Calcutta High Court
Mohanlal Agarwal vs Manjan Devi Patni & Ors on 2 March, 2020
Equivalent citations: AIRONLINE 2020 CAL 316
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
IN THE HIGH COURT AT CALCUTTA
ORIGINAL JURISDICTION
ORIGINAL SIDE
A.P. No. 74 of 2019
G.A. No. 399 of 2019
Mohanlal Agarwal
Vs.
Manjan Devi Patni & Ors.
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
For the petitioner : Mr. Satadeep Bhattacharya, Advocate,
Mr. Saptarshi Mukherjee, Advocate,
For the respondent : Mr. Rajeev Kumar Jain, Advocate,
Nos. 1 to 11 Mr. Abhirup Chakraborty, Advocate,
Ms. Laila Khatun, Advocate,
Mr. Ayush Jain, Advocate.
Judgment on : 02.03.2020
Ashis Kumar Chakraborty, J.
In this application, A.P. No.74 of 2019 under Section 34 of the Arbitration and Conciliation Act, 1996 (in short "the Act of 1996") the petitioner has sought to challenge the award made by the Sole Arbitrator on February 28, 2018 (hereinafter referred to as "the impugned award"). The petitioner has also filed an application, G.A. No.399 of 2019 for stay of operation of the impugned award. In the arbitration proceeding the respondent nos. 1 to 11 herein were the claimants, the petitioner and the proforma respondent nos. 12 and 13 herein were the respondent nos. 1, 2 and 3, respectively. The proforma respondents herein did not appear before the Arbitrator. For the sake of convenience the parties are described hereinafter as per their array in this application.
By the impugned award the Arbitrator has directed the petitioner to pay Rs.1,10,00,000/- together with pre-reference interest, interest pendente lite and interest upon award at varying rates to the respondent nos.1 to 11, (hereinafter referred to as "the respondents"). The Arbitrator further directed the petitioner to deliver possession of the subject property situate at premises No.14 R.G.Kar Road, P.S. Ultadanga, Kolkata-700004 (hereinafter referred to as "the said property") and to return all documents, papers etc. concerning the said property to the respondents.
The petitioner has filed the application to challenge the impugned award beyond the time stipulated under sub-Section (3) of Section 34 of the Act of 1996 read with the Proviso thereto. In other words, the petitioner has filed the present application beyond three months from the date of receipt of the impugned award and even beyond thirty days thereafter. The petitioner, however, claims the benefit of Section 14 of the Limitaion Act,1963 for admission of this application. In fact, the petitioner had filed an application, Misc. Case No.298 of 2018, under Section 34 of the Act of 1996 before the learned District Judge at Alipore, South 24-parganas and challenged the impugned award within three months from the date of recipt thereof. The petitioner alleged that disputes and differences which had arisen between the parties culminating in making of the impugned award by the Arbitrator related to the said property situate within the jurisdiction of the learned District Judge at Alipore. Thus, according to the petitioner, in view of the definition of the term "Court" in Section 2(1)(e) of the Act of 1996, the Court of the learned District Judge at Alipore was the only court which had the jurisdiction to entertain the said Misc. Case No.298 of 2018. The respondents, however, filed an application raising objection to the maintainability of the said Misc. Case No.298 of 2018 before the learned District Judge at Alipore. The respondents stated that they had filed an application, A.P. No. 712 of 2017 under Section 29A of the Act of 1996, before this Court praying for extension of time for making and publication of the award by the Arbitrator. By order dated September 05, 2017 a learned Single Judge of this Court, in presence of the petitioner, allowed the said application and extended the time for making the award by the Arbitrator. The respondents contended that in view of the said order dated dated September 05, 2017 passed by this Court, Section 42 of the Act of 1996 is squarely applicable in this case and the learned District Judge at Alipore lacked the jurisdiction to entertain the said Misc. Case No.298 of 2018. The respondents prayed for rejection of the said Misc. Case No.298 of the 2018. The petitioner contested the said application and filed his written objection. During the pendency of the said Misc. Case 298 of 2018 the respondent nos. 1 to 11 filed the application, EC 327 of 2018 before this Court to execute the award made by the Arbitrator against the petitioner. The said execution application was moved upon notice to the petitioner and by order dated August 01, 2018 a learned Co-ordinate Bench of this Court restrained the petitioner from selling, disposing of, alienating, encumbering all of its properties and assets. It appears that the petitioner did not challenge the said order dated August 01, 2018 on the ground of lack of jurisdiction of this Court to entertain the execution application.
