For an appeal to be maintained under section 37 Arbitration and Conciliation Act, 1996, an arbitral award under section 34 must be refused or set aside: Bombay High Court

Section 37 (1) (c) of the Arbitration and Conciliation act,1996 mentions that for an order to be appealed under section 37, the award granted under section 34 must be refused or set aside. However, If the amendment application for the ground to challenge the refusal of the counterclaim is dismissed, it is not that the petition filed to challenge the entire award comes to an end and thus will not be maintainable under section 37. This was decreed by the two-judge bench comprising of Hon’ble Justice Nitin Jamdar and Hon’ble Justice C.V. Bhadang in Oil & Natural Gas Corporation Ltd. Vs. Sime Darby Engineering Sdn. Bhd. And Swiber Offshore Construction Pte. Ltd. [COMMERCIAL APPEAL NO. 55 OF 2020].

The brief facts of the case are, the appellant ONGC issued a tender on 29th may 2009 for an independent project. On 19 May 2010, the tender was awarded to the respondents. An agreement between the parties was executed on 3rd July 2010 pursuant to the same. However, a dispute arose between the parties and the arbitration clause was invoked and an arbitral tribunal was set up. Th tribunal held the appellant liable to pay the respondent for the settlement of rival claims. Aggrieved by this, the appellant filed an arbitration petition and a year later took out chamber summons to amend this petition and add grounds to challenge the award. The respondents contested such a chamber summons. The grounds were categorized into elaboration of the existing grounds and additional grounds. The learned judge allowed the elaboration of the existing grounds but decreed that the additional grounds cannot be included due to the expiry of the period of limitation. Challenging this order, the present appeal is filed before the Hon’ble High Court claiming that, the additional grounds must also be allowed to be included.

The counsel for the respondents challenged the maintainability of the present appeal under section 37 of the act. They submitted that asper section 37 (1) (c) of the act, only those orders whose awards are set aside or there is a refusal to set aside under section 34 of the act can be appealed before the court. However, the counsel for the respondent submitted that the award under section 34 was set aside due to a delay and thus will be maintainable under section 37 for an appeal before the Hon’ble court. To support this claim, the counsel for the appellant made use of the Effect test to ascertain whether the appeal is maintainable under Section 37(1) (c) of the Act. According to the Appellant, what needs to be seen is the effect of the order to decide whether an appeal under Section 37 is maintainable.

The court heard both the counsels and came to the opinion that the effect test used by the appellant would not assist them in this case. They opined that “the effect of refusing to condone delay for filing a petition under Section 34 is that there is a refusal to set aside the award in its entirety, and as a consequence, the petition under Section 34 also gets dismissed. This position is entirely different from the rejection of an amendment. The court said that there is a difference between refusing an amendment to take a ground of challenge and rejecting the entire petition finally under Section 34. Mere refusal for addition of certain grounds to a pre-existing petition does not make it maintainable for an appeal under section 37. The court relied on the observation on the apex court in State of Maharashtra v. Hindustan Construction Company Ltd. [AIR 2010 SC 1299] and dismissed the present appeal on the grounds of non-maintainability under section 37 since the award was not set aside or refused to be set aside.

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