Madhya Pradesh High Court
The State Of Madhya Pradesh vs Rajendra Kumar Garg on 10 January, 2020
Author: Chief Justice
Bench: Chief Justice
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AA No.19/2017
THE HIGH COURT OF MADHYA PRADESH: JABALPUR
Arbitration Appeal No.19/2017
(State of Madhya Pradesh & others Vs. Rajenra Kumar Garg)
JABALPUR DATED: 10.01.2020
Shri Himanshu Mishra, Government Advocate for the appellants/State.
Shri Sanjay Singh, Advocate for the respondent.
Challenge in the present appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short "the Act") by the appellant/State is to an order dated 14.12.2016 (Annexure A/5) passed by the 10th Additional District Judge, Bhopal in Arbitration Case No.130/2015, whereby the application filed by the appellant under Section 14 of the Limitation Act, 1963 (for brevity "the 1963 Act") for condonation of delay in filing the arbitration application has been dismissed and as a natural corollary, the arbitration application under Section 34 of the Act for setting aside the arbitral award dated 25.11.2014, has been dismissed.
2. Brief facts as narrated by the appellants are that the respondent/contractor was awarded a works contract for widening of two lane road in KM 1 to 88 to 102 of NH 86 vide work order dated 21.11.2005. The respondent approached the M.P. Arbitration Tribunal on account of the dispute which arose between the parties. The M.P. Arbitration Tribunal vide order dated 5.4.2010 declined the petition/reference giving liberty to the concerned party to seek remedy under the provisions of the Act. Subsequent to the order dated 5.4.2010, the respondent filed an application under Section 11(6) of the Act for appointment of an arbitrator before this Court. This Court vide order dated 3.2.2012 passed in Arbitration Case No.91/2010 appointed a
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AA No.19/2017 former judge of this Court as sole arbitrator to resolve the dispute between the parties. The sole arbitrator after completing the arbitration proceedings partly allowed the claim of the respondent/contractor vide award dated 25.11.2014 and directed the appellant/department to pay a sum of Rs.28,79,000/- to the respondent herein. The appellants against the award dated 25.11.2014, moved an application under Section 34 of the Act along with an application under Section 14 of the 1963 Act for condonation of delay in filing the said application before the District Judge, Bhopal. Vide impugned order dated 14.12.2016, the application under Section 14 of the 1963 Act was rejected by the Court below and in consequence thereof, the application under Section 34 of the Act also stood dismissed on the ground of limitation as having been filed beyond the statutory period of 120 days. Against order dated 14.12.2016, present appeal has been preferred by the appellant/State before this Court.
3. Learned counsel for the appellant/State contended that the Court below without considering the facts putforth by the appellants has wrongly rejected the application under Section 14 of the 1963 Act, thereby dismissing the arbitration application under Section 34 of the Act. It was urged that the appellants made out the sufficient cause for condoning the delay as mentioned in the application. The Court below ought to have considered that the delay in filing the application under Section 34 of the Act was bonafide as the matter was being prosecuted before the wrong forum.
4. On the other hand, learned counsel for the respondent contended that the Court below has rightly dismissed the application under Section 34 of the Act on the ground of limitation as the same was filed after expiry of three months, even after extended period of 30 days. It was argued that it was due
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AA No.19/2017 to the negligence of the appellants that inordinate delay was caused and therefore, application under Section 34 of the Act was barred by limitation and moreover, the provisions of the 1963 Act do not apply. Therefore, as per provisions of the Act, the period beyond the statutory period of 120 days for filing arbitration application could not be excluded.
5. I have heard learned counsel for the parties and find no merit in the present appeal.
6. Section 34 of the Act provides recourse against arbitral award. Relevant portion of Section 34 of the Act is reproduced as under:-
"34. 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) * * * (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 under section 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.
(4) * * *"
7. On plain reading of Sub-section (3) of Section 34 of the Act, it is clear that it provides that an application for setting aside the arbitral award may not be made after three months have elapsed from the date of receipt of arbitral award. However, the proviso to this sub-section gives a further period of 30 days for making the arbitration application, if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months. As per later part of proviso, it is
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AA No.19/2017
specifically prohibited that beyond the extended period provided under the proviso of 30 days, the application under Section 34 of the Act cannot be entertained. The appellant/State is trying to make out a case that since the appellants approached the wrong forum and there was continuity in litigation against the arbitral award, therefore, the period spent therein has to be excluded under Section 14 of the 1963 Act in filing the application under section 34 of the Act. This controversy has been considered by a three Judge Bench of the Supreme Court in the case of Consolidated Engineering Enterprises Vs. Principal Secretary, Irrigation Department and others (2008) 7 SCC 169, the Court held as under:-
"53. Sub-section (3) of section 34 of the AC Act prescribes the period of limitation for filing an application for setting aside an award as three months from the date on which the applicant has received the arbitral award. The proviso thereto vests in the court discretion to extend the period of limitation by a further period not exceeding thirty days if the court is satisfied that the applicant was prevented by sufficient cause for not making the application within three months. The use of the words "but not thereafter" in the proviso makes it clear that even if a sufficient cause is made out for a longer extension, the extension cannot be beyond thirty days. The purpose of proviso to section 34(3) of AC Act is similar to that of Section 5 of the Limitation Act which also relates to extension of the period of limitation prescribed for any application or appeal. It vests a discretion in a court to extend the prescribed period of limitation if the applicant satisfies the court that he had sufficient cause for not making the application within the prescribed period. Section 5 of Limitation Act does not place any outer limit in regard to the period of extension, whereas the proviso to sub-section 3 of section 34 of the AC Act places a limit on the period of extension of the period of limitation. Thus the proviso to sub-section 34(3) of the AC Act is also a provision relating to extension of period of limitation, but differs from section 5 of the Limitation Act, in regard to period of extension, and has the effect of excluding section 5 alone of the Limitation Act.
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54. On the other hand, Section 14 contained in Part III 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. Neither sub-section (3) of section 34 of the AC Act nor any other provision of the AC Act exclude the applicability of section 14 of the Limitation Act to applications under section 34(1) of the AC Act. Nor will the proviso to section 34(3) exclude the application of section 14, as section 14 is not a provision for extension of period of limitation, but for exclusion of certain period while computing the period of limitation. Having regard to section 29(2) of Limitation Act, section 14 of that Act will be applicable to an application under section 34(1) of the AC Act. Even when there is cause to apply section 14, the limitation period continues to be three months and not more, but in computing the limitation period of three months for the application under section 34(1) of the AC Act, the time during which the applicant was prosecuting such application before the wrong court is excluded, provided the proceeding in the wrong court was prosecuted bona fide, with due diligence. Western Builders [(2006) 6 SCC 239-State of Goa Vs. Western Builders] therefore lays down the correct legal position. "
8. From the above settled legal proposition by the Supreme Court in Consolidated Engineering Enterprises (supra), it emerges that Section 14 of the 1963 Act is applicable to proceedings under Section 34(1) of the Act provided the applicant shows that it was prosecuting the matter before a wrong Court bonafide with due diligence.
9. Now adverting to the factual matrix herein, a perusal thereof shows that it is an admitted fact that an application under Section 34 of the Act was filed by the appellant/State on 7.12.2015 for setting aside the arbitral award dated 25.11.2014 passed by the arbitrator after expiry of the period of limitation provided under Sub-section (3) of Section 34 of the Act. From the perusal of the application under Section 14 of the 1963 Act, it is clear that the appellant- State has made the internal correspondences for seeking permission and
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AA No.19/2017 opinion or legal advice of higher officials whether to challenge the arbitral award or comply therewith, which does not depict that the appellant-State was prosecuting the matter bonafide before the legal forum so as to attract the provisions of section 14 of the 1963 Act in order to exclude the time in proceeding bonafide in Court without jurisdiction.
10. As noticed earlier, the proviso to sub-section (3) of Section 34 of the Act clearly envisages that a period of 30 days can be granted after the expiry of period of three months, in which the application under Section 34 of the Act can be filed, but not thereafter. Therefore, the learned Court below has rightly rejected the said application.
11. Considering the facts and circumstances and in view of the law laid down by the Supreme Court in Consolidated Engineering Enterprises (supra), I find no reason to interfere with the impugned order passed by the Court below. Accordingly, the appeal filed by the appellant/State being devoid of merit is dismissed.
(Ajay Kumar Mittal) Chief Justice C. Digitally signed by CHRISTOPHER PHILIP Date: 2020.02.12 12:42:50 +05'30'