Delhi High Court
Union Of India vs M/S. Microwave Communication ... on 1 December, 2010
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of hearing : 23rd November, 2010
Date of decision: 1st December, 2010
+ FAO(OS) No.503/2007
UNION OF INDIA .....Appellant
Through: Mr. Mr. A.S. Chandhiok, ASG
with Ms. Maneesha Dhir &
Ms. Preeti Dalal, Advocates.
Versus
M/S. MICROWAVE COMMUNICATION LTD.
.....Respondent
Through: NEMO.
AND
+ FAO(OS) No.426/2010
UNION OF INDIA .....Appellant
Through: Mr. A.S. Chandhiok, ASG
with Mr. P.S. Parmar, Advocate
Versus
M/S. KTECH ENGINEER BUILDERS CO. PVT. LTD.
.....Respondent
Through: Mr. Akhil Sibal, Advocate with
Mr. Pradeep Chhindra, Advocate
%
CORAM:
HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE G.P.MITTAL
FAO (OS) No.503/2007 & FAO (OS) No.426/2010 Page 1 of 19
1. Whether reporters of local papers may be
allowed to see the Order?
2. To be referred to the Reporter or not?
3. Whether the Order should be reported
in the Digest?
JUDGMENT
G.P. MITTAL, J.
1. These appeals raise an important question of law.
Whether an application for setting aside of an Award
under Section 34 of the Arbitration & Conciliation Act,
1996 (for short „A&C Act‟) can be filed on the day when
the Court reopens, by virtue of Section 4 of the Limitation
Act, if the period of three months or for that matter
additional period of 30 days on proof of sufficient cause
expires on a day when the Court is closed?
2. We would like to extract the provisions of Section 34 (3) of
the A&C Act hereunder for ready reference:-
34. Application for setting aside
arbitral award -
(1) xxxxxxxxx
(2) xxxxxxxxx
(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.
(emphasis supplied).
3. The proviso to sub-Section (3) of Section 34 of the A&C
Act was subject of interpretation in Union of India v/s.
M/s. Popular Construction Company, 2001 (8) SCC
470. It was held by the Apex Court that the history and
scheme of the A&C Act support the conclusion that the
time limit prescribed under Section 34 to challenge an
award is absolute and un-extendable by Court under
Section 5 of the Limitation Act in view of the fact that a
further period of 30 days had been provided in addition to
the period of three months for preferring the objections
whenever the Petitioner satisfies the Court that he was
prevented by sufficient cause from making the application
for setting aside of the award within the period of
limitation.
4. The questions: whether (1) in computing the period of
limitation for filing an application for setting aside an
arbitral Award during which the applicant had been
prosecuting with due diligence proceedings in any Court
in good faith which from defect of jurisdiction was unable
to entertain it could be excluded (u/s. 14 of the Limitation
Act) and whether (2) an application for setting aside of an
Award could be filed on the re-opening day of the Court
when the limitation for filing an application had expired
on a day when the Court was closed (u/s. 4 of the
Limitation Act) came up for consideration before various
High Courts. The observation in Popular Construction
Company that the period of limitation prescribed under
Section 34 was absolute and unextendable were so
sweeping that most of the High Courts treated it
sacrosanct and took the view that provisions of Ss. 4 and
14 of the Limitation Act are not applicable in the matter of
filing an application for setting aside of an Award under
Section 34 of the A&C Act. In „Durga Enterprises vs.
Union of India & Ors., MANU/AP/0959/2003‟ the Andhra
Pradesh High Court however took the view that since the
provisions of Section 4 had not been excluded by the
provisions of the A&C Act, there was no reason to exclude
the applicability thereof to the filing of the application
under Section 34 of the A&C Act. The learned Single
Judge in the impugned judgment (in OMP No.235/2004
decided on 12th October, 2007) preferred not to agree with
the view taken by the Andhra Pradesh High Court and was
swayed by the views of the Gauhati High Court in „Assam
Urban Water Supply & Sewerage Board vs. Subhash
Project & Marketing Ltd., AIR 2005 Gauhati 112; of the
Bombay High Court in „HMP Engineers Ltd. & Ors. vs.
