Vishal Exports Overseas Ltd. vs Hamburg Bulk Carriers, Gmbh
2009 Latest Caselaw 4249 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        I.A. No. 6124/2009 in O.M.P. 173/2005

VISHAL EXPORTS
OVERSEAS LTD.                                     ..... Petitioner
                                 Through:         Mr. U.D. Shukla with Mr. Ashish
                                                  Dholakia & Ms. Princy, Advs.

                                            Versus

HAMBURG BULK CARRIERS,
GMBH                                              ..... Respondent
                Through:                          Mr. Prashant Pratap with
                                                  Mr. O.P. Gaggar, Advocate


%                                           Date of Decision : 22nd October, 2009


CORAM:
HON'BLE MR. JUSTICE MANMOHAN

1. Whether the Reporters of local papers may be allowed to see the judgment?
2. To be referred to the Reporter or not?                                  Yes
3. Whether the judgment should be reported in the Digest?                  Yes


                                  JUDGMENT

MANMOHAN, J : (Oral)

1. On the last date of hearing, this Court passed the following

order:-

"IA No. 6124/2009

Reply to the application has been filed. This is second time that the petition under Section 34 is being dismissed in default. On first occasion, i.e., 4th July, 2007 while this Court dismissed the petition, it was also observed that the petition was barred in view of Section 34(3) of the Arbitration and Conciliation Act.

Counsel has to satisfy not only on restoration but on the issue of petition being within limitation

simultaneously. So the arguments of both the issues shall be heard together. List on 22nd October, 2009.

2. Consequently, today the matter is listed for arguments on the

restoration application as well as the maintainability issue, namely,

whether the present objection petition filed by petitioner was barred by

limitation in view of Section 34 (3) of Arbitration and Conciliation

Act,1996 (hereinafter referred to as "Act, 1996").

3. The relevant facts of the present case are that on 30th August,

2002 an Award was rendered by an Arbitral Tribunal. Though,

petitioner received a copy of the Award on 31st August, 2002, it filed its

objections after a gap of 82 days before the City Civil Court at

Ahmedabad under Section 34 of Act, 1996.

4. Since, the trial court dismissed respondent‟s preliminary

objection with regard to territorial jurisdiction, respondent filed a

special civil application bearing No.9054/2004 before the Gujarat High

Court. On 3rd November, 2004, Gujarat High Court allowed

respondent‟s said application and directed that "the trial court may

return the plaint to the party for presentation of the same before the

appropriate court."

5. After a gap of 3 days, petitioner applied for a certified copy of

the aforesaid judgment passed by the Gujarat High Court. Though on

2nd December, 2004, the Gujarat High Court‟s Registry notified the

petitioner that certified copy was available, petitioner collected the

same after a gap of 5 days, i.e., on 7th December, 2004.

6. However, it was only after a gap of nearly 5 weeks, i.e., on

13th January, 2005, that the petitioner filed an application before the

City Civil Court at Ahmedabad for taking back the original objection

petition for presentation before this Court. On 30th March, 2005, the

City Civil Court at Ahmedabad passed the order directing return of the

original objection petition as well as the documents for presentation of

the same before an appropriate Court on or before 15th April, 2005.

The trial court made it clear that in view of the submissions advanced

by the learned counsel for respondent, it was not deciding the issue

whether the petitioner‟s application for return of objection petition was

barred by limitation.

7. However, it was only on 12th April, 2005 that the petitioner filed

the present objection petition before this Court. It is in the aforesaid

facts that the issue whether the objection petition was barred by

limitation in accordance with Section 34(3) of Act, 1996 needs to be

determined.

8. Mr. U.D. Shukla, learned counsel for petitioner drew the

attention of this Court to Section 14 of the Limitation Act, 1963

(hereinafter referred to "Act, 1963"). The relevant portion of the said

Section reads as under :-

"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 the 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 count 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."

9. Mr. Shukla submitted that in view of the aforesaid provision, the

time between the date the petitioner filed its objection petition before

the City Civil Court and the date on which the objection petition was

returned to the petitioner, needs to be excluded. In this context, he

referred to a judgment of the Supreme Court rendered in the case of

Ram Ujarey Vs. Union of India reported in (1999) 1 SCC 685 wherein

it was held as under :-

"21. The period of limitation within which claim petitions can be filed before the Tribunal is indicated in Section 21 of the Act. The contingencies contemplated by Section 21 are not applicable to the present case. The suit, admittedly, was filed within time. It is another matter that it was filed in a court which had no jurisdiction and, therefore, the Tribunal, while allowing the appeal filed against the decree passed by the trial court, directed the plaint to be

returned to the appellant for presentation before the appropriate Bench of the Tribunal. Some delay had occurred in the refiling of the plaint before the Tribunal and as pointed out by the Tribunal itself, the delay was only of one-and-a-half months, although at one place the Tribunal observed that there was a delay of about eight months. The period of eight months has been calculated by the Tribunal from the date on which an order was passed at Allahabad for the return of the plaint. The limitation would not run from the date of the order, but would run from the date on which the plaint was returned and made available to the appellant, if the appellant was not at fault......"

10. Mr. Shukla further submitted that the expressions „due diligence‟,

„good faith‟ and „time to be excluded‟ in Section 14 of Act, 1963 would

include within their ambit, a reasonable time the petitioner took „to mull

over its option‟ after the order dated 3rd November, 2004 was passed by

the Gujarat High Court upholding the respondent‟s submission with

regard to territorial jurisdiction. In this connection, Mr. Shukla placed

reliance upon a judgment of the Supreme Court rendered in case of

Consolidated Engineering Enterprises Vs. Principal Secretary,

Irrigation Department and Ors. reported in (2008) 7 SCC 169 wherein

it was held as under :-

"31. To attract the provisions of Section 14 of the Limitation Act, five conditions enumerated in the earlier part of this judgment have to co-exist. There is no manner of doubt that the section deserves to be construed liberally. Due diligence and caution are essential prerequisites for attracting Section 14. Due diligence cannot be measured by any absolute standards. Due diligence is a measure of prudence or activity expected from and ordinarily exercised by a reasonable and prudent person under the particular circumstances......"

