The Superintending Engineer, Public Works Department and The Executive Engineer, PWD/WRO, Periyar Dam Special Division vs Er. Sundharam Contractor

R.S. Kamanathan, J.—Heard both sides.

The Petitioners herein filed Ar.O.P. No. 22 of 1998 challenging the arbitral award, dated 19.01.1998, on the file of the Principal District Judge,

Madurai, on 21.04.1998 to set aside the award passed by the arbitrator. The arbitrator also referred the arbitral award to the Principal Sub Judge,

Madurai, in Ar.O.P. No. 5 of 1998 to pass a decree as per the provisions of the Act. The learned Principal District Judge, dismissed the Ar.O.P.

No. 22 of 1998, by order, dated 11.12.2000. Aggrieved by the same, the Petitioners preferred an appeal before this Court in C.M.A. No. 1463

of 2001 and this Court passed an order in C.M.A. 1463 of 2001 holding that the Principal Sub Judge, Madurai, has no inherent jurisdiction to

deal with the Ar.O.P. No. 22 of 1998 filed u/s 34 of the Arbitration and Conciliation Act 1996 and as per Section 21(e) of the said Act, ''Court''

means the principal civil Court or original jurisdiction in a district and therefore, only the District Court, Madurai, has got jurisdiction and the Sub

Court has no jurisdiction and the said order was passed in C.M.A. No. 1463 of 2001 on 23.12.2005 and the copy of the order was made ready

on 21.01.2006 and thereafter, the Petitioners filed Ar.O.P. before the District Court and also filed I.A. No. 1325 of 2009 on 24.03.2006 u/s

34(3) of the Arbitration & Conciliation Act, to condone the delay of 37 days in filing the application to set aside the arbitral award.

The Respondent herein filed a counter stating that as per Section 34(3) of the Arbitration and Conciliation Act, arbitral award can be set aside if

the application is filed within a period of three months from the date of award and if the same is not filed within three months, the Court has got

power to condone the delay of only 30 days in filing the application to set aside the award and in total, an application to set aside the final award

has to be filed within a period of 120 days and in this case, it was filed beyond the period of 120 days and hence, the application filed to condone

the delay is not maintainable. As the Court has no jurisdiction to condone the delay beyond the period of 120 days, the learned Principal District

Judge dismissed the I.A. No. 1325 of 2009 holding that Section 5 of the Limitation Act is not applicable to the arbitration proceedings and

therefore, the petition is not maintainable. Aggrieved by the same, the Petitioners herein filed C.R.P. No. 149 of 2009 and this Court dismissed

that civil revision petition and observed that the District Court has not considered the scope of Section 14 of the Limitation Act and without

considering the applicability of Section 14 of the Limitation Act, the learned Principal District Judge has held that the Court has no power to

condone the delay beyond 120 days and on that ground, set aside the order of the District Court made in I.A. No. 1325 of 2009 and remanded

the matter to the lower Court to decide the issue afresh in the light of the Section 14 of the Limitation Act. The learned Principal District Judge,

after hearing both parties, dismissed the application holding that even after taking into consideration of Section 14 of the Limitation Act, the delay is

more man 120 days and hence, the delay cannot be condoned and dismissed the application to condone the delay. Aggrieved by the same, this

civil revision is filed by the revision Petitioners.

Mr. S.C. Herold Singh, the learned Government Advocate, appearing for the revision Petitioners submitted the judgments of the Honourable

Supreme Court, reported in the case of State of Goa Vs. Western Builders, and in the case of Consolidated Engg. Enterprises Vs. Principal Secy.

Irrigation Deptt. and Others, , and submitted that Section 14 of the Limitation Act can be invoked in this case and Ar.O.P. No. 22 of 1998 was

filed before the Subordinate Court, Madurai, in a bona-fide manner and that was prosecuted with due diligence and that was finally disposed of by

this Court, by the order, passed in C.M.A. No. 1463 of 2001, dated 23.12.2005 and the order copy was made ready on 21.01.2006 and

therefore, the period from 19.01.1998 to 21.01.2006 is to be excluded for calculating the period of limitation and if so, the application filed on

24.03.2006 is within the period prescribed u/s 34(3) of the Arbitration and Conciliation Act and therefore, the Court has got power to condone

the delay.

