Delhi High Court recently addressed a petition filed by Delhi Metro Rail Corporation (petitioner) under section 34 of the Arbitration & Conciliation Act, 1996, challenging an arbitral award passed in favour of HCC Samsung JV (respondent). The core issue revolved around the limitation period for filing the section 34 petition, particularly in light of a prior application filed under section 33 of the act.
Background
In 2012, the petitioner floated a tender for the design and construction of tunnels and underground metro stations. The respondent emerged as the successful bidder, and a contract agreement was executed in February 2013.
The project, however, faced delays, leading to extensions of time. Subsequently, the respondent submitted a claim for compensation due to variations and delays, which the petitioner rejected.
This impasse led to invocation of the arbitration clause, resulting in an arbitral tribunal in September 2020. The tribunal rendered a majority award in favour of the respondent, while rejecting the petitioner’s counterclaims. The petitioner then filed an application under section 33 of the act – which was later dismissed – and consequently filed the section 34 petition challenging the arbitral award.
Limitation question
The primary legal question before the high court was determining the starting point for calculating the limitation period for the section 34 petition. The respondent argued that section 33, which provides for an application for correction and interpretation of the award within 30 days of receipt, was an application filed by the petitioner for a review of the award on merits, which is not permissible under section 33.
Therefore, they contended that the limitation period should commence from the date of receipt of the arbitral award, and not from the date of disposal of the section 33 application. The petitioner countered that its section 33 application was filed for the limited purpose of correcting factual errors made by the arbitral tribunal and was thus a bona fide application.
Analysis and implications
The court referred to section 34(3) of the act, which stipulates that an application for setting aside an award must be made within three months from the date of receiving the award. However, if a request under section 33 has been made, the limitation period begins from the date of disposal of that request.
The court also noted the Supreme Court’s observations, in Gyan Prakash Arya v Titan Industries Ltd (2023), emphasising that section 33 can only be invoked to correct arithmetical or clerical errors, not to modify an award based on re-evaluation of the merits.
Additionally, the court clarified that if a section 33 application is essentially a disguised attempt to seek a review of the award, it would be considered misconceived.
This case highlights the importance of aligning procedural tactics with statutory intent. While section 33 permits corrections of “computational, clerical or typographical errors”, parties often misuse it to indirectly challenge substantive findings. Further, although this judgment clarifies blatant misuse of section 33, it remains to be seen how courts deal with hybrid applications, namely, partly disguised reviews where partly valid corrections exist.
The court’s scrutiny of the nature of section 33 application highlights the judiciary’s commitment to preventing parties from circumventing the prescribed timelines for challenging arbitral awards.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at support@numenlaw.com. Readers should not act on the basis of this information without seeking professional legal advice.
