Union Of India Thru' G.M., N.C. ... vs M/S Sankalp Associates
2015 Latest Caselaw 214 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Reserved
 
F.A.F.O. No. 1211 of 2013
 
Union of India & Ors.		-------				Appellants
 
					Versus
 
M/s. Sankalp Associates	-------				Respondent
 

 
Hon'ble Krishna Murari, J.

Hon'ble Pratyush Kumar, J.

(Delivered by Hon'ble Krishna Murari, J.)

By means of this FAFO, the appellants have challenged the judgment and order dated 07.03.2013 passed by the District Judge, Allahabad rejecting the application filed by them under Section 34 of the Arbitration and Conciliation Act, 1996 (for short the Act) for setting aside the arbitral award dated 28.03.2008 passed by the sole arbitrator.

We have heard Shri A.K. Gaur, learned counsel for the appellants and Shri Sanjay Singh appearing for the respondents.

Facts, in short, relevant for the purpose of the case, are as follows.

An agreement dated 15.02.1996 was executed between the parties, whereunder work of annual civil engineering repairs and maintenance and small works was allotted in favour of the respondents. There was a dispute between the parties and the respondents made an application under Section 11 (5) of the Act before this Court. In the said proceedings, an arbitrator was appointed. The Arbitrator made an arbitral award, which was published on 28.03.2008. The appellants herein challenged the award by filing FAFO (D) No. 1370 of 2008 before this Court. The said appeal was presented beyond time by 64 days and was accompanied by a delay condonation application. Notices were issued on the delay condonation application.

In the meantime, the award was put to execution by filing Execution Case No. 7 of 2009. It is alleged by the appellants that when Shri Rajendra Singh was appointed as a counsel in the said case, he vide letter dated 14.07.2009 informed that the appeal filed against the award is not maintainable and the appellants were required to file an objection/application under Section 34 of the Act before the District Judge. Thereafter, the appellants vide letter dated 11.11.2009 requested Shri Rajendra Singh to file application under Section 34 of the Act.

Although the exact date has not been disclosed anywhere in the pleadings made by the appellants, however, it appears that an application under Section 34 of the Act was filed sometimes in December 2009 along with an application seeking condonation of delay read with Section 14 of the Limitation Act. The respondents filed objection against the maintainability of the application/objection on the allegation that it was barred by time. The District Judge vide order dated 07.03.2013 rejected the application/objection being barred by time.

It is contended by the learned counsel for the appellants that they are entitled to get the benefit of Section 14 of the Limitation Act for pursuing the proceedings in wrong court, which was subsequently withdrawn on 11.01.2010. It is further submitted that in view of the judgment of the Hon'ble Apex Court passed in the case of M/s. Consolidated Engineering Enterprises Vs. Principal Secretary Irrigation Department & Ors., JT 2008 (6) SC 22, the appellants are entitled to be extended the benefit of Section 14.

In reply, it has been submitted that the benefit of Section 14 is liable to be extended only, in case, the appellants have been prosecuting the proceedings before the wrong forum with due diligence, which is not so in the case in hand. The earlier FAFO which is alleged to have been wrongly filed before this Court itself was barred by time and, thus, it cannot be said that the appellants were prosecuting the proceedings with due diligence.

In the case of M/s. Consolidated Engineering Enterprises (supra), the Hon'ble Apex Court, by a majority, has held as under.

"10. A bare reading of sub-section (3) of Section 34 read with the proviso makes it abundantly clear that the application for setting aside the award on the grounds mentioned in sub-section (2) of Section 34 will have to be made within three months. The period can further be extended, on sufficient cause being shown, by another period of 30 days but not thereafter. It means that as far as application for setting aside the award is concerned, the period of limitation prescribed is three months which can be extended by another period of 30 days, on sufficient cause being shown to the satisfaction of the Court. Section 29 (2) of the Limitation Act, inter alia provides that where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period of limitation prescribed by the schedule, the provisions of Section 3 shall apply as if such period was the period prescribed by the schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 shall apply only insofar as, and to the extent, they are not expressly excluded by such special or local law. When any special statute prescribes certain period of limitation as well as provision for extension upto specified time limit, on sufficient cause being shown, then the period of limitation prescribed under the special law shall prevail and to that extent the provisions of the Limitation Act shall stand excluded. As the intention of the legislature in enacting sub-section (3) of Section 34 of the Act is that the application for setting aside the award should be made within three months and the period can be further extended on sufficient cause being shown by another period of 30 days but not thereafter, this Court is of the opinion that the provisions of Section 5 of the Limitation Act would not be applicable because the applicability of Section 5 of the Limitation Act stands excluded because of the provisions of Section 29 (2) of the Limitation Act.

11. However, merely because it is held that Section 5 of the Limitation Act is not applicable to an application filed under Section 34 of the Act for setting aside an award, one need not conclude that provisions of Section 14 of the Limitation Act would also not be applicable to an application submitted under Section 34 of the Act of 1996.

12. ........... .............. ....................

