A Single Bench of the Calcutta High Court in the case of Indian Oil Corporation Limited v. Tapas Kumar Das, [A.P. 827 of 2018, decided on July 12, 2021] has adjudicated upon an issue whether an application to amend the grounds of challenge under Section 34 (application for setting aside arbitral award) of the Arbitration and Conciliation Act, 1996 (“the Act”) is permissible in case it is filed after the statutory time limit prescribed under Section 34(3) of the Act.
Brief Facts:
The main contention of the petitioner/ applicant for incorporation of additional grounds of challenge under Section 34 of the Act was with respect to certain Marketing Discipline Guidelines, 2005 (“Guidelines”) framed by the Ministry of Petroleum for the conduct of certain dealerships of public sector oil marketing companies. The said Guidelines formed a part of the agreement between the parties and as per the petitioner/ applicant, the arbitrator had failed to provide sufficient importance to it.
Decision of the Court:
The Court, while taking note of the legislative intent enumerated under Section 34(3) of the Act, observed that, allowing a petitioner/ applicant to introduce a new ground to an existing application under Section 34 of the Act would defeat the statutory objective under 34(3) of the Act which permits an aggrieved party to approach a court within the statutory time limit of 3 (three) months plus an additional 90 (ninety) days upon satisfaction of the court that the petitioner/ applicant was prevented by sufficient cause from making the application within 3 (three) months and not beyond.
The Calcutta High Court thus, opined that the test is whether the additional grounds sought to be introduced in the Section 34 application by way of an amendment beyond the prescribed limitation period under Section 34(3) of the Act can be traced to the arbitration proceedings that is in pleading/ document which was before the arbitrator or whether the petitioner/ applicant would be constrained to file a new application under Section 34 of the Act for challenging the award under the additional grounds.
As per the Court, if the contents or points urged in the additional grounds can be found in the contentions urged by the parties before the arbitrator, it cannot then be said that the additional grounds are sought to be introduced by the petitioner/ applicant for the first time in a proceeding under Section 34 of the Act and would thus, pass the bar under Section 34(3) of the Act.
The Calcutta High Court, therefore, in consideration of the facts and circumstances of the instant case held that, the petitioner/ applicant would pass the test since, the Guidelines constitutes a prominent and significant part of the records before the arbitrator and has also been referred to in the existing grounds challenge and thus, disallowing the petitioner/ applicant from bringing the said Guidelines into the existing application would deprive the petitioner/ applicant from an important challenge to the arbitral award. Further, the Court also opined that, the objective of courts in respect of amendments is to primarily allow a party to amend its pleading as may be necessary for the purpose of determining the real questions in controversy between the parties.
Therefore, the Calcutta High Court granted leave to the petitioner/ applicant to amend/ include additional grounds of challenge under Section 34 of the Act basis the Guidelines being crucial for determining the challenge to the arbitral award and since, the same also formed a part of the records in the proceedings before the arbitrator. Additionally, the Court also noted that, the instant application under Section 34 of the Act was made within 120 (one hundred and twenty) days of the statutory time limit, although the present application for amendment has been filed after 3 (three) years.
Please find attached a copy of the judgment.
This update has been contributed by Arka Majumdar (Partner) and Kunal Dey (Associate).
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