Deepak Khosla And Ors. vs Vikram Bakshi And Ors.
2018 Latest Caselaw 490 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                       Decided on: 19.01.2018

+      C.M. NOS.16893/2017 & 16894/2017 IN FAO (OS) 359/2011
       DEEPAK KHOSLA AND ORS.                        ..... Appellants
                      Through : Appellant in person.

                              versus

       VIKRAM BAKSHI AND ORS.                     ..... Respondents

Through : Sh. Rishi Sood with Sh. Anand. M.

Mishra, Advocate, for Respondent No.1.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE SANJEEV SACHDEVA MR. JUSTICE S. RAVINDRA BHAT % C.M.NOS.16894/2017 (for condonation of delay) & C.M. APPL.16893/2017 (for restoration)

1. The appellant, by this application, seeks condonation of delay of 805 days in filing an application (CM No. 16893/2017) for restoration of the appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act"), against an order of the learned Single Judge granting interim relief to the respondent, Mr. Vikram Bakshi under Section 9 of the Arbitration Act, passed on 16.11.2010.

2. It is unnecessary to set out the entire gamut of facts, save those that are germane to decide this application for condonation of delay. Mr. Vikram Bakshi, the respondent in this appeal ("Bakshi" hereafter), had approached this Court under Section 9 of the Arbitration Act seeking interim relief against alleged violations of an agreement dated 31.03.2006 entered between

him, Ms. Sonia Khosla, Mr. R.P. Khosla and M/s. Montreaux Resorts Pvt. Ltd. ("Company") to finance and develop a resort-cum-real estate development venture at Kasauli, Himachal Pradesh. Clause 29 of the said agreement provided for arbitration of disputes that arose between the contracting parties. Bakshi alleged that the first and third respondents in the petition were not allowing the arbitration proceedings to proceed and simultaneously calling for and convening board and shareholder meetings in breach of the agreement dated 31.03.2006 and without his knowledge, although he was the majority shareholder in the Company. Mr. Bakshi in his Section 9 petition sought, inter alia, relief in terms of restraining the respondents in that petition from giving effect to any resolution passed in any EGM, board or shareholder meeting, till the passing of the award by the arbitrators. Further, he also sought an injunction against holding any board or shareholding meeting of the Company till the award of the arbitrators, restraining Mr. Deepak Khosla from acting as the Managing Director or shareholder of the Company and furthermore, restraining the Registrar of Companies from accepting any forms from any of the respondents till the passing of the award.

3. By order dated 16.11.2010, a learned Single Judge found that unless the reliefs claimed by the petitioner were granted, they would prejudice the arbitral proceedings and also affect the rights of the parties. Therefore, he granted interim relief under Section 9 in the application filed by Bakshi. Against this order, Mr. Deepak Khosla filed FAO (OS) 359/2011. The appeal was accompanied by an application for condonation of delay of 247 days; this Court allowed the application and took the appeal on record. The appeal was listed from time to time.

4. On 11.02.2015, an order was passed by this Court, whereby the Court dismissed the appeal for non-prosecution as no one appeared for the appellants when the matter was called out, even the second time. Thereafter, C.M. No. 16893/2017 was filed, to restore the appeal [FAO (OS) 359/2011] to the file of the Court. However, this application was filed after a delay of 805 days.

5. Mr. Deepak Khosla, who appeared in person, urged that the delay in filing this application must be condoned. It was urged that that the dismissal of the appeal for non-prosecution only came to the knowledge of the appellant in the course of hearings before the National Company Law Tribunal, in which the opposite party attempted to place reliance on the said order dated 16.11.2010. Only after that did the appellant, on searching on the website of the Delhi High Court, find the said order and was surprised to see that his appeal had been dismissed. Therefore, Mr. Khosla contends, that there is no mala fide in the delay in filing the application for restoration.

6. Mr. Khosla further urged that the impugned order was passed without jurisdiction and contrary to the principles of audi alterum partum and hence the order is a nullity. It is urged that the law of limitation does not apply to an order that is a nullity in law, because such an order is void ab initio as if non est, that is it never existed. Such an order, urged Mr. Khosla, can be challenged any time. Reliance is placed on the following part of the decision in Kiran Singh v. Chaman Paswan, AIR 1954 SC 340 to advance this proposition:

"It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and

even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties."

7. Lastly, it is urged that the appellant has been embroiled in a number of litigations across the country and in his professional engagements as an Advocate, and accordingly, did not have the time to file this application within the stipulated period.

