The Delhi High Court on Thursday dismissed an appeal filed by Nagar Palika Nokha against a commercial court’s order concerning an arbitration dispute.
The appeal was deemed delayed, as the challenge to the trial court’s order dated January 24, 2024, was filed beyond the permissible time frame.
A division bench, headed by Chief Justice Devendra Kumar Upadhyay, upheld the trial court’s decision, which had dismissed Nagar Palika Nokha’s application under Section 34 of the Arbitration and Conciliation Act, 1996, on the grounds of limitation.
Case Background
The case revolves around a tender awarded by Nagar Palika Nokha to M/s Enviro Infra Engineers Pvt. Ltd. for the design, construction, and maintenance of Sewage Treatment Plants (STPs). The dispute arose over alleged non-payment of dues to the company, leading to arbitration proceedings under the Micro, Small, and Medium Enterprises Development Act (MSMED), 2006.
The arbitral tribunal ruled in favor of Enviro Infra Engineers, granting them an award against the Nagar Palika. The trial court had previously issued a warrant to attach Bikaner House to execute the arbitration award.
Grounds for Appeal
Nagar Palika Nokha sought to challenge the arbitral award, citing the following:
Jurisdiction Issues: The appellant argued that the arbitration was conducted without jurisdiction since the agreement signed on November 22, 2011, lacked an arbitration clause.
Improper Conciliation: It was claimed that the mandatory conciliation process under Section 18 of the MSMED Act was flawed due to inadequate notice.
Natural Justice Violation: The appellant alleged that they were not given a proper opportunity to present their case, which violated principles of natural justice.
Court’s Observations
The High Court rejected the appeal, noting the delay in filing and affirming the trial court’s findings. Earlier, the commercial court had directed Nagar Palika to deposit ₹92 lakh as part of the arbitration award. The court warned that the amount would be released to Enviro Infra Engineers if Nagar Palika failed to secure a stay order from the High Court.
Current Status
With the High Court dismissing the appeal, the arbitration award remains enforceable. The matter is scheduled for further proceedings before the commercial court on February 1, 2025. If Nagar Palika Nokha does not obtain a stay order, the deposited amount will be disbursed to Enviro Infra Engineers.
Conclusion
This case highlights the importance of adhering to procedural timelines in arbitration disputes. The High Court’s decision reinforces the enforceability of arbitral awards and underscores the need for compliance with the MSMED Act and the Arbitration and Conciliation Act.
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