Bharat Sanchar Nigam Ltd. vs Haryana Telecom Ltd.
2010 Latest Caselaw 3637 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+     FAO(OS) No.290/2010 & CM No.7824/2010

BHARAT SANCHAR NIGAM LTD. .....Appellant through
                          Mr.Dinesh Agnani with
                          Ms. Leena Tuteja, Advs.

                  versus

HARYANA TELECOM LTD.               .....Respondent through
                                   Mr.Narendra M. Sharma,
                                   Mr. Abhishek Sharma, Advs.

                       WITH

      FAO(OS) No.385/2010

BHARAT SANCHAR NIGAM LTD. .....Appellant through
                          Mr.Dinesh Agnani with
                          Ms. Leena Tuteja, Advs.

                  versus

HARYANA TELECOM LTD.               .....Respondent through
                                   Mr.Narendra M. Sharma,
                                   Mr. Abhishek Sharma, Advs.

%                             Date of Hearing : August 02, 2010

                              Date of Decision : August 06, 2010

      CORAM:
*     HON'BLE MR. JUSTICE VIKRAMAJIT SEN
      HON'BLE MS. JUSTICE MUKTA GUPTA
      1. Whether reporters of local papers may be
         allowed to see the Judgment?                No
      2. To be referred to the Reporter or not?      Yes
      3. Whether the Judgment should be reported
         in the Digest?                              Yes




FAO(OS)290/2010                                        Page 1 of 19
 VIKRAMAJIT SEN, J.

1. These Appeals assail the Judgment of the learned Single

Judge dated 15.3.2010 dismissing the Appellants‟ Objections

under Section 34 of the Arbitration & Conciliation Act, 1996

(A&C Act for short) on the ground that they could not be

entertained having been filed beyond the prescribed period of

prescription set-down in third sub-section of that very Section.

The learned Single Judge has applied Union of India -vs-

Popular Construction Co., (2001) 8 SCC 470 wherein their

Lordships have clarified that "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 arbital award

cannot be made beyond the period prescribed". Considerations

analogous to Section 5 of the Limitation Act, 1963 (Limitation

Act) would palpably be available in terms of proviso to Section

34(3), that is, for the period spanning 30 days after three

months have elapsed from the date on which the concerned

party had received the Arbitral Award. We may immediately

revert to Section 31(5) of the A&C Act which mandates that

after the Arbitral Award is made, a signed copy shall be

delivered to each party. The case of the Appellants is that a

signed copy of the Arbitral Award was not delivered to them by

the Arbitrator, although a photocopy thereof had been provided

to it by the Respondents/Claimants. There is considerable

controversy even with regard to the date on which the said

photocopy was made available by the Respondents to the

Appellants.

2. The Award in FAO(OS) No.290/2010 (in Arbitration Case

No.113/98 arising out of Suit No. AA164/1997) is for a sum of

` 1,16,37,288/- together with interest at the rate of eighteen per

cent per annum, in the event that the Appellants fail to make the

payment within two months of the Award which was pronounced

on 7.8.2000. The Award in FAO(OS) No.385/2010 (in Arbitration

Case No.114/1998 arising out of Suit No. AA 163/1997) is for a

sum of ` 1,49,78,142/- with interest at the rate of eighteen per

cent per annum in the event that the Appellants fail to make the

payment within two months of the Award which was pronounced

on 7.8.2000. Although it is a matter of speculation whether the

Objections filed by the Appellants would have found favour with

the learned Single Judge, the fact remains that by declining to

consider the Objections on the premise that they had been

preferred beyond the prescribed period of prescription, the

Union of India would become liable to discharge the principal

sum of ` 2,66,15,430/- together with interest of ` 4,79,07,774/-.

Negligent or egregiously incorrect legal action seems to have

become the preserve of the Government and/or Corporations

held or controlled by it. This is obviously because of lack of

answerability of its officers, as the present case will make

manifest.

3. The wisdom expressed by the Privy Council over a century

ago in Nazir Ahmad -vs- King Emperor, AIR 1936 PC 253

continues to remain contemporarily contextual. The Privy

Council observed that if an action has to be taken in a particular

manner, it must be carried out in that manner only, else it may

be held not to have been effected at all. The wisdom of this

pronouncement is manifestly evident in the facts of the present

case. This abiding reasoning in respect of strict compliance with

the procedural requirement of a statute had been applied by the

Hon‟ble Supreme Court in Ramchandra Keshav Adke -vs-

Govind Joti Chavre (1975) 1 SCC 559; Shiv Bahadur Singh -vs-

State of Uttar Pradesh, AIR 1954 SC 322 and Deep Chand -vs-

State of Rajasthan, AIR 1961 SC 1527. In Ramchandra, the

Court was called upon to decide whether Section 5(3) of

Bombay Tenancy and Agricultural Land Act, 1948, which deals

with verification of the alleged surrender of possession by the

tenant was compulsory, and the effect of its non-compliance.