Ralies India Ltd. & Ors., 2004 (1) RAJ 198 (Bom)‟ and
„Pushpa P. Mulchandani & Ors. vs. Admiral Radhakrishin
Tahilani (Retd.) & Ors., 201 (4) RAJ 139 (Bom)‟; and of
Himachal Pradesh High Court in „State of H.P. vs. Kataria
Builders, 2003 (2) ALR 526 (HP)‟, where a strict
interpretation of the words „but not thereafter' was
taken and it was held that the provisions of Section 4 of
the Limitation Act cannot be made use of by an aggrieved
party even if the period of limitation had expired on a
holiday or during vacation.
5. With regard to the applicability of Section 14, the
controversy was set at rest in „State of Goa v/s. Western
Builders, (2006) 6 SCC 239‟, where after examining the
provisions of the A&C Act including Section 43 and the
provisions of Section 29 (2) of the Limitation Act, the Apex
Court opined that there was no provision which prohibited
or excluded the applicability of Section 14 of the
Limitation Act in case of filing application under Section
34 of the A&C Act. It was observed that if statute was
silent and there was no specific prohibition then the
statute should be interpreted in a way which advances
cause of justice.
6. The matter was again examined by three Judges Bench of
the Apex Court in „Consolidated Engineering
Enterprises vs. Principal Secretary, Irrigation
Department & Ors., (2008) 7 SCC 169‟. The Apex Court
held that merely because Section 5 of the Limitation Act is
not applicable to an application filed under Section 34 of
the Act for setting aside an Award one need not conclude
that the provisions of Section 4 to Section 24 of the
Limitation Act are excluded by the proviso to Section 34
(3) of the A&C Act. In para 10 of the report the Apex
Court took pains to clarify that the provisions of Section 5
of the Limitation Act were impliedly excluded and it shall
have to be examined whether other provisions of
Limitation Act have either been expressly or impliedly
excluded. The Apex Court observed:-
"10. A bare reading of Sub-section (3) of
Section 34 read with the proviso makes
it abundantly clear that the application
for setting aside the award on the
grounds mentioned in Sub-section (2) of
Section 34 will have to be made within
three months. The period can further be
extended, on sufficient cause being
shown, by another period of 30 days but
not thereafter. It means that as far as
application for setting aside the award is
concerned, the period of limitation
prescribed is three months which can be
extended by another period of 30 days,
on sufficient cause being shown to the
satisfaction of the Court. Section 29 (2)
of the Limitation Act, inter alia provides
that where any special or local law
prescribes for any suit, appeal or
application a period of limitation
different from the period of limitation
prescribed by the schedule, the
provisions of Section 3 shall apply as if
such period was the period prescribed
by the schedule and for the purpose of
determining any period of limitation
prescribed for any suit, appeal or
application by any special or local law,
the provisions contained in Sections 4 to
24 shall apply only insofar as, and to the
extent, they are not expressly excluded
by such special or local law. When any
special statute prescribes certain period
of limitation as well as provision for
extension upto specified time limit, on
sufficient cause being shown, then the
period of limitation prescribed under the
special law shall prevail and to that
extent the provisions of the Limitation
Act shall stand excluded. As the
intention of the legislature in enacting
Sub-section (3) of Section 34 of the Act
is that the application for setting aside
the award should be made within three
months and the period can be further
extended on sufficient cause being
shown by another period of 30 days but
not thereafter, this Court is of the
opinion that the provisions of Section 5
of the Limitation Act would not be
applicable because the applicability of
Section 5 of the Limitation Act stands
excluded because of the provisions of
Section 29 (2) of the Limitation Act."
7. In Consolidated Engineering Enterprises the question
of applicability of Section 4 did not directly come up for
consideration before the Apex Court. However, the
observation in para 32 of the report "Thus the proviso to
sub-Section 34(3) of the AC Act is also a provision relating
to extension of period of limitation, but differs from
section 5 of the Limitation Act, in regard to period of
extension, and has the effect of excluding section 5 alone
of the Limitation Act." clearly laid down that the proviso to
Section 34 (3) of the A&C Act had excluded only Section 5
of the Limitation Act. In other words, the applicability of
other provisions of the Limitation Act was held to be
applicable.
