Arbitration | Delivery Of Award To Govt Official Not Connected With Case Doesn't Amount To Valid Service On State : Supreme Court

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.

Citing its ruling of Union of India vs. Tecco Trichy Engineers & Contractors (2005), the Court said that the delivery of the copy of the arbitral award should be made to the “party to the proceedings”, and if government is part to the proceedings than the delivery should be made to an individual who has the knowledge and is the best person to understand and appreciate an award and more particularly, to take decision for its challenge.

“This Court has held that the award should be received in the context of huge organisations by the person who has knowledge of the proceedings and who would be the best person to understand and appreciate the arbitral award as also to take a decision in the matter of moving appropriate applications.”, the court said.

A bench of Justice JB Pardiwala and Justice KV Viswanathan heard the case where the dispute arose after an arbitral award was passed on 12 November 2013 in favor of the Appellant. A signed photocopy of the award was collected by an Assistant Engineer of the Respondent's State Irrigation Department. Based on this, the award-holder argued that the State was bound to file its challenge within 90 days, i.e., by 12 February 2014.

However, the Respondent filed its Section 34 petition only on 20 March 2014, i.e., beyond the 90-day period, contending that it had never been formally served with the award and only became aware when execution proceedings were initiated. The District Court dismissed the petition as time-barred, but the Calcutta High Court later set aside this ruling, holding that delivery to the Assistant Engineer did not constitute valid service on the "party."

Affirming the High Court's decision, the Court said that the collection of the award's copy by the Assistant Engineer was not proper delivery of a copy as mandated under the 1996 Act, and the same cannot be treated as proper service for commencing the limitation for challenging the award.

“Applying the dictum in Tecco Trichy Engineers & Contractors (supra) a delivery to the Assistant Engineer who was not “a party to the arbitration” and who was not in a decision-making capacity to take further recourses on the award would not be a valid service of the award.”, the court said.

Accordingly, the appeal was dismissed.

Cause Title: M/S. MOTILAL AGARWALA Versus STATE OF WEST BENGAL & ANR.

Citation : 2025 LiveLaw (SC) 867

Click here to read/download the order

Mr. Ajit Kumar Sinha, Senior Advocate, argued for the appellant

Ms. Madhumita Bhattacharjee, Adv. argued for the Respondent-State