The Court opined that "the imperative language, the beneficent

purpose and importance of these provisions for efficacious

implementation of the general scheme of the Act, all unerringly

lead to the conclusion that they were intended to be mandatory.

Neglect of any of these statutory requisites would be fatal.

Disobedience of even one of these mandates would render the

surrender invalid and ineffectual. .... The rule will be attracted

with full force in the present case because non-verification of

the surrender in the requisite manner would frustrate the

purpose of this provision". In Deep Chand, the Supreme Court

adverted to the rule in Nazir Ahmad to hold that a statement of

account which has not been recorded in strict compliance of

Section 164 of Code of Criminal Procedure, 1973 would not be

admissible as a confession. In Ram Phal Kundu -vs- Kewal

Sharma, (2004) 2 SCC 759, the Court declined to look into any

extrinsic evidence to inquire into the question as to who shall be

deemed to have been set up as a candidate by a political party

and would only look at the paragraphs delineated by the

Symbols Order of Election Symbols (Reservation and Allotment)

Order, 1968 which lay down the mechanism for ascertaining

when a candidate shall be deemed to be set up by a political

party and the procedure for substitution of a candidate.

4. We mention these decisions since we perceive it is

poignant to point out that if the statutory necessity of delivering

a signed copy of the Arbitral Award is not rigorously complied

with, it will, more often than not, pregnant with pernicious

potentialities. This is particularly so since the A&C Act has

ordained that Objections preferred after 120 days, of the

delivery [under Section 31(5)] or the receipt [under Section

34(3)] of the Arbitral Award, cannot be considered by the Court.

Scope to condone delay after this period has not been vested in

the Court. The word „party‟ has been defined in Section 2(h) of

the A&C Act to mean a party to an arbitration agreement. We

may, therefore, be pardoned if we repeat, reemphasize and

reiterate the Nazir Ahmad dictum. If the fasciculus of

Section 31 is read holistically, it will be crystal clear that all the

actions postulated in that provision pertain to the powers and

responsibilities of the Arbitral Tribunal. The Section does not

envisage any role of the Claimant. Inasmuch as sub-section

31(5) speaks of „each party‟, the delivery/receipt of the Arbitral

Award has to be strictly effected on each party itself in

contradistinction to its agent or officers etc. In FAO(OS)

No.578/2009 titled Karmyogi Shelters Pvt. Ltd. -vs-

Benarsi Krishna Committee, a Division Bench of this Court

was concerned with the controversy whether the onerous

obligations of the statute had been adequately met by the

service of Arbitral Award on the Advocate of one of the party

concerned. The Division Bench lamented that considerable

judicial time had been wasted in entertaining arguments

surrounding sufficiency of service simply because the statute

has not been strictly complied with. It was further held that

Section 2(g) of the A&C Act does not take within its sweep the

service of the Arbitral Award on an agent of any of the parties to

the arbitration. The Bench had also found it inappropriate to

extrapolate the ratio in Nilkantha Sidramappa Ningashetti -vs-

Kashinath Somanna Ningashetti, AIR 1962 SC 666 on the

premise that whilst condonation of delay in filing the Objections

under the earlier and repealed Arbitration Act, 1940 could be

prayed for before the Court, this indulgence is available only for

a comparatively short period of 30 days under the A&C Act.

Karmyogi applied an earlier decision of the Division Bench in

National Projects Constructions Corporation Limited -vs-

Bundela Bandhu Constructions Company, AIR 2007 Delhi

202:139 (2007) DLT 676 which, in turn, applied, as it was bound

to, the dictum in Union of India -vs- Tecco Trechy Engineers &

Contractors, (2005) 4 SCC 239. We should immediately

differentiate the case before us from the earlier case since the

delivery/receipt of the Arbitral Award by the Advocate of the

Appellants has remained unsubstantiated. The factual matrix in

Reshma Construction -vs- State of Goa, 1998(3) Bombay CR 837

: 1999(1)MhLJ 462 is strikingly similar to the case before us. An

amendment in the Award had been prayed for and the Court

observed that it was the duty of the Applicant to collect a

corrected and signed copy of the amended Award. The Court

also observed that it was the mandatory duty of the Arbitrator to

issue a copy of the Award to each and every party to the

proceedings. In Kempegowda -vs- National Highway Authority

of India, 2008(2) ALR 393 Karnataka the High Court has held

that Section 31(5) of the A&C Act required the Arbitrator to

ensure delivery of a copy of the Award on the parties to the

arbitration proceedings. The compensation in accordance with

the Award dated 21.2.2003 was disbursed on 27.10.2003.