8. Section 37 of the Arbitration Act provides that an order granting or refusing an interim measure under Section 9 is an appealable order. However, Section 37 or any other provision of the Arbitration Act does not provide for the limitation period for filing such an appeal. Section 43 of the Arbitration Act, however, provides that the Limitation Act, 1963 would be applicable to arbitration proceedings; even otherwise, considering that any specific limitation period is not prescribed for filing appeals under Section 37, the rules under the Limitation Act, 1963 would ipso facto apply in view of Section 3 and Section 29 of the Limitation Act.

9. As a matter of law, it cannot be denied that while adjudicating an application for condonation of delay, the Court should not take a pedantic approach. The law of limitation cannot be allowed to become an obstacle or come in the way of dispensation of justice, or deny relief in genuine cases to the petitioner. The Court possesses the discretion or the inherent jurisdiction to waive, or condone, any delay in filing an appeal. However, much as with the exercise of any discretion, there are certain principles governing condonation of delay by the Court. The Supreme Court reviewed the law on

condonation of delay in Basawaraj v. The Spl. Land Acquisition Officer, AIR 2014 SC 746 and held:

"Sufficient cause is the cause for which Defendant could not be blamed for his absence. The meaning of the word "sufficient" is "adequate" or "enough", inasmuch as may be necessary to answer the purpose intended. Therefore, the word "sufficient" embraces no more than that which provides a platitude, which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case, duly examined from the view point of a reasonable standard of a cautious man. In this context, "sufficient cause" means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has "not acted "diligently" or "remained inactive". However, the facts and circumstances of each case must afford sufficient ground to enable the Court concerned to exercise discretion for the reason that whenever the Court exercises discretion, it has to be exercised judiciously. The applicant must satisfy the Court that he was prevented by any "sufficient cause" from prosecuting his case, and unless a satisfactory explanation is furnished, the Court should not allow the application for condonation of delay. The court has to examine whether the mistake is bona fide or was merely a device to cover an ulterior purpose.

12. It is a settled legal proposition that law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes. The Court has no power to extend the period of limitation on equitable grounds. "A result flowing from a statutory provision is never an evil. A Court has no power to ignore that provision to relieve what it considers a distress resulting from its operation." The statutory provision may cause hardship or inconvenience to a particular party but the Court has no choice but to enforce it giving full effect to the same. The legal maxim "dura lex sed lex" which means "the law is hard but it is the law", stands attracted in

such a situation. It has consistently been held that, "inconvenience is not" a decisive factor to be considered while interpreting a statute.

13. The Statute of Limitation is founded on public policy, its aim being to secure peace in the community, to suppress fraud and perjury, to quicken diligence and to prevent oppression. It seeks to bury all acts of the past which have not been agitated unexplainably and have from lapse of time become stale.

According to Halsbury's Laws of England, Vol. 24, p. 181:

330. Policy of Limitation Acts. The courts have expressed at least three differing reasons supporting the existence of statutes of limitations namely, (1) that long dormant claims have more of cruelty than justice in them, (2) that a Defendant might have lost the evidence to disprove a stale claim, and (3) that persons with good causes of actions should pursue them with reasonable diligence. An unlimited limitation would lead to a sense of insecurity and uncertainty, and therefore, limitation prevents disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have been lost by a party's own inaction, negligence or laches."

10. This Court, therefore, has to first decide whether there was "sufficient cause" for delay in filing the application for restoration of the appeal filed under Section 37 of the Arbitration Act. It is urged that since the impugned order is a nullity in law, it could be challenged at any time and the law of limitation would not apply, since a null order is essentially non est or void ab initio and hence could be challenged even after the limitation period as being so. The decision of the Supreme Court in Kiran Singh (supra) was

highlighted as being in support of this proposition. However, a perusal of the said decision would reveal that the Court in that case was not concerned with the question of limitation at all; the question of limitation was not even considered in that case. That being the case, the appellant's reliance on this decision to advance the stated proposition is misplaced. That decision, having not considered the question of limitation at all, cannot be interpreted in a manner that is so wide as to lay down the proposition that in all cases where an order is alleged to be null and void, the law of limitation would not apply. Even otherwise, if the proposition advanced by the appellant were to be accepted, in all cases where a party would run afoul of the limitation period in an appeal, it would contend that the order it challenges is null and void and, therefore, the limitation period would not apply. In fact, this proposition was specifically rejected by the Supreme Court in State of Punjab v. Gurdev Singh, AIR 1991 SC 2219:

