This is written by Advocate Aditi Lakhanpal, an advocate in the Punjab Haryana High Court.
The prerequisite of fervent advocacy in adjudication proceedings has lately been embattled. The clout of dilatory tactics has always been persistent in dispute resolution. The expression ‘dilatory tactics’ symbolizes tactics adopted by one of the disputant parties when they apprehend that the arbitral tribunal is unlikely to rule in their favor. To break down into simpler words, it explicates how one party employs dilatory tactics against the opposing party to undermine the arbitral proceedings. Such parties opt for dilatory tactics like false and vexatious counterclaims, frivolous applications, and meritless appeals to delay and efficiently negate the due process of law.
Arbitration is often said, to be an expedient accolade to the judicial process, offers an alternative forum to the time consuming & expensive court proceedings. The arbitration process not only ensures practical, inexpensive, flexible proceedings but most importantly, speedy resolution of disputes with the consensus of the parties. Nevertheless, using dilatory tactics by one of the parties to the dispute sabotage the very intent of the arbitration process. In this regard, it is pertinent to refer to Arbitration & Conciliation Amendment (Act) 2015 (Act) that incorporates Section 29A, basically aimed at reducing inordinate delays that frustrate arbitral proceedings.
A dig into the provisions of Section 29a
The legislative intent of the provisions of section 29A of the Act is to adjudicate the arbitral proceedings expeditiously. The purpose of employing the time limitation in passing the arbitral award is to stall unnecessary delay by the disputant parties. A restrain has been put on the arbitral tribunal to pass the arbitral award within 12 months. This period of 12 months can be extended by the consent of both the parties for a further 6 months, therefore altogether 18 months.
So, once the period of 18 months lapses as permitted u/s Section 29A, disputant parties are constrained to extend the mandate of the arbitral tribunal. Though, this period can be extended on an application made by one party to the dispute, showing sufficient cause. In this regard, an endeavor shall be made by the Court to dispose of the matter within 60 days from the date of service of notice on the opposite party.
No doubt the incorporation of Section 29A was to expedite the route of dispute resolution, yet there are certain grey areas attached to it. Where on one side, provisions of section 29A of the Act ensure timely disposal of the matter, conversely, provisions of Section 29A have all possibility to result in delaying the arbitration process. It is imperative to mention that although order renders that u/s 29A is not an appealable order u/s 37 of the Act, yet the disputant party may take recourse to the Supreme Court by way of special leave petition. This may have a domino effect of prolonged disputes, increased judicial intrusion, and significantly unscrupulous parties resorting to dilatory tactics. Consequently, dilatory tactics employed by the disputant parties have certainly dis-arrayed all the timelines’ limitations.
However, Courts have time after time thwarted the growing dilatory practices of the disputant parties. In this piece, it is noteworthy to mention the keystone pronouncement titled Noor Mohammed vs Jetha Nand & Anr wherein a delay was caused due to dilatory tactics adopted by the parties, the Apex Court opined that:
“In a democratic setup, intrinsic and embedded faith in the adjudicatory system is of seminal and pivotal concern. Delay gradually declines the citizenry faith in the system. It is the faith and faith alone that keeps the system alive. It provides oxygen constantly. Fragmentation of faith has the effect-potentiality to bring in a state of cataclysm where justice may become casuality. A litigant expects a reasoned verdict from a temperate Judge but does not intend to and, rightly so, to guillotine much of time at the altar of reasons. Timely delivery of justice keeps the faith ingrained and establishes the sustained stability. Access to speedy justice is regarded as a human right which is deeply rooted in the foundational concept of democracy and such a right is not only the creation of law but also a natural right. This right can be fully ripened by the requisite commitment of all concerned with the system. It cannot be regarded as a facet of Utopianism because such a thought is likely to make the right a mirage losing the centrality of purpose. Therefore, whoever has a role to play in the justice dispensation system cannot be allowed to remotely conceive of a casual approach.
Instances of dilatory tactics in arbitration process
It is very often for the parties to the dispute to indulge in dilatory tactics when they apprehend that verdict might not rule in their favor. In this piece, devious parties embroil to courts as a dilatory tactic. Needless to say, involving courts in breach of an agreement to arbitrate or to challenge arbitral awards undeniably sabotage the veracity and finality of the arbitral process. Below-mentioned are some of the instances of dilatory tactics adopted by the unscrupulous parties to delay the arbitral process.
