Bombay High Court
Jayshri Ginning And Spinning (P) ... vs C.A. Galiakotwala And Co Pvt. Ltd on 19 July, 2016
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL (L) No.467 OF 2015
FROM
NOTICE OF MOTION NO. 73 OF 2013
IN
ARBITRATION PETITION (L) NO. 1634 OF 2012
WITH
NOTICE OF MOTION (L) NO. 1451 OF 2015
Jayshri Ginning & Spinning (P) Ltd.,
(Now known as Jayshri International
Pvt Ltd) having their address at
8-B, National Highway, Dhoraji Road,
Jetpur -360 370, Dist. Rajkot .... Appellant
(Original Petitioner)
vs
C.A. Galiakotwala & Company Pvt Ltd.,
A private company registered under the
Companies Act, 1956, having its
administrative office at 66, Maker
Chamber III, 223, Jamnalal Bajaj Road,
Nariman Point, Mumbai 400 021 .... Respondent
(Original Respondent)
Mr. S.K. Talsania, Senior Advocate with Mr. Sagar Seth and Ms. Rinku
Valanju and Mr. Rohit Sharma i/by Valanju Rinku Smitesh for the
Appellant.
Mr. S. U. Kamdar, Senior Advocate with Mr. Rohan Rajadhyaksha, Ms.
Anshika Mishra and Mr. Prabhav Shroff i/by AZB Partners for
Respondent.
CORAM: ANOOP V. MOHTA AND
G. S. KULKARNI, JJ.
CLOSED FOR JUDGMENTS ON : June 27, 2016
PRONOUNCED ON : July 19, 2016
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JUDGMENT (Per Anoop V. Mohta, J.):-
This Appeal is filed under Section 37 of the Arbitration
and Conciliation Act, 1996 (for short, Arbitration Act, 1996) by the
Original Petitioner as the Notice of Motion for condonation of delay of
25 days in filing Section 34 Arbitration Petition was dismissed by the
learned Judge on 27 April 2015, thereby the Arbitration Petition also
stands rejected. Hence, the Appeal.
2 The basic events are as under :
The business affairs of the Petitioner Company were
wholely, solely and independently looked after by one Shri Parbatbhai
B. Hirpara. The other directors of the company were not involved in
the running of the business of the company and they were all engaged
in their own independent businesses.
3 On 9 August 2010, alleged Contract was made between
the Petitioner and the Respondent for sale of 600 Cotton Bales
delivery of which was to be made between 1.12.2010 to 15.12.2010
i.e. forward contract (on the basis that the cotton will grown in and
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around Jetpur area, farmers will sell grown crop to the Petitioner, the
Petitioner will process and gin cotton etc.).
4 On 10 January 2011, Shri Parbatbhai B. Hirpara passed
away after suffering for about five months. On 31 March 2011,
financial year ended and no claim was received by the Petitioner from
the Respondent. During March 2011 to October 2011, the operations
of the Petitioner were at a standstill. On 15 June 2011, alleged Debit
note for differential price at Rs.14,300/- per candy for
Rs.41,01,583.20 with invoicing back date of 13.05.2011 was made.
5 The Respondent vide its letter dated 17 March 2012
addressed to the Secretary of the Cotton Association of India
requested for appointment of an Arbitrator and nominated Shri
Pankaj Kotak as the sole Arbitrator. On 20 March 2012 Cotton
Association of India sent a copy of Respondent's statement of Facts
and Claim dated 17 March 2012. The Respondent prayed, inter alia,
that the Petitioner be ordered and directed to pay to the Respondent
an amount of Rs.41,01,583.20/- together with interest thereon at the
rate of 15% per annum from 13 May 2011 till payment and/or
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realization and cost of the Arbitration. On 24 May 2012, first hearing
was held at Mumbai. The Petitioner was absent. On 21 June 2012,
second and final hearing were held by the learned Arbitrator in the
absence of the Petitioner. On 24 August 2012, the learned Arbitrator
ex-parte, passed impugned Award dated 24 August 2012. The said
Award was received by the Petitioner on or about 3 September 2012
under cover of Cotton Association of India's letter dated 28 August
2012 sent by Registered Post with A.D. On 26 December 2012,
Arbitration Petition No. 745 of 2015 was filed under Section 34 of the
Arbitration Act, 1996. On 2 January 2013, Notice of Motion No. 73 of
2013 was filed. On 27 April 2015 and Arbitration Petition was
disposed of.
6 The learned counsel appearing for the Respondent
vehemently opposed the Appeal and its maintainability by relying on
the following judgments :
(1) State of Maharashtra and anr v. Ramdas Construction Co and 1
(2) International Technology Kirchner Italia Branch,S.P.A. v. Esteem
Projects Pvt. 2
1 2006 (6) Mh. L. J. 678 (dated 12 July 2006)
2 Order dated 19.03.2009 in Appeal No.485/2005 in NM/1238/2003 in
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(3) Padamshi Khimji Chheda & ors. And Ravji Khimji Chheda vs.
