State of Rajasthan vs Master Construction, Engineers and Contractors

Atul Kumar Jain, J.—In this bunch of Five Civil Misc. Appeals filed U/s. 37 of the Arbitration and Conciliation Act, 1996 (Hereinafter referred as the Act of 1996) common points have been argued by both the parties and so these appeals are being hereby decided by a common order.

In these appeals orders dated 18.12.13 passed by ADJ No. 8 Jaipur Metro, Jaipur in Arbitration File No. 449/2013, 446/2013, 447/2013, 448/2013 and 445/2013, have been challenged by the state of Rajasthan. By the impugned order the lower court has dismissed their objections filed U/s. 34 of the Act of 1996.

It has been argued on behalf of the appellant that the Award was to be signed by three arbitrators but actually it was signed by two arbitrators only, so when the award was given to the appellant, it was incomplete award and so its objections should not have been dismissed on the grounds of limitation. Here Section 31(1) and Section 31(2) of the Act of 1996 are relevant which read as under-

"Section 31(1)- An Arbitral award shall be made in writing and shall be signed by the members of the Arbitral Tribunal.

Section 32(1)- For the purposes of Sub Section (1) in Arbitral Proceedings with more than one arbitrator the signatures of majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated."

Thus it can be said that if the award was signed by two of the three members who were in majority then it was meaningless that the third person had signed it or not and so the first argument of the appellant deserves no favour from this Court.

Sec. 34(3) of the Act of 1996 reads as under -

"Application for setting aside arbitral award-

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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 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".

It has been argued next by appellant that there was a confusion regarding territorial jurisdiction of the court where the objections could have been filed and so the State Govt. filed the objections firstly in the court of District Judge Jodhpur within 87 days from the date of passing of the award. Award was passed on 15.12.11 and the objections were filed on 13.03.12. District Judge Jodhpur ordered for the return of the objections on 29.07.13 and Certified Copy of the Award was physically returned to the appellant on 13.11.13 and objections were again filed in the court at Jaipur on 14.11.13.

It has been submitted by the appellant that the appellant was entitled to file objections in 90+30=120 days and it has filed objections only within 88 days because as per the appellant, time consumed in the wrong court should be excluded as per Sec. 14 of the Limitation Act. But it has been argued by the respondents that Section 14 of Limitation Act is not applicable to the arbitration proceedings pending in the courts and respondents seek help from the following ruling-

The Commissioner of Sales Tax, U.P., Lucknow Vs. Parson Tools and Plants, Kanpur, AIR 1975 SC 1039 : (1975) 4 SCC 22 : (1975) 3 SCR 743 : (1975) 35 STC 413 : (1975) 7 UJ 267 . In this case it was held that if the legislature in a special statute prescribes a certain period of Limitation, then the Court will have no jurisdiction to extend the period of Limitation by help of Section 14(2) of the Limitation Act. On the other hand it has been argued by the appellant that because of Sec. 43(4) of the Act of 1996 the provisions of the Sec. 14 of the Limitation Act equally apply to an application submitted U/s. 34 of the Act of 1996.

Appellant relies upon following rulings-

"1. Panjam V. Thirumala Reddi Vs. C.K. Anavema Reddi and Others, AIR 1934 Mad 306 : (1934) ILR (Mad) 560 : (1934) 39 LW 559 : (1934) 66 MLJ 687 -This was a case relating to the old Limitation Act 1908 and it was held in this case that time occupied in obtaining copy which accompanies memorandum of appeal should also be excluded U/s. 12 of the Limitation Act 1908 from the period of Limitation.

Consolidated Engg. Enterprises Vs. Principal Secy. Irrigation Deptt. and Others, (2008) 2 ARBLR 139 : (2008) 3 CLT 244 : (2009) 3 CompLJ 203 : (2008) 5 CTC 741 : (2008) 6 JT 22 : (2008) 6 SCALE 748 : (2008) 7 SCC 169 . In this case it was held that benefit of exclusion of time under Section 14 of the Limitation Act 1963 will be available where application U/s. 34(3) of the Arbitration Act 1996 is pursued in a court without jurisdiction was further held in this case that there is no provision in the Arbitration Act 1996 which excludes applicability of Section 14 of the Limitation Act to an application submitted under Section 34 of the Act of 1996.On the contrary, Section 43 makes provisions of the Limitation Act 1963 applicable to Arbitration proceedings. So if under Sub-Section 4 of Section 43 of the Act of the Act of 1996, period between commencement of Arbitration proceedings till the award is set aside by the court, has to be excluded in computing period of Limitation provided for any proceedings. With respect to the dispute, there is no good reason as to why it should not be held that provisions of Section 14 of the Limitation Act would be applicable to an application filed under Section 34 of the Act of 1996. It was further held in this case that if there are no lack of bona-fides on the part of the party challenging the arbitration award and if it had diligently prosecuted the matter before the other court and had also immediately after coming to know the lack of jurisdiction of the court had filed the memo seeking withdrawal of the appeal and presented the same before the another court."

Having no jurisdiction, then only the provisions of Section 14 of Limitation Act 1963 will apply. No doubt, Section 14 deserves to be construed liberally but due diligence and caution are essential pre-requisites for attracting Section 14. Due diligence is a measure of prudence or activity accepted from and ordinarily exercised by a reasonable and prudent person under the circumstances. Section 14 requires that the prior proceeding should have been prosecuted in good faith and with due diligence. The definition of good faith is found under Section 2(h) of the Limitation Act which would indicate that nothing shall be deemed to be in good faith which is not done with due care and attention. Section 14 will not help a party who is guilty of negligence, lapse or inaction.

