Bharat Sanchar Nigam Limited vs Haryana Telecom Limited & Anr.
2010 Latest Caselaw 1419 Del

                                            #F-20
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      O.M.P. 251/2001

BHARAT SANCHAR NIGAM
LIMITED                                     ..... Petitioner
                 Through                    Mr. Dinesh Agnani, Ms. Leena
                                            Tuteja and Mr. Harsh Parekh,
                                            Advocates

                       versus

HARYANA TELECOM
LIMITED & ANR.                              ..... Respondents
                                Through:    Mr. Narendera M. Sharma with
                                            Ms. Mithu Jain, Advocates and
                                            Mr. S.L. Uppal, AR for R-1.


%                                  Date of Decision : March 15th, 2010

CORAM:
HON'BLE MR. JUSTICE MANMOHAN

1. Whether the Reporters of local papers may be allowed to see the judgment? No.
2. To be referred to the Reporter or not?                                    No.
3. Whether the judgment should be reported in the Digest?                    No.


                                JUDGMENT

MANMOHAN, J (ORAL)

1. Present petition has been filed under Section 34 of Arbitration

and Conciliation Act, 1996 (hereinafter referred to as "Act, 1996")

challenging the arbitral Award dated 7th August, 2000 passed by

Mr. Justice P.K. Bahri (Retd.).

2. At the outset, Mr. Narendera M. Sharma, learned counsel for

respondent-claimant submitted that the objection petition was barred by

limitation. He stated that the objection petition challenging the

impugned Award had initially been filed on 12th December, 2000

before the District Court, Ambala, Haryana and on 8 th January, 2001

before the High Court of Himachal Pradesh at Shimla. On an

application filed under Section 42 of Act, 1996 read with Order 7 Rule

11 of Code of Civil Procedure, 1908 (in short "CPC") by the

respondent-claimant, the District Court, Ambala vide order dated 16th

May, 2001 dismissed the objection petition under Order 7 Rule 11 of

CPC. Thereafter petitioner-objector filed the objection petition in this

Court on 9th July, 2001, even though on 22nd August, 2000 the

Arbitrator had forwarded a signed copy of the impugned Award to

petitioner-objector' counsel. In this connection, he drew my attention

to Item No. 24 of the Index of papers filed by the Arbitrator in this

Court and a UPC receipt showing despatch of a letter by the Arbitrator

to petitioner-objector' counsel Ms. Rashmi Gulati.

3. Mr. Sharma stated that assuming without admitting that service

upon the petitioner-objector' lawyer was not good enough, the

respondent-claimant had on 29th September, 2000 furnished another

photocopy of the corrected Award to the office of the

Chairman/Secretary of Department of Telecommunication (in short

"DOT"), Ministry of Communications & Information Technology,

Government of India which was duly received vide Diary No.

356/CH(TC). He stated that by way of abundant precaution on 3rd

October, 2000, another copy of the letter dated 29th September, 2000

along with corrected photocopy of the Award had been filed in the

Central Registry of DOT.

4. Mr. Sharma also referred to internal correspondence of the

petitioner-objector to show that officials of petitioner-objector had

started taking action on the impugned Award even prior to 20 th October,

2000.

5. Mr. Sharma stated that on 6th November, 2000 after obtaining a

certified copy of the Award from the Registry of this Court, another

photocopy of the said Award had been furnished to the petitioner-

objector. Consequently, according to him, the present objection

petition being beyond the maximum time period of three months plus

thirty days was clearly barred by limitation.

6. On the other hand, Mr. Dinesh Agnani, learned counsel for

petitioner-objector, without prejudice to the rights of petitioner-

objector, submitted that the limitation, if any, for filing the objections

would only start from 6th November, 2000 when respondent-claimant

furnished a photocopy of a certified copy of the corrected Award. He

stated that if 6th November, 2000 was taken as the starting point of

limitation, then the petitioner-objector' objection petition filed on 12th

December, 2000 before the District Court, Ambala was well within

limitation.

