On July 30, 2018, the Hon’ble Supreme Court of India (“the Hon’ble Court”) passed a judgment in the matter of State of Bihar v. Bihar Rajya Bhumi Vikas Bank Samiti (AIR 2018 SC 3862).
Whether Section 34(5) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) inserted by Amending Act 3 of 2016, is mandatory or directory?
The current appeal has arisen from a matter wherein a section 34 petition was filed before the Patna High Court challenging an arbitral award made on January 6, 2016 and in the said matter a notice was issued to the opposite party by the court. The issue raised in that matter was that no prior notice had been issued to the other party in terms of section 34(5) of the Arbitration Act nor was the aforesaid application accompanied by an affidavit as per the requirement of section 34(5). The Hon’ble Patna High Court held that the said provision was only directory. However, the division bench dismissed the section 34 petition on the grounds that section 34(5) was a mandatory requirement and had not been complied with.
The Hon’ble Court observed that the object of the provision in Section 34(5) is only to expedite the hearing and not to scuttle the same. All rules of procedure are the handmaids of justice and if, in advancing the cause of justice, it is made clear the such provision should be construed as directory, then so be it.
The Hon’ble Court also observed that the other provisions of Section 34 are in stark contrast to section 34(5) and (6). This is one more indicator that the same Amendment Act, when it provided time periods in different situations, did so intending different consequences.
The Hon’ble Court allowed the appeal and the judgment of the Patna High Court was set aside. Hence, the section 34 petition that has been filed in the present case will now be disposed of on its merits.
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