Bombay High Court
Ntpc Bhel Power Projects Private Ltd vs Shree Electricals And Engineers ... on 17 March, 2025
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2025:BHC-AS:12377-DB
11.ARA55_2024.DOC
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION APPEAL NO. 55 OF 2024
NTPC BHEL Power Projects Pvt. Ltd. ... Appellant
Versus
Shree Electricals & Engineers (India) Pvt. Ltd. ...Respondent
Mr. Akash Menon a/w. Mr. Kalash Bakliwal for the appellant.
Mr. Mandar Limaye a/w. Mr. S.C. Wakankar, Mr. Vedant Bende for the
respondent.
_______________________
CORAM: G. S. KULKARNI &
ADVAIT M. SETHNA, JJ.
RESERVED ON : 15 January, 2025
PRONOUNCED ON: 17 March, 2025
_______________________
Judgment (Per G. S. Kulkarni, J.)
1. This appeal under Section 37 of the Arbitration and Conciliation Act,
1996 (for short "ACA") is directed against the judgment and order dated 21
July, 2023 passed by the learned District Judge No. 2 at Pune, whereby Civil
Miscellaneous Application No. 343 of 2023 filed by the appellant under
Section 34 of the ACA challenging an arbitral award dated 5 February 2020
passed by the Micro and Small Enterprises Facilitation Council, Pune (for short
"Facilitation Council") constituted under the Micro, Small and Medium
Enterprises Development Act, 2006 (for short "the MSME Act") has been
dismissed on the ground that the same is filed beyond the limitation as
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prescribed under sub-section (3) of Section 34 of the ACA.
2. The relevant facts are: Disputes and differences had arisen between the
parties under the purchase order dated 9 March, 2013. The respondent
accordingly approached the Facilitation Council making a claim of an amount
of Rs. 4,50,92,587/-. There were attempts to bring about a settlement. In fact,
a Settlement Agreement dated 16 May, 2016 was entered between the parties,
however, certain dues were claimed by the respondent. The dispute hence was
taken up in arbitration. The Facilitation Council adjudicated the disputes
leading to an arbitral award dated 5 February, 2020 being rendered by the
Facilitation Council.
3. The case of the appellant is that an award was rendered just before the
Covid-19 pandemic engulfed the country and consequent thereto a lock-down
was declared in March, 2020. The appellant in such context has referred to an
order dated 23 March, 2020 passed by the Supreme Court whereby the
Supreme Court extended the period of limitation in relation to all proceedings
including the arbitration proceedings. The case of the appellant is that the
impugned award was made available/received by the appellant on 21 August,
2020, which itself was during the lock-down period.
4. The appellant has contended that the appellant moved a Writ Petition,
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being Writ Petition No. 9317 of 2021 before this Court challenging such
arbitral award passed by the Facilitation Council on the ground that initially
the Facilitation Council had entertained the matter in Conciliation and hence
it was not permissible for the Facilitation Council to take up the matter for
arbitration relying on the decision of this Court in Gujarat State Petronet Ltd.
vs. Micro and Mine Enterprises Facilitation Council 1. There were other
contentions as urged on behalf of the petitioner in the said Writ Petition inter
alia that the disputed amount was paid by the appellant to the respondent,
hence no amount was payable. Whereas in such proceedings, on behalf of the
respondents, reliance was placed on the decision of Supreme Court in
]harkhand Urja Vikas Nigam Limited vs. State of Rajasthan and Others 2, to
contend that the Supreme Court had held that it is open to the Facilitation
Council to take up the Arbitration proceedings after failure of the conciliation.
5. On the said Writ Petition filed by the appellant, a learned Single Judge
of this Court considering the rival contentions, passed an interim order dated 7
October, 2022, that the parties would be required to be heard, as arguable
issues were raised, and accordingly listed the petition for final disposal on 18
November, 2022, thereby granting an interim stay to the impugned award
1
Writ Petition No. 5449 of 2015 decided on 6 August 2018.
2
2021 SCC OnLine SC 1257
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subject to the appellant depositing the amount of Rs.4,52,250/- in this Court.
The proceedings thereafter were listed before the learned Single Judge on 11
January, 2023, when the Court passed an order accepting the request as made
on behalf of the appellant to withdraw the Writ petition to avail of the
alternate remedy which may be available to the appellant in law. The said
order reads thus:
"1. Heard Mr. Kamdar, learned Advocate for Petitioner and Mr.
Petkar, learned Advocate for Respondent.
2. At the outset, Mr. Kamdar, learned Advocate for Petitioner seeks
to withdraw the present Writ Petition to avail any alternate remedy /
relief that may be available to the Petitioner in law in respect of the
subject matter of the present Writ Petition.
3. Writ Petition is allowed to be withdrawn with the above liberty.
4. At the request of Mr. Petkar, it is clarified that all contentions of
the parties are expressly kept open."
