Bombay High Court
M/S. Satish K. Narang And Co vs Jamnadas Morarjee Secs. Ltd on 4 May, 2021
Bench: R.D. Dhanuka, Virendrasingh Gyansingh Bisht
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 989 OF 2005
IN
ARBITRATION PETITION NO. 36 OF 2004
M/s.Satish K. Narang & Co. )
B-11/2096, Rock View Apartment, )
Vasant Kunj, New Delhi 110 070. ) ..... Appellant
VERSUS
Jamnadas Morarje Secs.Ltd. )
Member(s) Clg. No. 330, )
204, Stock Exchange Tower, )
Dalal Street, 2nd Floor, Mumbai ) ..... Respondent
Mr.Kunal Kumbhat, a/w. Ms.Rachana Kumbhat, i/b. Ms.Sunanda
Kumbhat for the Appellant.
Mr.Simil Purohit, a/w. Mr.Vishal Paltabiraman, i/b. M/s.Purohit & Co.
for the Respondents.
CORAM: R. D. DHANUKA AND
V. G.BISHT, JJ.
RESERVED ON : 19th MARCH, 2021
PRONOUNCED ON : 4th MAY 2021
JUDGMENT (Per R. D. Dhanuka, J.) :-
. By this appeal filed under section 37 of the Arbitration and
Conciliation Act, 1996 (for short 'Arbitration Act'), the appellant has
impugned the judgment dated 2nd May, 2005 passed by the learned
Single Judge dismissing the arbitration petition filed by the appellant
under section 34 of the Arbitration and Conciliation Act, 1996. Some
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of the relevant facts for the purpose of deciding this appeal are as
under:-
2. The appellant was the original petitioner/claimant before the
learned Single Judge and also before the arbitral tribunal. The
respondent herein was the original respondent before the learned Single
Judge as well as in the arbitral proceedings. It was the case of the
appellant that the appellant is an investor whereas the respondent is a
corporate member of the Bombay Stock Exchange Limited and is
carrying on business as share, stock and finance broker.
3. On 3rd August, 1994, the appellant purchased 1000 shares of
Prakash Tubes Ltd. through the respondent. On 27th August, 1994, 200
shares of the said company were returned to the respondent as the same
were returned by the said company Prakash Tubes Ltd. on the ground
that the signature differed. On 12th August, 1995, 100 shares were
returned by the respondent after rectification along with 75 bonus
shares on the said 100 shares to the appellant. It is the case of the
appellant that the respondent was right to return 100 shares plus 75
bonus shares of the said Prakash Tubes Ltd. to the appellant.
4. It is the case of the appellant that on 4 th January, 1995, the
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appellant purchased 100 shares of Brook Bond Ltd. through the
respondent. On 23rd January, 1995, the respondent delivered 50 shares
of the said Brook Bond Ltd. to the appellant and did not deliver the
balance 50 shares of the said company. It is the case of the appellant
that on 4th May, 1994, the appellant purchased 1,00,000 shares of
Torrent Gujarat Bio Tech Ltd. through the respondent. On 24th
November, 1994, the appellant returned 100 shares to the respondent
with objection memo of the said company Torrent Gujarat Bio Tech
Ltd. The respondent however did not return those 100 shares after
rectification of the objection to the appellant.
5. It is the case of the appellant that on 30 th March, 1995, though
the respondent had sold 100 shares of Atlantic Spinning on behalf of
the appellant, the respondent did not give credit of the sale proceeds of
those shares to the appellant. The respondent sent a statement of
account of the appellant for the period between 27th March, 1995 and
11th August, 1995. According to the appellant, the statement of account
showed the difference of Rs.3,100/- in settlement nos. 5527 and 7453.
The last transaction between the appellant and the respondent was on
6th December, 1995. On 29th May, 1996, the respondent sent a letter to
the appellant for reconciliation of the statement of accounts. It is the
case of the appellant that on 25th June, 1996, the appellant forwarded
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his reconciliation statement to the respondent. According to the
appellant, during the period between 17th September, 1996 and 14th
October, 1998, the appellant sent various reminders to the respondent
for payment due to the appellant. The respondent however did not
make any payment due to the appellant.
6. On 26th March, 1998, the SEBI called upon the Bombay Stock
Exchange to amend its bye laws to include the applicability of the
Limitation Act, 1963. On 31st March, 1998, the Governing Board of
the Bombay Stock Exchange passed a resolution thereby adopting the
instructions of the SEBI and resolved to amend the bye-laws. On 29 th
August, 1998, the bye-laws of the Bombay Stock Exchange were
amended. The provisions with respect to the limitation were added by
amending the bye law no.252. The amendment were two fold i.e.
claim against defaulter members and the claim between the members
and non-members.
7. It is the case of the respondent that as far as the claim against the
defaulters are concerned, the bye-law prescribed a period of six months
from the date the claim arises or becomes due. However, the arbitral
tribunal was granted sufficient power to condone delay as provided
under section 5 of the Limitation Act. Bye-law 252(2) of the amended
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bye-law provided that the provisions of the Limitation Act, 1963 were
applicable.
8. On 7th June, 2002, the Governing Board of the Bombay Stock
Exchange passed a resolution and once again amended the bye-law
252(2) by the said amendment. It was provided that the claim has to be
received by the exchange within a period of six months from the date
of transaction. The said amendment empowers the Governing Board to
appoint the committee to settle all claims and differences amicably. It
was provided that the time taken by the Investor's Grievances
Redressal Committee (IGRC) would be excluded while computing the
period of limitation. It was also provided that all transactions done
prior to the date on which the bye-laws came into effect, the limitation
period of six months shall be computed from the date on which the
bye-laws came into effect. SEBI granted its approval to the said
amendment on 4th June, 2003.
9. It is an undisputed position that on 29th April, 1999, the appellant
made a complaint which was referred to the IGRC against the
respondent member. On 29th August, 1999, the respondent replied to
the said complaint dated 29th April, 1999. It is the case of the appellant
that the respondent for the first time in the said reply to the complaint
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indicated that there was a dispute between the parties. On 17 th
September, 1999, a meeting came to be held by the said IGRC. On 29 th
September, 1999, the IGRC directed the parties to go for arbitration.
On 29th September 2000, 30th September 2000 and 4th November, 2000,
the appellant addressed letters seeking help of the Bombay Stock
Exchange for the registration of the dispute between the appellant and
the respondent.
10. On 1st July, 2002, the appellant lodged a statement of claim
against the respondent. According to the arbitral award, the date of the
reference was 26th October, 2002. On 31st October, 2002, the
respondent filed a reply and the counter claim and raised a plea of
limitation in respect of the claims made by the appellant. The appellant
filed a rejoinder on 10th February, 2003. The respondent filed sur-
rejoinder on 11th March, 2003. During the period between 19th
December, 2002 and 5th May, 2003, the matter was heard by the arbitral
tribunal. On 27th June, 2003, the learned arbitrator rejected the claim
made by the appellant on the ground of limitation. The learned
arbitrator held that the claim of the appellant was time barred on 13 th
June, 2003. The appellant ought to have filed their claim on or before
28th August, 2001. The appellant applied for rectification of the said
award before the learned arbitrator.
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11. By an order dated 21 July, 2003, the learned arbitrator made few
st
corrections in the said arbitral award dated 27 th June, 2003. The
appellant filed the petition under section 34 of the Arbitration Act
impugning the said award dated 27th June, 2003 before the learned
Single Judge. The learned Single Judge dismissed the said arbitration
petition by a judgment dated 2nd May, 2005. The appellant preferred
this appeal under section 37 of the Arbitration Act against the said
judgment dated 2nd May, 2005.