7. Mr. Agnani further stated that petitioner-objector' counsel, Ms.

Rashmi Gulati had not forwarded any copy of the impugned Award to

petitioner-objector. According to him, receipt of the Award, if any, by

petitioner-objector' counsel was irrelevant and meaningless.

8. Though initially Mr. Agnani took the stand that the entire Award

had not been furnished to petitioner-objector vide respondent-

claimant's letter dated 29th September, 2000 but later on, on a perusal of

the file he handed over a photocopy of the respondent-claimant's letter

dated 29th September, 2000 which showed that the said letter along with

a copy of the entire Award had been received by Secretary, DOT on the

said date vide despatch number mentioned by respondent-claimant's

counsel. He, however, stated that the said letter did not constitute

service of Award as firstly it was not a signed copy of the impugned

Award and secondly, it had not been forwarded by the Arbitrator

himself. In this connection, Mr. Agnani relied upon Sub-section 5 of

Section 31 of Act, 1996, which reads as under:-

31. Form and contents of arbitral award. -

xxxxx xxxx xxxx xxxx

(5) After the arbitral award is made, a signed copy shall be delivered to each party.

9. In support of the aforesaid submission, Mr. Agnani relied upon

the following judgments :-

A) National Projects Constructions Corporation Limited Vs. M/s.

Bundela Bandhu Constructions Company reported in AIR 2007

DELHI 202 (DB)

B) Union of India Vs. Tecco Trichy Engineers and Contractors

reported in AIR 2005 SC 1832.

C) Kempegowda Vs. National Highways Authority of India & Ors.

reported in 2008(2) Arb.L.R. 393 (Karnataka).

10. Mr. Agnani also pointed out that after the objection petition had

been rejected by the District Court, Ambala, petitioner-objector had on

9th July, 2001 filed the present objection petition in the Registry of this

Court. Mr. Agnani submitted that the petitioner-objector was entitled to

benefit of Section 14 of Limitation Act, 1963 (hereinafter referred to as

"Act, 1963) in pursuance to Supreme Court's judgment in the case of

Consolidated Engineering Enterprises Vs. Principal Secretary,

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

11. In rejoinder, Mr. Sharma stated that petitioner-objector was not

entitled to benefit of Section 14 of Act, 1963 as objection petition filed

before the District Court, Ambala was not maintainable in view of the

bar contained in Section 42 of Act, 1996, which reads as under:

"42. Jurisdiction. -Notwithstanding anything contained elsewhere in this part or in any other law for the time being in force, where with respect to an agreement any application under this Part has been made in a court, that alone shall have jurisdiction over the arbitral proceedings and all applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court."

12. Mr. Sharma stated that the objection petition filed by the

petitioner-objector before Ambala Court was rejected on filing of an

application by the respondent-claimant under Section 42 of Act, 1996

read with Order 7 Rule 11 of CPC which was contested by the

petitioner-objector. Mr. Sharma submitted that in view of the aforesaid

order, petitioner-objector could not claim benefit of Section 14 of Act,

1963 as Section 34 proceedings were certainly not proceeded with

either in good faith or with due diligence. The petitioner-objector even

filed an application for review of the order dated 16th May, 2001

rejecting objection petition under Section 42 of Act, 1996 read with

Order 7 Rule 11 CPC.

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 arbitral

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 arbitral award. However, Courts have the power to

condone a further delay of thirty days if sufficient cause is shown.

Accordingly, three months plus thirty days is the maximum period

within which an objection petition challenging an arbitral 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' case (supra), petitioners

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

prosecuting with due diligence a proceeding in another Court even

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

The necessary ingredients of Section 14 of Act, 1963 which have to be

complied with by petitioner before it can avail of the said benefit have

been stipulated in Consolidated Engineering Enterprises' case (supra)

itself. The relevant observations of Supreme Court in Consolidated

Engineering Enterprises' case (supra) read as under :-

"21. Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. On analysis of the said section, it becomes evident that the following conditions must be satisfied before Section 14 can be pressed into service:

(1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party; (2) The prior proceeding had been prosecuted with due diligence and in good faith;