"First of all, to say that the suit is not governed by the law of Limitation runs afoul of our Limitation Act. The statute of Limitation was intended to provide a time limit for all suits conceivable. Section 3 of the Limitation Act provides that a suit, appeal or application instituted after the prescribed "period of limitation" must subject to the provisions of Section 4 to 24 be dismissed although limitation has not been set up as a defence. Section 2(j) defines the expression' 'period of limitation'' to mean the period of limitation prescribed in the Schedule for suit, appeal or application. Section 2(j) also defines, ''prescribed period'' to mean the period of limitation computed in accordance with the provisions of the Act. The Court's function on the presentation of plaint is simply to examine whether, on the assumed facts, the plaintiff is within time. The Court has to find out when the "right to sue" accrued to the plaintiff. If a suit is not covered by any of the specific articles prescribing & period of limitation, it must fall within the

residuary article. The purpose of the residuary article is to provide for cases which could not be covered by any other provision in the Limitation Act. The residuary article is applicable to every variety of suits not otherwise provided for. Article 113 (corresponding to Article 120 of the Act 1908) is a residuary article for cases not covered by any other provisions in the Act. It prescribes a period of three years when the right to sue accrues. Under Article 120 it was six years which has been reduced to three years under Article 113. According to the third column in Article 113, time commences to run when the right to sue accrues.

The words "right to sue" ordinarily mean the right to seek relief by means of legal proceedings. Generally, the right to sue accrues only when the cause of action arises, that is, the right to prosecute to obtain relief by legal means. The suit must be instituted when the right asserted in the suit is infringed or when there is a clear and unequivocal threat to infringe that right by the defendant against whom the suit is instituted.

5. In the instant cases, the respondents were dismissed from service. May be illegally. The order of dismissal has clearly infringed their right to continue in the service and indeed they were precluded from attending the office from the date of their dismissal. They have not been paid their salary from that date. They came forward to the Court with a grievance that their dismissal from service was no dismissal in law. According to them the order of dismissal was illegal, inoperative and not binding on them. They wanted the Court to declare that their dismissal was void and inoperative and not binding on them and they continue to be in service. For the purpose of these cases, we may assume that the order of dismissal was void, inoperative and ultra vires, and not voidable.

If an Act is void or ultra vires it is enough for the Court to declare it so and it collapses automatically, It need not be set aside, the aggrieved party can simply seek a declaration that it

is void and not binding upon him. A declaration merely declares the existing state of affairs and does not 'quash' so as to produce a new state of affairs.

6. But nonetheless the impugned dismissal order has atleast a de facto operation unless and until it is declared to be void or nullity by a competent body or Court. In Smith v. East Elloe Rural District Council 1956 AC 736 Lord Redcliffe observed:

An order even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.

7. Apropos to this principle, Prof. Wade states: "the principle must be equally true even where the 'brand' of invalidity' is plainly visible; for their also the order can effectively be resisted in law only by obtaining the decision of the Court (See: Administrative Law 6th Ed. p. 352). Prof. Wade sums up these principles:

The truth of the matter is that the court will invalidate an order only if the right remedy is sought by the right person in the right proceedings and circumstances. The order may be hypothetically a nullity, but the Court may refuse to quash it because of the plaintiff's lack of standing, because he does not deserve a discretionary remedy, because he has waived his rights, or for some other legal reason. In any such case the 'void' order remains effective and is, in reality, valid. It follows that an order may be void for one purpose and valid for another, and that it may be void against one person but valid against another.

(Ibid p.352)

8. It will be clear from these principles, the party aggrieved by the invalidity of the order has to approach the Court for relief of declaration that the order against him is inoperative and not binding upon him. He must approach the Court within the prescribed period of limitation. If the statutory time limit expires the Court cannot give the declaration sought for."

The Supreme Court in State of Kerala v. M.K. Kunhikannan, AIR 1996 SC 906, made similar observations.

11. Therefore, the appellant's reliance on this ground to justify the delay in filing this application does not persuade the Court.

12. The other ground relied on by the appellant to seek condonation of delay is that he was occupied in various other Courts across India in a series of litigations and in his professional engagements as an Advocate. However, this Court is of the opinion that this ground relied on by the appellant - that he was busy in other litigations across the country, would not meet the threshold of "sufficient cause", as laid down by the Supreme Court in Basawaraj (supra), required to explain the delay in filing the application, that too of more than 800 days. Since the delay is of such a long duration, correspondingly, the burden to demonstrate "sufficient cause" would be even higher on the appellant to justify such an inordinate delay and that it was based on sound reasons. In the circumstances of the case, this Court is of the opinion that the appellant has been unable to show any "sufficient cause" as to condone the delay in filing this appeal.

13. For the above reasons, C.M. No.16894/2017for condonation of delay is rejected. The application - C.M. No. 16893/2017 for restoration of FAO

(OS) 359/2011 to the file of the Court, therefore, has to be dismissed as being filed beyond the period of limitation. No order on costs.

S. RAVINDRA BHAT (JUDGE)

SANJEEV SACHDEVA (JUDGE) JANUARY 19, 2018