12. Mr.Kunal Kumbhat, learned counsel for the appellant invited our
attention to various documents annexed to the appeal paper-book and
submits that the disputes between the parties arose during the period
between 1994-1995 which was referred to the arbitration. The last
transaction between the parties took place on 6 th December, 1995. The
respondent had forwarded reconciliation statement to the appellant on
29th May, 1996. The appellant reconciled the statement of account and
forwarded their reconciliation statement to the respondent on 25 th June,
1996. The appellant had called upon the respondent to return 175
shares of Surya Roshni Ltd., 50 shares of Brook Bond Ltd., 100 shares
of Torrent Gujarat Bio Tech Ltd., 100 shares of Atlantic Spinning and
demanded payment of Rs.3,100/- as difference in settlement nos. 5527
and 7453.
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13. It is submitted that during the period between 1996 to 1998, the
appellant had exchanged about 12 correspondences with the respondent
and had repeatedly requested for return of those shares and the amount.
All those correspondences were placed before the arbitral tribunal. The
respondent had neither denied the liability nor returned the said shares
and the amount demanded by the appellant. He submits that even in
the reply to the complaint filed by the appellant before the IGRC, the
respondent had not specifically denied the claim of the appellant but
had only contended that there was serious dispute between the
appellant and the respondent.
14. In the minutes of the meeting dated 29th April, 1999, issued by
the IGRC, it was observed that the respondent member wanted to
oppose the claim only on the technical point such as limitation etc. He
submits that the said IGRC directed the parties to go for arbitration
only on 29th September,2000. The appellant had accordingly lodged a
statement of claim before the learned arbitrator on 1st July, 2002. The
respondent did not deny the claim of the appellant on merits but only
raised an issue of limitation in the written statement filed before the
learned arbitrator. He submits that the learned arbitrator passed an
award which was patently illegal on the ground of limitation.
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15. It is submitted by the learned counsel that the arbitration between
the appellant and the respondent was filed as a statutory arbitration
under the rules, bye-laws and regulations of the Bombay Stock
Exchange. When the transaction took place between the parties in the
year 1995-96, none of the rules, bye-laws and/or regulations of the
Bombay Stock Exchange prescribed any limitation period for reference
of a dispute to arbitration. He submits that though section 43 of the
Arbitration Act provided that the provisions of the Limitation Act, 1963
would be applicable to the arbitration proceedings, in view of section
2(4) of the Arbitration Act, section 43 which provided for applicability
of the provisions of the Limitation Act, 1963 was specifically excluded
to statutory arbitration. The law of limitation thus could not be applied
by the respondent or by the learned arbitrator in view of the specific
exclusion to the applicability of the provisions of the Limitation Act,
1963 in case of statutory arbitration.
16. Learned counsel for the appellant invited our attention to the
impugned judgment delivered by the learned Single Judge. He submits
that the learned Single Judge has upheld the arguments of the appellant
that the arbitral reference 2002 was not barred by the law of limitation.
The said finding rendered by the learned Single Judge has not been
challenged by the respondent. He submits that though on the date of
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the transaction between the parties, the period of limitation was not
applicable, in view of section 2(4) of the Arbitration Act, the learned
arbitrator applied the amended bye-laws 252 of the Bombay Stock
Exchange from the date of enactment of the said bye-laws to the
transaction between the parties and held the claims made by the
petitioner as barred by law of limitation.
17. It is submitted that the learned arbitrator was bound to decide the
dispute on the basis of the arbitration agreement between the parties
and the provisions of law applicable on the date of transaction and not
subsequent amendment to the bye-laws of the Bombay Stock
Exchange. The rejection of the substantial claims of the appellant by
means of a post facto amendment of bye-laws and by applying it to all
past disputes in the absence of any such specific provision in the bye-
laws and in the absence of any authority which is entrusted with the
framing of such delegated legislation would clearly be against the clear
legislative intent of section 2(4) of the Arbitration and Conciliation Act,
1996. Such amendment which is brought into effect on the later date
could not have been applied to the earlier transaction and to place the
appellant in disadvantage situation.
18. The learned Single Judge in paragraph (1) at page 83 of the
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paper-book has opined that if there was no period of limitation laid
down for making a reference to arbitration, under the Bombay Stock
Exchange bye-laws, the arbitration must be invoked within a
reasonable period of time is contrary to the legislative intent and
section 2(4) of the Arbitration Act. He submits that the learned Single
Judge failed to take cognizance that the Arbitration Act, 1940 which
governs all the arbitrations, specifically excludes the application of
Limitation Act to statutory arbitrations under section 46 of the said Act.
The learned arbitrator has not dealt with the said aspect in the
impugned judgment.
19. Learned counsel strongly placed reliance on the judgment of
Division Bench of this Court in case of Savita Khandu Berali vs.
Nagar Agricultural Sale & Ors., AIR 1957 Bom.178 and would
submit that this Court in the said judgment has categorically held that
the Limitation Act cannot be applied to statutory arbitration by analogy.
Learned counsel for the appellant placed reliance on the judgment of
this Court in case of Ashalata Lahoti vs. Hiralal Liladhar, 1999 (1)
Bom C.R. 293 and in case of R.C.Goenka vs. Chase Trading Co., &
Anr., 2002 (3) Bom C.R. 201. He also placed reliance on the judgment
of this Court in case of Marwadi Shares & Finance Ltd. vs. Minal
Kinaksinh Thakore & Ors.,delivered on 7th January, 2014 in
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Arbitration Petition Nos. 485 of 2013 and 486 of 2013.
20. Learned counsel for the appellant placed reliance on the
judgment of Madras High Court delivered on 25th April, 2018 in case of
The Project Director, Project Implementation Unit & Anr. vs.
K.Periyasamy & Ors. in W.A.Nos. 308 to 312 of 2016 and other
connected matters and in particular paragraphs 20 to 34 in support of
his submission that in view of the provisions of section 2(4) applicable
to the statutory arbitrations, the provisions of the Limitation Act, 1963
could not be applied to the transactions already held prior to the
amendment of the bye-laws of the Bombay Stock Exchange and more
particularly bye-law 252 w.e.f. 29th August, 1998.
21. It is submitted by the learned counsel that the arbitral tribunal
has applied the amended bye-law 252 of the Bombay Stock Exchange
from the date of enactment of the said bye-law which never formed
part of the rules, regulations and bye-laws by which the transaction in
question were governed. It was beyond the authority of the arbitral
tribunal to apply the provisions of bye-laws 252 to the past transactions
which were governed by section 2(4) of the Arbitration Act which
expressly excluded the provisions of the Limitation Act to the statutory
arbitrations. He submits that the rules, regulations and bye-laws of the
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Bombay Stock Exchange clearly provided that a broker, shares a
fiduciary relation with his client and carries out all the transactions as
an agent. Since the shares in respect of which the arbitration shall be
instituted still lie in trust of the respondent, the question of limitation
did not arise.
22. It is submitted that the learned Single Judge failed to appreciate
and came to the conclusion erroneously that since there was a debit
entry in the statement of account of the appellant, the shares could not
have been in the custody of the respondents. He submits that though
there were debit entries in the statement of accounts of the appellant,
but the debit entries were only pertaining to the part of the shares partly
received by the appellant and those debit entries could not be inferred
as debit entries for all the shares purchased by the appellant from the
respondent.
