Bharat Sanchar Nigam Ltd. vs Haryana Telecom Ltd.

Manmohan, J.—Present petition has been filed u/s 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ''Act, 19%) challenging the arbitral award dated 7 August, 2000, passed by Mr. Justice P.K. Bahri (Retd.).

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 12 December, 2000, before the District Court, Ambala, Haryana, and on 8 January, 2001, before the High Court of Himachal Pradesh at Shimla. On an application filed u/s 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 16 May, 2001, dismissed the objection petition under order 7, Rule 11, of CPC. Thereafter, Petitioner-objector filed the objection petition in this Court on 9 July, 2001, even though on 22 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.

Mr. Sharma stated that assuming without admitting that service upon the Petitioner-objector'' lawyer was not good enough, the Respondent-claimant had on 29 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 and Information Technology, Government of India, which was duly received vide Diary No. 356/CH(TC). He stated that by way of abundant precaution on 3 October, 2000, another copy of the letter dated 29 September, 2000, along with corrected photocopy of the award had been filed in the Central Registry of DoT.

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 October, 2000.

Mr. Sharma stated that on 6 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.

On the other hand, Mr. Dinesh Agnani, learned Counsel for Petitioner-objector, without prejudice to the rig its of Petitioner- objector, submitted that the limitation, if any, for filing the objections would only start from 6 November, 2000, when Respondent-claimant furnished a photocopy of a certified copy of the corrected award. He stated that if 6 November, 2000, was taken as the starting point of limitation, then the Petitioner-objector''s objection petition filed on 12 December, 2000, before the District Court, Ambala, was well within limitation.

Mr. Agnani furthei stated that Petitioner-objector''s 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''s counsel was irrelevant and meaningless.

Though, initially, Mr. Agnani took the stand that the entire award had not been furnished to Petitioner-objector vide Respondent- claimant''s letter dated 29 September, 2000, but, later on, on a perusal of the file, he handed over a photocopy of the Respondent-claimant''s letter dated 29 September, 2003, 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:

Form and content of the award -

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

In support of the aforesaid submission, Mr. Agnani relied upon the following judgments:

(A) National Projects Constructions Corporation Ltd. v. Bundela Bandhu Constructions Company AIR 2007 Del 202 (DB);

(B) Union of India (UOI) Vs. Tecco Trichy Engineers and Contractors, ;

(C) Kempegowda v. National Highway Authority of India (2008) 2 ALR 393 (Karn).

Mr. Agnani also pointed out that, after the objection petition had been rejected by the District Court, Ambala, Petitioner-objector had on 9 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 Engg. Enterprises Vs. Principal Secy. Irrigation Deptt. and Others, .

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:

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 c.nd all applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court.

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 u/s 42 of Act, 1996, read with order 7, Rule 11, of Code of Civil Procedure, 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 16 May, 2001, rejecting objection petition u/s 42 of Act, 1996 read with order 7, Rule 11, CPC.

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 herein below:

Application for setting aside arbitral award. -

(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 u/s 33, from die 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.

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. M/s Popular Construction Co., , after referring to Section 34 of the Act, 1996, has held as under:

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.

Here the history and scheme of the 1996 Act support the conclusion that the time-limit prescribed u/s 34 to challenge an award is absolute and unextendible by court u/s 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:

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.

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.

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 u/s 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 u/s 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

Undoubtedly, keeping in view the observations of Supreme Court in Consolidated Engg. Enterprises Vs. Principal Secy. Irrigation Deptt. and Others, , 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 Engg. Enterprises Vs. Principal Secy. Irrigation Deptt. and Others, , itself. The relevant observations of Supreme Court in Consolidated Engg. Enterprises Vs. Principal Secy. Irrigation Deptt. and Others, , read as under-

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.

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.

Upon a perusal of the original arbitral record, I find that the arbitrator on 7 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 on application for correction of suit numbers in the impugned award u/s 33(l)(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 21 August, 2000, and the said typographical correction was carried out by the arbitrator on 22 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 has 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 and Others, 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 Karmyogi Shelters (P) Ltd. v. Benarsi Krishna Committee and another decided on 28 August 2009, since reported as (2010) 3 Comp LJ 741 (Del), 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''s counsel and the said service, to my mind, would constitute compliance of Sub-section (5) of Section 31 of Act, 1996.

In any event, photocopy of the letter dated 29 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 29 September, 2000. The letter dated 29 September, 2000 along with official noting is reproduced hereunder:

By Hand Delivery

29.9.2000

Union of India through Secretaxy

Department of Telecommunications

Ministry of Communications

Government of India

Sanchar Bhavan,

20AshokRoad,

New Delhi 110 001.

Dear Sir,

Sub: Arbitration Cases Nos. 113/98 and 114/98:

In the matter of arbitration between M/s Haruama Telecom Ltd. v. Union of India Copies of awards passed in the abovementioned two cases were signed 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. 113/9,8 DDG(MMII) both on 22nd August, 2000. However, we also enclose herewith a signed copy each of both the awards passed in favour of Harvana Telecom Ltd.

The awards were filed in the Hon''ble High Court on 26.8.000 by 3477/DDG.MM.I the Ld. Arbitrator under Diary No. 3453 for Case No. 14/98 and 3/10 1342 for Case No. 113/98. 2736/DDGMM2/20

One copy each of tine It page of both awards in which Suit Nos. 00 were corrected have also been enclosed with the awards.

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.

29/9

Thanking you, we remain, ADG(ST) Examined & P/u Dir (MMS). Award has to be honoured and Amount should be refunded within 2 months.

Yours faithfully,

For Haryana Televcom Limited, P/u immediately. Signed 4/10/2k

Authorised Signatory

Encl: Copies of Awards as above.

Please put up in correct file for examination. Signed 5/10.

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 (2005) 4 Comp LJ 15 (SC), supra.

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.

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 u/s 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 12 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.

Accordingly, present objection petition having been filed beyond the limitation period is dismissed, but with no order as to costs.