Limitation, however, was held to have started to run only on

8.12.2003 when the Appellant was delivered with a copy of the

Award. In Ramesh Pratap Singh -vs- Vimala Singh, 2004(2) ALR

147 (MP), the Jabalpur Bench of the said Hon‟ble High Court

found service of an unsigned/photocopy of an Award to be

wholly irrelevant and held that the period of limitation should be

counted from 27.7.1998, on which date a signed copy of the

Award has been furnished to the Appellant/Objector.

5. It also seems to us that it is imperative that delivery/

receipt of the Arbitral Award should be at the instance,

responsibility and authority of the Arbitral Tribunal. In the case

in hand, the Arbitral Award appears to have been dispatched

under „Certificate of Posting‟ and not recorded delivery, and

that too to the Advocate of the Appellants. „UPC‟ merely

evidences the posting of a letter/envelope and not its service. In

matters of moment, such as delivery/receipt of an Arbitral

Award, the Arbitral Tribunal is duty-bound to ensure that the

Award is actually delivered directly to the party concerned. It is

our fervent hope that the Arbitrators and Arbitral Tribunals

shall henceforward consider their judicial contract to have

culminated only upon their being satisfied that each of the

parties before it has actually been served with the Arbitral

Award. If the recorded delivery is returned undelivered, the

Arbitral Tribunal must dispatch it once again until it is served or

there is sufficient reason to assume that it stands served.

6. Learned counsel for the Respondent has laid great store

on the alleged service of the Arbitral Award at the instance and

the initiative of the Claimant/Respondent on the

Chairman/Secretary, Department of Telecommunication (DoT)

on 29.9.2000 and 4 days later on the Central Registry of the

DoT. It has also been emphasized that there has been an

admission with regard to these asseverations in the Petition. On

a complete and not a piecemeal reading of the pleadings, this is

not correct. Furthermore, reliance has been placed on remarks

on the file of the Appellants. These would be relevant as

evidence of actual service only if steps for service on the

Appellants had been initiated in consonance with the statutory

provisions, viz. by the Arbitral Tribunal itself. What had

transpired in the present case, however, is that due to an error

in the numbering of the matter, an amendment in the Arbitral

Award was necessitated and a copy of the corrected Award is

stated to have been served by the Respondent on the Appellants

on 6.11.2000. The application was moved by the Respondents

under Section 33 of the A&C Act and facially, therefore, the

period of 90 days would have to be computed from the date on

which that application was disposed of and not prior thereto.

Learned counsel for the Respondent is, therefore, entirely

wrong in adverting to any alleged event prior to 6.11.2000, on

which date the application for correction was disposed of by the

learned Arbitrator. Had the Appellants not filed the application,

time for filing Objections would commence, uncontestably, from

6.11.2000. In any event, receipt of a photocopy of the Arbitral

Award prior to this date, when amendments to the Arbitral

Award were carried out, would be an anachronistic error. If the

arguments of the Respondent are to be accepted, then the

requirement of limitation to be calculated only from the date on

which a certified copy of a judicial order sought to be impugned

before the Appellate Forum would become otiose. Till date, no

Court has adhered to this opinion, and for good reason, since a

truncated or edited copy of a decision could be supplied by an

adversary and if actions taken thereon are held to be binding,

alarming and dangerous repercussions may ensue.

7. Since there has been a complete infraction of the statutory

provisions so far as service of the Arbitral Award on the

Appellants is concerned, we hold that the period of limitation

had not started to run when the Objections were filed in the

various Courts by the Appellants. As a general proposition,

therefore, the period of 90 days for filing Objections, as

stipulated in Section 34 of the A&C Act, would have to be

computed from the date on which the concerned party was

served or received the singed copy of the Arbitral Award from

the Arbitral Tribunal. This, however, does not entirely solve the

conundrum which has arisen before us.

8. So far as FAO(OS) No.290/2010 arising out of OMP

No.251/2001 is concerned, the Appellant/BSNL appears to have

filed Objections under Section 34 of the A&C Act on 12.12.2000,

but in the Court of the District Judge, Ambala, Haryana, by the

Haryana Circle Department of Appellant. These Objections came

to be rejected on 16.5.2001 on the ground that the appointment

of the Chairman having been made by the High Court of Delhi

this Court alone should exercise jurisdiction in respect of any

further lis under the A&C Act including the entertainment and

decision on Objections. Certified Copy of these Orders was

received by the Appellant on 22.5.2001. The learned District

Judge, Ambala, inter alia, relied on Section 42 of the A&C Act.

