Karnataka High Court
Bhaskar Industrial Development Ltd., vs South Western Railway on 17 October, 2017
Bench: L.Narayana Swamy, H.B.Prabhakara Sastry
MFA No.101368/2017
1
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 17th DAY OF OCTOBER, 2017
PRESENT
THE HON'BLE Mr. JUSTICE L.NARAYANA SWAMY
AND
THE HON'BLE Dr. JUSTICE H. B. PRABHAKARA SASTRY
MFA NO.101368 OF 2017 (A-S)
BETWEEN:
BHASKAR INDUSTRIAL DEVELOPMENT LTD.,
1/1, CAMAC STREET, 3RD FLOOR,
KOLKATA-700016,
REPTD. BY ITS DIRECTOR,
MR. ARUN AGARWAL
...APPELLANT
(BY SRI. S.S.NAGANANDA, SR. COUNSEL
FOR SRI MAHANTESH C. KOTTURSHETTAR, ADV.)
AND:
SOUTH WESTERN RAILWAY,
CLUB ROAD, KESHWAPUR,
HUBLI-580023,
THROUGH THE PRINCIPAL CHIEF ENGINEER
...RESPONDENT
(BY SRI. ANURADHA DESHPANDE, ADV.)
MFA No.101368/2017
2
THIS MFA IS FILED UNDER SECTION 37(1)(b) OF
ARBITRATION AND CONCILIATION ACT, 1996 R/W. ORDER XLIII(1)
RULE 1(r) OF CPC, AGAINST THE JUDGMENT DATED 03.01.2017,
PASSED IN A.S. NO.1/2015 (OLD NO.148 OF 2014) ON THE FILE OF
THE PRINCIPAL DISTRICT AND SESSIONS JUDGE, DHARWAD,
DISMISSING THE APPEAL/SUIT AS TIME BARRED/PREMATURE.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT, COMING ON FOR PROUNCEMENT OF THE
JUDGMENT THIS DAY, Dr.H. B. PRABHAKARA SASTRY J.,
DELIVERED THE FOLLOWING:
JUDGMENT
The appellant in this appeal had preferred an Arbitration Suit No.1/2015 before the Court of Principal District and Sessions Judge, Dharwad, (henceforth, for brevity called as 'the Arbitration Court'). In the said suit, the present appellant had also filed two interlocutory applications under order VI rule 17 r/w. Section 151 of CPC and under order I rule 10 r/w. Section 151 of CPC. In its objections to the said I.As, the respondent herein had raised an issue regarding the maintainability of the suit contending that the Arbitration Suit was pre-mature. MFA No.101368/2017 3 The Arbitration Court raised a point to decide whether the appeal was filed in time and by answering the said point in negative and observing that the appeal/suit was time barred/pre-matured, dismissed it. It is the said order, the appellant has challenged before this Court under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 r/w. Order XLIII (1) rule 1(r) of the CPC.
2. In its memorandum of appeal, the appellant has taken a contention that the reply mail dated 31.01.2014 addressed to the respondent with a copy to the counsels for the appellant in the form of clarification issued by the Arbitrator has resulted in disposal of the application under Section 33 of the Arbitration and Conciliation Act, 1996 (henceforth, for brevity called as 'the Act'). As such, it cannot be called that any such application was pending under Section 33 of the Act, making the Arbitration suit a pre-mature. It is his further contention that since the Arbitration award though was passed on 06.01.2014, but in view of the filing of the application under Section 33 of MFA No.101368/2017 4 the Act, by the respondent, the limitation to prefer the Arbitration suit by challenging the Arbitration award was extended, however, the Arbitration Court did not take notice of the same.
3. The learned senior counsel Sri S.S.Nagananda appearing for the appellant in his argument, while drawing the attention of this Court to the relevant provisions of the Arbitration Act submitted that, the Arbitration Court has misconceived the fact of the case and came to an erroneous conclusion that the application under Section 33 of the Act was still pending when in fact the same was disposed of on 31.01.2014 itself. He also submitted that, in view of the pendency of the application under Section 33 of the Act till 31.01.2014 the limitation for filing the Arbitration suit challenging the award had not yet expired as on the date 30.04.2014 when the suit was filed.
MFA No.101368/20175
4. On the other hand, the learned counsel for the respondent in her argument vehemently supported the impugned order stating that the reply mail dated 31.01.2014 cannot be considered as disposed of the application filed under section 33 of the Act.
5. It is not in dispute that the parties to this appeal with regard to the supply of the goods and the monitory claims had referred their dispute to an Arbitrator who by his award dated 06.01.2014 had allowed the claim of the appellant herein, in part for a sum of `18,42,801-95 as against the claim of `2,49,47,598-13 and had rejected the counter claim of the respondent herein. Challenging the said arbitral award, the present appellant has preferred an Arbitration suit before the Arbitration Court under Section 34 of the Act. The said Arbitration Court in its order on I.A.No.IV and VI had raised a point for consideration to decide whether the appeal filed was in time. By the impugned order it answered the said point observing that MFA No.101368/2017 6 the appeal/suit was time barred / pre-mature, as such it dismissed the appeal/suit.