By order dated August 14, 2018 the learned District Judge at Alipore upheld the objection of the respondents with regard to the jurisdiction of his Court to entertain the said Misc. Case No.298 of 2018 and directed return of the application to the petitioner for filing the same before the appropriate Court. The petitioner, however, challenged the said order dated August 14, 2018 by filing a revisional application, C.O. No. 3328 of 2018 under Article 227 of the Constitution of India before this Court. The respondents contested the said revisional application. By a judgment and order dated January 24, 2019 a Co-ordinate Bench of this Court rejected the said revisional application. Thereafter, on February 5, 2019 the petitioner took back the original impugned award from the Court of the learned District Judge at Alipore and on the next day he filed this application before this Court. The petitioner claims that he had bona fide filed and had been prosecuting the said Misc. Case No.298 of 2018 before the learned District Judge at Alipore as well as the revisional application before this Court with due diligence. The petitioner, therefore, claims the benefit of Section 14 of the Limitation Act, 1963 for exclusion of the time during which he had been prosecuting the said Misc. Case No.298 of 2018 before the learned District Judge at Alipore as well as the said revisional application before this Court. In support of his claim for the benefit of Section 14 Limitation Act of 1963 in this application under Section 34 of the Act of 1996 the petitioner relied on the decision of the Supreme Court in the case of Consolidated Engineering Enterprises -Vs- Principal Secretary, Irrigation Department & others, reported in (2008) 7 SCC 169. It was submitted that the provision of Section 14 of the Limitation Act, 1963 is aimed for furtherance of the cause of justice and such provision is to be interpreted by the Court extremely liberally. In this regard, the petitioner cited the decision of the Supreme Court in the Case of M. P. Steel Corporation -Vs- Commissioner of Central Excise, reported in (2015) 7 SCC 58. Learned counsel for the petitioner next cited the decision of the Supreme Court in the case of Oil & Natural Gas Ltd. -Vs- Modern Construction & Company, reported in (2014) 1 SCC 648 and contended that in the present case since the learned District Judge at Alipore returned the application filed in Misc. Case No.298 of 2018 for lack of jurisdiction to entertain the same, the petitioner is further entitled to the benefit of Section 14 of the Limitation Act for exclusion of time period between the order dated August 14, 2018 and February 06, 2019 when this application was filed before this Court. Urging all these grounds learned Counsel for the petitioner pressed for admission of this application.
However, learned counsel appearing for the respondent vehemently opposed the petitioner's prayer for exclusion of the time in computing the period of limitation for filing the present application under Section 34(3) of the Act of 1996 by invoking Section 14 of the Act of 1963. It was submitted that the respondents filed the application AP No.395 of 2018, under Section 29A of the Act of 1996, before a Co-ordinate Bench of this Court and in presence of the petitioner they obtained the order dated September 05, 2017 for extention of time for making and publication of the award by the Arbitrator. The petitioner did not challenge the said order before any superior Court. Accordingly, in view of Section 42 of the Act of 1996, all subsequent applications by any party with regard to the arbitration proceeding had to be filed before this Court alone, but the petitioner negligently filed the said Misc. Case No. 298 of 2018 before the learned District Judge at Alipore. Thus, according to the respondents filing of the said Misc. Case No.298 of 2018 by the petitioner to challenge the arbitral award cannot be construed to be bona fide. The respondents further submitted that the petitioner participated in the arbitral proceeding conducted by the Arbitrator on the basis of the said order dated September 05, 2017.
The respondents cited the decision of the Supreme Court in the case of State of West Bengal and Ors. -vs- Associated Contractors, reported in (2015)1 SCC 32 and submitted that Section 42 of the Act of 1996 is applicable to all applications made whether before or during arbitral proceedings or after an award is pronounced under Part-I of the same Act. It was contended that when the respondents filed the application under Section 29A of the Act of 1996 before this Court and obtained the order extending the time for making of the award by the Arbitrator under Section 42 of the same Act is squarely applicable in this case. Therefore, there was no bona fide on the part of the petitioner to file either the said Misc. Case before the learned District Judge at Alipore or the revisional application before this Court. It was argued that in view of settled position in law that Section 42 of the Act of 1996 applies to all applications made to a Court before, during and even after arbitral proceedings are over including after award has been made an application for challenging an award under Section 34 of the same Act, the petitioner cannot be held to have filed either the said Misc. Case No. 298 of 2018 before the learned District Judge at Alipore or the revisional application before this Court in good faith or with due diligence. It was further submitted that in the said Misc. Case No. 298 of 2018 the petitioner did not allege that the order dated September 05, 2017 passed by a learned Single Judge of this Court was without jurisdiction and consequently, the impugned award is also void for being made by the Arbitrator when his mandate stood terminated before passing of the said order dated September 05,2017. Learned Counsel for the respondents, therefore, pressed for dismissal of the present application on the ground of being barred by limitation under Section 34(3) of the Act of 1996 read with the Proviso thereto.