8. Section 4 of the Limitation Act has been enacted not to
enlarge the period of limitation but on the maxim „lex non
cogit ad impossibilia‟ . When any party is prevented from
doing a thing in Court on a particular day not by his own
act but by the act of the Court he/she is entitled to do at
the first available opportunity. As stated above, Section 4
does not enlarge the period of limitation but it only
enables the party to file any suit, application, etc. on the
reopening day of the Court if the Court is closed on a day
when limitation expires. For instance, an Award is
received by a party, say, on 28th of February. As per
provision of Section 34 (3) of the A&C Act, the objections
can be filed upto 29th of May and if there is sufficient
cause for condonation of delay then upto 28th of June of
that year. The Courts are closed from 28th May to Ist of
July. Any party aggrieved by the Award would be deprived
to challenge the same not only in the extended period of
30 days but also in the initial period of three months as
the initial period of three months and the extended period
of 30 days as prescribed under Section 34 sub-Section (3)
of the A&C Act expired on 29th May and 28th June
respectively when the Courts were closed.
9. We are of the considered view that the provisions of
Section 4 of the Limitation Act would apply to the filing of
the application under Section 34 of the A&C Act because
in such cases there is neither any inaction nor any lack of
diligence on the part of the aggrieved person.
FAO (OS) No.503/2007
10. In this case, the Appellant has received the arbitral Award
dated 13.02.2004 on 23.02.2004. The period of three
months for filing an application for setting aside expired
on 24.05.2004 and the extended period of 30 days, if there
was sufficient cause expired on 23rd of June, 2004. As per
the Notification dated 29.05.2004 issued by this Court, the
Court was closed for Summer Vacation from 28th May to
3rd of July. It was also mentioned that for the purposes of
limitation, the Court reopens on 5.07.2004. Admittedly,
the application for setting aside of the Award was filed on
5.07.2004. Thus, if we hold that there was sufficient
cause for condonation of delay upto 30 days, application
would be deemed to be filed within the period of
limitation. The reasons given for condonation of delay in
para 1 of the impugned order are :-
(i) "Petitioner received arbitral award
dated 13.2.2004 on 23.2.2004.
(ii) Various cells of the department
like VAS, Legal & LF Cells of
Department of Telecom (DOT) took time
to examine the arbitral award from
24.2.2004 to 12.5.2004.
(iii) Arbitral award was referred to the
department of Legal Affairs for their
advice to challenge the award on
13.5.2004 which referred the matter for
advice to Legal Cell and it was on
24.5.2004 that the department of Legal
Affairs was requested for appointment
of government counsel for defending the
case.
(iv) Government counsel was
appointed by the department of Legal
Affairs on 27.5.2004. There is delay of
approximately one month and 12 days in
filing the objection petition which was
filed on 5.7.2004."
11. In the impugned order the learned Single Judge has
referred to :-
1. State of Rajasthan v. Shri Umrao
Singh - 1994(5) SLR 638.
2. State of Haryana v. Chandra Mani
and Ors. -(1996) 3 SCC 132.
3. Collector, Land Acquisition,
Anantnag and Another v. Mst.
Katiji and others - AIR 1987 SC
1353.
4. G. Ramegowda, Major etc. v. The
Special Land Acquisition Officer,
Bangalore - AIR 1988 SC 897.
5. Union of India v. R.P. Builders - 57
(195) DLT 337 (DB).
6. Union of India v. Shiv Darshan
Singh (Sh.) & Ors. - 1999 IV AD
(Delhi) 226.
7. Kutch District Panchayat v. Premji
V. Dudiya - MANU/GJ/0239/2000.
8. State of West Bengal, represented
by The Secretary, Department of
Finance, Government of West
Bengal v. West Bengal Judicial
Service Association and Ors.
9. State of Gujrat v. Heirs of Decd.
Praga Dungar.
wherein the delay on account of administrative exigencies
was found to be sufficient cause for condonation of delay.