Seeking unnecessary adjournments is one of the dilatory maneuvers employed by the disputant parties. The tactic of unnecessary adjournments with the intent to frustrate arbitral proceedings was taken up by the Bombay High Court the case titled Sap India Private Limited vs Cox And Kings Limited. In this case adjournment of the application filed under section 11(6) of Arbitration and Conciliation Act, 1996 was challenged by the applicant. Applicant urged that in the past also repeated attempts were made to seek the adjournment. To this, Respondent contended that he didn’t get the opportunity to make any submissions on law and facts.
HC negated this contention of the Respondent and opined that Respondent himself submitted that he won’t make argue further beyond pleadings on record. In addition to this, HC stated that the Respondent has acted in a manner to cause colossal insult to justice and the concept of speedy disposal of civil litigation. Thus, in the light of previous adjournments, HC considered it apt not to adjourn the matter and directed Respondent to pay Rs. 50,000/- to Maharashtra Legal Service Authority. In this regard, relevant observations made by the HC are reproduced herein under (Para 7):
“It is distressful, saddening as also very unfortunate that such praecipe/letter of the Advocates was moved with a sole intention of creating a record and to delay proceedings and protract and prolong adjudication of matters on such invalid grounds. Such a practice ought to be deprecated. What is more disturbing is that such a praecipe is moved after the matter is finally heard and closed for orders. The Court in its solemn path of dispensation of justice would not deter or get distracted and it would be the duty and obligations of the Court to reject such plea as made today, in the respondent’s application. In the context of the Court dealing with situation of unwarranted and invalid adjournment applications, the law is well settled.”
Evading Arbitration proceedings
Delhi High Court had a stringent approach while adjudicating matter titled A G Aerovision Electronics Pvt Ltd … vs Tata Capital Financial Services wherein Respondent failed to appear before the tribunal after appearing initially. Subsequently, an ex parte award was passed by the Arbitrator. As a result, Respondent files a petition u/s 34 alleging that he didn’t receive a signed copy of the Arbitral Award pursuant to section 31(5) of the Act. Furthermore, the timeline for filing an application had not even started. To this, Court stated that the attempts were made to serve but envelopes had always returned with the statements as “locked”, “unclaimed” and “closed premises”. In this regard, the High Court made the following observations (Para 26):
“6. In our view, if the submission made by learned counsel for the appellants No. 2 to 4 that till a signed copy of the arbitral award is delivered on a party, the limitation period prescribed under Section 34(3) of the Act of 1996 does not commence for making an application under Section 34(1) for setting aside the award, is accepted without looking at the fact situation in a given case, it will give a licence to dishonest litigants to adopt all kinds of devious tactics to evade receiving a signed copy of the award and then claiming that the same was not “delivered” and therefore, the period of limitation cannot commence for filing a petition under Section 34(3) of the Act. We find merit in the submission made by learned counsel for the respondent that if such a plea is accepted, then no beneficiary under an award would ever be able to reap its fruits by applying for its execution and enforcement.”
In a similar vein, Bombay High Court in the matter of Obulapuram Mining Company Pvt. vs JSW Steel Limited directed the applicant to pay Rs. 100,000/- who did not appear in the arbitral proceedings, albeit service had been effected. The Award was dispatched to the registered office of the applicant, which continues to be the office of the applicant even as on date. The applicant has vaguely contended that they came to learn from an ex-employee that an Award had been passed against the applicant. Furthermore, the applicant failed to substantiate the particulars of such employee and how that ex-employee came to known about arbitral proceedings. It is further relevant to note that the applicant’s advocate himself has not taken any scrutiny of the arbitral record besides the applicant had access to the records and necessary e-mails in this regard. The court concluded that the acts of the applicant were nothing but dilatory tactics to willfully evade the entire arbitral process.
Henceforth, evading arbitration proceedings is a very common dilatory tactic adopted by the party to disputant that certainly violates the very objective of the Act i.e., speedy resolution.
