M/S P.C. Sharma & Co. vs Delhi Development Authority & ...
2008 Latest Caselaw 1696 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   OMPs No. 51/2007 & 52/2007

%                                Date of decision: 22.09.2008

M/S P.C. SHARMA & CO.                          ....... Petitioner
                            Through: Mr. Sandeep Sharma, Advocate

                               Versus

DELHI DEVELOPMENT AUTHORITY                     ...... Respondents
& ANOTHER
                             Through: Mr Gaurav Sarin, advocate for
                             the Respondent /DDA in OMP.No.51/2007.

                             Mr Bhupesh Narula, Advocate for the
                             Respondent/DDA in OMP No.52/2007.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?              Yes

2.    To be referred to the reporter or not?       Yes

3.    Whether the judgment should be reported
      in the Digest?                               Yes


RAJIV SAHAI ENDLAW, J.

1. Both the petitions with respect to separate arbitration

proceedings, but between the same parties and involving identical

facts, have been preferred under Sections 5, 11 and 12 of the Old

Arbitration Act, 1940 with the prayer for removal of the respondent

No.2 (also same in both the petitions) appointed as the sole

arbitrator by the respondent No.1 DDA and for appointment of an

independent arbitrator. Replies have been filed by the respondent

No.1 to both the petitions. However, the counsel for the petitioner,

during the hearing, did not press for the relief of change of

arbitrator but only pressed/argued for extension of time under

Section 28 of the Act for extension of time for making of the award.

The counsel for the respondents in each of the cases have opposed

the said prayer for extension of time on the ground of the same being

barred by time. The power of the court to extend the time for

making of the award was not disputed and ,in fact, Mr Gaurav Sarin,

counsel for the respondent in one of the cases himself, cited Hari

Krishna Wattal v Vaikunth Nath Pandya AIR 1973 SC 2479 and

The Hindustan Construction Co Ltd v Governor of Orissa and

Others AIR 1995 SC 2189.

2. In the facts of the cases, three questions fall for

adjudication i.e., (1) In the absence of the petitioner having filed the

petition under Section 28 of the Act for extension of time, can an

order extending the time for making of the award be made in the

present petition; (2) Whether the prayer of the petitioner for

extension of time is barred by time; (3) If the aforesaid two

questions are answered in favour of the petitioner, whether in the

facts and circumstances of the case, grounds for extension of time

for making of the award are made out.

3. The two cases have had a chequered history. The

agreements from which disputes and differences have arisen appear

to be of the year 1985. Disputes and differences having arisen

between the parties, the petitioner on 20th April, 1993 invoked the

arbitration clause in the agreements. Alleging failure of the

respondent No.1 to appoint the arbitrator, the petitioner in or about

1994 instituted suits for appointment of arbitrator and which were

allowed on 25th August, 1995 with direction to respondent No.1 to

appoint an arbitrator. The respondent No.1 in terms of direction of

this court, appointed an arbitrator on 22.09.1995. The petitioner

filed its claims before the arbitrator. The arbitrator appointed by the

respondent No.1 was changed from time to time. On 15th

September, 1998, the then arbitrator adjourned the proceedings sine

die owing to time for making award having expired and no request

for extension having been received from both the parties. After

considerable time, the petitioner in or about 2001 instituted OMPs in

this court under Sections 5, 11 and 12 of the Act for removal of the

arbitrator and for appointment of an independent arbitrator. The

said OMPs (being OMPs No 28/2001 and 29/2001) were dismissed by

this court vide order dated 28th February, 2006. A perusal of the

said order shows that the petitioner had therein stated that the

petitioner had declined to give its consent to enlargement of time on

the ground that in terms of arbitration agreement, the arbitrator

could only be appointed by name and not by designation, as had

been done by the respondent No.1. However, at the time of hearing

of the said OMPs, removal of the arbitrator was sought only on the

ground that the arbitration proceedings had dragged on for too long

and which called for removal of the arbitrator appointed by the

respondent No.1 and appointment of an independent arbitrator. This

court in the order dated 28th February, 2006 found that the

petitioner itself was to blame for the delay in the arbitration

proceedings and it was the petitioner who had not acceded to

enlargement of time to enable the arbitrator to give the award. The

OMPs were accordingly dismissed.

