Telangana High Court
Food Corporation Of India vs A.P. State Warehousing Corporation And ... on 27 April, 2022
Author: P.Naveen Rao
Bench: P.Naveen Rao
HIGH COURT FOR THE STATE OF TELANGANA
********
I.A.NO.1 OF 2022 AND C.M.A.NO.157 OF 2022
Date : 27.04.2022
Between:
Food Corporation of India, rep.by its
Senior Regional Manager (Now General Manager)
HACA Bhavan Hyderabad.
.... Appellant/
Petitioner
and
A.P.State Warehousing Corporation, rep.by its
Managing Director, Behind Gandhi Bhavan,
Nampally, Hyderabad and two others.
....Respondents
DATE OF JUDGMENT PRONOUNCED : 27.04.2022
HON'BLE SRI JUSTICE P.NAVEEN RAO
&
HON'BLE SRI JUSTICE SAMBASIVARAO NAIDU
1. Whether Reporters of Local Newspapers : No
may be allowed to see the Judgments ?
2. Whether the copies of judgment may be : Yes
marked to Law Reporters/Journals
3. Whether Their Lordship wish to : No
see the fair copy of the Judgment ?
PNR,J + SSRN,J
I A No.1 of 2022 and
CMA No.157 OF 2022
2
* HON'BLE SRI JUSTICE P.NAVEEN RAO
&
HON'BLE SRI JUSTICE SAMBASIVARAO NAIDU
+ CIVIL MISCELLANEOUS APPEAL NO.157 OF 2022
% 27.04.2022
# Food Corporation of India, rep.by its
Senior Regional Manager (Now General Manager)
HACA Bhavan Hyderabad.
.... Appellant/
Petitioner
Vs.
$ A.P.State Warehousing Corporation, rep.by its
Managing Director, Behind Gandhi Bhavan,
Nampally, Hyderabad and two others.
....Respondents
!Counsel for the Appellant : M/s.Dominic Fernandes
Counsel for the Respondents : --
<Gist :
>Head Note:
? Cases referred:
(2000) 9 SCC 94
(2021) 6 SCC 460
(2020) 2 SCC 109
PNR,J + SSRN,J
I A No.1 of 2022 and
CMA No.157 OF 2022
3
HONOURABLE SRI JUSTICE P.NAVEEN RAO
&
HON'BLE SRI JUSTICE SAMBASIVARAO NAIDU
I.A.NO.1 OF 2022 AND C.M.A.NO.157 OF 2022
JUDGMENT:(Per Hon'ble Sri Justice P.Naveen Rao) The then A.P.State Warehousing Corporation entered into an agreement with Sri A.Rama Krishna on 29.09.2004 for handling and transport services, which is essentially required for loading and transportation at the godowns. Disputes arose between the respondents 1 and 2, and also the appellant. The Managing Director of Warehousing Corporation nominated the third respondent as Arbitrator. The Arbitrator passed award on 18.10.2008. This award of the Arbitrator was challenged by the appellant in Arbitration O.P.No.343 of 2009 filed under Section 34 of the Arbitration and Conciliation Act, 1966 (for short, Act, 1966) in the Court of Chief Judge, City Civil Court, Hyderabad. The Chief Judge vide her order dated 27.06.2017 dismissed the petition, confirming the award dated 18.10.2008 passed by the 3rd respondent.
Aggrieved thereby, this appeal is filed. Appellant filed I.A.No.1 of 2022 praying to condone the delay of 898 days in filing the appeal.
2.1. We have heard extensively the learned counsel appearing for the petitioner/appellant on the delay condonation application. According to PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 4 the learned counsel, there was no privity of contract between the petitioner/appellant and the respondents 1 and 2. The appellant has not subscribed to the arbitration clause either in oral or in written communication and the arbitration clause is applicable only between the parties to the arbitration agreement. Therefore, petitioner/appellant was illegally drawn into arbitration proceedings and award was passed by the Arbitrator without appreciating the true and correct facts.
2.2. According to learned counsel, though petitioner/appellant is no way concerned with the agreement entered into by the first and second respondents and though a specific plea was taken in this regard before the Arbitrator as well as before the lower Court, the same was not properly appreciated and issue was not decided in a right perspective and illegally liability is fastened on the petitioner/appellant.
2.3. He would submit that the Office of appellant corporation was not aware of the orders passed in Section 34 of the Act, 1996, application till notice in E.P., was received and the lawyer appearing for the Food Corporation of India (for short 'FCI') did not inform of that result.
2.4. He would submit that due to bifurcation of the State, even the functioning of the FCI was affected and there is lot of disturbance in movement of the people and files, resulting in dislocation of work. Due PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 5 to this, there was shortage of staff even to attend to day to day functioning of the Office. He would further submit that added to this, spread of Covid-19 pandemic impaired the functioning of Office of the FCI.
