Sanchayita Lahkar

The High Court of Rajasthan Division Bench of Justice Sanjeev Prakash Sharma and Justice Chandra Prakash Shrimali held that the delay in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 was liable to be condoned, setting aside the dismissal order passed by the Single Judge. The Bench directed that the matter be remanded back to the Single Judge for adjudication on merits. It was further ordered that both parties are to be given full opportunity to address and advance their submissions on merits before the appropriate bench assigned to hear arbitration matters.

The appellant is a company incorporated under the laws of Taiwan, engaged in civil construction and related works across multiple countries including India. A dispute arose between the appellant and the respondent, leading to arbitration proceedings before a tribunal comprising Hon’ble Mr. Justice Vikramajit Sen (Retd.), Hon’ble Mr. Justice Mukul Mudgal (Retd.), and Mr. Pradeep K. Deb, IAS (Retd.). By majority decision of 2:1, the arbitral tribunal rejected the claims of the appellant through an award dated 20 December 2017.

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Challenging this award, the appellant filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 on 16 March 2018 before the Rajasthan State Commercial Court (District Level), Jaipur. The respondent objected to the jurisdiction of the Commercial Court, arguing that the dispute fell under the category of international commercial arbitration. On 22 November 2018, the Commercial Court accepted the objection and returned the petition under Order VII Rule 10 CPC to be filed before the competent court.

The appellant then filed the same petition on 6 December 2018 before the High Court. However, the Registry refused to accept it in the existing form, holding that a Section 34 petition could not be directly filed. Consequently, the appellant filed an application under Section 10(1) of the Commercial Courts Act, 2015 attaching the original Section 34 petition.

The matter was registered as D.B. Arbitration Application No.117/2018. The respondent again raised objections regarding maintainability, contending that no valid application under Section 34 of the Act had been filed before the High Court, that the earlier application ought to have been rejected rather than transferred, that verification requirements under the Rajasthan Arbitration Rules, 2003 and High Court Rules, 1952 were not fulfilled, and that the application was time-barred.

In response, the appellant argued that they had not delayed the proceedings and that an application under Section 14 of the Limitation Act had also been filed seeking exclusion of the time spent before the Commercial Court. The appellant urged that proceedings under arbitration law required a pragmatic approach, and that their application should be considered on merits.

The respondent, however, contended that the appellant had abandoned earlier defective applications, failed to pursue them diligently, and filed a fresh application only on 14 February 2019. It was argued that defects in earlier applications were not cured, and delay could not be condoned. The respondent stressed that provisions under Section 10(1) of the Act of 2015 and Section 34 of the Act of 1996 did not permit adjudication of applications filed before a court lacking jurisdiction.

The Single Judge of the High Court, after hearing arguments, dismissed the application on 2 March 2022, holding that there was no application under Section 34 properly filed before a competent authority, no application for condonation of delay, and no relief sought under Section 10(1) of the Act of 2015 in relation to arbitration. This dismissal led to the present special appeal filed under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 read with Section 13(1A) of the Commercial Courts Act, 2015.

The Division Bench examined whether an application under Section 34 of the Act of 1996 had indeed been moved, whether delay warranted dismissal, and whether Section 14 of the Limitation Act could apply.

The Bench recorded that “it is settled law that merely mentioning a wrong heading of provision on the application would not defeat the cause of justice. The contents of the application are required to be seen and not the provision mentioned on it.” It observed that the contents of the appellant’s application clearly demonstrated objections to the arbitral award under Section 34.

The Bench further noted that “the Single Judge who had been assigned specially to hear the application on merits by the Division Bench ought to have considered the merits of the case.” It was observed that the respondent had sought to delay adjudication on technical grounds, and that the appellant’s course of filing the returned application from the Commercial Court before the High Court could not be faulted.

On the issue of delay, the Division Bench referred to principles laid down in M.P. Steel Corporation v. Commissioner of Central Excise, (2015) 7 SCC 58, noting that “the principle of law with regard to the appellant prosecuting with due diligence need to be looked into as per Explanation (a) to Section 14 of the Limitation Act.” The Bench stated that “the time spent by the appellant in pursuing the wrong forum needs to be condoned.”

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It was further recorded that “once there were written submissions alongwith the application under Section 14 of the Limitation Act on record, the course which should have been adopted was to hear on the application instead ignoring the same.” Accordingly, the Bench held that there were sufficient reasons to ignore the delay and that the Single Judge’s findings could not be sustained.

The Division Bench conclusively set aside the order of the Single Judge dated 2 March 2022. It stated: “We are, therefore, left with no option but to set aside the findings arrived at by the learned Single Judge and allow this appeal and set aside the order dated 02.03.2022 passed by the learned Single Judge.”

The Court directed: “Consequently, the appeal is allowed and the order dated 02.03.2022 passed by the learned Single Judge is set aside. We remand the matter back to the learned Single Judge hearing arbitration cases to decide the application on merits.”

It was ordered that “both the parties shall be free to address and take their submissions on merits of the case before the learned Single Judge independent of our aforesaid observations.” Further, “Registry is directed to list the case before the Single Bench having roster of hearing arbitration matters. Parties shall, accordingly, appear before the learned Single Judge on the said date.” All pending applications were disposed of.

Advocates Representing the Parties

For the Appellant: Mr. Anil Kher, Senior Advocate with Mr. Anant Kasliwal, Senior Advocate assisted by Mr. Shashank Kasliwal, Mr. Raghav Krishnatri and Mr. Diwakar Kholdwa

For the Respondent: Mr. Rajendra Prasad, Advocate General, Senior Advocate assisted by Mr. Sandeep Pathak, Mr. Harshita Thakral, Ms. Dhriti Laddha and Mr. Tanay Goyal

Case Title: Continental Engineering Corporation Limited v. Jaipur Metro Rail Corporation

Neutral Citation: 2025:RJ-JP:30360-DB

Case Number: D.B. Special Appeal (Civil) No. 4/2022 in S.B. Arbitration Application No.117/2018

Bench: Justice Sanjeev Prakash Sharma and Justice Chandra Prakash Shrimali