Kesarben Laxmichand Dedia and ors. And Sunderben K. Shah
(wife) & ors.,1
(4) Home Care Retail Marts Private Limited v. Haresh N. 2
7 The learned counsel appearing for the Appellant has relied
on the following judgments on maintainability of the Appeal:
Chief Engineer of BPDP/EO, Ranchi v. Scoot Wilson Kirpatrick
India (P) Ltd3
(2) Essar Constructions v. N. P. Rama Krishna 4
8 The legislative scheme in this context can be traced from
the Arbitration Act, 1940 (for short Arbitration Act, 1940). It would
be useful to refer to Section 39 of the Arbitration Act, 1940 and
Section 37 of the Arbitration Act, 1996. The provisions read as
under:-
SS No.332/2003
1 Order dated 22.07.2013 in Appeal No.195/2013 in CHS/1649/2006
in Arbp/66/1991 in Award No.172/1990
2 Judgment dated 4.5.2016 in Appeal(L) No.849/2015 in Arbp/715/2014
3 (2006) 13 SCC 622
4 (2000) 6 SCC 94
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The Arbitration Act, 1940-
"Section 39. Appealable orders.- (1) An
appeal shall lie from the following orders passed
under this Act and (and from no others) to the Court
authorised by law to hear appeals from original
decrees of the court passing the order:-
An Order-
* * *
(vi) setting aside or refusing to set aside an
award."
The Arbitration Act, 1996-
Section 37 - Appealable orders- (1) An appeal shall
lie from the following orders (and from no others) to
the Court authorised by law to hear appeals from
original decrees of the Court passing the order,
namely:-
[(a) -------
(b) -------
(c) setting aside or refusing to set aside an arbitral
award under section 34.]
It is therefore, clear that Section 37(1) (c) of the Arbitration Act, 1996
is pari materia with Section 39(1) (vi) of the Arbitration Act, 1940.
9 Section 34(3) itself provides to justify a sufficient case for
filing such Petition beyond 3 months, but within 30 days thereafter.
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The mandate is not to entertain or accept such Petition beyond 120
days. The composite application under Section 34 and/or separate
application for explaining the delay or Notice of Motion for such
justification therefore, has direct bearing on the acceptance and/or
rejection of the application. The learned Judge, if satisfied with the
reason for filing application beyond 3 months, but before 30 days,
such application is required to be considered on merits. But
unsatisfied, then Section 34 composite application itself would be
dismissed/rejected. This would amount to rejection of Section 34
application itself, without considering the merits of the matter. Such
proceedings, in our opinion, are clearly substantive proceedings. It is
hard to dissect such composite application under Section 34(3). The
effect of rejection would be the same. The real test, therefore, is
whether the decision on the Application/Notice of Motion, referring
condonation of delay would amount or result into final adjudication of
the rights of the parties. It is indispensable that the obvious
contention is that the award to be a decree of the Court as Section 36
would provide, can be enforced in the same manner, as if it was a
decree of the Court. Therefore, the Appeal under Section 37 would
be maintainable. In the present case, for want of sufficient reason, the
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application was rejected, without touching to the merits of the matter.
We have noted that a sufficient case is made out in view of the
averments so made. There is no case to reject the Appeal merely
because of stated wrong statement. The application ought to have
been decided on merits in the interest of justice, considering the
scheme of the Arbitration Act itself. Equal and fair opportunity needs
to be given to the parties to decide the claim or counter-claim in
accordance with law. The private Arbitrator's award/decision
therefore, unless gets the confirmation from the Court under Section
34, as the award gets converted into "executable decree", there is no
other effective forum available to the aggrieved party to test the
award, whether passed within the framework of law and the record.
10 The law is settled so far as the issue of dismissal of Appeal
for default and/or as barred by limitation. The Appeal is dismissed on
refusal to condone the delay is still a decision in the Appeal. The
Supreme Court in Shyam Sundar Sarma Vs. Pannalal Jaiswal &
Ors. 1 has observed that-
"10..................Thus, the position that emerges on a survey
of the authorities is that an appeal filed along with an
1 (2005) 1 SCC 436 (dated 4 November 2004)
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application for condoning the delay in filing that appeal
when dismissed on the refusal to condone the delay is
nevertheless a decision in the appeal."
11 The decision of the Apex Court in Union of India Vs. Tecco
Trichy Engineers & Contractors 1 had considered the similar issue
arising out of an order passed by the Division Bench of the High Court
upholding the decision of the learned Single Judge refusing to
condone the delay. In this case, on 10 July 2001, the Chief Engineer
had presented an application for setting aside arbitral award under
Section 34 of the Arbitration Act, 1996. An application seeking
condonation of delay under sub-section (3) of Section 34 was also
filed. The delay sought to be condoned was of 27 days only based on
an assumption that the copy of the award was received on
19.03.2001. The application for condonation of delay was contested
by Respondent No.1 on the ground that the arbitral was delivered on
12.03.2001 and calculated from that date, there was a delay of 34
days in filing the application or the period of limitation prescribed by
sub-section (3) of Section 34 of the Act while the proviso appended to
the said provision does not permit any delay beyond the period of 30
1 (2005) 4 SCC 239 (dated 16 March 2005)
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days being condoned by the Court. The objection raised by
Respondent No.1 was found favour with the learned Single Judge of
the High Court, who rejected the application holding it as barred by
limitation. The decision was upheld by the Division Bench of the High
Court. Feeling aggrieved, the Appellant has approach the Apex Court.
