Arbitration and Conciliation Act, 1996:
s. 34(5) – Whether mandatory or directory – Held: When a provision results in general inconvenience or injustice, without promoting the real aim and object of the enactment, the provision must be declared to be directory – s. 34(5) is a procedural provision, infraction of which leads to no consequence – To construe such a provision as mandatory would defeat the advancement of justice as it would provide the consequence of scuttling the process of justice by burying the element of fairness – Interpretation of Statutes.
Judgments/Orders:
An earlier judgment cannot be overruled sub silentio without upsetting the reasons on which it is based.
Allowing the appeal, the Court
HELD: 1.1 Section 34(5) of Arbitration and Conciliation Act, 1996 is a procedural provision, the infraction of which leads to no consequence. The object behind the provision is to dispose of applications under Section 34 expeditiously. All rules of procedure are the handmaids of justice and if, in advancing the cause of justice, it is made clear that such provision should be construed as directory, then so be it. To construe such a provision as being mandatory would defeat the advancement of justice as it would provide the consequence of dismissing an application filed without adhering to the requirements of Section 34(5), thereby scuttling the process of justice by burying the element of fairness. [Paras 20 and 22] [1163-F-G; 1165-A-B]
1.2 Considerations of convenience and justice are uppermost, and if general inconvenience or injustice results, without promoting the real aim and object of the enactment, the provision must be declared to be directory. [Para 19] [1163-E]
1.3 The only requirement in Section 34(1) is that an application for setting aside an award be in accordance with sub-sections (2) and (3). This, again, is an important pointer to the fact that even legislatively, sub-section (5) of s. 34 is not a condition precedent, but a procedural provision which seeks to reduce the delay in deciding applications under Section 34. [Para 23] [1165-D-E]
1.4 It is evident from s. 29A that unlike Section 34(5) and (6), if an Award is made beyond the stipulated or extended period contained in the Section, the consequence of the mandate of the Arbitrator being terminated is expressly provided. This provision is in stark contrast to Section 34(5) and (6) where, if the period for deciding the application under Section 34 has elapsed, no consequence is provided. This is one more indicator that the same Amendment Act, when it provided time periods in different situations, did so intending different consequences. [Para 24] [1166-D-E]
1.5 Therefore, it is not correct that Section 34(5) is independent of Section 34(6) and is a mandatory requirement of law by itself. Sub-section (6) of s. 34 refers to the date on which the notice referred to in sub-section (5) is served upon the other party. This is for the reason that an anterior date to that of filing the application is to be the starting point of the period of one year referred to in Section 34(6). Even if sub-section (5) be construed to be a provision independent of sub-section (6), the same consequence in law is the result – namely, that there is no consequence provided if such prior notice is not issued. [Para 25] [1166-F-G]
1.6 It shall be the endeavour of every Court in which a Section 34 application is filed, to stick to the time limit of one year from the date of service of notice to the opposite party by the applicant, or by the Court, as the case may be. In case the Court issues notice after the period mentioned in Section 34(3) has elapsed, every Court shall endeavour to dispose of the Section 34 application within a period of one year from the date of filing of the said application, similar to what has been provided in Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. This will give effect to the object sought to be achieved by adding Section 13(6) by the 2015 Amendment Act. [Para 27] [1168-B-C]
1.7 In cases covered by Section 10 read with Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within six months, as stipulated. Appeals which are not so covered will also be disposed of as expeditiously as possible, preferably within one year from the date on which the appeal is filed. [Para 28] [1168-D, E]
Kailash v. Nanhku and Ors. (2005) 4 SCC 480: [2005] 3 SCR 289 ; Topline Shoes v. Corporation Bank (2002) 6 SCC 33 : [2002] 3 SCR 1167 ; Salem Advocate Bar Association v. Union of India (2005) 6 SCC
344 : [2005] 1 Suppl. SCR 929 ; New India Assurance Co. Ltd. v. Hilli Multipurpose Cold Storage Pvt. Ltd. (2015) 16 SCC 20 ; J. J. Merchant (Dr.) v. Shrinath Chaturvedi (2002) 6 SCC 635 : [2002] 1 Suppl. SCR
469 ; State v. N.S. Gnaneswaran (2013) 3 SCC 594 ; Bikhraj Jaipuria v.Union of India [1962] 2 SCR 880 – relied on.
Bihari Chowdhary and Anr. v. State of Bihar and Ors, (1984) 2 SCC 627 : [1984] 3 SCR 309 – referred to.
2. An earlier judgment cannot be overruled sub silentio without upsetting the reasons on which it is based. [Para 17] [1161-H; 1162-A]
Maxwell on Interpretation of Statutes 10th Edn. p. 376 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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