4. The petitioner preferred appeals against the said order

being FAO(OS) 319/2006 and FAO(OS) 320/2006 to the Division

Bench of this Court against the said order. The Division Bench held,

vide order dated 3rd May, 2006 that the appellant remained silent for

over four years after the proceedings were adjourned sine die and

the delay in the disposal of the arbitration proceedings was

attributable to the petitioner and dismissed the appeals in limine. I

may clarify that the arbitration proceedings were adjourned sine die

on 15th September, 1998 and OMPs were filed in the year 2001 i.e.,

after nearly three years and not four years, as apparently

erroneously recorded in the order of the Division Bench.

5. The petitioner, after the dismissal of the appeals aforesaid,

applied for revival of the arbitration proceedings. The

SE(Arbitration) of the respondent No.1 vide his letter dated 4th July,

2006 directed both the parties to appear before him on 3rd August,

2006 for clarification in the matter. On 3rd August, 2006, the

respondent No.1 sought time to seek legal opinion from the legal cell

for enlargement of the time. The petitioner enlarged the time for

making the award till the date of the award. In these circumstances,

the matter was adjourned to 4th September, 2006. On 4th September,

2006 the respondent No.1 sought further time for seeking legal

opinion. The matter was, thereafter, adjourned to 26th September,

2006 and then again to 19th October, 2006 when the respondent No.1

intimated that the proceedings were adjourned sine die long back

and the arbitrator had become functus officio and, therefore, the

time could not be extended by mutual consent of the parties. It was

thereafter that the present petitions came to be filed in or about

February, 2007.

6. Though, as aforesaid, the hearing was only on the issue of

extension of time and the limitation thereof but I may record that the

reply of the respondent in both OMPs admits the power of the court

to extend the time and, in fact, in reply to OMP 51/2007 the plea of

limitation has not even been taken. The counsel for the respondents

have fairly conceded that the replies have been filed on the premise

that the petitions were for extension of time for making the award.

7. In my view, the petitions as drafted for appointment of an

independent arbitrator even though not pressed for the said relief

were misconceived. Similar prayer had been made by the petitioner

in OMP Nos 28/2001 and 29/2001 filed earlier and which prayer at

the time of hearing of the said OMPs was pressed only for the reason

of delay and which reason had not found favour with the Single

Judge of this court in the order dated 28th February, 2006 and by the

Division Bench in order dated 3rd May, 2006. Thereafter, there was

no subsequent event entitling the petitioner to again seek for

appointment of independent arbitrator. After the dismissal of the

appeal, the arbitration proceedings could not take place owing to the

refusal of the respondent No.1 to consent to extension of time for

making of the award. The respondent No.1 was fully justified in so

refusing and such refusal by the respondent No.1, entitled the

petitioner to only approach this court for extension of time for

making of the award and did not entitle the petitioner to again apply

for appointment of an independent arbitrator. No fault could be

attributed to the arbitrator for not proceeding with the arbitration

owing to the refusal of the respondent to extend the time. Thus the

petitions as filed for appointment of an independent arbitrator

were/are not maintainable.

8. The petitioner has, in the rejoinder filed to the replies of

the respondent No.1 in these petitions, made a prayer for extension

of time, in addition to the prayer for appointment of an independent

arbitrator. As aforesaid, during hearing only extension of time for

making the award was pressed.

9. In Sakalchand Moti v. Ambaram AIR 1924 Bombay 380

and in Madura Mills Co. v. Krishna Ayyar, AIR 1937 Madras 405,

both under the Arbitration Act, 1899, it was held that time could be

extended under Section 12 of the 1899 Act, which was narrower in

language, though corresponding to Section 28(1) of the 1940 Act,

even on an oral prayer made in that behalf and further that the court

was empowered to exercise the power for extension of the time for

making the award even without a party asking for it.