In this context, the Supreme Court has held as under:-
"12. The learned Single Judge of the High Court as also the
Division Bench have erred in holding the application
under Section 34 filed on behalf of the appellant as
having been filed beyond a period of 3 months and 30
days within the meaning of sub-section (3) of Section
34. There was a delay of 27 days only and not of 34
days as held by the High Court. In the facts and
circumstances of the case, the delay in filing the
application deserves to be condoned and the
application under sub-section (1) of Section 34 of the
Act filed on behalf of the appellant deserves to be
heard and decided on merits."
12 In Chief Engineer of BPDP/REO Ranchi Vs. Scoot Wilson
Kirpatrick India (P) Ltd. 1
"7 Reference may be made to some
observations in Essar Constructions v. N.P. Rama Krishna
Reddy ((2000) 6 SCC 94, where it was held that appeal
is maintainable against the dismissal of objections on
the ground of limitation. Similar views were expressed
in Union of India v. Manager, Jain and Associates,
(2001) 3 SCC 277. .......................
1 (2006) 13 SCC 622 (dated 10 November 2006)
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8 The decision in Popular Construction's case (supra)
[Union of India V. Popular Construction Co., (2001)
8 SCC 470] did not deal with specific issues in this case.
In that decision it was held that in respect of "sufficient
cause cases" the provisions of Section 34(3) of the Act
which are special provisions relating to condonation of
delay override the general provisions of the Section 5 of
the Limitation Act, 1963 (in short "Limitation Act"). The
position was reiterated in the Western Builders case
(supra) [State of Goa V. Western Builders, (2006) 6
SCC 239] and also in Fairgrowth Investments Ltd. v.
Custodian, (2004)11 SCC 472. There can be no quarrel
with the proposition that Section 5 of the Limitation Act
providing for condonation of delay is excluded by Section
34(3) of the Act.
9 But the question in the instant case is not about the
applicability of Section 5 of the Limitation Act, and
question really is whether the appeal was maintainable.
The High Court did not consider this aspect. The appeal is
clearly maintainable. Therefore, the order of the High
Court is set aside. The High Court shall deal with the
matter and examine the respective stand on merits
treating the appeal to be maintainable."
13 In view of the law as enunciated in the above decisions of
the Supreme Court and that the said position in law was in existence
when the judgment of the Division Bench was rendered in
International Technology Kirchner Italia Branch, S.P.A. (Supra) as also
in Ramdas Construction Co. & Anr. (Supra) . These judgments of the
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Division Bench would be of no assistance to the Respondents as the
position in law as we have noted in the above decision is not shown or
referred. The position of law, as stand even prior to 2006, and as
followed in the other Judgments, till this date, in our view, clinches
the issue in favour of the Appellant. All are bound by the Supreme
Court judgments. We are, therefore, proceeding accordingly in the
present case.
14 We may also note that a Division Bench of this Court in
the case of M/s. MPD Associates Private Limited v. M/s. Angel Broking
Limited and anr in Appeal No. 395 of 2014 decided on 20 November
2014 had entertained an Appeal arising out of dismissal of a Notice of
Motion which was filed seeking condonation of delay. The Division
Bench in allowing the Appeal condoned the delay and consequent
dismissal of the arbitration petition in non-removal of office objections
came to be set aside. This Bench by judgment dated 14 June 2016 in
Appeal No.209/2016 in NM/689/2015 in Ar. Petition (L)
No.1124/2015 in similar situation has observed as under:
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"The issue of condoning delay between three months
30 days and the exercise of power under Section 34 is
settled in by the Supreme Court (Three Judges Bench)
in Union of India v. Tecco Trichy Engineers & Contracts
(2005) 4 SCC 239 and further followed in State
Himachal Pradesh & Anr v. Himachal Techno Engineers
& anr (2010) 12 SCC 210."
15 We are thus entertaining the Appeal against the rejection
of condonation of delay Application under Section 34 (3) of the
Arbitration Act. The other Judgments, so referred and relied upon are
distinguishable on facts and circumstances itself and in view of clear
position of law, no further discussion is required even though the
reference is made of Section 37 as were different on context on the
facts.
16 Hence the following order :
ORDER
(a) The Appeal is allowed.
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(b) Impugned order dated 27 April, 2015 passed by learned Single
Judge is quashed and set aside. The delay in filing the Arbitration
Petition is condoned.
(c ) The Arbitration Petition is restored to file for hearing on merits
before learned Single Judge.
(d) In view of disposal of Appeal, Notice of Motion (L) NO. 1451 OF
2015 does not survive and is disposed of accordingly.
(e) No costs.
(G. S. KULKARNI, J.) (ANOOP V. MOHTA, J.)
