Union Of India (Uoi) vs Modi Sales And Anr.
2002 Latest Caselaw 1158 Del

JUDGMENT

S. Mukerjee, J.

IA 6765/2001 in OMP 91/1995

1. This is an application for condensation of delay in instituting the petition under Section 28 of the Arbitration Act 1940 for extension of time. It is submitted by learned counsel for the petitioner that strictly speaking there is no bar nor any limitation period under the Limitation Act and this application has been filed only by way of abundant caution.

2. After hearing both counsel, I am of the view that for reasons set out in the application which is duly supported by affidavit, and considering the fact that the Union of India is the petitioner/applicant, this application is allowed subject to all just exceptions without going into the question as to whether such an application has been only by way of abundant caution and may otherwise not strictly be required as per requirements of law.

3. As a result of allowing of this application, the delay in preferring the petition under Section 28 of the Arbitration Act 1940 as pre contention of non-applicant, stands condoned. The accompanying petition under section 28 of the Arbitration Act is held to be not barred by limitation. The application is disposed of in the said terms.

OMP No. 91/95

1. This case represents a rather sorry state of affairs. A petition under Section 28 of the Arbitration Act 1940, seeking extension of time, has led to a period of almost seven years time being consumed without any progress in the arbitration proceedings. The remedy of arbitration which had been conceived as an expeditious remedy for resolving the disputes, has been totally belied.

2. The factual matrix constituting the background of this case, needs to be briefly summarised for appreciating the points arising for decision in the present case.

3. On 23rd February, 1976 a contract for the supply of 591 MT of special steel, came into existence between respondent No. 1 and the petitioner. The respondent No. 1 failed to make the full supplies as per the said contract, and therefore disputes arose.

4. On 23rd May 1980, the petitioner (U.O.I.) demanded Rs. 5,91,239,21/- from the respondent No. 1 as cost incurred in purchasing the balance quantities of steel.

5. The disputes were referred to the sole arbitration in terms of arbitration clause in the agreement.

6. The respondent No. 1 did not allow the arbitration to proceed and filed a petition under Section 5, 11, 32 and 33 of the Arbitration Act, 1940 in this court which was registered as OMP No. 130/1985 challenging both the arbitration agreement as well as the appointment of Sh. A.K. Bhattacharya as the sole arbitrator.

7. On 4th October 1985, the said earlier petition (OMP No. 130/1985) was dismissed by Hon'ble M.K. Chawla, J.

8. In terms of the above-said order of this Court dated 4th October 1985, the Union of India then requested the arbitrator to proceed with the arbitration proceedings.

9. On 29th October 1985, the sole arbitrator requested both parties to submit their consent for extension of time up to 12th January 1986.

10. The U.O.I communicated their consent for extension of time on 19th November 1985, while the respondent No. 1 vide communication dated 20th November 1985, refused to agree for extension of time on the purported ground that time for extension has to be granted by the Court.

11. As the factual development set out in the earlier paras will reveal, the extension of time ought to have been granted without any further consideration of the matter and purely upon the consideration that the pendency of the earlier petition (which was at the instance of respondent No. 1), had prevented the arbitration from proceeding to its logical conclusion during the period up to 4th October 1985, when the said petition was dismissed vide order passed by Hon'ble M.K. Chawla, J. of this Court.

12. Thereafter as regards the proceedings by way of formal petition seeking extension of time under Section 28 of the Arbitration Act 1940, is concerned, this matter has a chequered history.

13. The stand of the U.O.I. is that a petition under Section 28 of the Arbitration Act 1941, was got drafted by Sh. H.P. Sharma, Government Advocate, and had been signed and handed over to the said advocate. However it is not clearly established on record whether that petition was actually lodged by the advocate or not. The U.O.I. has admitted that inspite of enquiry made by the Law Department, neither the petition could be traced out, nor the status about filing of the same, could be determined.

14. On 26th October 1994, when the above development came to light within the concerned department of U.O.I., the present petition under Section 28 of the Arbitration Act (OMP 91/1995) was filed. Respondent No. 1 took the objection that the present petition is barred by limitation.

15. Petition (U.O.I.) took the stand that the provisions of Limitation Act are not applicable to petition under Section 28 of the Arbitration Act 1941 by relying on F.A.C.T. v. Industry Side (P) Ltd. 1988 (1) KLT page 845.

