Maharashtra State Road Development Corporation Ltd. v. Simplex Gayatri Consortium & Ors.

ARBITRATION AND CONCILIATION ACT, 1996,

--Application for setting aside of arbitral award --Non-issuance of prior notice Fresh petition filed after withdrawing earlier petition--Objection as to subsequent petition barred by limitation--Where petitioner had not complied with the requirement of issuing prior notice under section 34(5) before filing of the arbitration petition under a bona fide mistake but the same was rectified by filing a fresh petition after complying with the aforesaid requirement, then, the time taken by the petitioner in pursuing the subsequent petition would be excluded while computing the period of limitation under section 34(3).--Petitioner filed arbitration petition on 26-7-2017 for setting aside the arbitral award, but no prior notice required under section 34(5) was issued to the respondents. Respondents raised an issue that the petitioner had not complied with the requirement under section 34(5) by not issuing the prior notice to the respondents, but the matter was adjourned till 31-8-2017. However, on 31-8-2017, petitioner sought for liberty to withdraw the said arbitration petition with liberty to file a fresh arbitration petition and the same was granted to it. Petitioner lodged fresh petition on 1-9-2017 and issued a notice under section 34(5) to the respondents before lodging the second arbitration petition. Respondents raised objection on the ground that the subsequent arbitration petition was ex-facie barred by limitation, as it was filed after expiry of three months from the date of service of copy of award as contemplated under section 34(3). Further, the benefit of exclusion of time for the purpose of computation of limitation under section 34(3) could not be granted to the petitioner because it had not prosecuted the earlier petition in good faith and with due diligence. Held: Petitioner had not issued the prior notice at the time of filing earlier arbitration petition under the bona fide doubt as to whether notice contemplated under section 34(5) was mandatory or directory. Petitioner could not be held guilty of negligence for not giving proper notice under section 34(5), as the said notice was not mandatory but was directory. Further, petitioner was prosecuting the earlier arbitration petition in good faith and with due diligence, thus, the time taken by the petitioner in pursuing the subsequent petition i.e. ,the period between 26-7-2017 and 31-8-2017 would be excluded under section 14(2) while computing the period of limitation under section 34(3). Therefore, there was no delay in filing the arbitration petition by the petitioner. Hence, there was no merit in the objections raised by the respondents and the same were rejected.