6. On the backdrop of the aforesaid order passed by the learned Single
Judge permitting the appellant to withdraw the Writ Petition, the appellant on
17 March, 2023 filed before the Court of learned District Judge at Pune, an
application under Section 34 of the ACA along with a delay application
praying for condonation of delay of 66 days in filing the Section 34
proceedings. The respondent opposed the delay condonation application on
the ground that the arbitral award was dated 5 February, 2020 and merely on
the ground that the appellant had filed a Writ Petition in this Court and
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ultimately withdrew the same on 11 January, 2023 would not assist the
appellant so as to seek a relief of condonation of delay on the ground that the
delay was only of 66 days. The learned District Judge considering the rival
contentions has held that Section 34 application was filed beyond the
limitation as prescribed under Section 34(3) and has rejected the delay
condonation application by the impugned order. It is on such backdrop the
parties are before the Court.
7. Learned counsel for the appellant has made extensive submissions. It is
his submission that the arbitral award dated 5 February, 2020 was received by
the appellant on 21 August, 2020. He submits that the period thereafter was
indisputedly the Covid-19 pandemic period in respect of which under the
orders passed by the Supreme Court in Re : Cognizance for Extension of
Limitation3, the period from March, 2020 till 30 May, 2022 was required to be
excluded. It is his submission that from 24 December, 2020 till 11 January,
2023, the appellant was bonafide pursuing the proceedings of Writ Petition
No. 9317 of 2021 before this Court, in view of the decision of this Court in
Gujarat State Petronet Ltd. (supra), in which the Division Bench held that the
Facilitation Council, being a conciliation forum, could not act as an Arbitration
forum. It is submitted that once to such extent, the decision of the Division
3
(2020) 19 SCC 10
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Bench was overruled by the Supreme Court in the case of Gujarat State Civil
Supplies Corporation Ltd. vs. Mahakali Foods Pvt. Ltd. & Anr. 4 and the
appellant, having become aware of the said decision, had withdrawn the Writ
Petition filed before this Court on 11 January, 2023 and soon thereafter within
the stipulated limitation as prescribed under Section 34(3), filed the Section 34
petition before the District Court at Pune on 17 March, 2023. It is submitted
that Section 34 proceedings were thus filed within the prescribed limitation
and there was no delay in filing of the said proceedings. It is also his
submission that even the language of the delay condonation application would
indicate that the same was filed merely as a formality, as the appellant clearly
believed that the proceedings under Section 34 were filed within the prescribed
period of limitation. It is, therefore, prayed that the impugned order be set
aside and it be held that Section 34 proceedings filed by the appellant well
within the prescribed limitation, so that the proceedings are adjudicated by the
District Court in accordance with law.
8. In supporting the aforesaid contentions, the learned counsel for the
appellant would submit that this is a case where the provisions of Section 14 of
the Limitation Act had clearly become applicable for the Court to condone the
delay in filing Section 34 application, for the reason that the appellant was
4
(2023) 6 SCC 401 (Judgment dated 31 October, 2022)
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bonafide pursuing Writ Petition No. 9317 of 2021 filed by it on 24 December,
2020 till the same was withdrawn on 11 January, 2023. In supporting the
contention that it is permissible for Section 34 Court, to consider the
applicability of Section 14 of the Limitation Act, 1963, reliance is placed on the
decision of this Court in Consolidated Engineering Enterprises vs. Principal
Secretary, Irrigation Department & Ors.5, decision of the Supreme Court in
Kripal Singh vs. Government of India, New Delhi & Ors. 6 as also the order
passed by the learned Single Judge of this Court in Kisan Mouldings Ltd. vs.
Micro and Small Enterprises Facilitation Council (MSEFC) Konkan Thane &
Anr.7.
9. On the other hand, Mr. Limaye, learned counsel for the respondent in
opposing the submissions as urged on behalf of the appellant would submit
that no interference is called for in the order passed by the learned District
Judge rejecting the delay condonation application as filed by the appellant, as
the delay of 66 days as calculated by the appellant is a misnormer. In
supporting such submissions, Mr. Limaye would submit that taking into
consideration the case of the appellant, there is no dispute that the copy of the
arbitral award dated 5 February, 2020 was received by the appellant on 21
5
(2008) 7 SCC 169
6
2024 SCC OnLine SC 3814
7
Interim Application (L) No. 28278 of 2024 in Commercial Arbitration Petition (L) No. 25371 of 2024.
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August, 2020, it is submitted that even assuming that the period of limitation
stood extended considering the orders passed by the Supreme Court in Re :
Cognizance for Extension of Limitation (supra), the limitation as prescribed
under sub-section (3) of Section 34 was required to be reckoned from 30 May,
2022, which would be the period of three months plus 30 days, i.e. upto 30
September, 2022. It is submitted that the Section 34 application was
admittedly filed on 17 March, 2023, which is after a period of 5 months and
17 days, from the limitation having expired even considering the order of the
Supreme Court.
