Mr. Lalit Kumar vs M/S Indiabulls Securities Ltd. ...
2017 Latest Caselaw 2305 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         FAO No.246/2016

%                                                   9th May, 2017

MR. LALIT KUMAR                                       ..... Appellant
                          Through:     Mr. Hemant Sharma, Advocate.
                          versus

M/S INDIABULLS SECURITIES LTD. AND ANR. ..... Respondents

Through: Mr. Ankit Jain, Advocate for Respondent No.1.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not? YES

VALMIKI J. MEHTA, J (ORAL)

1. This first appeal has been filed under Section 37 of the

Arbitration & Conciliation Act, 1996 (hereinafter referred to as „the

Act‟) challenging the impugned order dated 25.2.2016 of the court

below dismissing the objections filed by the present appellant under

Section 34 of the Act as barred by limitation.

2. The facts of the case are that the present appellant was a

customer of the respondent no.1/broking firm. Since the disputes and

differences arose between the parties with respect to transactions

entered into, and which were denied by the present appellant, the

appellant invoked arbitration proceedings under the aegis of the

National Stock Exchange. Arbitration proceedings culminated in

passing of the Award dated 29.6.2013 whereby the Arbitrator Sh. S.S.

Agarwal passed his Award dated 29.6.2013 awarding a sum of

Rs.6,34,579.23/- to the respondent no.1 in the counter claim filed by

the respondent no.1 in the arbitration proceedings and the claim

petition of the present appellant was dismissed as being not

substantiated. The Award dated 29.6.2013 was admittedly posted by

the Arbitration Tribunal to the parties along with the covering letter

dated 12.7.2013 and there is no dispute that the present appellant

would have received the same by 14th or 15th July, 2013.

3. In law the limitation period of 90 days for filing

objections to the Award therefore begins from 14th or 15th July, 2013

with the further fact that there can be condonation of delay of 30 days

after 90 days in filing of the objections i.e objections can be filed under

Section 34 to the Award within 120 days. After a period of 120 days,

there cannot be condonation of delay in view of the judgment of the

Supreme Court in the case of Union of India Vs. M/s Popular

Construction Co. (2001) 8 SCC 470. I also note that though delay

cannot be condoned beyond a period of 120 days, however, Supreme

Court has held in the judgment in the case of Consolidated

Engineering Enterprises Vs. Principal Secretary, Irrigation

Department and Others (2008) 7 SCC 169 that the provision of

Section 14 of the Limitation Act, 1963 will apply for the benefit of the

person who has filed objections in case the objections are filed in a

Court which does not have jurisdiction to try the objections.

4. In the present case the appellant after receiving the copy

of the Award filed a complaint with the Consumer Forum on

13.8.2013. The contention of the appellant is that the period spent in

pursuing of this complaint before the Consumer Forum from 13.8.2013

till 21.7.2015 be excluded under Section 14 of the Limitation Act as

per the ratio of the judgment of the Supreme Court in the case of

Consolidated Engineering Enterprises (supra).

5. On behalf of the respondent no.1 however it is argued that

the appellant cannot be granted the benefit of Section 14 of the

Limitation Act because the complaint filed before the Consumer

Forum was an independent proceeding which was not in the nature of

objections under Section 34 of the Act and which becomes clear from

the averments of the complaint filed, and that if at all there remains any

doubt whatsoever the same is resolved from the fact that the

respondent no.1 in its written statement before the Consumer Forum

clearly pleaded that the appellant was prohibited by the doctrine of res

judicata in filing of the complaint before the Consumer Forum

inasmuch as the disputes between the parties stood settled in terms of

the Award of the Arbitrator dated 29.6.2013 and in response to the

written statement of the present respondent no.1 in the Consumer

Forum all that the appellant in his replication pleaded was that the

Award is illegal on account of collusion of the respondent no.1 herein

with the Arbitrator.

6. The issue before this Court is whether the appellant is

entitled to the benefit of Section 14 of the Limitation Act for the period

spent of pendency of the consumer case filed by the appellant before

the Consumer Forum. Benefit of Section 14 of the Limitation Act can

only be given if the requirements of Section 14 are complied with and

which provides that a person seeking benefit of Section 14 has pursued

the alternative remedy bonafidely and in good faith and that the

alternative proceedings in a Court which lacked jurisdiction should be

pursued with due diligence. Section 14 of the Limitation Act reads as

under:-

"Section 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 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 court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order, where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature.

Explanation.- For the purposes of this section-

(a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted;

(b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding;

(c) misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction."

7. (i) It is clear from the reading of Section 14 of the Limitation

Act that benefit of Section 14 of exclusion of time spent in the

alternative proceedings has to be bonafide and which is clear from the

heading of the Section itself. Besides the fact that the alternative

proceedings pursued must be bonafide and with due diligence, Section

14 also makes it clear that the pursuing of the proceedings in the Court

without jurisdiction is in good faith.

(ii) We have therefore to examine the facts of the present case as to

whether the proceedings filed by the present appellant before the

Consumer Forum satisfies the ingredients of Section 14 of the

Limitation Act as stated above.