10. In Narsing Das v. Firm Bisandaval AIR 1954 Orissa 29,

it was held that Section 28(1) of the 1940 Act is very wide and

confers full discretion on the court to enlarge time for making award

at any time. In Prahallad Rai v. F.C.I. AIR 1980 Orissa 16, power

under Section 28 of the 1940 Act was exercised on the strength of a

letter sent by someone who was neither a party to the arbitration

proceedings nor a member of the panel of arbitrators. It was held

that the court could extend the time even suo moto in a fit case, of

course, after giving opportunity of hearing to all the parties. This

court also in Union of India v Messrs Khanchand Bhagat Ram

Jain & Sons 6(1970) DLT 460 held that power under Section 28

could be exercised by the court suo moto.

11. Thus, it appears that the courts have always favoured

enlargement of time for making the award even when one of the

parties to the arbitration expressed disinclination or even opposition

to such extension, where the party seeking such extension had not

been guilty of condemnable delay or contumacious conduct. In this

regard see Hari Om Properties v B Datta 80 (1999) DLT 103.

12. The case law was again reviewed in Fertilisers and

Chemicals Travancore Ltd v. Industry Side Pvt. Ltd and Others

1988 (009) Arbitration Law Reporter 0059 Kerala where it was

again held that (a) no application as such is necessary for the court

to exercise the power under Section 28 of the Act; (b) if any

application is filed it is only to be treated as a reminder of the court's

power and if circumstances would justify enlargement of time, it

should be granted in appropriate cases. If the power is exercisable

without any formal application, there is no question of Article 137 of

the Limitation Act coming into play when a court proposes to enlarge

time; (c) exercise of such powers cannot be refused merely because

it is requested for through an application nor could any such

application be dismissed as barred by limitation.

13. The aforesaid judgment in Fertilisers and Chemicals

Travancore Ltd was concurred by this court in Delhi Development

Authority v Girdhar Engineers and Contractors Manu/DE/

0991/2005.

14. Thus, the absence of a petition under the provisions of

Section 28 of the Act could not come in the way of this court

exercising the power under Section 28 of the Act. In the present

case, of course, the petitioner has, in the rejoinder as aforesaid,

made such a prayer. This court even while dismissing the petition

can suo moto exercise the power under Section 28 of the Act.

15. Similarly, argument of the counsel for the respondent that

exercise of power to extend the time is circumscribed by limitation is

no good, it having been held in the judgment (supra) that the same is

not circumscribed by laws of limitation. It is the argument of the

counsel for the respondent that the cause of action for extension of

time had accrued to the petitioner when the proceedings were

adjourned sine die on 15.09.1998 as aforesaid and under Article 137

of the Schedule to the Limitation Act, the time under Section 28 of

the Act could have been extended within a period of three years only

therefrom. It was also argued that the petitioner then, instead of

applying for extension of time had filed OMPs No 28/2001 and

29/2001 for appointment of independent arbitrator and the exercise

of power to extend time would also be barred under Order 2 Rule 2

of the CPC. I do not agree with either of the said contentions.

Independently of the judgment (supra) that the exercise of the power

is not circumscribed by any limitation, I find that the right, if any, to

the petitioner to seek extension of time accrued only in October 2006

when the respondent No.1 refused to concur in extension of time.

The arbitration proceedings were adjourned sine die on 15.09.1998

owing to the petitioner itself having declined to extend the time - the

respondents at that time had not declined to extend the time. Thus,

even if the provisions of Article 137 of Schedule I to the Limitation

Act were to apply, the cause of action for applying for extension of

time would accrue only in October, 2006 and the present petitions

(and the rejoinders therein) were filed within three years.