He further submitted that though it was stated in the petition that there is a delay of 37 days, there is no delay if the period of limitation is

considered from the date of order passed in C.M.A. No. 1463 of 2001 and by way of abundant caution, this application was filed. He further

submitted that even assuming that there is a delay by invoking Section 5 of the Limitation Act, the delay can be condoned and therefore, relying

upon Section 43 of the Act by which it has been made clear that the Limitation Act shall apply to arbitration proceedings in Court and therefore,

the petition for condoning the delay can be allowed.

On the other hand, the learned Counsel appearing for the Respondent, Mr. Alagarsamy, submitted that the petition filed for condoning the delay

is not maintainable and the period from the date of award till the date of disposing of C.M.A. No. 149 of 2009 cannot be excluded and the

Petitioners filed Ar.O.P. No. 22 of 1998 only on 21.04.1998 and not on 25.03.1998 as contended by the revision Petitioners and therefore, even

in the first instance, it was filed after 92 days and as per Section 34(3) of the Arbitration & Conciliation Act, it has to be filed within 90 days and

the Court has got power to condone the delay of 30 days and therefore, even while filing of the arbitration proceedings, there was a delay of 2

days. He further submitted that C.M.A. No. 1463 of 2001 was disposed of on 23.12.2005 and therefore, from that date onwards the limitation

starts and even excluding the period from 21.04.1998, the date of presentation of Ar.O.P. No. 22 of 1999 to 23.12.2005, the date of the order in

C.M.A. No. 1463 of 2001, the petition ought to have been filed on or before 19.01.2006 and the application was filed only on 24.03.2006 and

hence, this Court has no power to condone the delay even if Section 14 of the Limitation Act is made applicable. He further submitted that Section

5 of the Limitation Act, cannot be invoked as it has been held by the Honourable Supreme Court that to set aside the arbitral award, Section 5 of

the Limitation Act cannot be made applicable as the Act itself provides 30 days'' time to condone the delay and therefore, Section 29(2) of the

Limitation Act can be made applicable.

To appreciate the contention of both parties, we will have to see the provisions of Section 14 of the Limitation Act and Section 34 of the

Arbitration & Conciliation Act.

Section 34 of the Arbitration Act reads as follows:

Application for setting aside arbitral award:

(1) 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);

(2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that

(i) a party was under some incapacity; or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the

time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise

unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains

decisions on matters beyond the scope of the submission to arbitration.

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement

was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part;

or

(b) the court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India;

(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 arbitrary 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;

(4) On receipt of an application under Sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the

proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take

such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

It is seen from Section 34(3) of the said Act, an application for setting aside may be filed within a period three months from the date of receipt

of arbitral award and the Court can entertain the application within a further period of 30 days, if the applicant satisfies the Court that he was

prevented by sufficient cause from making the application within the said period of three months, but not thereafter. Therefore, under that Act,

within three months from the date of receipt of the arbitral award, the application to set aside the arbitral award has to be filed and if the same

could not be filed within a period of three months, the Court has got power to receive the application within 30 days thereafter, if the Court is

satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months.

u/s 43 of the Arbitration & Conciliation Act, the Limitation Act is made applicable to arbitration as it applies to proceedings in Court.

Therefore, it was contended by Mr. S.C. Herold Singh, the learned Special Government Pleader, for the revision Petitioners that when the

Limitation Act is made applicable to the arbitration proceedings and Section 5 of the Limitation Act is also made applicable and hence, the Court

has got power to condone the delay even though, the delay exceeds the period of 30 days. The arguments of the learned Counsel appearing for

the Petitioners cannot be accepted, having regard to the Section 29(2) of the Limitation Act.

As per Section 29(2) of the Limitation Act, ""where any special or local law prescribes for any suit, appeal or application a period limitation

different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the

Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the

provisions contained in Sections 4 - 24 (inclusive) shall apply only in- so-far as, and to the extent to which, they are not expressly excluded by

such special or local law.

A reading of Section 29(2) of the Limitation Act, would make it clear that when the special or local law prescribes a period limitation different

from the period prescribed by the Schedule and the provisions of the Limitation Act are not expressly excluded, then Sections 4 - 24 of the

Limitation Act shall apply.