(iii) In my opinion, the benefit of Section 14 of the Limitation Act

can be available to the appellant only if proceedings filed before the

Consumer Forum were in the nature of objections under Section 34 of

the Act whereby the present appellant would have challenged the

Award as illegal on various grounds as per Section 34 of the Act,

however, it is seen that there is not even a whisper of any averment

whatsoever in the complaint filed before the Consumer Forum of any

arbitration proceedings having taken place or of passing of the Award

or of the fact that Award is illegal on various grounds as stated in the

complaint before the Consumer Forum. Therefore the proceedings

initiated by the present appellant before the Consumer Forum were

independent proceedings and were not in the nature of objections under

Section 34 of the Act. For this reason itself, the appellant cannot claim

that period spent in the proceedings before the Consumer Forum can be

said to be alternative proceedings filed in a Court which did not have

jurisdiction because the proceedings filed before the Consumer Forum

were not in the nature of objections to the Award but were independent

proceedings as per facts pleaded in the Consumer Forum complaint

and which facts were more or less identical to the claim petition filed

by the present appellant in the arbitration proceedings.

8. In my opinion, it cannot also be held that the time spent

by the appellant before the Consumer Forum can be said to be spent

bonafidely and in good faith inasmuch as the present respondent no.1

in its written statement had specifically taken up an objection that the

complaint filed before the Consumer Forum was an independent

complaint on the same facts which were decided by an arbitration

Award and was barred by res judicata. The respondent no.1 herein

specifically pleaded that the complaint before the Consumer Forum

was barred by res judicata in view of the fact that arbitration

proceedings took place, and which resulted in the Award of the

Arbitrator Sh. S.S. Agarwal awarding a claim of Rs.6,34,579.23/- to

the respondent no.1. This relevant para 8 of the written statement also

besides annexing copy of the Award specifically stated that if the

complainant had a genuine ground to challenge the Award then the

appellant ought to have filed objections to the Award and which was

not done. In response to this written statement all that the appellant

pleaded in his replication was that the Arbitrator had acted in collusion

with the present respondent no.1 and hence the arbitration proceedings

were wrong. In my opinion, therefore, the proceedings before the

Consumer Forum were not pursued bonafidely and in good faith and

hence there does not arise the issue of giving benefit to the appellant of

Section 14 of the Limitation Act.

9. Learned counsel for the appellant has sought to place

reliance upon the order passed in Lok Adalat proceedings before the

Consumer District Forum on 11.7.2015 and it was argued that since the

present respondent no.1 was represented in the proceedings in the Lok

Adalat which allowed withdrawal of the complaint with entitlement of

the appellant to file fresh proceedings and pendency of the case in

Consumer Forum will be excluded for the purpose of limitation, and

accordingly it is argued that the objections under Section 34 of the Act

were within limitation as the period before the Consumer Forum had to

be excluded because of Section 14 of the Limitation Act when read

with the order passed in the Lok Adalat proceedings of 11.7.2015.

10. In order to appreciate the argument of the appellant, let

me reproduce the order dated 11.7.2015 of the Lok Adalat in the

consumer disputes case and which order reads as under:-

      "                        ORDER
      11/07/2015
      Matter taken up in Lok Adalat.

Present: Advocate- Hemant Sharma for complainant along with complainant in person and present Advocate Anju Mathur for OP. It is a matter pertaining to share and securities. Complainant is allowed to withdraw the matter with the liberty to file a fresh complaint/proceedings in appropriate Forum and period of pendency of this case is to be deducted from any other complaints made by him for purpose of limitation. Signature of complainant obtained on record. File consigned to R/R. Order may be given dasti.

I withdraw my complaint and approach the appropriate Forum.

      Sd/- (Illegible) Complaint. 11.7.2015
                                       Sd/-                  Sd/-
                                       (Member)              (Member)"

11. In my opinion, first of all Lok Adalat is not a Court and

Lok Adalat had no powers like a Court to direct that benefit of Section

14 of the Limitation Act could be given to the present appellant.

Further whether or not benefit under Section 14 of the Limitation Act

has to be given has to be decided by the Court in which the application

under Section 14 of the Limitation Act is filed and not by the Court

which allows proceedings to be withdrawn for being filed in the

competent court. No doubt, courts do make observations while

allowing the litigant to withdraw a case that when a case is filed before

an appropriate forum the competent court will liberally look at the

provision of the exclusion of time as per Section 14 of the Limitation

Act, however, such observations which are made are only in the nature

of observations and are not binding directions for the competent court

which decides the application under Section 14 of the Limitation Act.

Therefore for both the reasons that Lok Adalat was not a Court which

was entitled to pass an order giving benefit of exclusion of time under

Section 14 of the Limitation Act and also the fact that it is only the

Court before which an application is filed under Section 14 of the

Limitation Act which has the power to allow exclusion of time,

therefore the appellant cannot derive any benefit of the order dated

11.7.2015 passed in the Lok Adalat proceedings, and which benefit

cannot be given to the appellant even if the respondent no.1 was

represented in the Lok Adalat proceedings.

12. I may also note that the present appellant when he filed

objections under Section 34 of the Act in the court below did not file

an application under Section 14 of the Limitation Act for exclusion of

time spent in the proceedings before the Consumer Forum, yet the

court below has acted liberally in treating the averments made in

Section 34 petition as grounds for exclusion of time under Section 14

of the Limitation Act.

13. In view of the above it is clear that objections filed by the

present appellant under Section 34 of the Act were grossly barred by

time. Appellant was not entitled to benefit of exclusion of time under

Section 14 of the Limitation Act for the period spent by the appellant

in the Consumer Forum. The court below has rightly dismissed the

objections as time barred though the court below has not discussed the

issue of Section 14 of the Limitation Act, however, this Court has done

so in exercise of powers underlying Order XLI Rule 24 CPC read with

the ratio of the recent judgment of the Supreme Court in the case of

Lisamma Antony and Another Vs. Karthiyayani and Another (2015)

11 SCC 782.

14. Dismissed.

MAY 09, 2017/ Ne                             VALMIKI J. MEHTA, J