(3) The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature; (4) The earlier proceeding and the latter proceeding must relate to the same matter in issue and; (5) Both the proceedings are in a court.

xxxx xxxx xxxx xxxx

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. The time during which a court holds up a case while it is discovering that it ought to have been presented in another court, must be excluded, as the delay of the court cannot affect the due diligence of the party. Section 14 requires that the prior proceeding should have been prosecuted in good faith and with due diligence. The definition of good faith as found in Section 2(h) of the Limitation Act would indicate that nothing shall be deemed to be in good faith which is not done with due care and attention. It is true that Section 14 will not help a party who is guilty of negligence, lapse or inaction. However, there can be no hard-and-fast rule as to what amounts to good faith. It is a matter to be decided on the facts of each case. It will, in almost every case be more or less a question of degree. The mere filing of an application in wrong court would not prima facie show want of good faith. There must be no pretended mistake intentionally made with a view to delaying the proceedings or harassing the opposite party. In the light of these principles, the question will have to be considered whether the appellant had prosecuted the matter in other courts with due diligence and in good faith."

16. Upon a perusal of the original arbitral record, I find that the

Arbitrator on 7th August, 2000 had passed the impugned arbitral Award

in favour of the respondent-claimant. Since the Arbitrator had passed

two arbitral awards between the same parties on the same day, the suit

numbers in the two awards had got interchanged. Accordingly,

respondent-claimant filed an application for correction of suit numbers

in the impugned Award under Section 33(1)(a) of Act, 1996. The

arbitral record further reveals that a copy of the application for

rectification had been served in the office of petitioner-objector-DOT

on 21st August, 2000 and the said typographical correction was carried

out by the Arbitrator on 22nd August, 2000. From Item No. 24 of the

Index of papers which states "copy of the Award sent through UPC to

Ms. Rashmi Gulati, Advocate for the respondent dated 22nd August,

2000" read with UPC receipt at page 233(C) of the arbitral record, I am

of the view that a signed copy of the impugned Award had been

despatched to petitioner-objector. In view of Section 114 of Evidence

Act, 1872 and Section 27 of General Clauses Act, 1897 a presumption

would have to be drawn that petitioner-objector were served with a

corrected copy of the Award in compliance with Sub-section (5) of

Section 31 of Act, 1996. Undoubtedly, the said presumption is a

rebuttable one but in the present case I find that the petitioner-objector

have till date not taken any steps to place on record any letter from its

previous lawyer to show that she had not received a signed copy of the

impugned Award. I am also of the opinion that delivery on any person

expressly or impliedly authorised by a "party" is delivery on that party.

In fact in S. Maharaj Baksh Singh Vs. Charan Kaur reported in AIR

1987 Punjab & Haryana 213 (DB) the Court held that a lawyer is

understood to embody his client in his own person. Order 3 of CPC

also entitles the advocate, appearing for one of the parties, to receive

service of process. A learned Single Judge of this Court in OMP

51/2005 tiled as Karmyogi Shelters Pvt. Ltd. Vs. Benarsi Krishna

Committee & Anr decided on 28th August, 2009 has held that to hold

that the award has to be delivered personally to the party and cannot be

delivered to the advocate representing the party would create

unnecessary delay/drag in the arbitration proceedings. Consequently, in

my opinion, deemed service of a signed copy of the arbitral Award

would have to be presumed upon the petitioner-objector' counsel and

the said service, to my mind, would constitute compliance of Sub-

section (5) of Section 31 of Act, 1996.