10. On the appellant's submission of applicability of Section 14 of the
Limitation Act, as a ground for condonation of delay, Mr. Limaye would have
two fold submissions. Firstly, the overall facts and circumstances of the case are
required to be considered inasmuch as the appellant having received the
arbitral award on 21 August, 2020 filed Writ Petition in this Court. It is his
submission that it cannot be accepted that the writ petition was bonafide
pursued by the appellant, inasmuch as the position in law that the Facilitation
Council would have authority to enter arbitration was well settled in view of
the decision of the Supreme Court in ]harkhand Urja Vikas Nigam Limited
(supra) and as noted by the learned Single Judge in the order dated 7 October,
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2022. It is his submission that despite the position as laid down in the said
decision, the appellant did not take steps to invoke Section 34 and filed
proceedings to challenge the arbitral award as passed by the Facilitation
Council and in fact the appellant waited upto 11 January, 2023 to withdraw
the Writ Petition with liberty to take recourse to the remedy as may be
available in law. It is submitted that the order dated 11 January, 2023 passed
by the learned Single Judge permitting the appellant to withdraw the petition
also does not refer to any recent knowledge of the decision rendered by the
Supreme Court in the case of Gujarat State Civil Supplies Corporation Ltd. vs.
Mahakali Foods Pvt. Ltd. & Anr. (supra) being rendered on 31 October, 2022.
It is submitted that even considering the date of such decision of the Supreme
Court in Gujarat State Civil Supplies Corporation Ltd. vs. Mahakali Foods
Pvt. Ltd. & Anr. (supra), Section 34 proceedings were required to be filed on
or before 28 February, 2023 and which in fact came to be filed by the appellant
on 17 March, 2023 before the District Court at Pune. It is, therefore, his
submission that the Section 34 proceedings were clearly time barred, being
filed beyond the prescribed limitation of 3 months and the extended period of
30 days, under the proviso to sub-section (3) of Section 34 of ACA. Mr.
Limaye in supporting the aforesaid contentions that Section 14 cannot be
invoked as the appellant was not bona fide pursuing the present proceedings,
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Mr. Limaye has placed reliance on the decision of the Supreme Court in the
case of Deena (Dead) through LRs. vs. Bharat Singh (Dead) through LRs. And
Ors.8
Analysis
11. We have heard learned counsel for the parties. With their assistance, we
have perused the record. The questions which arise for our consideration in the
present proceedings are:
"(i) Whether Section 34 application as filed by the appellant
was barred by limitation as prescribed under Section 34(3) of
ACA?
(ii) Whether in the facts and circumstances of the case,
the benefit of Section 14 of the Limitation Act, 1963 was
available to the appellant to seek condonation of delay of 66
days?
12. To answer the aforesaid questions, some of the admitted facts are
required to be noted:
The arbitral award was rendered by the Facilitation Council on 5
8
(2002) 6 SCC 336
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February 2020. The same was received by the appellant on 21 August 2020.
At the relevant time, as rightly contended on behalf of the appellant, the
position in law qua the challenge to the decision of the Facilitation Council was
as to what was held by the Division Bench of this Court in the case of Gujarat
State Petronet Ltd. Vs. Micro and Small Enterprises Facilitation Council &
Ors. (supra). In such decision, the Division Bench observed that the
Facilitation Council had no jurisdiction to initiate arbitration proceedings and
that the Facilitation Council was required to refer the disputes to any
institution or Centre providing Alternate Dispute Resolution Services for
arbitration. Such observations of the Division Bench are required to be noted:
"23. Admittedly, in the present case, respondent No.1 conducted the
conciliation proceedings between the petitioner and respondent No.3 and
by the impugned order, terminated the same as being unsuccessful. What
is surprising is that respondent No.1 - MSEFC, having conciliated the
dispute between the parties and conciliation proceedings being
unsuccessful and terminated, the MSEFC itself initiated to arbitrate the
dispute between the same parties. In our view, respondent No.1-MSEFC
itself, could not have initiated arbitration proceedings between the
petitioner and respondent No.3. In terms of the provisions of sub-section
(3) of Section 18 the MSMED Act, respondent No.1 - MSEFC ought to
have referred the dispute between the petitioner and respondent No.3 to
any institution or centre providing alternate dispute resolution services
for arbitration. The impugned order, so far as it relates to authorising
respondent No.1 - MSEFC to initiate arbitration proceedings/arbitral
dispute cannot be sustained and the same deserves to be quashed and set-
aside."
13. The said decision of the Division Bench in Gujarat State Petronet Ltd.
Vs. Micro and Small Enterprises Facilitation Council & Ors. (supra) was
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challenged before the Supreme Court in the proceedings of SLP(C) No. 31227
of 2018.
