Bombay High Court
Kajiva Construction Company Pvt. Ltd vs Shyamnarayan And Broters on 4 May, 2016
Author: Anoop V. Mohta
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.321 OF 2016
IN
ARBITRATION PETITION NO.ARBP/724/2015
Kajiva Construction Co. Pvt. Ltd. ... Appellant
Vs.
Shyam Narayan & Brothers
ig .... Respondents.
Mr. Anjani Kumar Singh with Vatsal Verma i/b. Ms. Pallavi Marathe for
Appellant
Mr. Jithin Palakkal with Ms. Priyanka Pawar i/b. Charvy
Hatkananglekar for Respondents.
CORAM : ANOOP V. MOHTA AND
A.A. SAYED, JJ.
CLOSED FOR
JUDGEMENT ON : 21 APRIL 2016
PRONOUNCED ON : 04 MAY 2016
JUDGEMENT:- (Per Anoop V. Mohta, J.) This Appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, "the Arbitration Act") challenging order dated 31 August 2015 passed by the learned Single 1/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 2 app-321-16-judgment..sxw Judge rejecting the Appellant's Arbitration Petition under Section 34 on the ground of limitation. That resulted into confirmation of Award dated 17 February 2014 passed by the learned Arbitrator which allowed the claim of the Claimant/Respondent.
2 The Respondent had undertaken the work of excavation for fleet building at Marol, Andheri (East). Disputes and differences had arisen between the Appellant and the Respondent due to non-
payment of the dues of the Respondent in connection with the work.
3 The Respondent had filed a Civil Suit No.2934 of 2010 in this Court for recovery of its dues on or about 10 th November 2011.
The Respondent had also filed Company Petition No.282 of 2011 on or about 20 June 2011 under the provisions of sections 433 and 434 of the Companies Act, 1956. By consent of parties, the Civil suit and the Company Petition were disposed off vide order of this Court dated 9 August 2012, and the parties were referred to arbitration for adjudication of the disputes and differences to an Arbitrator.
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4 The parties submitted their pleadings and had led oral
evidence of their respective witnesses and had also advanced their arguments in the matter. After hearing the parties and after considering the evidence on record the learned Arbitrator has passed impugned Award dated 17th February 2014.
5 A copy of impugned Award dated 17 February 2014 was received by the Appellant on the same day viz. 17 February 2014. On 10 June 2014, an Arbitration Appeal No. 20 of 2014 was filed by the Appellant purportedly under Section 34 of the Arbitration Act on Appellate Side of this Court. On 15 September 2014 the Appeal came to be numbered by the Department after removal of objections by the Appellant. On 7 October 2014, an order is passed by the learned Single Judge (S.C. Gupte, J.)permitted the Appellant to convert the Arbitration Appeal to an Arbitration Petition based on the admission made by the Appellant that the Appellant had wrongly invoked the Appellate jurisdiction of this Court. On 7 November 2014, pursuant to order dated 7 October 2014, Arbitration Petition (L) No.1739 of 2014 was transferred to the Original Side and the presentation date and filing of the Arbitration Petition is shown as 07-11-2014.
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6 On 24 March 2015, the matter was called out for rejection
by the Prothonotary and Senior Master due to non-removal of objections and non-compliance of the rules of this Court. Time was granted to the Appellant to remove office objections and to comply with the rules upto 7 April 2015. On 28 April 2015 for some reason, a fresh Arbitration Petition with added grounds was filed by the Appellant under Section 34 of the Arbitration Act. On 2 May 2015, the Arbitration Petition filed by the Appellant was registered as ARBP/724/2015. On 31 August 2015, the impugned order is passed by the learned Single Judge dismissing the Arbitration Petition only on the ground of limitation which is the subject matter of this Appeal.
7 The basic objection of Respondent is that there is no explanation provided by the Appellant for condoning the delay in filing Section 34 Application and specifically in view of the following mandatory provision of Arbitration Act, 1996.
"34 Application for setting aside arbitral award . -
(1) ...........
(2) ............
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(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."