11. On the other hand, Mr. Prashant Pratap, learned counsel for

respondent submitted that the present objection petition was barred in

view of Section 34 (3) of the Act, 1996. He submitted that Section 14

of Act, 1963 only provided for exclusion of time which a party spent

upon prosecuting a proceeding with due diligence. He stated that in the

present case, petitioner had filed the objection petition in City Civil

Court at Ahmedabad even though the agreement between the parties

had been signed in Delhi and arbitration proceedings had been

conducted in Bombay. He submitted that petitioner was not entitled to

the benefit of Section 14 of Act, 1963 inasmuch as the objection

petition had been filed in Ahmedabad even though no cause of action

had arisen there. He further stated that the petitioner should have filed

its objection petition before this Court latest by 6 th January, 2005 as by

the said date even the additional 30 days granted by the Proviso to

Section 34 (3) had expired. He submitted that this Court had no power

or jurisdiction to condone the delay beyond a period of 120 days after

rendering of an arbitral award.

12. Mr. Pratap further submitted that principle analogous to Order 7

Rule 10 of Code of Civil Procedure would not apply in the present case

as firstly, an objection petition was not a plaint and secondly, the

original objection petition had not been re-filed in this Court.

13. Having heard the parties at some length, I am of the opinion that

it would be appropriate to first refer to Section 34(3) of Act, 1996

which provides a period of limitation for filing objections to an

arbitration award. The said sub-section is reproduced hereinbelow :-

"34. Application for setting aside arbitral award. -

xxxx xxxx xxxx xxxx

(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."

14. Consequently, three months is the period of limitation for filing

objections to an arbitration award. However, Courts have the power to

condone a further delay of thirty days. Accordingly, three months plus

thirty days is the maximum period within which an objection petition

challenging an arbitration award can be filed. In fact, Supreme Court in

Union of India vs. Popular Construction Co. reported in (2001) 8 SCC

470 after referring to Section 34 of the Act, 1996 has held as under:-

"12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are "but not thereafter" used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an

application to set aside the award beyond the extended period under the proviso, would render the phrase "but not thereafter" wholly otiose. No principle of interpretation would justify such a result.

xxx xxx xxx

14. Here the history and scheme of the 1996 Act support the conclusion that the time-limit prescribed under Section 34 to challenge an award is absolute and unextendible by court under Section 5 of the Limitation Act. The Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main objectives the need "to minimize the supervisory role of courts in the arbitral process". This objective has found expression in Section 5 of the Act which prescribes the extent of judicial intervention in no uncertain terms:

"5. Extent of judicial intervention-

Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part."

15. The "Part" referred to in Section 5 is Part I of the 1996 Act which deals with domestic arbitrations. Section 34 is contained in Part I and is therefore subject to the sweep of the prohibition contained in Section 5 of the 1996 Act.

16. Furthermore, Section 34(1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award "in accordance with" sub-section (2) and sub-section (3). Sub-section (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, sub-section (3) would not be an application "in accordance with" that sub-section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The importance of the period fixed under Section 34 is emphasized by the provisions of Section 36 which provide that

"where the time for making an application to set aside the arbitral award under Section 34 has expired... the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court".

15. Undoubtedly, keeping in view the observations of Supreme Court

in Consolidated Engineering Enterprises‟s case (supra), petitioner

would certainly be entitled to exclusion of time that petitioner spent in

prosecuting with due diligence a proceeding in another Court even

though the said Court did not have jurisdiction to entertain the same.

Since in the present case, the trial court had come to the conclusion that

it had territorial jurisdiction to entertain the petition, it cannot be said

that the proceedings filed by the petitioner were either vexatious or

vitiated by malice.

16. However, in my opinion, petitioner would only be entitled to

exclusion of time that it spent either in prosecuting its objections in the

City Civil Court at Ahmedabad or in contesting the appeal filed by

respondent. The petitioner would certainly not be entitled to exclusion

of time that it took „to mull over its option‟ after the Gujarat High Court

upheld the respondent‟s contention that the Ahmedabad City Civil

Court had no territorial jurisdiction to entertain petitioner‟s objection

petition because Section 14 of Act, 1963 only provides for exclusion of

time that a party has spent on prosecuting with due diligence another

civil proceeding. In any event, after the Gujarat High Court had

decided against the petitioner, it still had a reasonable time period of

thirty days „to mull over its option‟ and refile its objections before a

court of competent jurisdiction inasmuch as by that time ninety days

had only expired (i.e. 82 days prior to filing of initial objections + 3

days delay in applying for certified copy + 5 days delay in collecting

the certified copy). Moreover, as the petitioner has admittedly not re-

filed its initial objection petition before this Court, the judgment of

Ram Ujarey (supra) referred to by learned counsel for the petitioner has

no application to the facts of the present case.

17. In the present case, I also find that the petitioner has not been

diligent in pursuing its objection petition. As mentioned hereinabove,

the present objection petition was dismissed in default on 4th July, 2007

as well as on 24th March, 2009. It is pertinent to mention that the

Arbitral Tribunal has already informed this Court that since the matter

was very old, the arbitral record had been destroyed. Consequently,

both the application and petition are dismissed.

MANMOHAN, J.

October 22, 2009 rn

I.A. No. 6124/2009 in O.M.P. No. 173/2005 Page 10 of