Case Note & Summary
The Appellant, Vikramsinha Laxmansinha Jadhavrao, filed an Arbitration Appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging the judgment and order dated 8th January 2018 passed by the learned District Judge-I, Pune. The District Judge had held that the Appellant's application under Section 34 of the Act, filed on 11th August 2017 challenging an arbitral award dated 27th May 2017, was not in compliance with Section 34(5) of the Act, which requires that prior notice be given to the other party and that the application be accompanied by an affidavit endorsing such compliance. Consequently, the District Judge dismissed the Section 34 application. The Respondents had filed a caveat in June 2017. The Appellant issued a notice dated 11th August 2017 to the Respondents, informing them that copies of the main application and stay application were being sent in advance, and the Respondents acknowledged receipt on the same day. However, the affidavit filed by the Appellant in support of the Section 34 application did not specifically mention the prior notice. The Respondents argued that this non-compliance rendered the application non-maintainable. The Appellant contended that there was substantial compliance as the Respondents had actual notice and were not prejudiced. The High Court analyzed the language of Section 34(5) and held that the requirement is procedural and directory, not mandatory. The court noted that the purpose of the provision is to ensure that the other party is not taken by surprise, and since the Respondents had prior notice and acknowledged it, there was substantial compliance. The court set aside the impugned order and directed the District Judge to restore the Section 34 application and decide it on merits, preferably within six months.
Headnote
A) Arbitration Law - Setting Aside Arbitral Award - Section 34(5) of the Arbitration and Conciliation Act, 1996 - Prior Notice and Affidavit - The court considered whether the requirement under Section 34(5) to issue prior notice and file an affidavit endorsing compliance is mandatory or directory. The Appellant had issued a prior notice to the Respondents and served copies of the application in advance, but the affidavit filed did not specifically mention the prior notice. The court held that the requirement is procedural and not mandatory, and substantial compliance is sufficient. Since the Respondents had actual notice and were not prejudiced, the dismissal of the Section 34 application was set aside. (Paras 1-11)
Issue of Consideration
Whether the failure to file an affidavit endorsing compliance with the requirement of prior notice under Section 34(5) of the Arbitration and Conciliation Act, 1996, renders the Section 34 application non-maintainable, or whether substantial compliance is sufficient.
Final Decision
The High Court allowed the appeal, set aside the impugned judgment and order dated 8th January 2018, and directed the learned District Judge-I, Pune, to restore Civil Miscellaneous Application No.779 of 2017 to its original file and decide it on merits, preferably within six months from the date of the order.
Law Points
- Section 34(5) of the Arbitration and Conciliation Act
- 1996
- prior notice
- affidavit
- substantial compliance
- procedural requirement
- condonation of delay
Case Details
2018 LawText (BOM) (03) 53
Arbitration Appeal No.12 of 2018
Mr. S.M. Gorwadkar, Senior Advocate with Mr. C.D. Nargolkar, Mr. Sagar Shah I/by Mr. Aumkar Joshi, for Appellant. Mr. G.S. Godbole with Mr. Drupad Patil, for Respondents.
Vikramsinha Laxmansinha Jadhavrao
Ishwar Constructions Private Limited and Ishwar Chaundulal Parmar
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Nature of Litigation
Arbitration appeal against dismissal of Section 34 application for non-compliance with Section 34(5) of the Arbitration and Conciliation Act, 1996.
Remedy Sought
The Appellant sought to set aside the order of the District Judge dismissing his Section 34 application and to restore the application for hearing on merits.
Filing Reason
The Appellant's Section 34 application challenging an arbitral award was dismissed by the District Judge on the ground that the Appellant failed to comply with Section 34(5) of the Act, which requires prior notice to the other party and an affidavit endorsing such compliance.
Previous Decisions
The learned District Judge-I, Pune, by judgment and order dated 8th January 2018, held that the Appellant's Section 34 application was not in compliance with Section 34(5) and dismissed it.
Issues
Whether the requirement under Section 34(5) of the Arbitration and Conciliation Act, 1996, to issue prior notice and file an affidavit endorsing compliance is mandatory or directory.
Whether the Appellant's failure to specifically mention the prior notice in the affidavit renders the Section 34 application non-maintainable despite actual notice to the Respondents.
Submissions/Arguments
The Respondents argued that as per Section 34(5), the Applicant must issue prior notice to the other party and file an affidavit endorsing compliance. Since the Appellant did not mention the prior notice in the affidavit, the application was not maintainable.
The Appellant argued that there was substantial compliance: a prior notice was issued and acknowledged by the Respondents on the same day, and copies of the application were served in advance. The omission in the affidavit was not fatal as the Respondents were not prejudiced.
Ratio Decidendi
The requirement under Section 34(5) of the Arbitration and Conciliation Act, 1996, to issue prior notice and file an affidavit endorsing compliance is procedural and directory, not mandatory. Substantial compliance is sufficient, and the court may condone non-compliance if the other party had actual notice and was not prejudiced.
Judgment Excerpts
The requirement under Section 34(5) of the Act is procedural and not mandatory. The purpose is to ensure that the other party is not taken by surprise.
In the present case, the Respondents had actual notice of the filing of the Section 34 application and were not prejudiced. Hence, there is substantial compliance.
Procedural History
The Appellant filed Civil Miscellaneous Application No.779 of 2017 under Section 34 of the Arbitration and Conciliation Act, 1996, on 11th August 2017 before the District Judge-I, Pune, challenging an arbitral award dated 27th May 2017. On 28th August 2017, the Respondents filed an application contending non-compliance with Section 34(5). The Appellant filed a reply on 14th September 2017. The District Judge, by judgment and order dated 8th January 2018, held that the Section 34 application was not in compliance with Section 34(5) and dismissed it. The Appellant then filed the present Arbitration Appeal under Section 37(1)(c) of the Act.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 34, 34(5), 37(1)(c)