14. In the aforesaid circumstances, after receipt of the said award, the
appellant being guided by the said decision of the Division Bench, approached
this Court by filing Writ Petition No.9317 of 2021, which was filed on 24
December 2020. This writ petition was filed during the period the nation was
hit by the Covid-19 pandemic and more particularly when orders passed by
the Supreme Court extending limitation to file legal proceedings were in
operation, by virtue of which generally the limitation to file proceedings had
stood extended in terms of its orders in Re : Cognizance for Extension of
Limitation9. The order dated 8 March, 2020 passed by the Supreme Court
reads thus:
1. Due to the onset of COVID-19 pandemic, this Court took suo motu
cognizance of the situation arising from difficulties that might be faced by
the litigants across the country in filing petitions/applications/suits
/appeals/all other proceedings within the period of limitation prescribed
under the general law of limitation or under any special laws (both Central
or State). By an order dated 23.03.2020 this Court extended the period of
limitation prescribed under the general law or special laws whether
compoundable or not with effect from 15.03.2020 till further orders. The
order dated 23.03.2020 was extended from time to time. Though, we have
not seen the end of the pandemic, there is considerable improvement. The
lockdown has been lifted and the country is returning to normalcy. Almost
all the Courts and Tribunals are functioning either physically or by virtual
mode. We are of the opinion that the order dated 23.03.2020 has served its
purpose and in view of the changing scenario relating to the pandemic, the
extension of limitation should come to an end.
9
(2020) 19 SCC 10tion
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2. We have considered the suggestions of the learned Attorney General
for India regarding the future course of action. We deem it appropriate to
issue the following directions: -
1. In computing the period of limitation for any suit, appeal,
application or proceeding, the period from 15.03.2020 till
14.03.2021 shall stand excluded. Consequently, the balance period
of limitation remaining as on 15.03.2020, if any, shall become
available with effect from 15.03.2021.
2. In cases where the limitation would have expired during the
period between 15.03.2020 till 14.03.2021, notwithstanding the
actual balance period of limitation remaining, all persons shall have
a limitation period of 90 days from 15.03.2021. In the event the
actual balance period of limitation remaining, with effect from
15.03.2021, is greater than 90 days, that longer period shall apply.
3. The period from 15.03.2020 till 14.03.2021 shall also stand
excluded in computing the periods prescribed under Sections 23 (4)
and 29A of the Arbitration and Conciliation Act, 1996, Section 12A
of the Commercial Courts Act, 2015 and provisos (b) and (c) of
Section 138 of the Negotiable Instruments Act, 1881 and any other
laws, which prescribe period(s) of limitation for instituting
proceedings, outer limits (within which the court or tribunal can
condone delay) and termination of proceedings.
4. The Government of India shall amend the guidelines for
containment zones, to state.
"Regulated movement will be allowed for medical
emergencies, provision of essential goods and services, and
other necessary functions, such as, time bound applications,
including for legal purposes, and educational and job-related
requirements."
3. The Suo Motu Writ Petition is disposed of accordingly."
15. Thereafter, by an order dated 10 January, 2022, the Supreme Court
further extended the limitation upto 28 February, 2022. According to the
appellant, thus the entire period from March, 2020 till 30 May, 2022 was
excluded under the aforesaid order passed by the Supreme Court extending the
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period of limitation. The order dated 10 January, 2022 passed by the Supreme
Court reads thus:
1. In March, 2020, this Court took Suo Motu cognizance of the
difficulties that might be faced by the litigants in filing pet applications/ suits/
appeals/ all other quasi proceedings within the period of limitation prescribed
under the general law of limitation or under any special laws (both Central
and/or State) due to the outbreak of the COVID−19 pandemic.
2. On 23.03.2020, this Court directed extension of the period of
limitation in all proceedings before Courts/Tribunals including this Court
w.e.f. 15.03.2020 till further orders. On 08.03.2021, the order dated
23.03.2020 was brought to an end, permitting the relaxation of period of
limitation between 15.03.2020 and 14.03.2021. While doing so, it was made
clear that the period of limitation would start from 15.03.2021.
3. Thereafter, due to a second surge in COVID−19 cases, the Supreme
Court Advocates on Record Association (SCAORA) intervened in the Suo
Motu proceedings by filing Miscellaneous Application No. 665 of 2021
seeking restoration of the order dated 23.03.2020 relaxing limitation. The
aforesaid Miscellaneous Application No.665 of 2021 was disposed of by this
Court vide Order dated 23.09.2021, wherein this Court extended the period
of limitation in all proceedings before the Courts/Tribunals including this
Court w.e.f 15.03.2020 till 02.10.2021.
4. The present Miscellaneous Application has been filed by the Supreme
Court Advocates−on−Record Association in the context of the spread of the
new variant of the COVID−19 and the drastic surge in the number of
COVID cases across the country. Considering the prevailing conditions, the
applicants are seeking the following:
i. allow the present application by restoring the order dated
23.03.2020 passed by this Hon'ble Court in Suo Motu Writ Petition
(C) NO. 3 of 2020 ; and
ii. allow the present application by restoring the order dated
27.04.2021 passed by this Hon'ble Court in M.A. no. 665 of 2021 in
Suo Motu Writ Petition (C) NO. 3 of 2020; and
iii. pass such other order or orders as this Hon'ble Court may deem fit
and proper.