The learned Single Judge, however, came to the
conclusion that the said judgments were of no help
because of the complete embargo placed by sub-Section
(3) of Section 34 of the A&C Act to entertain objections
after a period of three months plus 30 days.
12. We have already held above that the application for
setting aside an Award shall be deemed to be filed within
the extended period of 30 days it having been filed on the
reopening day of the Court provided there was sufficient
cause for condonation of delay. The reasons disclosed for
condonation of delay are that the application could not be
filed within three months as file had to be moved to the
various authorities who had to take the decision whether
application under Section 34 is to be filed or not. In other
words, there was delay on account of bureaucratic
reasons. On the basis of the judgments referred to in para
11 above and a Division Bench judgment of this Court in
„Union of India vs. R.P. Builders, 57 (1995) DLT 337 (DB)‟
there is no manner of doubt that the Appellant had shown
sufficient cause for not filing the application within the
initial period of three months and is entitled to the
condonation of delay of 30 days on account of delay
arising from bureaucratic procedure. The impugned
order, therefore, cannot be sustained. The same is
accordingly set aside. Consequently, application is
remanded to the learned Single Judge for disposal of the
objections on merits. No costs.
13. All pending applications also stand disposed of.
FAO (OS) No.426/2010
14. In the application for condonation of delay moved before
the learned Single Judge under Section 34 (3) of the A&C
Act, it has been stated that the Award passed on
28.08.2009 was received by the Appellant on 5.09.2009.
Garrison Engineer being Executing Authority sent the
same to Commander Works Engineer who forwarded the
case to Chief Engineer and so on and ultimately final
(legal) opinion was given on 24th December, 2009. The
Appellant received the said opinion on 29.12.2009.
Ultimately, Litigation Cell was contacted for appointment
of Govt. Counsel and the application for setting aside of
the Award was filed on 6th January, 2010. In substance,
the plea is that there was bureaucratic delay which could
be condoned upto 30 days. The delay to that extent is
therefore liable to be condoned.
15. During the course of arguments, it was very fairly
admitted by Mr. A.S. Chandhiok, learned ASG that the
Award had been received by the Chief Engineer on
2.09.2009 and by the Garrison Engineer on 05.09.2009.
Mr. Chandhiok has however urged that as per Section 34
(3) the period of limitation for filing an application shall
run from the date on which the party making the
application (for setting aside the Award) had received the
arbitral Award. The term "Party" as per Section 2 (h) of
the A&C Act means "A party to an Arbitration
Agreement".
16. Mr. A.S.Chandhiok, submits that for all practical purposes
Garrison Engineer was the party to the Arbitration
Agreement in the sense that he was the Executing
Authority of the work; vide letter dated 30th March, 2006
he had issued the work order to the Respondent and vide
letter dated 29th March, 2006 it had been made clear to
the Respondent (Contractor) that any correspondence in
connection with the contract should be addressed to
Garrison Engineer (Project), ABHM, Delhi Cantt. Mr. A.S.
Chandhiok, heavily relies upon „National Projects
Constructions Corpn. Ltd. Vs. Bundela Bandhu
Construction Company, 139 (2007) DLT 676 (DB)‟ to
which one of us (Vikramajit Sen, J.) was a party where it
had been held that the notice of filing of the Award shall
be effective from the date it is served on the concerned
official. Reliance is also placed on „Union of India vs.
Tecco Trichy Engineers & Contractors, (2005) 4 SCC
239‟ where it was held that in the context of a huge
organization like Railways the copy of the Award has to be
received by the person who has knowledge of the
proceedings and who would be the best person to
understand and appreciate the arbitral Award and also to
take a decision in the matter of moving an application
under sub-Section (1) or (5) of Section 33 or under sub-
Section (1) of Section 34.
17. It has been submitted that the proper party in the instant
case would be the Garrison Engineer, particularly, in view
of the acceptance of this position vide letter dated
29.03.2006 written by the Appellant to the Respondent.