23. It is submitted that there was continuous cause of action in view
of the respondent having failed to pay the sale proceeds of the shares to
the appellant or to deliver the shares lying in trust with the respondent
and thus the question of commencement of the limitation would not
arise. He submits that though all the original documents were filed by
the appellant before the arbitral tribunal, the arbitral tribunal
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simplicitor rejected the claims made by the appellant only on the
ground of limitation and did not consider those claims on merits.
24. It is submitted by the learned counsel that the findings of the
arbitral tribunal that the cause of auction arose in January 1995 is
totally erroneous. The learned Single Judge erroneously held that the
cause of action for making a reference to arbitration accrues on the date
on which the cause of action for filing a suit arises. The respondent
had not denied any time prior to filing of the arbitration that the
transaction had not taken place or that the shares had not been
transferred to the appellant. The cause of action thus never arose as the
respondent had not made denial to the demand of the appellant. He
submits that the respondent by their letter dated 24 th August, 1999, had
merely stated that there was some dispute with the appellant and the
matter be sent for arbitration. Since there was no refusal on the part of
the respondent, the dispute never arose.
25. It is submitted by the learned counsel that the learned Single
Judge did not consider the submission of the appellant that the shares
of the appellant were lying with the respondent in a fiduciary relation,
which continued until the delivery of the shares was effected over by
the respondent to the appellant. It could not be held that the agency
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had been terminated and the claims made by the appellant were beyond
the period of limitation. The findings recorded by the learned Single
Judge that the cause of action arose in January 1995 are without
assigning any reason whatsoever.
26. It is submitted by the learned counsel that the letter dated 29 th
May, 1996, could not be construed as denial of the liabilities by the
respondent as the respondent had neither at any point of time denied
that the appellant had purchased the shares for which the appellant was
seeking delivery nor the respondent had stated that they had delivered
those shares. The findings of the learned Single Judge that the debit
entry is a conclusive proof of delivery of the shares is completely
fallacious and unacceptable. The transaction in the year 1994-95 took
place physically and not online.
27. It is submitted by the learned counsel that the period taken
before IGRC i.e. between 29th April, 1999 and 29th September, 2000 is
required to be excluded. He submits that even if the provisions of the
Limitation Act, 1963 were made applicable, the period of three years
would commence only after 29th September, 2000 when the IGRC
directed the parties to refer their disputes to arbitration. The statement
of claim was already filed by the appellant on 26th October, 2002. The
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claim thus filed by the claimant was within the period of limitation.
28. Mr.Purohit, learned counsel for the respondent on the other hand
submits that it is not the case of the respondent that the said
amendment brought to the bye-law of the Bombay Stock Exchange in
the year 1998 was made effective with retrospective effect. He submits
that since the appellant had invoked the arbitration agreement after the
date of the said amendment to bye-law of the Bombay Stock Exchange
in the year 1998, the provisions of the said bye-law stood apply to the
said claims filed by the appellant after the date of the amendment. He
submits that it is an undisputed position that last transaction between
the appellant and the respondent took place on 6th December, 1995.
The respondent sent the last statement of account to the appellant on
29th May, 1996 contending that the respondent had to recover
Rs.18,379/- from the appellant. During the period between 17th
September, 1996 to 14th October, 1998, the appellant had sent various
reminders to the respondent.
29. On 29th August, 1998, the bye-laws of the Bombay Stock
Exchange were amended including bye-law no. 252. It is submitted
that the appellant had made a complaint to IGRC only on 29 th April,
1999. The IGRC had aleady directed both the parties to proceed
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further for arbitration. The appellant had filed statement of claim only
in the month of July 2002 which was ex-facie barred by law of
limitation according to the learned counsel for he respondent.
30. It is submitted that the cause of action as far as the appellant is
concerned, commenced in or around 1996. The respondent had vide its
letter dated 29th May, 1996 had denied their liability to the appellant.
He submits that the statute of the limitation is procedural. It is
submitted that merely because there was no limitation period
prescribed prior to 29th August, 1998, it did not give any vested right in
the appellant prior to 1998. In support of this submission, learned
counsel placed reliance on the judgment of Allahabad High Court in
case of Mt.Begam Sultan vs. Sarvi Begam, AIR 1926 Allahabad 93
and in particular on pages 93 and 94. He submits that the law of
limitation is applicable to an application for making a claim at the time
when the application is made.
31. It is submitted that the amendment to the bye-laws brought in the
year 1998 was in line with the provisions of the Limitation Act, 1963.
The said amendment has not extinguished the right of the parties. In
support of the submission that no vested right was created in favour of
the appellant even by virtue of section 2(4) of the Arbitration Act, the
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learned counsel placed reliance on the judgment of Supreme Court in
case of Ramprasad Dagaduram vs. Vijaykumar Motilal
Hirakhanwala & Ors., AIR 1967 SC 278 and in particular paragraphs
11 and 13. He also placed reliance on the judgment of Allahabad High
Court in case of The Allahabad Bank Ltd. vs. Rane Sheo Ambar
Singh & Ors., AIR 1976 Allahabad 447 and in particular paragraphs
11 to 13 of the said judgment.
32. It is submitted by the learned counsel that since in this case by
virtue of the amendment to bye-law 252 of the Bombay Stock
Exchange, the unlimited period of limitation applicable to the
transaction in view of section 2(4) of the Arbitration Act was curtailed
by providing the prescribed period of limitation under the provisions of
Limitation Act, 1963, the limitation would commence from the date
when the said amendment to bye-law 252 of the bye-law of the
Bombay Stock Exchange was made. He submits that three years period
of limitation thus would have commenced from 29th August, 1998.
Even if the time period taken before the IGRC to hear the complaint
made by the appellant is excluded, the claim made by the appellant
before the arbitral tribunal would be still time barred.
33. Learned counsel for the respondent placed reliance on the
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judgment of Supreme Court in case of R.C. Jall Parsi vs. Union of
India and another, AIR 1962 SC 1281 and in particular paragraph 5.
He submits that right to sue has no connection with the period of
limitation and such right is not taken away by the said amendment to
bye-law 252 inserted in the year 1998.
34. Learned counsel for the respondent placed reliance on the
judgment of Supreme Court in case of Vinod Gurudas Raikar vs.
National Insurance Co. Ltd. & Ors., AIR 1991 SC 2156 and in
particular paragraphs 2 to 11 in support of the submission that the mere
right existing on the date of the repeal of statute, to take advantage of
the provisions of the statute repealed is not a "right accrued" within the
meaning of the usual saving clause i.e. section 6 of the General Clauses
Act. Learned counsel submitted that since the appellant in this case
had not invoked arbitration agreement and had not filed statement of
claim prior to the date of amendment to bye-law 252 of the bye-laws of
the Bombay Stock Exchange, no right of any nature whatsoever was
vested in the appellant. The limitation period thus prescribed by the
said amendment to bye-law 252 of the Bombay Stock Exchange would
apply to the past transaction also however w.e.f. from the date of such
amendment.
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35. It is submitted that the appellant did not invoke the arbitration
agreement nor did file statement of claim even within the period of
limitation prescribed under the amended bye-law 252 and thus the
claim made by the appellant was ex-facie barred by law of limitation.
The appellant had reasonable time of three years to invoke arbitration
agreement and to file statement of claim before the arbitral tribunal
which the appellant admittedly failed. The accrual of the cause of
action and the initiation of the arbitral proceedings are two different
aspects. If the appellant would have taken recourse to the remedy by
invoking the arbitration agreement and by filing statement of claim
before the date of amendment to bye-law 252 of the Bombay Stock
Exchange, the appellant would have vested right only in that event.
