Chintels India Ltd. v. Bhayana Builders Pvt. Ltd.

Civil Appeal · 2021 INSC 76Decided 11 Feb 2021
Civil Appeal No. 4028 of 2020
Justice Rohinton Fali Nariman · Justice Navin Sinha · Justice K.M. Joseph

Background

Chintels India had applied under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an arbitral award, but a single judge of the Delhi High Court refused to condone the delay in filing that application. The question was whether such a refusal could itself be appealed under Section 37(1)(c) of the Act, which allows appeals against orders "setting aside or refusing to set aside" an arbitral award. The High Court's Division Bench, feeling bound by earlier Supreme Court rulings (including on BGS SGS Soma JV and Ramdas Construction Co.), had held that no such appeal was maintainable, and Chintels India appealed that ruling to the Supreme Court.

Decision Breakdown

The Supreme Court held that a refusal to condone delay in filing a Section 34 application effectively amounts to a refusal to set aside the award, and therefore qualifies as an appealable order under Section 37(1)(c). The Court reasoned that reading Section 37 narrowly to exclude such orders would leave parties with no remedy except approaching the Supreme Court directly under Article 136, which was not the legislative intent, and it held that two prior High Court decisions taking the contrary view (a Bombay High Court ruling and the Radha Krishna Seth decision) did not correctly state the law and stood overruled. The appeal was allowed, the High Court's judgment was set aside, and the matter was sent back to the Delhi High Court's Division Bench to actually decide on merits whether the delay-condonation refusal was correct.

Lesson Learnt

In arbitration disputes, a court's refusal to even consider a late-filed challenge to an award (for missing the limitation period) is not the end of the road: such a refusal can itself be challenged on appeal, ensuring parties are not shut out of the appellate process merely because their first attempt was rejected on a technical/limitation ground.

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