documents. Along with caution and proper scrutiny, Courts allow digitally signed and verified copies to be admissible-in-evidence to be relied upon by the parties.

In the case of Delhi Urban Shelter Improvement Board vs. Lakhvinder Singh [2017 SCC OnLine Del 9810] has held that the phrase "signed copy" in S. 31(5) of the Arbitration Act denotes the legislative desire that each party receive a copy that has been verified by the Arbitrator. It was decided that, in today's technologically advanced world, a correspondence's authenticity is not limited to written signatures, and that it would be incorrect to interpret the term "signed copy" of the award or order narrowly to mean a copy that has the arbitrator's original handwritten signatures.

CONCLUSION

It is to be borne in mind that the concept of establishing sufficient cause with regard to delay in filing and re-filing has accelerated the carriage of litigation proceedings. The Court will exercise its discretion whether or not the delay asked for should be condoned upon considering the facts and circumstances of the case. Nowadays, it is not a piece of cake to condone delays in filing and refiling of petitions and applications, especially in matters related to arbitration. Therefore, it is essential to tick mark the checklist of procedures and limitations prescribed under the applicable statutes.

Delhi High Court Judgement's Link- https://dhccaseinfo.nic.in/jsearch/judgement.php?path=dhc/NBK/judgement/04-01-2024/&name=NBK19122023FAC812020_163602.pdf