Irrespective of the applicability of the provisions of Order 2 Rule 2 of

the CPC to the arbitration proceedings, the cause of action for

extension of time and the cause of action for applying under Sections

5, 11 and 12 of the Act are independent and applying under one

would not bar the application under the other.

16. That takes me to the last aspect as to whether in the facts and

circumstances the power to extend the time should be exercised or

not. I may in this regard notice the judgment of this court in

Mahalingashetty & Co. Ltd v NPCC Ltd & Ors 126 (2006) DLT

142 wherein a Single Judge of this court held while agreeing with

the judgment (supra) that the powers under Section 28 are vast and

vide and time can be enlarged even against the intention expressed

in the agreement not to extend time and even suo moto, nevertheless

held that if the delay has been caused on account of a party which

seeks enlargement of time, normally, the court should not enlarge

time, as a person who has caused the delay cannot be allowed to

take advantage of his own wrong and extension of time cannot be

allowed to work injustice to the other party. This court had thus

declined to extend the time.

17. In the present case there is already a finding in the OMPs No

28/2001 and 29/2001 and appeals preferred there from of the

petitioner itself being guilty of delay. However, I find that the delay

on the part of the petitioner was in keeping quiet from 15.09.1998

when the proceedings were adjourned sine die and till 2001 when

OMPs No. 28/2001 and 29/2001 were filed. There is nothing to show

that prior thereto, when nearly 4-5 arbitrators were changed by the

respondent No.1 and when the arbitration proceedings remained

pending from 1995 till 15.09.1998, there was any delay on the part

of the petitioner. The petitioner also cannot be blamed for OMPs No.

28/2001 and 29/2001 having remained pending before this court

from 2001 till 28th February, 2006. No person ought to suffer for the

action (in this case delay) of the court. The petitioner in 2001

aggrieved by the frequent changes in the arbitrators and under the

then legal advice that appointment of arbitrator ought to have been

by name and not by designation had applied for appointment of an

independent arbitrator. The same did not find favour with this court.

The petitioner after the dismissal of the appeal approached for

revival of the arbitration but it could not take place in the

circumstances aforesaid. Of course, the action of the petitioner in

filing the present petitions, again for the same relief which had been

declined earlier, cannot be approved of.

18. However, the fact remains that when the petitioner had

agitated its claim initially within time, merely because the petitioner

has been guilty of delay in pursuing the arbitration from 15.09.1998,

can the petitioner be condemned unheard. The courts, finding a

litigant to be indulging in vexatious practice normally does not throw

out his case or shut his defence but puts him to terms. In the

present case also, in my opinion, it would be too harsh to shut out

the claims of the petitioner and equities would be balanced by

extending the time for making of the award but on the following

terms: (1) the petitioner in the event of succeeding in the arbitration

proceedings and in the event of any award in favour of the petitioner,

would not be entitled to any interest therein from 15.09.1998 till the

date of this order, inasmuch as the petitioner itself is to blame for

the said delay. Though I have held that the petitioner is not to blame

for delay in disposal of OMPs 28/2001 and 29/2001 but the petitioner

at the time of disposal thereof having not requested the court for

extension of time and having again filed the present misconceived

petitions is not entitled to interest, if any, till date; (2) the petitioner,

as a pre-condition to the revival of the arbitration proceedings to pay

costs of Rs 25,000/- in each case to Delhi Legal Services Authority

and furnishes proof thereof to the arbitrator; (3) The petitioner is

directed not to take any adjournment before the arbitrator and to

cooperate in the early disposal thereof.

19. Subject to the petitioner complying with the aforesaid terms, I

extend the time for making of the award by four months w.e.f. first

date before the arbitrator. The respondent No.1 is directed to

appoint /intimate the arbitrator to the petitioner within four weeks

here from. The arbitrator shall proceed with the arbitration from the

point at which the same were discontinued.

With these directions, both petitions are disposed of.

RAJIV SAHAI ENDLAW (JUDGE) September 22, 2008 M