6. According to Section 34(3) of the Act, an application for setting aside the arbitral award may not be made after 3 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 Arbitration Tribunal. The Proviso to the said Section 34(3) provides that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months, it may entertain the application within a further period of 30 days, but not later. Thus, in a situation where no request had been made by the either of the parties to the arbitration under Section 33 of the Act, the Arbitration suit is required to be instituted within 3 months from the date of receipt of the Arbitration award by the concerned party. In the instant case, it is not in dispute that the MFA No.101368/2017 7 Arbitration award was passed on 06.01.2014 and the same was communicated to the parties on 07.01.2014. As such, in the normal course the Arbitration suit if were to be preferred by the aggrieved parties, the same should have been preferred on or before 08.04.2014 as February 2014 consisted 28 days only. Admittedly, the appeal came to be filed on 30.04.2014.
7. In the present case, admittedly the respondent has filed an application under Section 33 of the Act on the date 30.01.2014. Thus, the limitation of time for the party intending to challenge the arbitral award would commence from the date of disposal of the said application/request under Section 33 of the Act.
The copy of the said application is produced at Annexure-G along with this memorandum of appeal. The prayer portion of the said application reads as below:
"It is therefore prayed that, the basis and method of calculating month wise total escalation/de-escalation amounts indicated MFA No.101368/2017 8 in the column (d) of the above table may kindly be clarified, so as to enable this office to decide further in this matter"
8. Admittedly, in response to the said application received by the Arbitrator on the very next day, i.e., on 31.01.2014 the Arbitrator responded to the parties through his E-mail/G-mail, as could be seen from Annexure-G1 to this memorandum of appeal. The Arbitrator has written as below in his E-mail.
"Clarification request has been received from the respondent.
It is clarified that quantity taken is the quantity inspected by the claimant's office month wise, in case the figure does not tally with the figures available with claimants/respondents the respective figure and basis may be made available to the arbitrator for perusal and necessary action."
A K Gupta Arbitrator MFA No.101368/2017 9
9. Admittedly, the above reply has been received by the respondent who had made the request through application under Section 33 of the Act, on the very same day. From the above reading of the E-mail reply of the Arbitrator it is clear that, what clarification the respondent had requested vide his application under Section 33 of the Act, the Arbitrator has clarified the same vide in the above mentioned E-mail. The word in his E-mail that "It is clarified that" cannot be lost sight of, what clarification the respondent wanted through his application under Section 33 of the Act about the basis and method of calculating the month wise total escalation amounts indicated in the table, was clarified by the Arbitrator stating that the basis was the quantity taken as inspected by the claimants office month wise. Therefore, there was nothing more for the Arbitrator to clarify further, however, it was only as an abundant caution and to ensure that the parties to the arbitration are not put to any further confusion, the Arbitrator in the very same E-mail has further stated that, MFA No.101368/2017 10 in case the figure does not tally with the figures available with the claimants/respondents, the respective figure and basis may be made available to the Arbitrator for perusal and necessary action. The said liberty (if can be called so) was given only as an abundant caution and to avoid any further confusion in future. But by that itself, it cannot be taken that the respondent's application under Section 33 of the Act was still pending.
10. It is on this point the Arbitration Court got itself into confusion and without noticing the fact that the Arbitrator has clearly stated in his G-mail/E-mail that he was clarifying the doubt ("It is clarified"), the Arbitration Court straight away jumped to a conclusion that Arbitrator wanted some more details from the parties so as to consider the application filed by the respondent under Section 33 of the Act. We have no other option but to say that the said finding arrived at by the Arbitration Court observing that the respondent's application under MFA No.101368/2017 11 Section 33 of the Act was then still pending, is an erroneous finding.
11. When the respondent's application under Section 33 of the Act was disposed of by the Arbitrator on 31.01.2014, the limitation of three months to file an Arbitration suit under Section 34 of the Act commences. Thus, within 3 months from that date i.e. on 30.04.2014, the appellant has preferred the Arbitration Suit. Thus, the finding of the Arbitration Court that the appeal/suit was either time barred or pre-mature, both cannot be sustained, since they are erroneous finding.
Accordingly, we proceed to pass the following order:
ORDER The appeal is allowed.
The order dated 03.01.2017, passed by the Prl.
District and Sessions Judge, Dharwad in Arbitration Suit MFA No.101368/2017 12 No.1/2015 is set aside and the Arbitration Suit is restored on its file.
Considering the age of the Arbitration Suit, we appreciate the Arbitration Court disposing the Arbitration Suit at the earliest. For the said purpose, both the parties herein are directed to appear before the Arbitration Court without awaiting any further notice from it on 30.10.2017 at 11:00 a.m. The registry to transmit a copy of this order to the Arbitration Court without delay.
Sd/-
JUDGE SD/-
JUDGE *Svh/MBS/−