5. Taking into consideration the arguments advanced by learned counsel
and the impact of the surge of the virus on public health and adversities
faced by litigants in the prevailing conditions, we deem it appropriate to
dispose of the M.A. No. 21 of 2022 with the following directions:
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I. The order dated 23.03.2020 is restored and in continuation of the
subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it
is directed that the period from 15.03.2020 till 28.02.2022 shall
stand excluded for the purposes of limitation as may be prescribed
under any general or special laws in respect of all judicial or quasi−
judicial proceedings.
II. Consequently, the balance period of limitation remaining as on
03.10.2021, if any, shall become available with effect from
01.03.2022.
III. In cases where the limitation would have expired during the
period between 15.03.2020 till 28.02.2022, notwithstanding the
actual balance period of limitation remaining, all persons shall have a
limitation period of 90 days from 01.03.2022. In the event the actual
balance period of limitation remaining, with effect from 01.03.2022 is
greater than 90 days, that longer period shall apply.
IV. It is further clarified that the period from 15.03.2020 till
28.02.2022 shall also stand excluded in computing the periods
prescribed under Sections 23 (4) and 29A of the Arbitration and
Conciliation Act, 1996, Section 12A of the Commercial Courts Act,
2015 and provisos (b) and (c) of Section 138 of the Negotiable
Instruments Act, 1881 and any other laws, which prescribe period(s)
of limitation for instituting proceedings, outer limits (within which
the court or tribunal can condone delay) and termination of
proceedings.
6. As prayed for by learned Senior Counsel, M.A. No. 29 of 2022 is
dismissed as withdrawn."
16. Insofar as Writ Petition No.9317 of 2021 as filed by the appellant before
this Court is concerned, it is seen that an interim order dated 7 October 2022
was passed by the learned Single Judge recording that an arguable case arises
for consideration in the said petition and accordingly, directed that the matter
be listed for final disposal noting the contentions as urged on behalf of the
petitioner on the decision of Division Bench in Gujarat State Petronet Ltd. Vs.
Micro and Small Enterprises Facilitation Council & Ors. (supra) as also the
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respondent's contention referring to the decision in ]harkhand Urja Vikas
Nigam Limited vs. State of Rajasthan and Others (supra).
17. It clearly appears that the appellant was pursuing the writ petition
considering the legal position as laid down by the Division Bench of this Court
in Gujarat State Petronet Ltd. Vs. Micro and Small Enterprises Facilitation
Council & Ors. (supra) that the Facilitation Council would not have
jurisdiction to enter arbitration and it would have jurisdiction only of
conciliation, hence a Writ Petition challenging the orders of the Facilitation
Council was maintainable.
18. However, it appears that the basis of the appellant's cause to pursue
the Writ Petition, stood extinguished, in view of the Supreme Court partly
reversing the decision of the Division Bench of this Court in Gujarat State
Petronet Ltd. Vs. Micro and Small Enterprises Facilitation Council & Ors.
(supra), when such proceedings were adjudicated along with other cases in its
decision in Gujarat State Civil Supplies Corporation Ltd. vs. Mahakali Foods
Pvt. Ltd. & Anr. (supra). In such context, the Supreme Court laid down the
following legal position:
"52. The upshot of the above is that:
52.1 Chapter-V of the MSMED Act, 2006 would override the
provisions of the Arbitration Act, 1996.
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52.2 No party to a dispute with regard to any amount due under Section
17 of the MSMED Act, 2006 would be precluded from making a
reference to the Micro and Small Enterprises Facilitation Council, though
an independent arbitration agreement exists between the parties.
52.3. The Facilitation Council, which had initiated the Conciliation
proceedings under Section 18(2) of the MSMED Act, 2006 would be
entitled to act as an arbitrator despite the bar contained in Section 80 of
the Arbitration Act.
52.4 The proceedings before the Facilitation Council/institute/centre
acting as an arbitrator/arbitration tribunal under Section 18(3) of
MSMED Act, 2006 would be governed by the Arbitration Act, 1996.
52.5 The Facilitation Council/institute/centre acting as an arbitral
tribunal by virtue of Section 18(3) of the MSMED Act, 2006 would be
competent to rule on its own jurisdiction as also the other issues in view
of Section 16 of the Arbitration Act, 1996........"
19. The obvious legal consequence which had arisen in view of the decision
of the Supreme Court in Gujarat State Civil Supplies Corporation Ltd. vs.
Mahakali Foods Pvt. Ltd. & Anr. (supra) was on the petitioner's cause being
pursued in the writ petition, no more surviving. Thus, to challenge the award
of the Facilitation Council, a party was required to take recourse to the
provisions of Section 34 of the ACA and a Writ Petition on such count was not
maintainable.
20. The decision in Gujarat State Civil Supplies Corporation Ltd. vs.
Mahakali Foods Pvt. Ltd. & Anr. (supra) was declared by the Supreme Court
on 31 October, 2022. Considering such legal position, on 11 January 2023
(supra), the learned Single Judge permitted the petitioner to withdraw Writ
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Petition No.9317 of 2021, so as to pursue such appropriate remedy as available
in law. Thereafter, the appellant filed the Section 34 proceedings before the
District Judge on 17 March 2023.