Even otherwise, the law of limitation is a matter of procedure, it does
not create a vested right.
36. Learned counsel for the respondent placed reliance on the
judgment of this Court in case of Gopaldas Ganpatdas and others vs.
Tribhuwan and others, AIR 1921 Bom 40 and in particular relevant
paragraph on pages 40 and 41. Learned counsel distinguished the
judgment of this Court in case of R.C. Goenka (supra) on the ground
that the petitioner in that matter had availed of the remedy before the
amendment of the bye-law of the Bombay Stock Exchange and had
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withdrawn the said proceedings before amendment. The issue before
the learned Single Judge in the said matter was whether the issue of
limitation is a procedural law or not? The parties had obtained liberty
to file claim after the amendment to bye-law 252 of the bye-law of the
Bombay Stock Exchange to file claim in the line with the bye-law of
the Bombay Stock Exchange.
37. Learned counsel for the respondent distinguished the judgment
of this Court in case of Marwadi Shares & Finance Ltd. (supra) on the
ground that this court in the said judgment had considered the rights of
the parties to file an appeal as substantive right which is not the case in
this matter. In that matter, the original proceedings were already filed
prior to the date of amendment to the bye-law of the Stock Exchange.
38. It is submitted by the learned counsel that even in the statement
of the account submitted by the respondent to the appellant, the
respondent had demanded the amount from the appellant and thus it
was clear that the cause of action had started even from such date of
receipt of such statement of account from the respondent to the
appellant.
39. Learned counsel for the respondent distinguished the judgment
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of this Court in case of Ashalata Lahoti (supra) on the ground that it
was not the case of the respondent that 1998 amendment to bye-law
252 of the Bye-laws of the Bombay Stock Exchange does apply with
retrospective effect.
40. Mr.Kumbhat, learned counsel for the appellant in rejoinder
invited our attention to ground (d) raised in the appeal memo and
would submit that the findings rendered by the learned Single Judge
that the cause of action accrued in the month of January 1995 has been
impugned by the appellant. He submits that since there was no refusal
on the part of the respondent to pay the dues of the appellant till 24 th
August, 1999 when for the first time the respondent raised the dispute,
the invocation of the arbitration and filing a statement of claim by the
appellant was within the period of limitation. He submits that none of
the judgments relied upon by the respondent before this Court have
dealt with the issue of limitation in case of statutory arbitration under
section 2(4) of the Arbitration Act.
41. Learned counsel for the appellant distinguished the judgment of
Allahabad High Court in case of Mt.Begam Sultan (supra) on the
ground that there was a distinct provisions of limitation at the relevant
period in that matter. In this case, in view of section 2(4) of the
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Arbitration Act, no period of limitation was at all applicable in view of
there being a statutory arbitration between the parties under the bye-
laws of the Bombay Stock Exchange. Learned counsel for the appellant
distinguished the judgment of Supreme Court in case of Ramprasad
Dagaduram (supra) on the ground that the facts before the Hon'ble
Supreme Court were different.
42. Learned counsel distinguished the judgment of Allahabad High
Court in case of The Allahabad Bank Ltd. (supra) and would submit
that in that case the provisions of the Limitation Act, 1908 were
referred. The legislature in its wisdom has provided for a specific
period of limitation in that matter. No such specific provisions of
limitation was applicable by virtue of section 2(4) of the Arbitration
Act. The period of limitation prescribed for the first time in the year
1998 was admittedly not applicable with retrospective effect. Such
period of limitation introduced for the first time in the year 1998 could
not apply to the cause of action having arisen prior to the date of such
amendment.
43. Learned counsel for the appellant distinguished the judgment of
Supreme Court in case of Vinod Gurudas Raikar (supra) on the ground
that the period of limitation under the unamended Limitation Act and
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amended Limitation Act were the same. He relied upon section 6(c) of
the General Clauses Act, 1897. Learned counsel distinguished the
judgment of this Court in case of Gopaldas Ganpatdas and others
(supra) on the ground that in the said judgment this Court had
considered the retrospective effect of section 48 of the Code of Civil
Procedure, 1882 in regard to the decree passed prior to the date of
coming into force of the new Code. The said judgment does not state
that on the amendment of the provisions relating to the period of
limitation, the said provision would apply with retrospective effect.
Learned counsel for the appellant distinguished the judgment of
Supreme Court in case of R.C. Jall Parsi (supra) on the ground that the
facts before the Supreme Court in the said judgment were different.
44. Learned counsel for the appellant relied upon following
judgments:-
(1) Judgment of Madras High Court delivered on 25 th April, 2018 in
case of The Project Director, Project Implementation Unit & Anr. vs.
K.Periyasamy & Ors. in W.A.Nos. 308 to 312 of 2016 and other
connected matters.
(2) Judgment of this court in case of Savitra Khandu Beradi vs.
Nagar Agricultural Sale & Ors., AIR 1957 Bom. 178.
(3) Judgment of Supreme Court in case of T.N. Generation and
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Distbn. Corpn. Ltd. Vs. PPN Power Gen. Co. Pvt. Ltd., (2014) 11
SCC 53 dealing with the identical issue.
45. Mr. Purohit, learned counsel for the respondent in his sur-
rejoinder arguments would submit that section 2(4) of the Arbitration
Act came into effect only in the year 1996 when the said Arbitration
Act was enacted. He submits that by virtue of the said amendment to
the bye-law 252 of the Bombay Stock Exchange, the provisions of the
Limitation Act, 1963 were made applicable to the transaction governed
by those bye-laws. Section 2(4) of the Arbitration Act was already in
the statute on the date of amendment to bye-law 252 of the Bombay
Stock Exchange and thus no contrary intention appears in the said
amendment to bye-law 252 carried out in the year 1998. The said
amendment to bye-law 252 in the year 1998 does not have any
exception to the Act that the past transaction in respect of which no
proceedings were filed prior to the date of the amendment to the bye-
law 252 would not be governed by the said amendment.
REASONS AND CONCLUSION :-
46. The questions that fell for consideration of this Court are as
under :-
(a) Whether any period of limitation was applicable to the
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transactions in question prior to 29 th
August, 1998 or
thereafter in view of Section 2(4) read with Section 43 of the
Arbitration and Conciliation Act, 1996 ?
(b) What is the effect of the amendment to Bye-law 252(2)
amended by the Stock Exchange, Mumbai providing that the
provisions of Limitation Act, 1963 would be applicable ?
(c) Whether any vested rights had accrued in favour of the
appellant by virtue of Section 2(4) of the Act even though no
arbitral proceedings were filed by the appellant prior to 29 th
August, 1998 ? If amended provision of Bye-law 252(2) of
the Bye-laws inserted on 29th August, 1998 applies to the
transactions in question with effect from the date of such
amendment, whether the appellant had filed arbitral
proceedings within the period of three years from the date of
such amendment ?
47. We shall now deal with the aforesaid questions fell for
consideration of this Court. The undisputed facts are as under :-
The last transaction between the appellant and the respondent
was on 6th December, 1995. The respondent had sent a letter to the
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appellant on 29 May, 1996 for reconciliation of the statement of
th
accounts. On 25th June, 1996, the appellant had forwarded its
reconciliation statement to the respondent. According to the statement
of accounts submitted by the respondent to the appellant, the
respondent were entitled to recover the sum of Rs.18,379/- from the
appellant.