The Objections eventually came to be filed in this Court on

9.7.2001. The Objections, OMP No.215/2001, were accompanied

by an application filed by the Appellant/BSNL seeking

condonation of delay, which was supported by an affidavit dated

30.8.2001 of the Assistant General Manager, Telecom, Haryana

Circle, Ambala, BSNL. The first hearing in the High Court of

Delhi was held on 31.8.2001. We will have to consider whether,

assuming that the time spent in the Court not possessing

jurisdiction (in the Ambala Court) can be excluded while

computing the period of 90/120 days, there is sufficient

explanation for the subsequent period, that is, 16.5.2001 to

9.7.2001.

9. The submission of the Appellants in both the Appeals is

that the delay should be condoned because the Appellants had

initiated proceedings bona fide in a Court not possessing

jurisdiction. We have also perused an Order of the High Court of

Himachal Pradesh, Shimla passed on 16.7.2001 in terms of

which the Objections filed by the Appellant before us were

rejected while considering an application filed by the

Respondents under Section 42 of the A&C Act read with Order

VII Rule 11 of the Code of Civil Procedure, 1908 (CPC for short);

later application was allowed. The wanton, ill-advice and

reckless action of the BSNL in approaching Courts in Ambala,

Chandigarh and the High Court of Himachal Pradesh at Shimla

has completely confounded the confusion.

10. In FAO(OS) No.385/2010, arising from OMP No.17/2002

Objections under Section 34 of the A&C Act came to be filed on

30.1.2001 in the Court of the District Judge, Union Territory,

Chandigarh which returned them by Orders dated 19.11.2001.

Meanwhile, the Respondent/Decree Holder had initiated

execution proceedings in this Court which attached the Bank

Accounts of the Appellant to the extent of ` 1,56,52,158/-.

Objections in this Court were filed on 3.1.2002.

11. We have expressed the opinion, hereinabove, that since

the Arbitral Award was not delivered by the Arbitral Tribunal

[as envisaged in Section 31(5) of the A&C Act] to the party, the

period for filing of Objections must be held not to have

commenced. Would this view remain steadfast even in

circumstances where Objections have actually been filed by the

concerned party albeit in the wrong Court. This is the legal

nodus which remains to be answered. It is axiomatic

jurisprudence that there is no estoppel against the statute. In

this case, however, this principle would not apply for the reason

that the party concerned, upon having filed Objections, has

exercised a right vested and bestowed upon it by virtue of a

statute. Moreover, law unhesitatingly and unquestionably acts

on admissions made by a litigating party. In this case the

Appellant has itself stated that copies of the Award were

received by it (from the Respondent/Decree Holder) on

6.11.2000, and thus, we find good reason to take this date as

the commencement of the period of limitation. On principles

analogous to Section 14 of the Limitation Act, 1963, the period

expended in a Court not possessing jurisdiction would have to

be excluded. Exclusion of time is an exercise totally distinct

from condoning the delay in filing an action. On the rejection or

return of the Plaint/Objections, the period for refiling cannot be

left open-ended. High Courts have taken the position that the

Court rejecting the plaint/petition is not possessed with powers

to fix a date within which the action must be filed in another

Court. By the introduction of Section 10(a) in Order VII, by Act

104 of 1976, this position has been changed and the vacuum has

been filled. It is now open to the Plaintiff/Petitioner to move an

application in the First Court, thereby specifying the Court in

which he proposes to present the plaint or refile the action after

its return, and pray that the First Court may fix a date for the

appearance of the parties. If the First Court passes such orders,

Sub-rule(4) clarifies that in this event the transferee Court

would not be required to once again issue notice to the

Defendant/Respondent.

12. It is trite that the Plaintiff/Petitioner may consider it

expedient or prudent to challenge the return or rejection order

before the Appellate forum; or it may decide to abide and

comply with the Order. In the first case, the time spent before

the Appellate Court may also have to be excluded. In the latter

case, the question that arises is how much time should be

reasonably allowed to the Plaintiff/Petitioner to file the rejected

Plaint in the Court which it considers rightly possesses

territorial jurisdiction. It seems incongruent to us that if the

Petitioner stands restricted to an initial period of 90+30 days, a

larger period can be allowed for the purpose of such refiling. So

far as this is concerned, we are in virgin legal territory as no

statutory provision appears to have been prescribed by any

legislation. We would, in these circumstances, hold that the

refiling must be carried out within the total span of 90 days,

leaving the Court with the discretion to condone any delay

restricted to a further period of 30 days provided sufficient

cause has been disclosed. The date of rejection in Ambala Court

was 16.5.2001; in Chandigarh on 19.11.2001 and in the High

Court of Himachal Pradesh on 16.7.2001. As already noted

above, the Objections were initiated in this Court in OMP

No.215/2001 on 31.8.2001 and in OMP No.17/2002 on 3.1.2002

respectively.