13. At this stage it would be relevant to ascertain whether there is any express provision in the Act of 1996, which excludes the applicability of Section 14 of the Limitation Act. On review of the provisions of the Act of 1996 this Court finds that there is no provision in the said Act which excludes the applicability of the provisions of Section 14 of the Limitation Act to an application submitted under Section 34 of the said Act. On the contrary, this Court finds that Section 43 makes the provisions of the Limitation Act, 1963 applicable to arbitration proceedings. The proceedings under Section 34 are for the purpose of challenging the award whereas the proceedings referred to under Section 43 are the original proceedings which can be equated with a suit in a court. Hence, Section 43 incorporating the Limitation Act will apply to the proceedings in the arbitration as it applies to the proceedings of a suit in the court. Sub-section (4) of Section 43, inter alia, provides that where the court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963, for the commencement of the proceedings with respect to the dispute so submitted. If the period between the commencement of the arbitration proceedings till the award is set aside by the court, has to be excluded in computing the period of limitation provided for any proceedings with respect to the dispute, there is no good reason as to why it should not be held that the provisions of Section 14 of the Limitation Act would be applicable to an application submitted under Section 34 of the Act of 1996 more particularly where no provision is to be found in the Act of 1996, which excludes the applicability of Section 14 of the Limitation Act to an application made under Section 34 of the Act. It is to be noticed that the powers under Section 34 of the Act can be exercised by the court only if the aggrieved party makes an application. The jurisdiction under Section 34 of the Act, cannot be exercised, suo motu. The total period of four months within which an application, for setting aside an arbitral award, has to be made is not unusually long. Section 34 of the Act of 1996 would be unduly oppressive, if it is held that the provisions of Section 14 of the Limitation Act are not applicable to it, because cases are no doubt conceivable where an aggrieved party, despite exercise of due diligence and good faith, is unable to make an application wihtin a period of 4 months. From the scheme and language of Section 34 of the Act of 1996, the intention of the Legislature to exclude, the applicability of Section 14 of the Limitation Act, is not manifest. It is well to remember that Section 14 of the Limitation Act does not provide for a fresh period of limitation but only provides for the exclusion of a certain period. Having regard to the legislative intent, it will have to be held that the provisions of Section 14 of the Limitation Act, 1963 would be applicable to an application submitted under Section 34 of the Act of 1996 for setting aside an arbitral award."

Same view was taken by the Hon'ble Apex Court in the case of Cold India Ltd. & Anr. Vs. Ujjal Transport Agency & Ors., (2011) 1 SCC 117.

Section 14 of the Limitation Act provides as under.

"14. Exclusion of time of proceeding bona fide in Court without jurisdiction.- (1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceedings is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.

(3) Notwithstanding anything contained in Rule 2 of Order XXXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the Court under Rule 1 of that Order where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the Court or other cause of a like nature."

Section 14 of the Limitation Act deals with exclusion of time during which the proceedings were being prosecuted, bona fidely, in a court having no jurisdiction. For application of the aforesaid provision, it is imperative to satisfy the following conditions, namely:

(i) Both the proceeding ought to be civil proceedings prosecuted by the same parties.

(ii) The earlier proceedings ought to have been prosecuted with due diligence and in good faith.

(iii) The earlier proceedings ought to have failed due to defect of jurisdiction.

(iv) Earlier proceedings and the subsequent proceedings should relate to the same subject matter in issue.

(v) Both the proceedings ought to be before the Court of law.

Insofar as the case in hand is concerned, condition nos. (i), (ii), (iv) and (v) do stand satisfy.

However, what is to be examined is that the earlier proceeding, namely, FAFO (D) No. 1370 of 2008, which was filed before this Court, whether was initiated by the appellants in good faith. Therefore, due diligence in prosecuting the proceedings before the wrong court is necessary for holding that the same was being prosecuted in good faith.

Admittedly, earlier FAFO (D) No. 1370 of 2008 was presented beyond time by 64 days and was accompanied by a delay condonation application. The FAFO having been filed beyond the prescribed period of limitation, it cannot be said that the same was being prosecuted by the appellants with due diligence and, thus, in good faith.

Thus, one of the essential ingredient for invoking the provision of Section 14 of the Limitation Act were lacking as it cannot be said that the earlier FAFO (D) No. 1370 of 2008 was being prosecuted by the appellant with due diligence and, thus, was not in good faith.

In the case of Ghasi Ram & Ors. Vs. chait Ram Sainti & Ors., AIR 1998 SC 2476, the Hon'ble Apex Court has observed as under.

""Good faith" ........ nothing shall be deemed to be done in good faith which is not done with due care and attention ........"

The appellant did not take due care and attention to file the earlier FAFO within time, hence, it cannot be said that he was acting in good faith and with due diligence in prosecuting the appeal before this Court.

The fact, which is also required to be noticed, is that according to the pleadings of the appellants itself, Shri Rajendra Singh, Advocate vide letter dated 14.07.2009 informed them that the appeal before this Court filed against the award is not maintainable and they were required to file objection/application under Section 34 of the Act before the District Judge. The information furnished to the appellants in July 2009 was acted upon by him in December 2009, after about five months by filing an objection under Section 34 of Act. Thus, even if the period during which earlier First Appeal From Order was filed and remained pending before this Court, till such time the appellants were informed that such proceedings were without jurisdiction, is excluded, even then proceedings were filed before District Judge after about five months.

The appellant is Union of India, an organisation equipped with all kind of expertise and advise of eminent lawyers, still it chose to present the matter in a Court which had no jurisdiction and that too beyond limitation, and, thus, it cannot be said to be a case of good faith as the good faith has to demonstrate exercise with due care and attention. Thus, the appellant cannot be held to be prosecuting the proceedings before this Court with due diligence.

The District Judge has rightly rejected the application as barred by time. Thus, in the facts and circumstances, the appellant is not entitled to the benefit of Section 14 of the Act and to get the period, during which earlier FAFO (D) No. 1370 of 2008 remained pending before this Court, excluded for the purposes of counting limitation.

Accordingly, we are of the opinion that the court below has not committed any error of law which can be said to be manifest in rejecting the application and consequently in dismissing the objection.

The appeal, as such, is bereft of merit and, accordingly, stands dismissed.

However, there shall be no order as to costs.

April 29th, 2015

VKS