17. In any event, photocopy of the letter dated 29 th September, 2000

placed on record by Mr. Agnani would show that another duly

corrected copy of the impugned Award had been received by the

Chairman/Secretary of DOT on 29th September, 2000. The letter dated

29th September, 2000 along with official noting is reproduced

hereunder:-

BY HAND DELIVERY 29-9-2000 Union of India, Through Secretary, Department of Telecommunications, Ministry of Communications, Govt. of India, Sanchar Bhavan, 20-Ashok Road, NEW DELHI-110001

Dear Sir,

Sub: Arbitration Cases No.113/98 & 114/98 in the matter of Arbitration between M/s. Haryana Telecom Ltd.

v/s Union of India

Copies of Awards passed in the abovementioned two cases were Sd/-

29/9 dispatched to you from the office of Hon'ble Mr. Justice P.K. Bahri DDG/MM.I (Retd), Arbitrator, by UPC, vide their Index Ref No.Vol.1 page 233C for case No.114/98 and Vol.I page-165-B for case No.113/98 DDG(MMII) both on 22nd August, 2000. However, we also enclose herewith a Sd/- copy each of both the Awards passed in favour of Haryana 3/10 Telecom Ltd.,

The Awards were filed in the Hon'ble High Court on 26-8-2000 by 3477/DDG.MM.I the Ld. Arbitrator under Diary No.13453 for Case No.114/98 and 3/10 1342 for case No.113/98.

2736/DDGMM2/20 One copy each of the Ist page of both Awards in which Suit Nos. 00 were corrected have also been enclosed with the Awards. 4.10.2000 Kindly arrange to reimburse a sum of Rs.1,16,37,288/- awarded in 356/CH(TC)/2000 case No.113/98 and a sum of Rs.1,49,78,142/- awarded in case CC No.114/98 immediately.

                   Thanking you, we remain,                      ADG(ST)
                                                                 Examined & P/u         Dir (MMS)
                                                                 Award has to be honour
                   Yours faithfully,                             & Amount should be
                                                                 refunded within 2 months
                   FOR HARYANA TELECOM LIMITED,                  P/u immediately.
                                                                                      Sd/- 4/10/2k
                   AUTHORISED SIGNATORY
                   Encl: Copies of Awards as above.
                                                                 Pl. put up in correct file for
                                                                 examination
                                                                          Sd/- 5/10

18. It is pertinent to mention that in the arbitral proceedings, Union

of India, Department of Telecommunication through the Secretary was

the respondent-claimant. Accordingly, in my view, service of the

impugned Award on the Chairman/Secretary of DOT constitutes

service of notice of the Award upon the officer who was in-charge of

and against whom the claim had been filed. I am further of the opinion

that service of the impugned Award on the Chairman/Secretary of DOT

constitutes sufficient notice upon the DOT to take steps in respect of

and with regard to the impugned Award passed by the Arbitrator to

constitute starting point of limitation for the purposes of Section 34(3)

of Act, 1996 as clarified by the Supreme Court in Tecco Trichy

Engineers' case (supra).

19. In fact, in National Projects Constructions Corporation

Limited's case (supra) this Court clarified that Section 31(5) of the Act,

1996 did not contemplate a punctilious or fastidiously formal

connotation to the word 'delivered'. A substantial and authentic

compliance of Sub-section (5) of Section 31 of Act, 1996 would be

sufficient. In the present instance, I find that not only the Arbitrator but

also the respondent-claimant had given sufficient and adequate notice

of the impugned Award to petitioner-objector. Consequently, the

judgments cited by the learned counsel for petitioner-objector are not

applicable to the facts and circumstances of the present case.

20. There is yet another aspect namely, petitioner-objector had filed

two objection petitions against the same Award, one before District

Court, Ambala, Haryana and the other at High Court of Himachal

Pradesh at Shimla even though the first proceeding under Section 11 of

the Act, 1996 had been filed by respondent-claimant before this Court.

Consequently, in view of the categorical language of Section 42 of Act,

1996, both objection petitions were clearly without jurisdiction and it

cannot be said that the said proceedings had been filed in good faith and

prosecuted in a bona fide manner. Accordingly, in my opinion,

petitioner-objector would not be entitled to the benefit of Section 14 of

Act, 1963 for the period 12th December, 2000 to 09th July, 2001.

Consequently, if benefit of this period is not given to petitioner-

objector, then also the present petition would be beyond limitation.

21. Accordingly, present objection petition having been filed beyond

the limitation period is dismissed, but with no order as to costs.

MANMOHAN,J MARCH 15, 2010.

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