13. Mr. Sharma, learned counsel for the Respondent/Decree

Holder, has contended that since the Objections were rejected

under Order VII Rule 11 of the CPC in the Ambala Court, the

relief permitted by Section 14 of the Limitation Act would not be

available. After the filing of the Objections in this Court, the

Appellant avowedly preferred a Review before the Ambala Court

praying that the Objections ought to have been returned under

Order VII Rule 10 and not rejected under Order VII Rule 11 of

the CPC. Where a Court arrives at a conclusion that it does not

possess jurisdiction, it should not proceed further and should

only pass orders which would consequentially ensue; in most

cases for the rejection of the plaint/petition/Objection or with

the dismissal thereof, with liberty for filing them in a competent

court in accordance with law. The Review was dismissed on the

ground that it had been preferred beyond the period of

limitation; secondly that the High Court of Delhi was already

seized of the Objections and no prejudice was shown to have

been caused. Therefore, the Review was not dismissed on

merits. This being the situation, we think that there is no

alternative but to treat the action of the Ambala Court as one

standing and predicated on Order VII Rule 11 of the CPC,

thereby rejecting the Objections and not dismissing them.

14. Learned counsel for the Appellants has submitted that the

legal action taken in the High Court of Himachal Pradesh at

Shimla may be discounted as totally irrelevant since it has no

further bearing on the Issues that have arisen before us.

15. However negligent and ill-advised the action taken by the

Appellants may be, we do not see them as not bona fide.

Therefore, the period spent by the Appellants in the Court at

Ambala and Chandigarh ought to be excluded while computing

the period of limitation. As has already been disclosed above, in

the case in hand, because of the admissions of the Appellants

before us, the starting point of limitation is 6.11.2000. The

Objections were filed in Ambala on 12.12.2000. Keeping in view

the proviso to Section 14(3), remission, allowance or exclusion

is allowable to the Appellants from 12.12.2000 till the rejection

of the Objections on 16.5.2001 and also from 16.5.2001 till

22.5.2001 since a Certified Copy was available only on

22.5.2001. The Objections were eventually filed on 9.7.2001,

thereby exhausting 47 days. So far as Objections are concerned,

a total of 82 days have been exhausted from the date of

receiving Award and filing Objections in Delhi, excluding the

time spent in Ambala. The Objections were, therefore, filed

within 90 days prescribed under Section 34 of the A&C Act and

should be entertained on merits.

16. We shall now deal with the Objections filed in Chandigarh.

Since they were filed on 30.1.2001, the Appellant had exhausted

84 days commencing from 6.11.2000. The Appellant would be

entitled to exclusion of the period from 30.1.2001 till 23.11.2001

when the certified copy of the Order, along with the entire file,

was received by it. The Appellant had exhausted 84 days from

6.11.2000 to 31.1.2001, leaving 6 days available to it for

refilling in the appropriate Court. If 30 additional days are

condoned, the filing should have been carried out in this Court

with 36 days from 23.11.2001. Since this period had expired

when this Court was in Winter Vacation, the Appellant, if it had

filed the Objections on the reopening day, would have the

benefit of the entire period of Winter Vacation. The first day of

reopening was 3.1.2002, on which the Objections were actually

filed in Delhi. Hence, the filing of Objections would be deemed

to have been done within 120 days. Keeping the convoluted

facts of the filing in the Chandigarh in view, we think it

appropriate to exercise powers reserved to the Court under

Section 34 of the A&C Act to condone a delay of 30 days for the

period between 91st day and the 120th day which expired on the

day of reopening. Since the filing occurred within this period,

these Objections also would have to be heard on merits.

17. For these reasons, the Appeals are allowed but with costs

of ` 1,00,000/-, out of which ` 50,000/- will be made payable to

the Prime Minister‟s Relief Fund and the balance be paid to the

Respondents. Subject to payment of costs to be paid within two

weeks, both Objections are remanded to the learned Single

Judge for their determination on merits.

( VIKRAMAJIT SEN ) JUDGE

( MUKTA GUPTA ) JUDGE August 06, 2010 tp