48. It was the case of the appellant that during the period between
17th September, 1996 and 18th October, 1998, there was exchange of
correspondence between the parties. On 29 th August, 1998 Bye-law
252(2) was amended providing that the provisions of Limitation Act,
1963 would be applicable. The appellant made a complaint to the
Investment Grievance Redressal Cell on 29th April, 1999. The
Investment Grievance Redressal Cell directed the parties to go to
arbitration on 29th September, 2000. The statement of claim was filed
by the appellant on 26th October, 2002 with the Stock Exchange,
Mumbai.
49. In the statement of claim filed by the appellant, it was the case of
the appellant that various shares were purchased by the appellant
through the respondent broker which were either not delivered by the
respondent or the sale price was not paid to the appellant. There was
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the difference of Rs.3,100/- in two statements of account of the
respondent. Various letters were addressed by the appellant to the
respondent for payment.
50. In the written statement filed by the respondent, the respondent
raised a plea of limitation and also denied the claims made by the
appellant on merits. The respondent relied upon Articles 2, 3 and 4 of
the Schedule to the Limitation Act, 1963. The respondent also relied
upon the Bye-laws 252(2) of the Stock Exchange, Mumbai which came
into force on 29th August, 1998. It was contended that the law of
limitation did not apply to the arbitral proceedings under the Bye-laws
before the amendment of 1998. The cause of action thus arose before
the amendment to the Bye-laws came into force on 29th August, 1998.
The said amendment to Bye-law 252(2) did not apply with
retrospective effect. The last account statement was received by the
appellant from the respondent on 29th May, 1996. It was contended
that limitation period is reduced from unlimited period to three years.
Section 30 of the Limitation Act will be applicable and there was no
question of non-applicability of limitation after the amendment.
51. The arbitral tribunal in the impugned award recorded various
reasons while dismissing the claims made by the appellant. It is held
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by the arbitral tribunal that it is an admitted fact that the last transaction
took place on 6th December, 1995 much before the amendment of Bye-
laws of the Bombay Stock Exchange when the limitation was made
applicable to the Bombay Stock Exchange transaction as and from 29 th
August, 1998. Prior to the said amendment the rules specifically
provided that the law of limitation does not apply. It was the case of
the appellant before the arbitral tribunal that since the transactions were
prior to 29th August, 1998, no limitation was applicable and the claim
could be filed at any time in future.
52. It is held by the arbitral tribunal that if the argument of the
appellant would be accepted, it would lead to absurdity. Any claim
prior to the date of amendment will not become time barred at any time
and the appellant can file claim by filing application on any day while
all claims claimed after the date of amendment would become time
barred on the expiry of three years from the date of amendment. The
arbitral tribunal held that time cannot be unlimited for the appellant as
transaction was prior to the amendment of Bye-laws of the Stock
Exchange making Limitation Act applicable to the transaction under
Rules, Regulations and Bye-laws. The arbitral tribunal accordingly
held that the claims made by the appellant on 26th October, 2002 were
time barred. The appellant ought to have filed their claim on or before
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28 August, 2001.
th
53. The arbitral tribunal corrected the said award by a rectification
order dated 21st July, 2003. In the award at various places the date of
13th June, 2003 mentioned was corrected as 26 th October, 2002.
Similarly, the date of filing of statement of claim mentioned as 12 th
January, 2003 was corrected to 26th October, 2002. The learned Single
Judge held that even if no period of limitation was laid down in the
Bye-laws, there would be an obligation on the part of the petitioners to
invoke the arbitration clause within a reasonable time from the date of
accrual of the cause of action to the petitioner. The cause of action
accrued in the month of January 1995 when according to the petitioner,
the petitioner was entitled to receive the delivery of the shares
purchased by the petitioner but was refused by the respondent.
54. It is held that even in cases where there is no period of limitation
prescribed, justice demands that the litigant must make his claim
without any undue delay. Inaction on the part of the claimant for a
long time in lodging a claim may make it unjust to uphold his claim.
The requirement of making a reference without any undue delay
applies with full force in relation to commercial litigation because most
of the time, the commercial litigation is based on documents and
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accounts which are required to be maintained by the parties in the
ordinary course of business. These documents which are required to be
maintained cannot be kept for unlimited time and the need for
destruction of the record after lapse of a particular period is also
recognized by various laws. It may workout to the prejudice of the
other side because in a given case the claim may be made after the
other side has destroyed its record for the relevant period. It is in the
public interest that the claim has to be filed within reasonable time
when no period of limitation is prescribed to institute proceedings or
enforcement of the claim.
55. The learned Single Judge also noticed that the only explanation
given by the appellant for not approaching the Investment Grievance
Redressal Cell till 1999 was that the respondent did not deny their
liability specifically. It is held by the learned Single Judge that the
letter dated 29th May, 1996 from the respondent to the appellant makes
the position absolutely clear which was in response to the statement of
account dated 28th May, 1996 sent by the petitioner to the respondent.
According to the said statement of account sent by the respondent there
was a debit of Rs.18,379/- in the account of the appellant.
56. Both the parties through their learned counsel relied upon several
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judgments in support of their rival contentions. Learned Single Judge
of this Court in case of Ashalata Lahoti (supra) held that the Bye-laws
framed under Section 9 of the Securities Contracts Act are statutory in
nature and in view of Sections 46 and 37 of the Arbitration Act are not
covered by Limitation Act. It is held that insofar as the dispute between
a member and a member is concerned, Bye-laws had been framed
whereby limitation to refer a dispute is three months. It is however, no
answer to contend that the principle of laches should be read into the
Act. Once the parties sign an Agreement to refer a dispute to arbitration
and make no provisions for raising disputes within a specific period,
the question of reading limitation into it will not arise. It is for the
Exchanges to consider amending the Bye-laws in manner like dispute
between members and members and providing for a suitable period of
limitation. It is not in dispute that in the year 1998 Bye-laws 252(2)
was amended so as to provide the period of limitation to the arbitration
under the Stock Exchange Bye-laws.
57. A learned Single Judge of this Court in case of R.C. Goenka
(supra) while dealing with a petition under Section 34 of the
Arbitration and Conciliation Act, 1996 impugning the arbitral award
rejecting the claim on the ground of limitation considered a situation
where the transactions were effected before the bye-laws of Stock
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Exchange came to be amended. The earlier statement of claim was
filed in the month of November 1997 and was withdrawn on 5 th
August, 1998. Fresh reference was filed on 6 th November, 1998 i.e.
after amendment of Bye-law 252(2) inserting the provision of
Limitation Act, 1963 in the Bye-laws. The arbitral tribunal rejected the
claim on the ground of limitation. The learned Single Judge in the said
judgment held that there was no provision for limitation in the contract
as a term until 29th August, 1998 except for disputes arising from
contracts between members and members.
58. It was held that there is nothing in the said bye-laws to hold that
the said provision will also apply to the contract which were entered
into and to which contracts Bye-law 252(2) was not incorporated as a
term of the contract. Only those contracts which have been entered
into after Bye-law 252(2) came into force will be governed by the
provision of limitation becoming applicable as term of the contract.
This Court held that the said amendment would not apply with
retrospective effect. These Bye-laws are statutory in character. It is
not the case of the respondent that the said Bye-law 252(2) introduced
and came into effect on 29th August, 1998 applied with retrospective
effect to the transactions prior to the date of such amendment. The said
judgment thus would not assist the case of the appellant.
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59. A learned Single Judge of this Court in case of Marwadi Shares
& Finance Ltd. (supra) had dealt with a petition under Section 34 of
the Arbitration Act impugning the order passed by the Appellate bench
of the Stock Exchange, Mumbai dismissing the appeal filed by the
petitioner on the ground of limitation. In that case, the learned
Arbitrator had made an award on 1st November, 2011. On 2nd
November, 2011, the petitioner had made an application under Section
33 inter-alia praying for corrections in the said award. The said
application was decided by the learned Arbitrator on 5th March, 2012.