8 The Apex Court in M/s. Consolidated Engineering Enterprises v. Principal Secretary, (Irrigation Department) and ors 1 has held as under :
"15 .......................................
Therefore it has to be held that section 14(2) of 1 AIR 2009 SC (Supp) 396 5/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 6 app-321-16-judgment..sxw the Limitation Act, 1963 is applicable to proceedings under section 34(1) of the AC Act."
9 It is submitted on behalf of the Respondent that there was delay even thereafter in taking steps in filing Petition within a further period of 30 (thirty) days. It is contended that this Petition needs to be treated as filed beyond 120 days and, therefore, rightly not entertained by the learned Single Judge. The supportive submissions have been made accordingly by the learned counsel appearing for the Respondents. Reliance is also placed on the judgments of Delhi High Court in The Executive Engineer (Irrigation and Flood Control) v.
Shree Ram Construction Co. in FAO (OS) Nos. 49, 132, 444, 665 of 2009 and CM Nos. 5212, 11595, 13776, 18944 of 2009 and 5016 of 2010 decided on 12 November 2010 (Vikramajit Sen and Mukta Gupta, JJ.) along with connected matters.
10 The parties have filed synopsis and written submissions in support of their contention referring to the judgments so relied upon.
Both the counsel have read and referred the affidavit and rejoinder in support of their case.6/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 :::
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11 The learned counsel appearing for the Respondents
submitted that from the date of Award till filing of Arbitration Petition, there was delay of more than three months. It is noticed that Arbitration Appeal No. 20/2014 was filed after 3 months and 25 days but within 120 days. The office objections in the Arbitration Appeal were removed on 15.09.2014 i.e. after further 97 days. The learned Single Judge, by order dated 7.10.2014, considering the case of Appellant, granted permission to convert the Arbitration Appeal into Arbitration Petition and also to file the same on the Original Side of this Court. This order of 7.10.2014 has not been challenged by the Respondent and the issue of limitation was not raised before the learned Single Judge. After 31 days, on 7.11.2014 the Arbitration Appeal filed on Appellate Side was converted by the Registrar to an Arbitration Petition on the Original Side. According to the Respondents, the Appellant did not remove office objection even till 7.4.2015 as directed by the Prothonotary & Senior Master by order dated 24-03-2015 and the Arbitration Petition was dismissed for want of removal of office objection. The Appellant is denying the same.
According to the Appellant, on account of the fact that there were many objections and amendments, the Department asked the 7/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 8 app-321-16-judgment..sxw Appellant to file a fresh draft of Petition, which was accordingly filed on 28.04.2015. However, new grounds were added in the fresh Petition without taking leave of the Court and no Application for seeking condonation of delay was filed. On 31.08.2015, the learned Single Judge, by the impugned order dismissed the Arbitration Petition on the ground of limitation.
12 There is no issue that Section 5 of Limitation Act is not applicable so far as the issue of sufficient reason in filing Section 34 Arbitration Petition beyond three months and thirty days is concerned.
However, it is well settled that provisions of Section 14 of Limitation Act are applicable. The Appeal was preferred within 3 months and 25 days on 10.06.2014 against Award dated 17 February 2014. This was beyond three months as contemplated under Section 34 (3) of the Act, but it was within further 30 days as per the said Section. It means the Appeal/Application was filed by the Appellant within three months and thirty days as prescribed. In the present facts and circumstances, in our view, it cannot be said that the Arbitration Petition was filed beyond three months and thirty days as prescribed.
We have gone through the affidavit of the Appellant and find that 8/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 9 app-321-16-judgment..sxw there is a sufficient cause made out for condoning the delay of 25 days ( of the extended period of 30 days) in filing the Arbitration Appeal, which is stated to be inadvertently filed as Arbitration Appeal instead of Arbitration Petition and wrongly filed on the Appellate Side.
13 As the Arbitration Appeal was filed on Appellate Side, the order of conversion was passed on 7.10.2014 after hearing the parties.
