To answer the questions raised before it, the Full Bench relied upon the judgment of the Supreme Court in Northern Railway v. Pioneer Publicity Corporation Pvt. Ltd., 2017 (11) SCC 234, wherein it was held that Section 34(3) of the Act had application only with respect to the filing of the petition and not with respect to re-filing and that the Court would have jurisdiction to condone re-filing delay beyond the period of 3 months and 30 days as prescribed under Section 34(3) of the Act.

Further, while relying on the meaning of “non-est”, the Full Bench relied on the judgement of the Supreme Court in Sunny Abraham v. Union of India, 2021 (20) SCC 12, to hold that non-est means “not in existence because of some legal lacuna in the process of creation of subject instrument which goes beyond remedial irregularity.”

The Court further held that,

“It refers to a case where a legal instrument is deemed to be not in existence because of certain fundamental defects in its issuance and subsequent action cannot revive its existence and rectify acts done in pursuance.”

The primary submissions raised by the petitioners were: (i) defects were procedural and curable and wouldn’t render the Section 34 petition non-est; (ii) Statement of truth is not critical to the petition and its non-filing is not a fatal defect; (iii) Section 34 is an application and not a pleading in terms of Order VI rule 1 of Civil Procedure Code, 1908 (“CPC”); (iv) procedural defects should not defeat substantive rights; (v) Procedural lapses can be rectified later; (vi) Section 34 does not explicitly require the filing of the arbitral award and that arbitral award can always be filed later if required; and (vii) non-filing of vakalatnama is a procedural defect.

The primary submissions raised by the respondents were: (i) defects in the petitions were fundamental and jurisdictional, thereby rendering them non-est; (ii) Statement of truth is mandatory in commercial matters, including Section 34 filings; (iii) Statement of truth is essential to integrity of arbitration proceedings; a defective filing without statement of truth is invalid as there is no verification of documents filed; (iv) Section 34 is time sensitive and ensuring compliance with procedural requirements is essential; a Section 34 filing must contain substantive grounds at the time of filing and that the Court should examine whether substantial modifications have been made between initial filing and re-filing; (v) The Commercial Courts Act, 2015 (“CCA”) aims to expedite arbitration-related litigation, and therefore, procedural compliance is critical and mandatory; (vi) non-filing of an arbitral award is fatal and without the award the court cannot examine the Section 34 petition and it makes the filing non-est; (vii) allowing petitions without the award would allow petitioners to misuse the system by stalling the limitation period without actually filing a valid challenge; and (viii) non-filing of a vakalatnama means that the petition has not been filed on behalf of an authorised person.

The Full Bench, while rejecting majority of the contentions of the respondents, held that:

(i) Non-filing of the statement of truth does not render a Section 34 petition non-est as it is a curable defect; (ii) Order VI rule 15A of CPC (introduced by CCA) is a procedural requirement and its non-compliance does not make a Section 34 petition non-est; (iii) A statement of truth is a verification mechanism and does not affect the substantive validity of a petition challenging an arbitral award; (iv)The requirement of a statement of truth is not jurisdictional in nature and can be rectified subsequently; (v) Absence or improper statement of truth can be rectified subsequently without affecting the limitation period; (vi) The non-filing of an arbitral award along with the Section 34 petition makes the petition non-est and does not stop the limitation period from running under Section 34 (3); and (vii) Non-filing of a vakalatnama does not render the Section 34 petition non-est, as it is a curable defect.

The Full Bench used the following principles to determine whether a Section 34 petition is non-est:

• If it lacks essential attributes to make it intelligible;
• If it lacks essential grounds to set aside an award under Section 34(2) of the Act; and
• If it has been filed without an arbitral award to enable the Court to examine its validity.

The Full Bench, while deciding the matter (though not specifically quoted) followed the age old principles of “Fiat justitia, ruat caelum” (let justice be done, though the heavens may fall) and “Jus Est Ars Boni Et Aequi” (law is the art of goodness and equity), ensuring that substantive justice should trump procedural requirements and technicalities of law should not result in miscarriage of justice.

However, one aspect not argued and considered by the Full Bench, is Section 5 of the Act which highlights the principle of minimal court intervention. Though the Full Bench has gone by the principles of substantive justice prevailing over procedural requirements, it should have considered the applicability of Section 5 of the Act. The Act has a time bound scheme and to promote efficient disposal of arbitration matters and to reduce overall pendency, minimal court intervention has been specially enshrined under Section 5 of the Act. Section 5 states:

“Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”

This is a non-obstante provision and overrides not only the provision of the Act but also other enactments. Therefore, the Full Bench while deciding the matter should have also considered the mandate of Section 5 and not have only decided based on the principle of substantive law trumps procedural requirements. It is important that courts become sensitive to time in arbitration proceedings and interpret laws in light of that mandate. Anything which increase the timeline for adjudication of a Section 34 petition should be discouraged and timelines ought to be made strict. For the time being, the liberal approach has been followed by the Full Bench but as a nation and judiciary, if we want to be arbitration friendly, we must always be cognizant of the mandate of Section 5 of the Act.

This article was originally published in Mondaq on 28 February 2025 Written by: Varun Pathak, Partner. Click here for original article

Read Less-