The petitioner had thereafter filed an appeal on 12th April, 2012 before
the Appellate Bench of the Bombay Stock Exchange Limited. There
was delay of three days in filing the appeal. The said application for
condonation of delay was rejected by the Appellate Bench on the
ground that SEBI circular and subsequent amendments by Bombay
Stock Exchange, the Bye-laws and Regulations had taken away the
powers of the Appellate Bench to condone delay. In that context, the
learned Single Judge of this Court (one of us R. D. Dhanuka, J.) held
that right of appeal is a vested right which can be taken away only by a
subsequent enactment if it so provides expressly or by necessary
indenment and not otherwise.
60. This Court held that the right of appeal is not a mere matter of
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procedure but is a substantive right which is a vested right and such a
right to enter the superior Court accrues to the litigant and exists as on
and from the date the original cause of action commences and although
it may be actually exercised when adverse judgment is pronounced.
Such a right has to be governed by the law prevailing on the date of
original cause of action and not as per the bye-law that prevails at the
time of its decision or at the date of filing of an appeal. The petitioner
had already filed proceedings before the learned Arbitrator. The vested
right of filing an appeal against the impugned award, if any and the
right to file an application for condonation of delay on showing
sufficient cause on the date of filing the original proceedings would be
continued. In our view, the said judgment would not assist the case of
the appellant. In this case, the appellant had not filed any arbitral
proceedings prior to the date of the amendment to Bye-law 252(2)
w.e.f. 29th August, 1998 but filed the proceedings much later. No right
had been thus accrued in favour of the appellant.
61. This Court in case of Savitra Khandu Beradi (supra) relied upon
by the learned counsel for the appellant had considered an issue
whether the Indian Limitation Act applies to claims referred for
adjudication under the procedure prescribed in Section 54 of the
Bombay Co-operative Societies Act or not. This Court held that a
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proceeding before the arbitrator is not a suit, appeal or application and
in terms Section 3 can have no application. Expiry of the period of
limitation prescribed for a suit does not destroy the right. It only bars
the remedy. In our view, the said judgment would not apply to the facts
of this case and would not advance the case of the appellant in view of
the appellant not having filed any claim prior to the amendment to
Bye-law 252(2).
62. Madras High Court in case of The Project Director, National
Highways Authority of India (supra) relied upon by the appellant
considered the issue as to whether provisions of Limitation Act, 1963
in particular Article 137 applies to the statutory arbitration under
Section 3-G(5) of the National Highways Act, 1956 or not. Section 3-
G(5) of the National Highways Act, 1956 provided that 'subject to the
provision of that code, the provision of Arbitration and Conciliation
Act, 1996 was applied to every arbitration under this Act'. The Madras
High Court adverted to and applied the principles laid down in the
judgment of this Court in case of Savitra Khandu Beradi (supra) and
also judgment of Supreme Court in case of Tamil Nadu Generation
and Distribution Corporation Limited v/s. PPN Power Generating
Company Private Limited, (2014) 11 SCC 53 and held that the
provision of the Limitation Act and more particularly Article 137
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would apply to an application for a reference to arbitration under
Section 3-G(5) of the National Highways Act, 1956.
63. In view of the fact that it is not the case of the respondent that
the said Bye-law 252(2) of the Bye-laws framed by the Stock
Exchange, Mumbai applied with retrospective effect, the judgment of
Madras High Court in case of The Project Director, National
Highways Authority of India (supra) would not assist the case of the
appellant. The question now arises for consideration of this Court is, as
to what is the effect of amendment of Bye-law 252(2) amended by the
Stock Exchange, Mumbai providing that the provision of Limitation
Act, 1963 would be applicable.
64. Allahabad High Court in case of Mt. Begam Sultan (supra)
relied upon by the learned counsel for the respondent held that the law
of limitation applicable to a suit or the proceeding is the law in force at
the date of the institution of the suit or the proceeding unless there is a
distinct provision to the contrary. It is held that there was no vested
right in the decree holder to wait for an indefinite period of time in
order to apply for execution. Supreme Court in case of Ramprasad
Dagaduram (supra) has held that the respondent had no vested right in
the law of procedure for enforcement of mortgage though the period of
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limitation was abridged for the enforcement of the mortgage by Article
132 of the Indian Limitation Act, 1908. Such abridgment did not take
away any vested right.
65. In our view, Mr. Purohit, learned counsel for the respondent is
right in his submission that since the appellant had not filed any arbitral
proceedings prior to the date of amendment to Bye-law 252(2)
inserting the provision of Limitation Act, 1963 to arbitral proceedings,
no right had been vested in favour of the appellant. The principles of
law laid down by the Supreme Court in case of Ramprasad
Dagaduram (supra) and the judgment of Allahabad High Court in case
of Mt. Begam Sultan (supra) would apply to the facts of this case.
66. Allahabad High Court in case of The Allahabad Bank Ltd.
(supra) has held that if the Limitation Act, 1963 did not prescribe any
period of limitation for an application than it was an unlimited period.
If the Act of 1963 prescribed any period of limitation for such an
application, than it will be a case where the period of limitation is
shorter than the period of limitation prescribed by the Limitation Act,
1908 and the application in that case would be required to be made
within a period of 90 days after the commencement of the Limitation
Act, 1963. In our view, the principles laid down by the Allahabad High
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Court in the said judgment apply to the facts of this case.
67. In view of Section 2(4) of the Arbitration and Conciliation Act,
1996, period of limitation was not applicable to the transactions entered
into between the appellant and the respondent prior to 29 th August,
1998 when the provisions of Limitation Act, 1963 were extended to the
arbitral proceedings under the Stock Exchange Bye-laws. However,
there would be no merit in the contention of the appellant that even
after applicability of the provisions of the Limitation Act, appellant
would be continued to be governed by no period of limitation in view
of Section 2(4). In our view, since the period of limitation was
prescribed by inserting Article 252(2) amended on 29th August, 1998,
the appellant ought to have filed arbitral proceedings within three years
from the date of amendment to Article 252 (2) of the Bye-laws framed
by the Stock Exchange, Mumbai which are statutory bye-laws. The
alleged rights if any in favour of the appellant in view of Section 2(4)
of the Arbitration Act to file claim without period of limitation stood
abrogated in view of the amendment to Bye-law 252(2). The appellant
would be thereafter governed by the amended Bye-law 252(2) for
filing any claim in respect of cause of action having arisen prior to the
date of amendment.
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68. The question now that arises for consideration is that if the
provisions of Limitation Act, 1963 apply to the transactions in
question, whether the proceedings were filed by the appellant within a
period of three years from 29th August, 1998 or not ?
69. In this respect, it would be apposite to refer to a judgment of the
Supreme Court in case of Vinod Gurudas Raikar (supra) relied upon
by the learned counsel for the respondent. The Supreme Court in the
said judgment had considered a Civil Appeal arising out of the order
passed by the High Court dismissing the appeal arising out of the order
passed by the Motor Accident Claim Tribunal. The Accident had taken
place on 22nd January, 1989. The Motor Vehicle Act, 1988 came into
force on 1st July, 1989. The period of limitation for filing a claim
petition both under the old Act and the new Act was six months. The
limitation period of six months expired on 22 nd July, 1989 under the
unamended provision. The claim petition was however filed on 15 th
March, 1990 with a prayer for condonation of delay. The Motor
Accident Claim Tribunal rejected the claim on the ground that in view
of provision of sub-Section 3 of Section 166 of the Motor Vehicles Act,
1988, delay of more than six months could not be condoned. The High
Court also dismissed the appeal filed by the claimant.