16. However, by way of abundant caution an application IA 6765/2001 under Section 5 of the Limitation Act was filed seeking condensation of delay. This application has been allowed vide separate orders set out above.

17. Learned counsel for respondent No. 1 has taken the stand that any application under Section 28 of the Arbitration Act, which is based on misleading facts has necessarily to be dismissed. Equally, according to him, the fact that there has been any inordinate delay of about 10 years in moving the application for extension of time, is itself a short ground on which the matter need to be dismissed without going into other aspects of the matter.

18. A further contention of respondent, is based upon petitioner's contention that an earlier application under Section 28 had been instituted in the year 1986, but was later on found not traceable.

19. On the basis of this stand of the petitioner, the respondent submits that if the earlier petition is not traceable, it should follow that the same must have been dismissed by the court and thereupon the issue of grant of further time stands closed by the principles of res judicata.

20. I have heard learned counsel for the parties at length. To my mind, the matter of extension of time under Section 28 of the Arbitration Act 1940, is almost a matter of routine which has to be accorded except in very, very rare cases. As already stated herein above, after going through the records and stand of both parties, I find that immediately upon dismissal of the earlier petition OMP 130/1985 filed by the respondent No. 1, the arbitrator has sought the consent of both parties for making and publishing the award up to 12th January 1986, and that while the petitioner communicated his consent on 19th November 1985, the respondent No. 1 has refused its consent by stating that the extension of time will have to be granted by the Court.

21. In these circumstances, it would follow that both on account of institution of the previous proceedings of OMP 130/1985, which was at the instance of respondent No. 1, and also by not furnishing the consent for extension of time, the respondent No. 1 strove to scuttle the arbitration even though his legal recourse in that direction, by way of OMP 130/1985, stood dismissed on 4th October 1985. Clearly therefore this was a case where the petitioner ought to have got the order of extension under Section 28 of the Arbitration Act 1940, simply for the asking.

22. Above being the position, the mere fact that there had been some default on the part of the Government advocate or any official of the Union of India in the matter of proper follow up or tracing out the petition under Section 28 filed in March 1986, that would not stand in the way of further time being granted under the statutory provisions of Section 28 of the Arbitration Act.

23. The respondent No. 1 cannot take benefit of it's own wrong in not allowing the arbitration to proceed.

24. Learned counsel for the petitioner has relied upon the judgment in the case of F.A.C.T. v. Industry Side (P) Ltd. 1988 (1) KLT page 845. I entirely agree with the reasoning of the said case which holds that there is no prohibit limitation period relating to the application under Section 28 of the Limitation Act 1940.

25. As regards the contention of respondent No. 1 that there has been inordinate delay of about 10 years, I have noted that in this case there was either a default on the part of the counsel or some slip up or misunderstanding on the part of the officials of the concerned department. Be that as it may, still Union of India having promptly communicated its consent for extension of time to the Arbitrator as far back as on 19th November 1985, it cannot be held that there was any deliberate or inordinate delay on the part of the petitioner.

26. As regards the point of the matter being res judicata as contended by respondent No. 1, it may be noted that such an argument of the respondent No. 1 is clearly a double-edged weapon. In case the respondent No. 1 admits that the petitioner had instituted the petition (which got misplaced) in 1986, that contention is self-destructive of the respondent No. 1's contention that the petitioner has slept over the matter for years together and approached this court only on 26th October 1994.

27. Moreover apart from the fact that such an inconsistent contention is not open to the respondent No. 1, even otherwise the establishing of the contention of res judicata requires that the person calling upon the Court to refrain from deciding the point, should be able to place before the Court the actual text of an earlier order by which an earlier proceeding was decided, before any such argument can be put forward. However, that has not been done. In fact, it could not be done because if the stand of the petitioner, as has crystalised through the proceedings, is properly considered, it would follow that the earlier alleged petition under Section 28 of the Arbitration Act 1940 was perhaps never filed at all and it was only an impression given by the then Government advocate that the petition has been filed, and it was bona fide on account of that the Government did not take any further steps in the matter. Resultantly, it was only in 26th October 1994 that the present petition was filed Along with the application for condensation of delay.

28. On consideration of all aspects of the matter, I consider this to be a fit and proper case where the time period for making and publishing the award needs to be extended till date and by a further period of four months from the date of this order.

29. Petition is accordingly allowed but with no orders as the cost.