The learned Judge, as recorded above, permitted the Appellant to do so. The office objection was not removed by the Appellant is the case of the Respondent. As stated, that there was no office objection taken out by the Office about the delay in filing as such. The matter was kept for removal of office objection, in view of the order passed by the learned Judge on 7.10.2014 for taking steps to convert the Arbitration Appeal on Appellate Side to Arbitration Petition on Original Side.
Ultimately, the office objections were removed and the Arbitration Petition under Section 34 was registered. The same was thereafter listed before the learned Judge.
14 So far as the filing of a fresh Arbitration Petition (after the order of conversion) which was affirmed on 28.04.2015 by adding new grounds without taking leave of the Court is concerned, we are of the view that there was no necessity as such to file such fresh 9/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 10 app-321-16-judgment..sxw Arbitration Petition again on 28.04.2015. There can be no two opinions that once the order for conversion was passed, the matter ought to have been pursued by the Appellant by taking necessary steps for conversion at the earliest. According to the Appellant, it had filed the fresh Petition as there were many objections and amendments and therefore the Department had asked the Appellant to file a fresh draft of the Petition. The fresh Arbitration Petition, therefore, so filed on 28.04.2015 by raising new grounds, in our view, ought not to have been filed. There was also no question of raising new grounds in such fashion, through the fresh Petition. The learned counsel appearing for the Appellant conceded and submitted that at this stage, the Appellant is not pressing for new grounds and will file appropriate Application/s, in accordance with law to take corrective action sofar as this aspect is concerned.
15 The reasons, therefore, of dismissing the Arbitration Petition on the ground of limitation, in the present facts and circumstances, is required to be interfered with as this amounts to rejection of the Arbitration Petition under Section 34, without giving hearing and opportunity to the Appellant on merits. This rejection has the effect of confirmation of the Award passed against the Appellant.10/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 :::
dgm 11 app-321-16-judgment..sxw As noted, though the Appellant took time to remove office objections and as the Arbitration Petition was required to be filed as per the format of the Original Side jurisdiction of this Court, ultimately he got the objections removed and affirmed the fresh Petition on 28.04.2015 again. This was also for the reason as stated by the Appellant that all the annexures of Petition were misplaced and, therefore, it took some time to reconstruct the Arbitration Petition.
16 The filing of the Arbitration Appeal on the Appellate Side, in our view, at the highest, amounts to filing of Application in wrong court. As a matter of fact, the Appeal is filed in the same Court i.e. this Court, but on the Appellate Side. The learned Single Judge, as recorded above, by order dated 7.10.2014, permitted to convert the same to the Original Side. Ultimately, the Arbitration Petition was affirmed on 25.04.2015 as indicated above and filed on 2 May 2015.
The requirement of law of filing of the Arbitration Petition within three months and thirty days (extended period), in our view, just cannot be overlooked in Arbitration proceedings. The objection and/or wrong filing of Arbitration Petition on the Appellate Side of this Court is required to be considered in the interest of justice not by invoking Section 5 of Limitation Act, but by considering the scope and 11/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 12 app-321-16-judgment..sxw purpose of Section 14 of the Arbitration Act. This view is reinforced by the Apex Court in Consolidated Engineering (supra). Therefore, having once permitted the Appellant to convert the Arbitration Appeal of Appellate Side to the Original Side Arbitration Petition, the further delay, even if any, in taking steps and/or removing office objections, in no way, affects the filing of Application under Section 34(3) of the Arbitration Act within the period prescribed. This is not the case of extension of limitation period, but this is a case where the bonafide Arbitration Appeal was filed on Appellate Side instead of Arbitration Petition on Original Side. The protection so available under Section 14 of Limitation Act, therefore, is required to be extended and/or given to the Appellant as case is made out. The issue of limitation and the issue of non-removal of office objections are distinct and separate. It cannot be said that the proceedings pursuant to order dated 7.10.2014 was disposed of and after order of conversion dated 7.10.2014, the proceedings had remained on the file of the Court.
