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Synopsis

The Allahabad High Court recently suggested that a specialized procedure can be created by the State Government of Uttar Pradesh to expedite the filing of appeals within the prescribed time in arbitration matters where the government is involved and for this, the government can form dedicated legal teams within each government department.

The bench of Justice Shekhar B. Saraf noted that the government often cites bureaucratic and procedural delays as reasons for not filing an appeal within the prescribed time limits as given under the Arbitration & Conciliation Act, 1996. While these factors can indeed slow down the process of filing appeals, they cannot be accepted as valid reasons for extending the statutory time limits prescribed under the Act, the bench said.

It added that the law is designed to ensure that arbitration remains a swift and efficient method of dispute resolution, and allowing exceptions for governmental delays would undermine this objective.

Court stressed that granting the government special privileges in the form of extended time limits would violate this principle and create a perception of bias.

Such a perception could undermine public confidence in the legal system, as it would suggest that the government is above the law and not subject to the same rules as everyone else, it added. 

Furthermore, court said that it is the taxpayers' money that the government deals with, and such a cavalier and lackadaisical approach in preferring appeals cannot be allowed.

Court, therefore, suggested that given the significant volume of legal cases that government departments and agencies are involved in, it is essential that the government establishes robust mechanisms to ensure compliance with statutory timelines, particularly under the Act.

On the suggestion of dedicated legal teams, court clarified that these teams can be responsible for monitoring legal matters and ensuring that all necessary actions, including the filing of appeals, are taken within the prescribed time limits. By having a dedicated team in place, the government can ensure that there is a clear line of accountability and that legal matters are handled with the urgency they deserve, court said. 

It added that these teams should consist of experienced legal professionals who are well-versed in the relevant laws and procedures and they should also have the authority to make quick decisions and act promptly to avoid unnecessary delays.

In addition, court suggested that the government could also implement robust tracking and monitoring systems to oversee the progress of legal cases and the government can also establish clear guidelines and protocols for the handling of legal matters.

Accordingly, court directed the Principal Secretary (Law), Government of Uttar Pradesh, to take necessary steps, in order to avoid the filing of appeals beyond the statutory time limits, by the Government.

Court ordered a report to be submitted on the action taken in this regard within 6 months. The Principal Secretary (Law) may take assistance of a committee of experts as may be required, court said.\

The order was passed in an application under Section 37 of the Arbitration & Conciliation Act, 1996 preferred against the order dated August 1, 2012 passed by the District Judge, Agra.

In the matter, the State Government entered into an agreement for excavation work with one M/s Harish Chandra India Limited. Disputes and differences arose between the parties which were referred to arbitration. The arbitrator gave an award in favour of the company on July 19, 2009. On May 17, 2010, the government filed an application under Section 34 of the Act challenging the aforesaid award along with an application for condonation of delay under Section 5 read with Article 137 of the Limitation Act, 1963.

The District Judge, Agra vide order dated August 1, 2012 rejected the application filed by the government under Section 5 read with Article 137 of the Limitation Act along with the application under Section 34 of the Act.

Aggrieved by the District Judge's order, the government preferred the instant appeal under Section 37 of the Act before the high court on March 13, 2013 arguing that the delay was not deliberate and was liable to be condoned in the interest of justice.

The high court held that the language used in Section 34(3) of the Act leaves no room for condoning the delay beyond what is permissible and in the present case, the government's application under Section 34 of the Act having been filed beyond the statutory limitation period (prescribed period of 3 months + extendable period of 30 days) could not have been admitted by the District Judge, Agra.

Therefore, court dismissed the government's application as time barred.

Case Title: State of UP and Others v. M/S Harish Chandra India Limited