2.5. On the long delay in filing the application he would submit that as held by the Hon'ble Supreme Court in catena of judgments, which are referred by the Hon'ble Supreme Court in State of Bihar and others vs. Kameshwar Prasad Singh and another1 that in Government Organizations decisions are taken at a laid back pace, requires processing of files at various levels, delay may also cause on account of a particular level officer going on leave or otherwise busy or is slow in dealing with matters and, therefore, while considering application for condonation of delay, these special circumstances have to be taken note of and liberally construed.
2.5.1. He would submit that there is no mala fide intention in filing the appeal with long delay. There was no occasion to adopt dilatory tactics as award was staring at the FCI. It has not drawn any advantage by filing the appeal at belated stage. The delay is caused in the peculiar facts of 1 (2000) 9 SCC 94 PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 6 the case. It was not willful or deliberate. He therefore, appeals to the Court to condone the delay and to admit the appeal.
3. The question for consideration is whether the petitioner/appellant is entitled to seek condonation of delay in filing the appeal.
4. To appreciate this contention, it is necessary to consider the relevant provisions of the Act, 1996 i.e., Sections 342 and 373 of the Act, 1996.
2Section 34. Application for setting aside arbitral awards.
(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) An arbitral award may be set aside by the Court only if--
(a) the party making the application 1[establishes on the basis of the record of the arbitral tribunal that]--
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India. Explanation 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(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) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.
PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 7
5. Section 34 of the Act, 1996 vests right in a person aggrieved by the Award passed by the Arbitrator, to challenge the Award before the Civil Court. The Act prescribes 90 days period of limitation to avail such remedy with a grace period of 30 days.
6. Section 37 of the Act, 1996 vests right in a person to challenge the decision of the trial Court by way of appeal. Section 37 does not prescribe limitation.
7. While conceding that the Limitation Act is applicable to matters arising under the Act, 1996 and that the Court has power to condone the delay having regard to objects of the Act, 1996, the Hon'ble Supreme Court held that "suffiecient cause" contained in Section 5 of the Limitation Act, is not elastic enough to cover long delays beyond the period provided by the appeal provisions and is not a loose panacea for the ill of presenting negligent and stale claims. In series of judgments the Hon'ble Supreme Court cautioned that exercise of power to condone delay should be an exception and not by way of rule. The Hon'ble Supreme Court 3
37. Appealable orders.--(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:--
3[(a) refusing to refer the parties to arbitration under section 8;
(b) granting or refusing to grant any measure under section 9;
(c) setting aside or refusing to set aside an arbitral award under section 34.] (2) Appeal shall also lie to a court from an order of the arbitral tribunal--
(a) accepting the plea referred to in sub‐section (2) or sub‐section (3) of section 16; or
(b) granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.
PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 8 viewed delay ranging from 120 days to 227 days as on higher side and refused to condone the delay. It is also held that no exception can be carved out in appeals filed by the Governments or their instrumentalities.
8. In Government of Maharashtra (Water Resources Department) rep. by Executive Engineer Vs Borse Brothers Engineers & Contractors Private Limited4, the Hon'ble Supreme Court held:
"32. Thus, from the scheme of the Arbitration Act as well as the aforesaid judgments, condonation of delay under Section 5 of the Limitation Act has to be seen in the context of the object of speedy resolution of disputes.
58. Given the object sought to be achieved under both the Arbitration Act and the Commercial Courts Act, that is, the speedy resolution of disputes, the expression "sufficient cause" is not elastic enough to cover long delays beyond the period provided by the appeal provision itself. Besides, the expression "sufficient cause" is not itself a loose panacea for the ill of pressing negligent and stale claims. This Court, in Basawaraj v. LAO [Basawaraj v. LAO, (2013) 14 SCC 81] , has held : (SCC pp. 85-88, paras 9-15)
"9. Sufficient cause is the cause for which the defendant could not be blamed for his absence. The meaning of the word "sufficient" is "adequate" or "enough", inasmuch as may be necessary to answer the purpose intended. Therefore, the word "sufficient" embraces no more than that which provides a platitude, which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case, duly examined from the viewpoint of a reasonable standard of a cautious man. In this context, "sufficient cause" means that the party should not have acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or it cannot be alleged that the party has "not acted diligently" or "remained inactive". However, the facts and circumstances of each case must afford sufficient ground to enable the court concerned to exercise discretion for the reason that whenever the court exercises discretion, it has to be exercised judiciously. The applicant must satisfy the court that he was prevented by any 4 (2021) 6 SCC 460 PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 9 "sufficient cause" from prosecuting his case, and unless a satisfactory explanation is furnished, the court should not allow the application for condonation of delay. The court has to examine whether the mistake is bona fide or was merely a device to cover an ulterior purpose. (See Manindra Land & Building Corpn. v. Bhutnath Banerjee [Manindra Land & Building Corpn. v. Bhutnath Banerjee, AIR 1964 SC 1336] , Mata Din v. A. Narayanan [Mata Din v. A. Narayanan, (1969) 2 SCC 770] , Parimal v. Veena [Parimal v. Veena, (2011) 3 SCC 545 : (2011) 2 SCC (Civ) 1] and Maniben Devraj Shah v. Municipal Corpn. of Brihan Mumbai [Maniben Devraj Shah v. Municipal Corpn. of Brihan Mumbai, (2012) 5 SCC 157 :
(2012) 3 SCC (Civ) 24] .)
10. In Arjun Singh v. Mohindra Kumar [Arjun Singh v.
Mohindra Kumar, AIR 1964 SC 993] this Court explained the difference between a "good cause" and a "sufficient cause"
and observed that every "sufficient cause" is a good cause and vice versa. However, if any difference exists it can only be that the requirement of good cause is complied with on a lesser degree of proof than that of "sufficient cause".
11. The expression "sufficient cause" should be given a liberal interpretation to ensure that substantial justice is done, but only [Ed. : The matter between two asterisks has been emphasised in original.] so long as negligence, inaction or lack of bona fides cannot be imputed to the party concerned [Ed. : The matter between two asterisks has been emphasised in original.] , whether or not sufficient cause has been furnished, can be decided on the facts of a particular case and no straitjacket formula is possible. (Vide Madanlal v. Shyamlal [Madanlal v. Shyamlal, (2002) 1 SCC 535] and Ram Nath Sao v. Gobardhan Sao [Ram Nath Sao v. Gobardhan Sao, (2002) 3 SCC 195] .)
12. It is a settled legal proposition that law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes. The court has no power to extend the period of limitation on equitable grounds. 'A result flowing from a statutory provision is never an evil. A court has no power to ignore that provision to relieve what it considers a distress resulting from its operation.' The statutory provision may cause hardship or inconvenience to a particular party but the court has no choice but to enforce it giving full effect to the same. The legal maxim dura lex sed lex which means "the law is hard but it is the law", stands attracted in such a situation. It has consistently been held that, "inconvenience is not" a decisive factor to be considered while interpreting a statute.
PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 10
13. The statute of limitation is founded on public policy, its aim being to secure peace in the community, to suppress fraud and perjury, to quicken diligence and to prevent oppression. It seeks to bury all acts of the past which have not been agitated unexplainably and have from lapse of time become stale. According to Halsbury's Laws of England, Vol. 28, Para 605 p. 266:
'605. Policy of the Limitation Acts.--The courts have expressed at least three differing reasons supporting the existence of statutes of limitation, namely, (1) that long dormant claims have more of cruelty than justice in them, (2) that a defendant might have lost the evidence to disprove a stale claim, and (3) that persons with good causes of actions should pursue them with reasonable diligence.' An unlimited limitation would lead to a sense of insecurity and uncertainty, and therefore, limitation prevents disturbance or deprivation of what may have been acquired in equity and justice by long enjoyment or what may have been lost by a party's own inaction, negligence or laches. (See Popat & Kotecha Property v. SBI Staff Assn. [Popat & Kotecha Property v. SBI Staff Assn., (2005) 7 SCC 510] , Rajender Singh v. Santa Singh [Rajender Singh v.
Santa Singh, (1973) 2 SCC 705] and Pundlik Jalam Patil v. Jalgaon Medium Project [Pundlik Jalam Patil v. Jalgaon Medium Project, (2008) 17 SCC 448 : (2009) 5 SCC (Civ) 907].) ...."
(emphasis supplied)
59. Likewise, merely because the Government is involved, a different yardstick for condonation of delay cannot be laid down. This was felicitously stated in Postmaster General v. Living Media (India) Ltd. [Postmaster General v. Living Media (India) Ltd., (2012) 3 SCC 563 : (2012) 2 SCC (Civ) 327 : (2012) 2 SCC (Cri) 580 :
(2012) 1 SCC (L&S) 649] ["Postmaster General"], as follows : (SCC pp. 573-74, paras 27-29).........."
......
63. Given the aforesaid and the object of speedy disposal sought to be achieved both under the Arbitration Act and the Commercial Courts Act, for appeals filed under Section 37 of the Arbitration Act that are governed by Articles 116 and 117 of the Limitation Act or Section 13(1-A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule. In a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the court, be condoned, always bearing in mind that the other side of the picture is that the opposite party PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 11 may have acquired both in equity and justice, what may now be lost by the first party's inaction, negligence or laches.
.....
65. Apart from this, there is a long delay of 131 days beyond the 60- day period provided for filing an appeal under Section 13(1-A) of the Commercial Courts Act. There is no explanation worth the name contained in the condonation of delay application, beyond the usual file-pushing and administrative exigency. This appeal is therefore dismissed.