A remarkable verdict pronounced by Justice Anil Kshetarpal on the sixteen-day of July 2020 in the matter between Reliance Infrastructure Ltd. Vs Haryana Power Generation Corporation Ltd Civil wherein Punjab & Haryana High Court slams a fine of Rs. 1,00,000/- on Reliance Infrastructure for employing dilatory tactics to thwart arbitration proceedings. The Court opined that from the year 2016, Reliance has been pulling out all stops to delay the disposal of the arbitration proceedings such as initially filing special leave petition before the Supreme Court and thereafter withdrawing the same unconditionally.
Petitioner even prayed for extension of time for filing counterclaims and rejoinder and subsequently filed an application for restoration of special leave petition and then filing an application u/s 14 of the Act before the Special Commercial Court despite the dictum that the Petitioner had already addressed a letter to the arbitrator stating that he has no objection to the appointment of the arbitrator. Consequently, Reliance Infrastructure’s failure to proceed diligently with the arbitration proceeding domino effects in dismissing the revision petition filed by it with the cost. In this regard, it is imperative to reproduce the relevant excerpt of the observation made by the HC:
“Para 46. The Court cannot shut its eyes to the fact that the matter before the Sole Arbitrator is pending since 2016 and the arbitral proceedings have been delayed by the petitioner. The petitioner has made efforts to thwart the arbitral proceedings despite having unconditionally withdrawn it’s Special Leave Petition before the Supreme Court, despite specifically having requested the Sole Arbitrator to proceed with the matter and despite withdrawing its application for recall filed before the Supreme Court. Thereafter, the present petition was filed by it under Section 14 of the Act in an attempt to reagitate some grounds which had already attained finality. The Court is also informed that the petitioner has also challenged before this Court an order dated 24.4.2019 passed by the Special Commercial Court, Gurgaon extending the mandate of the Sole Arbitrator by six months. This order dated 24.4.2019 has been stayed on 13.5.2019 by this Court in Civil Revision No.7193 of 2019 which is pending. Thus, since over a year no proceedings have been undertaken in the arbitral proceedings.”
Giving effect to the maxim “Actus Curiae Neminem Gravabit” the HC opines that the act of the Court shall prejudice no man in order to impart substantive justice to the parties. Furthermore, the HC states that since the order has been passed by the HC on 13.05.2019, the arbitrator cannot proceed with the arbitral proceedings. Even the time extended by the Special Commercial Courts has also lapsed. At this juncture, if any extension is provided to the Petitioner it would be prima facie prejudice to the Respondent. Therefore, the HC dismissed the revision petition filed by the Petitioner beside imposed fine of Rs 100,000/-.
Therefore, putting reliance on N. Balakrishnan vs M. Krishnamurthy, the above-mentioned verdicts are absolutely justified in not only preserving the due process of law but also to defend the interest of the bona fide party to the dispute. In this case, the SC went a step ahead and made the following observation (Para 13):
“It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quite a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss.”
In order to eradicate the virus of dilatory tactics from the arbitral process, accountability is on every stakeholder associated with arbitration proceedings be it disputant parties or the arbitrators. Arbitrators are required to be vigilant and reject the request of unnecessary adjournments. In this regard, it is pertinent to mention case titled Shiv Cotex v. Tirgun Auto Plast (P) Ltd wherein the Supreme Court held that:
“It is sad, but true, that the litigants seek – and the courts’ grant – adjournments at the drop of a hat. In the cases where the Judges are little proactive and refuse to accede to the requests of unnecessary adjournments, the litigants deploy all sorts of methods in protracting the litigation……..… It is not surprising that civil disputes drag on and on. The misplaced sympathy and indulgence by the appellate and revisional courts compound the malady further”.
In the light of the above-mentioned rulings, it is prima facie that the Courts have thrashed that the dilatory tactics of unscrupulous parties by imposing significant cost orders. Similarly, a moral obligation lies on the parties to the dispute that they should avoid adopting dilatory tactics and have faith upon the resolution passed by the arbitral tribunal.
Interestingly, the Supreme Court in the case titled Noor Mohammed v. Jethanand has appositely observed that:
“Sustenance of faith has to be treated as spinal sans sympathy or indulgence. If someone considers the task to be Herculean, the same has to be performed with solemnity, for faith is the “elan vital” of our system.”
Henceforth, the legal principle “justice delay is justice denied” should always be dredged up because; justice being delayed by any reason is always detrimental to the people and their faith in arbitration as a mode of resolution.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: