Andhra HC (Pre-Telangana)
R.S. Avtar Singh And Co. A Partnership ... vs Visakhapatnam Steel Plant (Rashtriya ... on 2 November, 2007
Equivalent citations: 2008(2)ALD810, AIR 2008 (NOC) 865 (A. P.), 2008 (3) AKAR (NOC) 411 (A. P.) 2008 AIHC (NOC) 820 (A. P.), 2008 AIHC (NOC) 820 (A. P.), 2008 AIHC (NOC) 820 (A. P.) 2008 (3) AKAR (NOC) 411 (A. P.), 2008 (3) AKAR (NOC) 411 (A. P.)
JUDGMENT B. Prakash Rao, J.
1. The appellant is an unsuccessful applicant in the Court below, who filed this appeal under Section 39 of the Arbitration Act, 1940 ('the Act' for brevity) assailing the order dated 08.03.2002 in O.P. No. 44 of 1994 on the file of the I Additional Senior Civil Judge, Visakhapatnam, rejecting an application filed under Sections 33 and 37 of the Act read with Section 151 of the Code of Civil Procedure, 1908, wherein he sought to condone the delay in preferring the claims/disputes in view of the undue hardship that would be caused to him and for determining the Arbitration Clause.
2. Heard Sri D.V. Sitaramamurthy, learned Counsel appearing on behalf of the appellant and Sri V. Ravinder Rao, learned Standing Counsel appearing on behalf of the respondents.
3. The facts, in brief, are that the appellant, who is a Class-I Contractor, was awarded the work of construction of structural steel and cladding work by the respondents fixing the period for completion within twenty one (21) months vide agreement No. VSP/CONT/M-14/87-88. It also provided that specific clause for arbitration in the event of disputes being arising. The appellant sought to invoke the said arbitration clause. Both sides made several allegations either way, there is no need to refer to any of these aspects at this stage. However, the arbitration clause contemplates two situations, providing the periods of the limitations. As per Clause 16(2) of the GCC disputes, differences on the claims other than excepted matters, have to be referred within 28 days of the decision of the Engineer. However, there has been delay of 22 months in filing the present application and seeking for appointment of the Arbitrator on the claims not accepted. In explaining the delay, the main reason shown is having regard to the illness he has been suffering, supported by a medical certificate but not marked. Therefore, it is the case of the appellant that undue hardship will be caused, if the arbitral proceedings are not initiated. Hence, the application.
4. Contesting the application, the case of the respondent is total denial on those allegations and that absolutely there is no justification behind the claims. Further, it was alleged that he himself is responsible for such long delay and latches without justification. The appellant has not come up with sufficient reason to seek indulgence under Section 37(4) of the Act and therefore, the application is liable to be dismissed. On a consideration of the allegations made from both the sides in the pleadings, the Court below, after holding a detailed enquiry where the documents were marked by consent as Exs. A1 to All on behalf of the appellant and Exs. B1 to B15 on behalf of the respondent, held that the appellant has failed to give valid and sufficient reason and dismissed the application. Hence, the appeal.
5. The main thrust on the part of the appellant is to the effect that while considering the application under Section 37(4) of the Act, it cannot be put under the same lines as that of Section 5 of the Limitation Act, 1963. Whereas, the Court below virtually considered the present application from stricter scrutiny, without taking note of the different expressions used, having varying connotations. On behalf of the respondents, it is contended that having regard to the facts of the case and there being no valid explanation for the delays without proper medical certificate, there is no need to seek any indulgence.
6. Having heard on either side and on perusal of the material available on record, the only point that arises for consideration is as to whether under the facts and circumstances of the case, the appellant is entitled for condonation of delay in filing the application filed in the Court below.
7. Before taking up the aforesaid issue, it is relevant to extract the provisions of Section 37(4) of the Act and Section 5 of the Limitation Act, which read as follows.
Where the terms of an agreement to refer future differences to arbitration provide that any claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within the time fixed by agreement and a difference arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.
5. Extension of prescribed period in certain cases: Any delay or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period for the appellant or the applicant satisfies the Court that he had sufficient cause for not preferring the appeal or making the application within said period.
8. On a bare reading of either of the above provisions, it is amply clear that 'sufficient cause' as pointed out under Section 5 of the Limitation Act, 1963 does not find place in the provision under Section 37(4) of the Act, which only uses the expression 'undue hardship'. The provisions under Section 37(4) of the Act are that if there is delay in issuing notice or appointing arbitrator or some other conciliation being taken to commence the arbitration if undue hardship is caused, the same can be extended on such terms as it thinks proper. One requires the party to come out with reasons for the delay, which is sufficient to the satisfaction of the Courts. Apart from the existence of sufficiency of the reasons, the power to condone or refuse is a discretionary, keeping in view if any rights are acquired to the other side due to the delays, which cannot be disturbed. Though the provision has been interpreted in a more stricter approach earlier, the recent trend of the Courts has drastically mellowed down the rigour. The main reason behind appears to be that instead of allowing one sided orders to become final, allow them to have any order or decision on merits after contest.
9. Whereas in contrast, the expression 'undue hardship' stands far apart with wider connotation than that of sufficient cause. In Sterling General Insurance Co. Ltd v. Planters Airways Pvt. Ltd , wherein it was held that in case of extension of time to refer to arbitration, it is the discretion of Court to exercise in cases of undue hardship.
10. On behalf of the appellant, reliance is placed on a decision reported in Tote Bookmakers Ltd v. Development and Property Holding Co. Ltd (1985) 2 A.I.I. E.R., where it was held as under.
Hardship is caused when a justifiable claim which may succeed is barred by a time limit. Undue hardship is caused when the hardship is not warranted by the circumstances. I cannot see that the cashflow of a trading applicant, which can never be a safe guide to the means of the applicant or otherwise to his prosperity, is a decisive matter in relation to the consideration of the exercise of discretion. Otherwise, every large company or wealthy individual would be unable to invoke Section 27, however monstrous the circumstances. In my judgment, it is permissible to take account of the probability of an applicant recovering from a third party in negligence, but in the present case I do not see how the master was able to reach the conclusion that he did in relation to a possible claim against Mr. Woolf. I have already referred to the limits on the instructions to Mr. Woolf that he was instructed merely to negotiate, and it seems to me I would be speculating to say that there was a probability of any recovery from Mr. Woolf, particularly in the circumstances which I have already rehearsed as to the course of the negotiations. I have in mind especially the failure by the lessor's agents to honour their promise on 9 August to place their rental evidence before Mr.Woolf. For my part, I would have thought that there was ground for excusing the failure to serve a notice within the time limit in view of the course of those negotiations. Further, the delay was slight, a matter of less than two months, and no hardship whatever has been shown to have been suffered by the lessor. Accordingly, subject only to the evidential point, and subject also to a possible term in relation to interest, so as to compensate the lessor for being out of pocket for the rent to which he would otherwise be entitled as a result of the delay in going to arbitration, I would have granted the application if I had held that there was an arbitration agreement.
Therefore, there exist no similarities between these two above provisions. In the later case of undue hardship, one can a step forward to seek indulgence in spite of any such delays, though explained to or not. The only approach which the Court has to see that if such period is not extended, it would cause any hardship unduly. Thus, it is the resultant loss, damage or any adverse affect, which may arise affecting the rights, which is a prime concern and it is this satisfaction, which enables party to seek extension and not the satisfaction of the reasons for delay or sufficiency thereof.
11. Coming to the facts of the case, no doubt, there is a delay of 22 months in making either of the claims. Even on the date of filing of the application, the appellant has an opportunity to file the suit, which would have been in time and therefore, there is no need to order the application. Be that as it may, at this stage, there is no need to go into the alternative remedy available. In this case, the appellant mainly sought to place reliance on medical certificate alleged to have been issued on 10.12.1992. However, the Court below has observed that it does not cover till the date of filing in this case or earlier. Therefore, there is no explanation from February 1992 to September 1992. If the said certificate illustrates the period in regard to the illness of a paralysis affected on the body of the appellant herein, it only shows that he was not well during the said period. Having regard to the expression under Section 37(4) of the Act, the approach of the Court below necessarily has to see that if an opportunity is not given by condoning the delay, the fact remains that the appellant suffered paralysis in the later period. No doubt the present dispute touches upon the various claims put forth and it necessarily has to be gone into by the arbitrator. Therefore, we are of the view that it is not necessary to come out with a specific cause but it is a resultant loss or hardship or inconvenience which would be put against, if such an opportunity is not given. In this case, all the claims or objections have to be gone into in an appropriate manner before the arbitrator. Having regard to the delay occurred, which no doubt appears to be sufficiently little longer, the said period can be condoned by putting on certain terms. We hold that if an opportunity is not given, necessarily it follow that the appellant would be put to undue hardship and denied of consideration of his claims.
12. The Civil Miscellaneous Appeal is accordingly allowed. The delay in filing application is condoned on terms of payment of Rs. 25,000/- (Rupees twenty five thousand only) payable within a period of six {6} weeks from today to the respondents. There shall be no order as to costs.