Case:- M/S. MOTILAL AGARWALA Vs. STATE OF WEST BENGAL & ANR.
Citation:- 2025 INSC 1062
Date:- 28.08.2025
Supreme Court Bench:- Justice K.V.Viswanathan and Justice J.B. Pardiwala
The Supreme Court has clarified that when the government or one of its departments is a party to arbitration, delivery of an arbitral award to an official who is not connected with or aware of the proceedings cannot be treated as valid service for commencing the limitation period to challenge the award.
Key Points:
- The Hon’ble Court relied on its earlier judgment in Union of India v. Tecco Trichy Engineers & Contractors (2005), which held that in large organizations, delivery must be to the person who can understand the award and decide on challenging it.
- In this case, an arbitral award dated 12 November 2013 was collected by an Assistant Engineer of the State Irrigation Department. The award-holder argued that this started the 90-day limitation period, meaning the State had to file its challenge by 12 February 2014.
- However, the State filed its Section 34 challenge only on 20 March 2014, claiming it had not been properly served with the award and only learned of it during execution proceedings.
- The District Court dismissed the challenge as time-barred, but the Hon’ble Calcutta High Court reversed that decision, saying delivery to the Assistant Engineer did not amount to valid service.
- The Hon’ble Supreme Court agreed with the Hon’ble High Court, stating that an Assistant Engineer is not a “party to the arbitration” and lacks decision-making authority. Therefore, the limitation period to challenge the award had not validly commenced.
The Hon’ble Supreme Court dismissed the appeal, reaffirming that for government departments, awards must be served on the appropriate authority with knowledge and decision-making power.