....
.....
67. That apart, on the facts of this appeal, there is a long delay of 75 days beyond the period of 60 days provided by the Commercial Courts Act. Despite the fact that a certified copy of the District Court's judgment was obtained by the respondent on 27-4-2019, the appeal was filed only on 9-9-2019, the explanation for delay being:
"2. That, the certified copy of the order dated 1-4-2013 was received by the appellant on 27-4-2019. Thereafter the matter was placed before the CGM purchase MPPKVVCL for the compliance of the order. The same was then sent to the law officer, MPPKVVCL for opinion.
3. That after taking opinion for appeal, and approval of the authorities concerned, the officer-in-charge was appointed vide order dated 23-7-2019.
4. That, thereafter due to bulky records of the case and for procurement of the necessary documents some delay has been caused however, the appeal has been prepared and filed pursuant to the same and further delay.
5. That due to the aforesaid procedural approval and since the appellant is a public entity formed under the Energy Department of the State Government, the delay caused in filing the appeal is bona fide and which deserve[s] to be condoned."
......
69. In the civil appeal arising out of SLP (C) Diary No. 18079 of 2020, there is a huge delay of 227 days in filing the appeal, and a 200-day delay in refiling. The facts of this case also show that PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 12 there was no sufficient cause whatsoever to condone such a long delay. The impugned judgment of the High Court of Delhi dated 15-10-2019 [Union of India v. Associated Construction Co., 2019 SCC OnLine Del 10797] cannot be faulted on this score and this appeal is consequently dismissed.
(emphasis supplied) 8.1. In N.V. International Vs State of Assam and others5, the Hon'ble Supreme Court held:
"4. We may only add that what we have done in the aforesaid judgment is to add to the period of 90 days, which is provided by statute for filing of appeals under Section 37 of the Arbitration Act, a grace period of 30 days under Section 5 of the Limitation Act by following Lachmeshwar Prasad Shukul [Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri, 1940 SCC OnLine FC 10 : AIR 1941 FC 5] , as also having regard to the object of speedy resolution of all arbitral disputes which was uppermost in the minds of the framers of the 1996 Act, and which has been strengthened from time to time by amendments made thereto. The present delay being beyond 120 days is not liable, therefore, to be condoned." (emphasis supplied)
9. In the case on hand, there is a delay of 899 days in filing this appeal. Two reasons are assigned for the delay. Firstly, that the Lawyer on record before the Court below did not inform disposal of application filed under Section 34 of the Act, 1996 and the FCI came to know of such disposal only when they received notice in E.P.; and secondly, due to bifurcation of the State, there was dislocation of Office work and Covid-
19 pandemic added to the problems.
5(2020) 2 SCC 109 PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 13
10. From the record it is noticed that the copy application was filed before the Court below on 25.10.2021 and copy was furnished on 12.11.2021. This appeal is preferred on 22.03.2022. No explanation is forthcoming for keeping quiet for the delay in filing this appeal from 12.11.2021 to 22.03.2022. Further, E.P., notice was served on 05.02.2021. It took more than eight months to file copy application.
Assuming that the Lawyer on record did not inform the appellant/ applicant, even after receipt of notice in E.P., no immediate steps were taken to avail the remedy of appeal and it took more than eight months even for filing an application to furnish certified copy in the lower Court.
11. The appellant/applicant was clearly negligent and was not prosecuting the legal remedies in a bona fide manner. He has not acted diligently. As noted above, he remained inactive for a long period. The reasons assigned cannot be said as amounting to showing "sufficient cause". Appellant/applicant is trying to blame the Lawyer on record who is no more and taking excuse from issues arising out of formation of State of Telangana etc, only to overcome their carelessness, laziness in prosecuting the legal remedy. As consistently held by the Hon'ble Supreme Court in matters arising out of the Act, 1996, the term "sufficient cause" is not elastic enough to condone the delay of 899 days.
As held by the Hon'ble Supreme Court in Borse Brothers Engineers and PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 14 Contractors (supra) merely because the appellant is Government organization, lenience cannot be shown to condone such a long delay.
12. For the aforesaid reasons, I.A.No.1 of 2022 is dismissed. As a consequence, CMA No.157 of 2022 is dismissed. No order as to costs.
Pending miscellaneous applications, if any, stand dismissed.
__________________________ P.NAVEEN RAO,J __________________________ SAMBASIVARAO NAIDU,J Date: 27.04.2022 KKM/PT PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 15 HONOURABLE SRI JUSTICE P.NAVEEN RAO & HON'BLE SRI JUSTICE SAMBASIVARAO NAIDU I.A.NO.1 OF 2022 AND C.M.A.NO.157 OF 2022 Date : 27.04.2022 PNR,J + SSRN,J I A No.1 of 2022 and CMA No.157 OF 2022 16 kkm