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70. Under the proviso to sub-Section 3 of Section 166 of the Motor
Vehicles Act, 1988, maximum period of delay which could be
condoned was six months which expired on 22nd January, 1990. The
Supreme Court held that it is true that the appellant earlier could have
filed an application for condonation of even more than six months after
the expiry of limitation but can this be treated to be a right which the
appellant had acquired. It is held that it would be treated to be a right.
So far as the period of limitation for commencing a legal proceeding is
concerned, it is adjudicable in nature and has to be governed by the
Motor Vehicles Act, 1988 subject to two conditions. If under the
repealing Act the remedy suddenly stands barred as a result of a shorter
period of limitation, the same cannot be held to govern the case,
otherwise the result will be to deprive the suitor of an accrued right.
The second exception is where the new enactment leaves a claimant
with such a short period for commencing the legal proceeding so as to
make it impracticable for him to avail of the remedy.
71. The Supreme Court adverted to the earlier judgment in case of
New India Insurance Co. Ltd. v/s. Smt. Shanti Misra, AIR 1976 SC
237. It is held in that matter that a period of two years was available to
the respondent for instituting a suit for recovery of damages when the
husband of the respondent had expired. In March, 1967, the claims
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tribunal under Section 110 of the Motor Vehicles Act, 1939 was
constituted, barring the jurisdiction of Civil Court and prescribed 60
days as the period of limitation. The respondent had filed an
application in July 1967. It was held that not having filed a suit before
March 1967, the only remedy of the respondent was by way of an
application before the tribunal. It was held that new law of limitation
providing for a shorter period cannot certainly extinguish a vested right
of action. In view of the change of the law, it was held that the
application could be filed within a reasonable time after the
constitution of the tribunal and that the time of about four months taken
by the respondent in approaching the tribunal after its constitution
could be held to be either reasonable time for the delay of about two
months can be condoned under proviso to Section 110-A(3).
72. The Supreme Court held that the period of limitation for lodging
the claim under the old as well as the new Act was same six months
which expired three weeks after coming in force of the new Act. It
would be open to the appellant to file his claim within this period or
even later by 22nd July, 1989 with a prayer to condone the delay. His
rights to claim for compensation was not affected at all with
substitution of one Act with another. Since, the period of limitation
remained the same, there was no question of the appellant being taken
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by surprise. In this background, the appellant's further default has to
be considered. It is held that having actually initiated the proceedings
when the old Act covered the field the claimant could say that his right
which had accrued on the date of filing of the petition could not be
taken away. The present case is different. The right or privilege to
claim benefit of a provision for condonation of delay can be governed
by the law in force at the time of delay. In our view, the principles laid
down by the Supreme Court in case of Vinod Gurudas Raikar (supra)
applies to the facts of this case.
73. If the appellant would have filed the arbitration proceedings
under the unamended Bye-laws and if such rights would have been
taken away by amendment subsequently with retrospective effect, the
appellant could have urged that such rights which are vested in him in
view of the appellant already having filed proceedings for recovery of
his claim cannot be taken away. In this case, admittedly the period of
limitation which was not applicable prior to 29th August, 1998 was
restricted to a period of three years w.e.f. 29 th August, 1998. The
appellant admittedly not having filed the statement of claim prior to the
date of such amendment, the case of the appellant would be governed
by the period of limitation prescribed by the provision to Bye-law
252(2) framed by the Stock Exchange, Mumbai.
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74. It is not the case of the alleged rights vested, if any in the
appellant having been taken away by amendment to Bye-law 252(2) of
the Stock Exchange, Mumbai. We are thus not inclined to accept the
submission of Mr. Kumbhat, learned counsel for the appellant that
though the period of limitation was introduced w.e.f. 29 th August, 1998,
the case of the appellant would be continued to be governed by the
unamended provision and would have indefinite period of limitation
even after 29th August, 1998 even though no such arbitral proceedings
were filed by the appellant till the date of amendment.
75. Supreme Court in case of R.C. Jall Parsi (supra) held that the
statute of limitation assumes the existence of a cause of action and does
not define it or create one. This Court in case of Gopaldas Ganpatdas
and others (supra) held that Act of limitation being a law of procedure
governs all the proceedings to which in terms are applicable from the
moment of its enactment, except so far as its operation is expressly
excluded or postponed. The Act of limitation, like other laws relating
to procedure, applies immediately to all the steps taken after they have
come into force, except when some provision is made to the contrary.
In our view, the principle laid down by this Court in the said judgment
would apply to the facts of this case. The Act of limitation being a law
of procedure, the amendment inserted by Bye-law 252(2) would apply
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to the past transactions also however, w.e.f. the date of such
amendment.
76. Supreme Court in case of Syed Yousuf Yar Khan and Ors. v/s.
Syed Mohammed Yar Khan and Ors., AIR 1967 SC 1318 considered a
situation where the period of limitation prescribed for the suit by the
corresponding law in Hyderabad was an unlimited period. Section 30
enabled the plaintiff to institute a suit within a period of two years after
1st April, 1951. The Part B States (Laws) Act, 1951 while extending
the Indian Limitation Act, 1908 to Hyderabad allowed the plaintiff
reasonable time to institute the suit for recovery of the property. The
extension of the Indian Limitation Act, 1908 to Hyderabad and the
consequential change in law prescribing a shorter period of limitation
did not confiscate the existing cause of action and must be recorded as
an alteration in the law of procedure for the enforcement of the cause
of action.
77. It is held that the Court must therefore apply the normal rule that
law of limitation applicable to the suit is the law in force at the date of
the institution of the suit. The suit is therefore governed by the Indian
Limitation Act, 1908. The plaintiffs not having instituted the suit
within two years after 1st April, 1951 therefore could not avail
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themselves of all the benefit of Section 30 of the unamended provision
to Section 30 of the Limitation Act, 1908. The Supreme Court
accordingly held that the suit was barred by law of limitation.
78. In our view, the principles of law laid down by the Supreme
Court in the said judgment squarely apply to the facts of this case. The
unlimited period of limitation prescribed prior to the date of
amendment to Bye-law 252(2) was reduced by a shorter period of
limitation by three years. Such amendment did not confiscate the
existing cause of action but was only as and by way of alternative in
the law of procedure for the enforcement of the cause of action. In our
view, the provision of limitation applicable on the date of filing such
arbitral proceedings would apply and not prior to the date of
applicability of the provision of limitation since the appellant had not
filed the arbitral proceedings prior to the date of such amendment.
79. Division Bench of this Court in the case of M/s. Delton
Electricals Vs. Maharashtra State Electricity Distribution Company
Limited & Ors., 2017 SCC OnLine Bom 9000 adverted to various
judgments of the Supreme Court and Privy Council in which it has
been held that the Courts have expressed at least three reasons for
supporting the existence of statutes of limitation; (1) that long dormant
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claims have more of cruelty than justice in them; (2) that a defendant
might have lost the evidence to disprove a stale claim; and (3) that
persons with good causes of action should pursue them with reasonable
diligence. A reference is also made to Halsbury, 4 th Edn., Vol.28
Paragraph 605 and the judgment of the Supreme Court in the case of
Nav Rattanmal and Ors. v. State of Rajasthan AIR 1961 SC 1704 in
which it was held that the Statutes of Limitation have been considered
as Statutes of Repose and Statutes of Peace. The generally accepted
basis for such statutes is that they are designed to effectuate a
beneficent public purpose.