21. Thus, the aforesaid periods of delay if any were required to be
considered in the context of the limitation, Section 34(3) of the ACA would
prescribe. Section 34(3) provides for limitation of three months and the
extended period of 30 days to assail the arbitral award in the following terms:
"34. Application for setting aside arbitral award.--
... ... ... ... ... ..
(3) An application for setting aside may not be made after three months
have elapsed from the date on which the party making that application had
received the arbitral award or, if a request had been made under section 33, from
the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by
sufficient cause from making the application within the said period of three
months it may entertain the application within a further period of thirty days, but
not thereafter."
22. Considering the aforesaid position in law and the facts of the case as
noted by us, we do not find any fault with the petitioner in pursuing Writ
Petition No. 9317 of 2021 before this Court, as at the time of filing of the said
Writ Petition, the decision of Division Bench of this Court in Gujarat State
Petronet Ltd. (supra) continued to hold the field, which was to the effect that
the Writ Petition assailing the decision of the Facilitation Council was held to
be maintainable, as it was held that the Facilitation Council had no jurisdiction
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to render an arbitral award. It is clear from the record that the proceedings of
Writ Petition had remained pending including on interim orders passed on the
same. There also appears to be no doubt about the limitation being extended
for all purposes under the orders passed by the Supreme Court, the benefit of
which was available to the appellant till 28 February, 2022. Admittedly, on 28
February, 2022, Writ Petition filed by the petitioner, as validly filed, was
subjudice before this Court and pending final consideration.
23. It is on such backdrop, what is material is the Supreme Court rendered
its judgment on a batch of proceedings in Gujarat State Civil Supplies
Corporation Ltd. vs. Mahakali Foods Pvt. Ltd. & Anr. (supra) on 31 October,
2022, which included the challenge to the decision of the Division Bench in
Gujarat State Petronet Ltd. (supra), reversing the same, when it held that the
Facilitation Council had the jurisdiction to render an arbitral award. In such
circumstances, the Court would not take a hard technical view that the
limitation to file Section 34 proceedings for the appellant would commence on
31 October, 2022, i.e., when the Supreme Court delivered the said decision
and therefore, stricto sensu the limitation as prescribed under sub-section (3)
of Section 34, namely, the period of three months and the extended period of
30 days would become applicable from the date of the decision of the Supreme
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Court. The appellant considering the law declared by the Supreme Court in
Gujarat State Civil Supplies Corporation Ltd. vs. Mahakali Foods Pvt. Ltd. &
Anr. (supra), righlty withdrew Writ Petition No. 9317 of 2021 as permitted by
the learned Single Judge of this Court by an order dated 11 January, 2023 to
pursue an alternate remedy, i.e., proceedings under Section 34 and accordingly
filed Section 34 proceedings on 17 March, 2023.
24. In these circumstances, we are inclined to accept the appellant's
contention that even assuming that there is a delay in filing of Section 34
proceedings, the same would be required to be condoned applying the
provisions of Section 14 of the Limitation Act. The appellant would also be
correct in its contention that in fact, if the limitation as prescribed under
Section 34(3) is to be applied from the date the Court permitted withdrawal of
the proceedings of Writ Petition No. 9317 of 2021 on 11 January, 2023,
Section 34 proceedings were filed within the limitation as prescribed under
sub-section (3) of Section 34 of ACA. This clear position, not only on facts
but also in law, has been completely overlooked and/or missed by the learned
District Judge in passing the impugned order.
25. Even assuming that there was a delay on the part of the appellant in
filing Section 34 proceedings, the applicability of the provisions of Section 14
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of the Limitation Act certainly is an acceptable proposition, in the facts and
circumstances of the present case. The following discussion would aid our
conclusion. In such context, at the outset, the provisions of Section 14 of the
Limitation Act are required to be noted, which reads thus:
"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 proceeding 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 XXIII
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.
Explanation.--For the purposes of this section,--
(a) in excluding the time during which a former civil proceeding
was pending, the day on which that proceeding was instituted and the day
on which it ended shall both be counted;
(b) a plaintiff or an applicant resisting an appeal shall be deemed to
be prosecuting a proceeding;
(c) misjoinder of parties or of causes of action shall be deemed to
be a cause of a like nature with defect of jurisdiction."
26. It appears to be a settled position in law that the provisions of Section 14
of the Limitation Act would be available to a party seeking condonation of
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delay even in filing of proceedings under Section 34 of the Arbitration Act and
qua the limitation, as prescribed under sub-section 3 of Section 34 of the ACA.
In Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation
Department & Ors. (supra) the Supreme Court in such context held that there
is no provision under the ACA which excludes the applicability of the
provisions of Section 14 of the Limitation Act to the applications under
Section 34 of the ACA. It was observed that Section 43 of the ACA in fact
makes the provisions of the Limitation Act, 1963 applicable to the arbitration
proceedings. The Court held that the proceedings under Section 34 of the
ACA 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 the proceedings of a suit. It was held that Section 43 incorporating the
Limitation Act, will apply to the proceedings of the arbitration as it applies to
the proceedings of a suit in the Court. It was held that if under sub-section (4)
of Section 43 of the Act, the period between commencement of arbitration
proceedings till the award is set aside by the Court, has to be excluded in
computing period of limitation provided for any proceedings with respect to
the dispute, in such event, there is no good reason as to why it should not be
held that the provisions of Section 14 of the Limitation Act would not be
applicable to an application submitted under Section 34 of the ACA, more
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particularly, when no provision is to be found in the ACA, which excludes the
applicability of Section 14 of the Limitation Act to an application made under
Section 34 of the ACA. The Court thus held that having regard to the
legislative intent, the provisions of Section 14 of the Limitation Act would be
applicable to an application submitted under Section 34 of the ACA for setting
aside an arbitral award. In reaching such conclusion, the Court also referred to
the decision of the Supreme Court in State of Goa vs. Western Builders 10
wherein the Court had taken a similar view. Referring to such decision, the
Supreme Court also held that the interpretation of Section 14 has to be liberal,
the language of beneficial provision contained in Section 14 of the Limitation
Act must be construed liberally so as to suppress the mischief and advance its
object. In the context of applicability of Section 14, the Supreme Court in
paragraph 21 of the decision observed that five conditions are required to be
satisfied for Section 14 of the Limitation Act to be pressed into service. The
observations in paragraph 21 read thus:
"Section 14 of the Limitation Act deals with exclusion of time of
proceeding bona fide in a court without jurisdiction. On analysis of the
said Section, it becomes evident that the following conditions must be
satisfied before Section 14 can be pressed into service:
(1) Both the prior and subsequent proceedings are civil proceedings
prosecuted by the same party;
(2) The prior proceeding had been prosecuted with due diligence and in
10
(2006)6 SCC 239
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good faith;
(3) The failure of the prior proceeding was due to defect of jurisdiction or
other cause of like nature;
(4) The earlier proceeding and the latter proceeding must relate to the
same matter in issue and;
(5) Both the proceedings are in a court.'
27. In the aforesaid context, to attract the provisions of Section 14 of
the Limitation Act, the Supreme Court observed that due diligence and
caution are essential pre-requisites for attracting the provisions of Section 14
and that due diligence cannot be measured by any absolute standards as the
due diligence is a measure of prudence or activity expected from and ordinarily
exercised by a reasonable and prudent person under the particular
circumstances. It was held that the time during which a Court holds up a case
while it was discovering that it ought to have been presented in another Court,
must be excluded, as the delay of the Court cannot affect the due diligence of
the party. It was held that Section 14 requires that the prior proceeding should
have been prosecuted in good faith and with due diligence. In such context
referring to the definition of 'good faith' as found in Section 2(h) of the
Limitation Act, it was observed that the definition of good faith would indicate
that nothing shall be deemed to be in good faith which is not done with due
care and attention. The Court observed that Section 14 will not help a party
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who is guilty of negligence, lapse or inaction, however, there can be no hard
and fast rule as to what amounts to good faith and the same is required to be
decided on the facts of each case.
28. In Deena (Dead) through LRs. vs. Bharat Singh (Dead) through LRs.
And Ors. (supra) as relied on behalf of the respondents, the Supreme Court
similarly held that the main factor which would influence the Court in
extending the benefit of section 14 to a litigant is whether the prior proceeding
had been prosecuted with due diligence and good faith. It was observed that a
party prosecuting a suit in good faith in the Court having no jurisdiction is
entitled to exclusion of that period. In observing on the expression 'good faith'
as used in Section 14 the Court observed that it would mean "exercise of due
care and attention' as the expression 'good faith' qualifies prosecuting the
proceeding in the Court which ultimately is found to have no jurisdiction.
Thus, it was held that the finding as to good faith or the absence of it, is a
finding of fact. Also, referring to the decision in the case of Vijay Kumar
Rampal and others vs. Diwan Devi and others 11, the Supreme Court observed
thus:
"14. The main factor which would influence the Court in extending
the benefit of section 14 to a litigant is whether the prior proceeding had
been prosecuted with due diligence and good faith. The party prosecuting
11
AIR 1985 SC 1669
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the suit in good faith in the court having no jurisdiction is entitled to
exclusion of that period. The expression 'good faith' as used in Section 14
means "exercise of due care and attention'. In the context of Section 14
expression 'good faith' qualifies prosecuting the proceeding in the Court
which ultimately is found to have no jurisdiction. The finding as to good
faith or the absence of it is a finding of fact. This Court in the case of Vijay
Kumar Rampal and others vs. Diwan Devi and others AIR 1985 SC 1669
observed :
"The expression good faith qualifies prosecuting the
proceeding in the Court which ultimately is found to have no
jurisdiction. Failure to pay the requisite court fee found
deficient on a contention being raised or the error of judgment
in valuing a suit filed before a Court which was ultimately
found to have no jurisdiction has absolutely nothing to do
with the question of good faith in prosecuting the suit as
provided in section 14 of the Limitation Act."