It was further held in this case that Section 14 of Limitation Act does not relate to extension of the period of Limitation, but relates to exclusion of certain period while computing the period of Limitation.

It was also held in paragraph 26 of this case that decision in CST v. Parson Tools and Plants(supra) did not decide the issue which falls for consideration of the court and the said decision cannot be construed to mean that the provisions of Section 14 of the Limitation Act are not applicable to an application submitted under Section 34 of the Act of 1996.

Section 14 of Limitation Act 1963 reads as follows:--

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 XXXIII 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.

Now the question arises that exclusion of time will commence from the date of order of return of the plaint or from the date when the plaint was actually and physically returned to the plaintiff. Order 7 Rule 10 C.P.C. is relevant here. It provides that while returning a plaint, the judge shall endorse thereon the date of its presentation and return, the name of the party presenting it, and a brief statement of the reasons for returning it.

In the case in hand plaint was ordered on 29.07.13 to be returned but date of physical return was 13.11.2013. Respondents have argued that when the court had ordered on 29.07.2013 for return of the plaint then the appellant should have taken the plaint back on the same date and if the plaintiff consumes three and half months unnecessarily to take the plaint back then for this delay the respondents cannot be penalized. On the other hand appellant has argued that his fresh application U/s. 34 of the Act of 1996 could not have been filed at Jaipur without the copy of the award and further as per rule 36 of General Rules (Civil) 1986. plaintiff was supposed to file a copy of the award/objections to be put on record in place of the returned award/objections. Appellant submits that the time consumed in obtaining the certified copies of the award and application U/s. 34 was unavoidable and so it should be excluded U/s. 14 of the Limitation Act.

I am of the firm view that such arbitrary exclusion is not permissible under the Limitation Act.

For satisfaction of the respondents other rulings referred by them are also mentioned hereunder which also fortify my view.

"1. Assam Urban Water Supply and Sew. Board Vs. Subash Projects and Marketing Ltd., (2012) 1 ARBLR 222 : (2012) 107 CLA 466 : (2012) 114 CLT 166 : (2012) 2 CTC 364 : (2012) 1 JT 362 : (2012) 1 SCALE 642 : (2012) 2 SCC 624 : (2012) AIRSCW 1395 .

CMA 1607/2013 Decided on 10.09.2013 by Jaipur Bench, State of Rajasthan v. Manda Developers and Builders Pvt. Ltd.

Union of India Vs. M/s Popular Construction Co., (2001) 8 AD 297 : AIR 2001 SC 4010 : (2002) 1 CompLJ 46 : (2001) 8 JT 271 : (2001) 6 SCALE 657 : (2001) 8 SCC 470 : (2002) 1 UJ 4 : (2001) AIRSCW 3994 : (2001) 7 Supreme 354 .

CMA No. 5459/09 Decided on 28.08.2012 by Jaipur Bench, State of Rajasthan v. United Construction Company.

Laws (DLH)-2010-3-61 Decided on 09.03.2010 by Delhi High Court, Union Of India v. Haryana Telecom Ltd.

Union of India (UOI) Vs. Mahavir Industries and Another, (2008) 152 DLT 339 .

Laws (P&H)-2012-11-54 Decided on 09.11.2012 by Punjab and Haryana High Court, Rama Industries Ltd. v. G.M. Fabricattors.

Esteem Mercantile Pvt. Ltd. Vs. K.H. Parekh and Another, (2002) 2 ALLMR 112 : (2002) 1 BOMLR 619 : (2002) 2 MhLj 216 .

Union of India Vs. Rahee Industries Ltd., (2010) 3 CALLT 171 .

ONGC Ltd. Vs. Modern Construction and Company, (2013) 10 AD 517 : AIR 2014 SC 83 : (2014) 1 RCR(Civil) 217 : (2013) 12 SCALE 520 : (2014) 1 SCC 648 .

Sri Amar Chand Inani Vs. The Union of India (UOI), AIR 1973 SC 313 : (1973) 1 SCC 115 : (1973) 2 SCR 684 : (1973) 5 UJ 463 .

M/s. Anuptech Equipments Private Ltd. Vs. M/s. Ganpati Co-op. Housing Society Ltd. and others, AIR 1999 Bom 219 : (1999) 3 ALLMR 580 : (1999) 2 BomCR 331 : (1999) 2 MhLj 161 .

AIR 1980 NOC 12 (CAl.) Gebr Eicher Traktoren Fabrik v. Soorajmal Nagarmal."

Thus I am of the view that objection petitions filed by the appellant, (the State of Rajasthan) in all these five matters were time barred because Sec. 14 of the Limitation Act does apply only to such cases when the party was bonafidely proceeding with due diligence another civil proceeding. In the present matters appellant was not sure that it should file a Review Petition before D.J. Jodhpur or it should get the award back from the said court and should file fresh objections before D.J. Jaipur and in this process much delay occurred for which there is no excuse with the appellant. Only because huge financial loss may be caused to the appellant, no extra concession can be given to it in matters of Limitation when the statute clearly prohibits the exclusion of period from Limitation.

Hence all these five appeals are devoid of any force and so they deserve dismissal and hence dismissed along with the annexed stay petitions.

Copy of this order be sent to the court below immediately in all the five files.