17 There is no issue, based upon the provisions and judgments so referred above that the mandate so prescribed of three months and thirty days (extended period) under Section 34(3) just 12/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 13 app-321-16-judgment..sxw cannot be altered. In view of above position, it cannot be disputed that proceedings to challenge the impugned Award was required to be filed within three months and at the highest three months and thirty days. Considering the reasons in the Affidavit filed on behalf of the Appellant, we are inclined to exercise the discretion in condoning the delay of 25 days which is beyond the period of three months, but well within the extended period of thirty days, as sufficient cause is made out by the Appellant. Having once recorded that the proceedings to challenge the Award was preferred within three months and thirty days and the delay of 25 days is condoned, as stated above, the Arbitration Petition is well within limitation and the further period of removal office objections, if any, in our view, cannot be the reason to deny the case of the Appellant on the ground that the Arbitration Petition under Section 34 was not filed within the statutory period of three months and thirty days.
18 We are inclined to observe that deliberate delay and/or intention to postpone the registration of Arbitration Petition and/or circulation of such Arbitration Petition under Section 34 by the parties, by not removing the office objections is required to be taken seriously. We deprecate the practice of deliberate delay, if any, of 13/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 14 app-321-16-judgment..sxw such arbitration matters. The office is also required to ensure removal of office objections, at the earliest, specifically in arbitration matters, as the Award so passed by the Arbitral Tribunal remains un- executable, once Section 34 Arbitration Petition is filed in the High Court/District Court as per the unamended statutory provision.
Therefore, the Award though passed in favour of the claimant/Respondent, he is unable to enjoy the fruits of the Award because of pendency of such Arbitration Petition and specifically for want of removal of office objection. The delay on the part of such Arbitration Petitioner and specifically non-removal of office objection, therefore, definitely causes injustice and hardship to the claimant/party in whose favour, an arbitral award is passed by the Arbitral Tribunal.
19 We are inclined to observe that Office needs to pass appropriate conditional order if at all reasonable time is granted to remove office objection. Inspite of time being granted to remove office objections, if the Arbitration Petitioners deliberately delay the proceedings, without sufficient reason, such Arbitration Petition needs to be disposed of, by rejecting the Arbitration Petition itself.14/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 :::
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20 In the present case, we are satisfied that there was
sufficient cause made out to condone the delay of 25 days which is within the extended period of thirty days after the initial period of three months in filing the Arbitration Appeal in the first instance. It is an admitted position that the Arbitration Petition was wrongly filed as Arbitration Appeal on Appellate Side of this Court within three months and thirty days. Therefore, the Court is well within its powers to condone such delay. The judgments cited on behalf of the Respondents are not applicable in the facts and circumstances of the present case, as this is essentially a case of conversion of proceedings from Arbitration Appeal filed on the Appellate Side to Arbitration Petition on the Original Side.
21 Taking an overall view of the matter and considering the facts and circumstances of the case and scope and purpose of Arbitration Act and keeping in mind the judgment of Apex Court in Consolidated Engineering Enterprises (supra), we are inclined to interfere with the impugned order passed by the learned Judge, however, subject to costs of Rs.25,000/- to be paid by the Appellant to the Respondent.15/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 :::
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22 In the present case, admittedly the learned Judge has not
dealt with the merits of the matter even on the unamended grounds so raised by the Appellant, whereby challenge was raised to the award in favour of the Respondent. The Petition, under Section 34, was dismissed solely on the ground of limitation. Therefore, considering the scope and power of Appellate Court and in the facts and circumstances of the case and as we have held that sufficient cause is made out to condone the delay of 25 days, we are inclined to interfere with the order passed by the learned Judge as indicated above.
23 In the result, the following order :
ORDER (1) Appeal is allowed.
(2) Impugned order dated 31 August 2015 is quashed and set aside, subject to costs of Rs.25,000/-
to be paid to the Respondents within six weeks.
(3) The delay of 25 days beyond three months in challenging the Award and the delay in removing the office objections by the Appellant shall stand 16/17 ::: Uploaded on - 10/05/2016 ::: Downloaded on - 11/05/2016 00:00:21 ::: dgm 17 app-321-16-judgment..sxw condoned.
(4) We request the learned Single Judge to decide Section 34 Arbitration Petition on merits expeditiously.
(A.A. SAYED, J.) (ANOOP V. MOHTA, J.)
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