In the present case, the issue that has fallen for decision of this Court involves the scope and purport of Section 14 of the Limitation Act, 1963. In view of the decision of the Supreme Court in the case of Consolidated Engineering Enterprises (supra) the position of law is settled that there is no bar to the applicability of Section 14 of the Limitation Act, 1963 to an application submitted by a party to the arbitral proceeding under Section 34 of the Act of 1996. Now the question arises whether in the present case the petitioner has been able to satisfy the conditions for obtaining the benefit under Section 14 of the Limitation Act, 1963. In the case of Consolidated Engineering Enterprises (supra) the Supreme Court held that the following five conditions that must be satisfied before a party can press for the benefit of Section 14 of the Limitation Act into service:-
(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.
Out of the aforementioned five conditions the petitioner has indisputably fulfilled the first, third, fourth and fifth condition.
In the Paragraph 31 of the same decision, the Supreme Court further held the due diligence cannot be measured by any absolute standard. Due diligence is a measure of prudence or activity expected from and ordinarily exercised by a reasonable and prudent person under the particular circumstances. In the case of M.P. Steel Corporation (supra) cited by the petitioner the Supreme Court applied their earlier decision in the case of Consolidated Engineering Enterprises (supra). In Paragraph 10 of the said decision, the Supreme Court explained the aforementioned second condition for applicability of Section 14 of the Limitation Act is that the prior proceeding had been prosecuted with due diligence and in good faith and to mean that the party who seeks the benefit of the said section should not be guilty of negligence, lapse or inaction nor there should be any pretended mistake intentionally made with a view to delay the proceeding or to harass the opposite party. In the present case, the petitioner claims to have prosecuted with the said Misc. Case No.298 of 2018 before the learned District Judge at Alipore and the revisional application before this Court with due diligence and in good faith. On the other hand, the respondents submitted that petitioner has not challenged the impugned award on the ground that the order passed by a learned Single Judge of this Court in the said application under Section 29A of the Act of 1996 was void and consequently, the impugned award made on February 28, 2018 after the Arbitrator's mandate stood terminated is also without jurisdiction. The respondents contended that the learned District Judge at Alipore while returning the application filed in Misc. Case No.298 of 2018 and the learned Single Judge of this Court while rejecting the said revisional application upheld their contention that in view of the this Court allowing the application filed under Section 29A of the Act of 1996 Section 42 of the same Act was squarely applicable in this case. Therefore, according to the respondents, the petitioner cannot be held to have satisfied the second essential condition laid down in the case of Consolidated Engineering Enterprises (supra) for applicability of Section 14 of the Limitation Act and the petitioner's prayer for admission of this application should be rejected.
It is not in dispute that the respondents filed the application under Section 29A of the Act of 1996, before a Co- ordinate Bench of this Court, for extension of time for making the award by the Arbitrator. By order dated September 05, 2017 a Co- ordinate Bench of this Court, in presence of the petitioner, extended the time to make and publish the award of the Arbitrator. A copy of the said order has been disclosed by the respondents in their affidavit and from a reading thereof, it is evident that the petitioner did not raise any objection to the jurisdiction of this Court to entertain the said application. Further, the petitioner accepted the said order dated September 05, 2017 and thereafter participated in the arbitral proceeding conducted by the Arbitrator. In the application filed in Misc. Case No.298 of 2018 before the learned District Judge at Alipore, the petitioner did not challenge the impugned award on the ground that the order dated September 05, 2017 passed by this Court was without jurisdiction and consequently, the impugned award made by the Arbitrator after termination of his mandate which took place before passing of the said order is also without jurisdiction and void. In the application filed in Misc. Case No.298 of 2018 the petitioner had not at all mentioned about the filing of the said application under Section 29A of the Act of 1996 before this Court or passing of the said order dated September 05, 2017 by a Co- ordinate Bench of this Court.
For all the forgoing reasons, I unable to convince myself to accept that the petitioner had prosecuted the said Misc. Case No. 298 of 2018 before the learned District Judge at Alipore with due diligence or in good faith. Thus , the petitioner can not claim benift of Section 14 of the Limitation Act,1963. In the facts of the present case the decision of the Supreme Court in Modern Construction & Company (supra) is of no assistance to the petitioner. Accordingly, the application A.P. No.74 of 2019 filed by the petitioner,for setting aside of the impugned award, beyond the period of the time stipulated in sub-Section (3) of Section 34 of the Act 1996 read with the Proviso thereto cannot be entertained and the same stands rejected.
In view of the dismissal of the main application A.P. No.74 of 2019 the application G.A. No.399 of 2019 praying for stay of operation of the impugned award also stands rejected.
There shall, however, be no order as to costs.
Urgent certified website copies of this judgement, if applied for, be made available to the parties subject to compliance with requisite formalities.
(ASHIS KUMAR CHAKRABORTY, J.)