18. On the other hand, Mr. Akhil Sibal, learned counsel for the
Respondent has urged that the Chief Engineer was the
party to the Arbitration Agreement as provided under
Section 2 (h) of the A&C Act. Mr. Sibal also relies on
Tecco Trichy Engineers particularly, paragraph 10 of
the report which is extracted hereunder for ready
reference:-
"10. In the present case, the Chief
Engineer had signed the agreement on
behalf of Union of India entered into
with the respondent. In the arbitral
proceedings the Chief Engineer
represented the Union of India and the
notices, during the proceedings of the
Arbitration, were served on the Chief
Engineer. Even the arbitral award
clearly mentions that the Union of India
is represented by Deputy Chief
Engineer/Gauge Conversion, Chennai.
The Chief Engineer is directly concerned
with the arbitration, as the subject-
matter of arbitration relates to the
department of the Chief Engineer and he
has direct knowledge of the arbitral
proceedings and the question involved
before the arbitrator. The General
Manager of the Railways has only
referred the matter for arbitration as
required under the contract. He cannot
be said to be aware of the question
involved in the arbitration nor the
factual aspect in detail, on the basis of
which the Arbitral Tribunal had decided
the issue before it, unless they are all
brought to his notice by the officer
dealing with that arbitration and who is
in charge of those proceedings.
Therefore, in our opinion, service of
arbitral award on the General Manager
by way of receipt in his inwards office
cannot be taken to be sufficient notice so
as to activate the department to take
appropriate steps in respect of and in
regard to the award passed by the
arbitrators to constitute the starting
point of limitation for the purposes of
Section 34 (3) of the Act. The service of
notice on the Chief Engineer on 19-3-
2001 would be the starting point of
limitation to challenge the award in the
Court."
19. It is not disputed that in the instant case the Chief
Engineer had signed the Arbitration Agreement on behalf
of the Union of India and was therefore a party as
envisaged under Section 34 (3) read with Section 2 (h) of
the A&C Act. This view is further fortified from the fact
that application for setting aside of the Award was
preferred by the Union of India through the Chief
Engineer, Delhi Zone. Even the instant Appeal has been
preferred by Union of India, Chief Engineer, Delhi Zone.
20. In Tecco Trichy Engineers the General Manager of the
Railways had simply referred the matter for arbitration as
required under the contract. Since the Chief Engineer
had signed the Agreement on behalf of the Union of India,
entered into with the Respondent, the Chief Engineer
represented Union of India in the arbitral proceedings and
the notices during the proceedings were served upon the
Chief Engineer. It was held that the Chief Engineer was
directly concerned with the arbitration. In the instant
case also the Chief Engineer was not only the signatory to
the Arbitration Agreement but he had also filed the claim
statement before the arbitrator; UOI through Chief
Engineer had also filed the application under Section 34
(3) for setting aside the Award. He has even filed the
instant appeal. Simply because the day to day work of
construction under the contract was to be looked after and
correspondence entered into with the Garrison Engineer,
the Garrison Engineer does not become a party to the
arbitration agreement. Tecco Trichy Engineers
therefore, does not help the Appellant, rather it supports
the case of the Respondent.
21. Under these circumstances, the receipt of Award by the
Chief Engineer on 2nd September, 2009 shall be the
starting point of limitation for filing an application under
Section 34 (1) of the A&C Act. The period of three months
consequently expired on 3rd December, 2009 and a further
period of 30 days on the ground of sufficient cause for not
filing the application within the period of three months
also comes to an end on 2nd January, 2010. The Court had
opened on 2nd January, 2010. The application under
Section 34 (1) of the A&C Act, however, was preferred
only on 6th January, 2010. Thus, assuming that there was
sufficient cause for condonation of delay, the same was
clearly barred by limitation. Section 4 of the Limitation
Act comes to the rescue of the aggrieved party only when
the Appeal, application etc. is filed on the reopening day
and not thereafter. No extension is permissible on the
basis of ratio of Popular Construction Company. Thus,
there is no error or infirmity in the order impugned in this
appeal. Appeal is without any merit. The same is
accordingly dismissed with costs of `25,000/-.
22. All pending applications also stand disposed of.
(G.P. MITTAL)
JUDGE
(VIKRAMAJIT SEN)
JUDGE
December 01, 2010
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