29. On the aforesaid discussion, in our opinion, this is a case wherein the
appellant cannot be labelled as a litigant who was not conscious of its rights to
assail the impugned arbitral award. The appellant, in a situation when the
orders of the Supreme Court on limitation were in operation and guided by the
decision of the Division Bench in Gujarat State Petronet Ltd. (supra), was
adviced to approach this proceedings of Writ Petition No. 9317 of 2021 to
challenge the award on an assumption of a legal position that the Facilitation
Council had no jurisdiction to enter arbitration and thus, the decision of the
Facilitation Council would not be an arbitral award. For such reason, the
petitioner bonafide accepting such legal position, assailed the decision of the
Facilitation Council in a Writ Petition filed before this Court. The Court
found substance in the contention as urged on behalf of the appellant and
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accordingly proceeded for hearing while granting interim stay. All these events
cannot be overlooked by the Court when it comes to a party being non-suited
on refusal to condone delay and in terms of the provisions of Section 34(3) of
the ACA. However, in view of the decision as rendered by the Supreme Court
in Gujarat State Civil Supplies Corporation Ltd. (supra), which was
pronounced on 31 October, 2022, the appellant moved the learned Single
Judge of this Court to withdraw the petition with liberty to file Section 34
proceedings. The said order dated 11 January, 2023 reads thus:
1. Heard Mr. Kamdar, learned Advocate for Petitioner and Mr. Petkar,
learned Advocate for Respondent.
2. At the outset, Mr. Kamdar, learned Advocate for Petitioner seeks
to withdraw the present Writ Petition to avail any alternate remedy/
relief that may be available to the Petitioner in law in respect of the
subject matter of the present Writ Petition.
3. Writ Petition is allowed to be withdrawn with the above liberty.
4. At the request of Mr. Petkar, it is clarified that all contentions of
the parties are expressly kept open."
30. As noted above, after withdrawal of the Writ Petition, Section 34
proceedings came to be filed before the learned District Judge on 17 March,
2023. In our opinion, considering the provisions of Section 34(3), which
provides for a limitation of three months to file an application for setting aside
of the arbitral award from the date the award was received and for a further
extended period of 30 days as ordained by the proviso, considering the peculiar
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facts of the case, it ought not to be a situation that the delay condonation
application as filed by the petitioner was required to be rejected by the learned
District Judge taking a strict view of the matter. This, more particularly,
considering the applicability of the provisions of Section 47 and the principles
of law as laid down in that regard in Consolidated Engineering Enterprises
(supra), State of Goa vs. Western Builders (supra) and Deena (Dead) through
LRs. (supra), for the reason that the principles and five parameters as laid
down in such decision and as noted by us in paragraph 26 (supra) are squarely
applicable to the effect firstly, that both the prior and subsequent proceedings
are civil proceedings prosecuted by the same party; secondly, the prior
proceeding had been prosecuted with due diligence and in good faith; thirdly,
the failure of the prior proceeding was due to defect of jurisdiction or other
cause of like nature; fourthly, the earlier proceeding and the latter proceeding
must relate to the same matter in issue; and fifthly, both the proceedings are in
a court. The provisions of Section 14 are intended to aid substantive justice
and the parties not suffering the hard technicalities of law so as to be rendered
remediless. This ought to have been the consideration which ought to have
weighed with the learned District Judge.
31. Before parting, we may observe that in taking any decision which is
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likely to render a party remediless, the Court would be required to exercise
utmost care and caution, to minutely examine the facts in applying the relevant
provisions of the Law of Limitation. This is a clear case wherein there was
blending of the Covid-19 period, in respect of which orders were passed by the
Supreme Court as also quite peculiarly, the appellant accepting the legal
position as available under the decision of the Division Bench of this Court
which was ultimately upset by the Supreme Court. All these were vital
considerations in the context of the law which we have applied, and moreso
keeping in mind the judicial conscience we wield. The interest of justice is
paramount, it cannot be either, dealt casually or under any narrow and
pedantic interpretation of the provisions of law, which would in any manner
render the justice in the case to be a casualty.
32. In the light of the aforesaid discussion, in our opinion, the appeal needs
to succeed. Hence, the following order:
ORDER
(i) The impugned judgment and order dated 21 July,
2023 passed by the learned District Judge No. 2 at Pune
dismissing the Miscellaneous Application no. 343 of
2023 filed by the appellant is quashed and set aside;
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(ii) Miscellaneous Application No. 343 of 2023 is
allowed by condoning the delay in the appellant filing
Section 34 application, challenging the arbitral award
dated 5 February, 2020 passed by the Micro and Small
Enterprises Facilitation Council, Pune.
(iii) Section 34 proceedings shall be decided by the
learned District Judge No. 2 on merits and in accordance
with law.
(iv) All contentions of the parties on said proceedings
are expressly kept open.
33. The appeal stands allowed in the aforesaid terms. No costs.
(ADVAIT M. SETHNA, J.) (G. S. KULKARNI , J.)
17 March 2025
Signed by: Vidya S. Amin
Designation: PS To Honourable Judge
Date: 17/03/2025 22:08:58