80. This Court also considered the judgment of the Supreme Court
in the case of Khadi Gram Udyog Trust Vs. Ram Chandraji Virajman
Mandir, Sarasiya Ghat, Kanpur, (1978) 1 SCC 44 in which it was
held that though a debt may be time- barred, it would still be a debt
due. The right remains untouched and if a creditor has any means of
enforcing his right other than by action or set-off, he is not prevented
from doing so. This Court also considered the judgment of the Supreme
Court in the case of Punjab National Bank and Ors. v. Surendra
Prasad Sinha 1993 Supp. (1) SCC 499 at page 503- 504 in which it
was held that the rules of limitation are not meant to destroy the rights
of parties. Section 3 of the Limitation Act only bars the remedy but
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does not destroy the right which the remedy relates to. There are good
reasons for supporting the existence of defence of limitation. One is
that long dormant claims have more of cruelty than justice in them; that
a defendant might have lost the evidence to disprove a stale claim and
that persons with good causes of action should pursue them with
reasonable diligence.
81. If the arguments of the learned counsel for the appellant is
accepted that even after insertion of period of limitation under Bye-
law 252 (2) of the Bombay Stock Exchange w.e.f. 29 th August 1998,
the appellant would still file his claim after any number of years, the
respondent who has defence of limitation will lose his right of defence.
The evidence that he would rely upon in such defence of period of
limitation may be rendered nugatory and may be destroyed due to
long duration during which the appellant had not filed the
arbitration proceedings for recovery of the alleged dues. The whole
purpose of enactment of the Limitation Act in public interest to
dismiss the stale claims would be frustrated in such an event.
82. There is no substance in the submission made by the learned
counsel for the appellant that the respondent had never denied the
liability till the complaint was filed by the appellant before Investor's
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Grievances Redressal Cell. There is also no substance in the
submission made by the learned counsel for the appellant that no
period of limitation would apply on the ground that there was
fiduciary relation between the appellant and the respondent and that
broker had acted as an agent of the appellant.
83. The appellant had placed reliance on various correspondence
during the period between 1996 and 1998 in support of the plea that
limitation period was extended in view of correspondence exchanged
between the parties. In our view, limitation once starts does not stop
unless there is acknowledgment of the liability or there is part payment
and that also only if liability is acknowledged or part payment is
made within the period of limitation.
84. Learned Single Judge has rightly held that by letter dated 29 th
May 1996 addressed by the respondent to appellant, the respondent
had made its position absolutely clear. The respondent in the said
letter had stated that the statement of account submitted by the
appellant was incorrect and that the statement of account would
actually show debit entry of Rs.18,379/- as enclosed and forwarded
to the appellant by the respondent. The next submission of the learned
counsel for the appellant that learned Single Judge has upheld the
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arguments of the appellant that the arbitral reference filed in 2002
was not barred by law of limitation is factually incorrect.
85. A perusal of Section 30 of the Limitation Act, 1963 makes it
clear that any suit for which the period of limitation is shorter than
the period of limitation prescribed by the Indian Limitation Act,
1908, may be instituted within a period of seven years next after the
commencement of the said Act, 1963 or within the period prescribed
for such suit by the Indian Limitation Act, 1908 whichever period
expires earlier. The said provision though takes cognizance of the
hardship which may be caused to the litigant due to shorter period
of limitation prescribed under the Limitation Act, 1963, then the
period prescribed under the Indian Limitation Act, 1908 in Section 30
(a) of the said Limitation Act, 1963, safeguards are provided to such
litigant. We are not inclined to accept the submission of the learned
counsel for the appellant that by virtue of Section 2(4) read with
Section 43 of the Arbitration and Conciliation Act, 1996, there
would be no period of limitation even after amendment to Bye-Law
252(2) framed by the Stock Exchange, Mumbai.
86. There is no dispute in the proposition canvassed by the learned
counsel for the appellant that till such time, the said Bye-law 252 (2)
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was inserted, in view of Section 2(4) of the Arbitration and
Conciliation Act, 1996, no limitation was applicable to the statutory
arbitrations and more particularly it were governed by Bye-laws,
Rules and Regulations of Bombay Stock Exchange. There is no merit
in the submission of the learned counsel for the appellant that there
was continuous cause of action in view of the respondent having failed
to pay the sale proceeds of the shares to the appellant or to deliver the
shares lying in the trust with the respondent. In our view, this
submission of the learned counsel for the appellant is contrary to Bye-
law 252 (2) brought into effect w.e.f. 29th August 1998.
87. Since this Court is of the view that limitation period of three
years in this case would commence w.e.f. 29 th August 1998, a
question that arise for consideration is whether within the period of
three years from 29th August 1998, the appellant had filed the claim
before the Stock Exchange, Mumbai or not. It is not in dispute that
the statement of claim was filed by the appellant on 1 st July 2002. It
is not in dispute that complaint filed by the appellant before the
Investor's Grievances Redressal Cell was pending during the period
between 29th April 1999 and 29th September 2000. In our view, time
taken before the Investor's Grievances Redressal Cell for deciding
the said complaint filed by the appellant is required to be excluded
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for the purpose of computation of limitation. Even after the said period
is excluded, statement of claim filed by the appellant in 26 th October
2002 was ex facie barred by law of limitation. Cause of action would
not commence only from the date of rejection of complaint by the
Investor's Grievances Redressal Cell for the purpose of filing
statement of claim for the first time.
88. Cause of action had already commenced w.e.f. 29th September
1998. Admittedly, there was no part payment made by the respondent
during this period. In our view, there was no acknowledgment of
liability after commencement of the period of limitation i.e. 29th
August 1998 till expiry of 3 years thereafter. The period of limitation
between 29th August 1998 and the date of filing complaint by the
appellant with the Investor's Grievances Redressal Cell i.e. 29 th April
1999 has to be excluded while computing the period of limitation of
three years. The balance period after disposal of complaint by IGRC
also has to be considered.
89. It is not in dispute that when Bye-law 252 (2) was amended
extending the period of limitation to the arbitrations governed by the
Bye-laws of Stock Exchange, Mumbai, Section 2(4) of the Arbitration
and Conciliation Act was already in the Statute. No contrary intention
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appears in the said amendment. The said amendment does not have
any exception to the Arbitration Act that the past transactions prior to
the date of such amendment where no proceedings were filed would
not be governed by the said amendment.
90. The arbitral Tribunal has rendered various findings of facts
after considering the pleadings, documents and the Bye-laws, Rules
and Regulations framed by the Stock Exchange, Mumbai. Learned
Single Judge while deciding the petition under Section 34 of the
Arbitration and Conciliation Act, 1996 rightly did not interfere with
the findings of facts and did not re-appreciate the evidence. The
appellant did not make out any case for interference with the award
rendered by the learned Single Judge. Scope of Section 37 of the
Arbitration and Conciliation Act, 1996 is very limited. The appellant
cannot expand the scope of Section 37 of the Arbitration and
Conciliation Act, 1996 by advancing various arguments which are not
advanced before the learned Single Judge while arguing the application
under Section 34 of the Arbitration and Conciliation Act, 1996. We
do not find any infirmity in the impugned award rendered by the
arbitral Tribunal and also in the impugned judgment rendered by the
learned Single Judge. Appeal is devoid of merit.
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91. We accordingly pass the following order :-
(i) Appeal No.989 of 2005 is dismissed.
(ii) There shall be no order as to costs.
(V.G. BISHT, J.) (R.D. DHANUKA, J.)