In this case, as stated supra, u/s 34(3) of the Arbitration & Conciliation Act, it has been specifically stated that the Court can entertain the

application beyond the period of 90 days, if the applicant is able to satisfy the Court that he was prevented from sufficient cause from making

application within the said period of 3 months and in that case, the Court can entertain the application within a further period of 30 days, but not

thereafter. Therefore, the Act contains a prohibition that the Court cannot entertain the application beyond the period 90 days from the date of the

award and if the applicant satisfies the Court that he was prevented by sufficient cause, the Court can entertain the application after the expiry of

90 days, if the same is filed within 30 days and not thereafter. Therefore, the provisions of Limitation Act, has been expressly excluded by the

Arbitration and Conciliation Act and hence, Section 5 of the Limitation Act cannot be made applicable.

Further, it is no longer res-integra and it has been held in the reported judgment in the case of Union of India Vs. M/s Popular Construction

Co., , that ""there is no dispute that the Arbitration and Conciliation Act, 1996 is a ""special law"" and that Section 34 provides for a period of

limitation different from that prescribed under the Limitation Act. The question then is whether exclusion in terms of Section 29(2) of the Limitation

Act, 1963 has been expressed in Section 34 of the 1996 Act.

In the language of Section 34 of the 1996 Act the crucial words are ""but not thereafter"" used in the proviso to Sub-section (3). 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 mere after"" wholly otiose. No principle of interpretation would justify such a result.

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 minimise 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.

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). 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 emphasised by the provisions

of Section 36 which provide that the award becomes enforceable as soon as the limitation period u/s 34 expires. This is a significant departure

from the provisions of the Arbitration Act, 1940. Now the consequence of the time expiring u/s 34 of the 1996 Act is that the award becomes

immediately enforceable without any further act of the court. If mere were any residual doubt on the interpretation of the language used in Section

34, the scheme of the 19% Act would resolve the issue in favour of curtailment of the Court''s power by the exclusion of the operation of Section 5

of the Limitation Act.

Therefore, Section 5 of the Limitation Act cannot be made application.

As a matter of fact, in CRP. No. 149 of 2009, this Court has also held that the matter was remanded only for the purpose of finding out

whether Section 14 of the Limitation Act made applicable to the facts of the case.

Section 14 of the Limitation Act 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

proceedings, 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 proceedings, 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 XXII of the Code of Civil Procedure, 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 delay 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.

Further, the Honourable Supreme Court in the judgment reported in the case of Consolidated Engg. Enterprises Vs. Principal Secy. Irrigation

Deptt. and Others, , laid the conditions for invoking Section 14 and further held that-

(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.

The policy of the Section is to afford protection to a litigant against the bar of limitation when he institutes a proceeding which by reason of some

technical defect cannot be decided on merits and is dismissed. While considering the provisions of Section 14 of the Limitation Act, proper

approach will have to be adopted and the provisions will have to be interpreted so as to advance the cause of justice rather than abort the

proceedings. It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the Section is intended to

provide relief against the bar of limitation is cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes

clear that the legislature has enacted the said Section to exempt a certain period covered by a bona-fide litigious activity. Upon the words used in

the Section, it is not possible to sustain the interpretation that the principle underlying the said Section, namely, that the bar of limitation should not

affect a person honestly doing his best to get his case tried on merits but failing because the Court is unable to give him such a trial, would not be

applicable to an application filed u/s 34 of the Act of 1996. The Principle is clearly applicable not only to a case in which a litigant brings his

application in the Court, that is, a Court having no jurisdiction to entertain it but also where he brings the suit or the application in the wrong Court

in consequence of bona-fide mistake or law or defect of produce. Having regard to the intention of the legislature this Court is of the firm opinion

that the equity underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy, in a wrong Court, should be

excluded.

Similar view was taken in the judgment reported in the case of State of Goa Vs. Western Builders, . It is further held that ""Section 14 of the

limitation Act has to be construed liberally and due diligence and caution are essentially pre-requisites for attracting Section 14. 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.

The Honourable Supreme Court has also stated the distinction between Sections 5 and 14 of the Limitation Act, in the matter of in the case of

Consolidated Engg. Enterprises v. Principal Secy. Irrigation Dept. 2008(5) MLJ 431(SC) , that ""the power to excuse delay and grant an extension

of time u/s 5 is discretionary whereas u/s 14, exclusion of time is mandatory, if the requisite conditions are satisfied. Section 5 is broader in its

sweep, than Section 14 in the sense that a number of widely different reasons can be advanced and established to show that there was sufficient

cause in not filing the appeal or the application within time. The ingredients in respect of Section 5 and 14 are different. The effect of Section 14 is

that in order to ascertain what is the date of expiration of the prescribed period, the days excluded from operating by way of limitation, have to be

added to what is primarily the period of limitation prescribed.

Bearing in mind the principles laid down by the Honourable Supreme Court in the aforesaid judgments, we will have to see whether the

applicant has prescribed the earlier proceedings with due diligence and in good faith.

It is admitted that the arbitral award was passed on 19.01.998. As per Section 34 of the Arbitration and Conciliation Act, an application to set

aside the arbitral award can be made to a Court by filing an application. The Court is defined u/s 2(1)(e) as the principal civil Court of original

jurisdiction in a district and at the time of passing of the Act, the original jurisdiction was conferred only on the Munsif Courts and Sub Court and

latter, by amendment of Civil Court Act original jurisdiction was also conferred on the District Court. Therefore, on the date of filing the application

to set aside the award, there was a confusion whether application can be filed in the District Court or in the Sub Court and many applications were

filed before the Sub Court, which was the higher forum having original jurisdiction in a District till that controversy has been cleared later, by the

Division Bench judgment of this Court reported in 2006(1) CTC 178. Therefore, when Ar.O.P. No. 22 of 1998 was filed by the applicant before

the Sub Court, Madurai, the Petitioners were under the bona-fide belief that the Sub Court was the Competent Court as per the Act and

therefore, in good faith, he was prosecuting the Ar. OP. No. 22 of 1998 before the Sub Court and therefore, it can be held that the petition was

prosecuting in good faith and with due diligence, the Ar.O.P. No. 22 of 1998 before the Sub Court, Madurai, till it was finally held in C.M.A. No.

1463 of 2001 by this Court, dated 23.12.2005 that the Sub Court has no jurisdiction and District Court alone has got jurisdiction and the

application thereafter was filed before the District Court. Therefore as per Section 14 of the Limitation Act, the time during which the Petitioner has

been prosecuting the Ar.O.P. No. 22 of 1998 shall be excluded and in that event period from 21.04.1998, the date of filing to 23.12.2005 the

date of order in CMA No. 1463 of 2001 can be excluded for calculating the period of limitation.

It was contended by Mr. S.C. Herold Singh, the learned Counsel appearing for the Petitioners that the period to be excluded is not the period

from 21.04.1998, but from the date of award, dated 19.01.1998 and therefore, the period of limitation starts only from 23.12.2005 viz., the order

passed in C.M.A. No. 1463 of 2001 and if so calculated, the fresh application filed on 24.03.2006 is within time. The argument of the learned

Counsel appearing for the Petitioner cannot be accepted as it has been made clear in the explanation to Section 14 of the Limitation Act that for

the purpose of Section 14 in excluding the time during which the former civil proceeding was pending, the date on which that proceeding was

initiated and the date in which it ended shall both be counted. Therefore, the date on which the Ar.O.P. No. 22 of 1998 filed namely 21.04.1998

and the date of order passed in CMA. No. 1463 of 2001 viz., 23.12.2005 had to be considered as 2 days and the period between those two

days including those two days can be excluded for calculating the period of limitation. Therefore, if so calculated even on 21.04.1998, 92 days

have lapsed from the date of the award and therefore, as per Section 34(3) of the Act, the Court has got power to consider the application if the

same has been filed within 28 days thereafter. Admittedly, C.M.A. 1463 of 2001 was disposed on 23.12.2005 and the copy was made ready on

21.01.2006 and even assuming that date can be reckoned as the starting point for limitation, fresh application ought to have been field on or before

18.02.2006. But in this case, the application was filed only 24.03.2006, which is beyond the period of 30 days. Therefore, in any event, the

application was filed beyond the period as laid down u/s 34(3) of the Arbitration and Conciliation Act even after taking into consideration of

Section 14 of the Limitation Act and as held supra, the Court has no power to entertain the application, if the same is filed beyond the period of 30

days as provided u/s 33 & 34 of the Act. Hence, in any event, the petition filed by the Petitioners is beyond the period prescribed u/s 34(3) of the

Act and hence, the Court has no power to condone the delay and therefore, the petition is not maintainable accordingly, this civil petition is

dismissed. Consequently, connected Miscellaneous Petition is closed. No costs.