Full Text
O.M.P. 251/2001
BHARAT SANCHAR NIGAM LIMITED ..... Petitioner
Through Mr. Dinesh Agnani, Ms. Leena Tuteja and Mr. Harsh Parekh, Advocates
LIMITED & ANR. ..... Respondents
Through: Mr. Narendera M. Sharma with Ms. Mithu Jain, Advocates and
Mr. S.L. Uppal, AR for R-1.
Date of Decision: March 15th , 2010
JUDGMENT
1. Whether the Reporters of local papers may be allowed to see the judgment? NO. 2. To be referred to the Reporter or not? NO. 3. Whether the judgment should be reported in the Digest? No.
JUDGMENT
MANMOHAN, J (ORAL)
1. Present petition has been filed under Section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act, 1996”) challenging the arbitral Award dated 7th August, 2000 passed by Mr. Justice P.K. Bahri (Retd.).
2. At the outset, Mr. Narendera M. Sharma, learned counsel for respondent-claimant submitted that the objection petition was barred by 2010:DHC:1496 limitation. He stated that the objection petition challenging the impugned Award had initially been filed on 12th December, 2000 before the District Court, Ambala, Haryana and on 8th January, 2001 before the High Court of Himachal Pradesh at Shimla. On an application filed under Section 42 of Act, 1996 read with Order 7 Rule 11 of Code of Civil Procedure, 1908 (in short “CPC”) by the respondent-claimant, the District Court, Ambala vide order dated 16th May, 2001 dismissed the objection petition under Order 7 Rule 11 of CPC. Thereafter petitioner-objector filed the objection petition in this Court on 9th July, 2001, even though on 22nd August, 2000 the Arbitrator had forwarded a signed copy of the impugned Award to petitioner-objector’ counsel. In this connection, he drew my attention to Item No. 24 of the Index of papers filed by the Arbitrator in this Court and a UPC receipt showing despatch of a letter by the Arbitrator to petitioner-objector’ counsel Ms. Rashmi Gulati.
3. Mr. Sharma stated that assuming without admitting that service upon the petitioner-objector’ lawyer was not good enough, the respondent-claimant had on 29th September, 2000 furnished another photocopy of the corrected Award to the office of the Chairman/Secretary of Department of Telecommunication (in short “DOT”), Ministry of Communications & Information Technology, Government of India which was duly received vide Diary NO. 356/CH(TC). He stated that by way of abundant precaution on 3rd October, 2000, another copy of the letter dated 29th September, 2000 along with corrected photocopy of the Award had been filed in the Central Registry of DOT.
4. Mr. Sharma also referred to internal correspondence of the petitioner-objector to show that officials of petitioner-objector had started taking action on the impugned Award even prior to 20th October,
2000.
5. Mr. Sharma stated that on 6th November, 2000 after obtaining a certified copy of the Award from the Registry of this Court, another photocopy of the said Award had been furnished to the petitionerobjector. Consequently, according to him, the present objection petition being beyond the maximum time period of three months plus thirty days was clearly barred by limitation.
6. On the other hand, Mr. Dinesh Agnani, learned counsel for petitioner-objector, without prejudice to the rights of petitionerobjector, submitted that the limitation, if any, for filing the objections would only start from 6th November, 2000 when respondent-claimant furnished a photocopy of a certified copy of the corrected Award. He stated that if 6th November, 2000 was taken as the starting point of limitation, then the petitioner-objector’ objection petition filed on 12th December, 2000 before the District Court, Ambala was well within limitation.
7. Mr. Agnani further stated that petitioner-objector’ counsel, Ms. Rashmi Gulati had not forwarded any copy of the impugned Award to petitioner-objector. According to him, receipt of the Award, if any, by petitioner-objector’ counsel was irrelevant and meaningless.
8. Though initially Mr. Agnani took the stand that the entire Award had not been furnished to petitioner-objector vide respondentclaimant’s letter dated 29th September, 2000 but later on, on a perusal of the file he handed over a photocopy of the respondent-claimant’s letter dated 29th September, 2000 which showed that the said letter along with a copy of the entire Award had been received by Secretary, DOT on the said date vide despatch number mentioned by respondent-claimant’s counsel. He, however, stated that the said letter did not constitute service of Award as firstly it was not a signed copy of the impugned Award and secondly, it had not been forwarded by the Arbitrator himself. In this connection, Mr. Agnani relied upon Sub-section 5 of Section 31 of Act, 1996, which reads as under:-
31. Form and contents of arbitral award. – xxxxx xxxx xxxx xxxx (5) After the arbitral award is made, a signed copy shall be delivered to each party.
9. In support of the aforesaid submission, Mr. Agnani relied upon the following judgments:- A) National Projects Constructions Corporation Limited Vs. M/s. Bundela Bandhu Constructions Company reported in AIR 2007 DELHI 202 (DB) B) Union of India Vs. Tecco Trichy Engineers and Contractors reported in AIR 2005 SC 1832. C) Kempegowda Vs. National Highways Authority of India & Ors. reported in 2008(2) Arb.L.R. 393 (Karnataka).
10. Mr. Agnani also pointed out that after the objection petition had been rejected by the District Court, Ambala, petitioner-objector had on 9th July, 2001 filed the present objection petition in the Registry of this Court. Mr. Agnani submitted that the petitioner-objector was entitled to benefit of Section 14 of Limitation Act, 1963 (hereinafter referred to as “Act, 1963) in pursuance to Supreme Court’s judgment in the case of Consolidated Engineering Enterprises Vs. Principal Secretary, Irrigation Department and Ors. reported in (2008) 7 SCC 169.
11. In rejoinder, Mr. Sharma stated that petitioner-objector was not entitled to benefit of Section 14 of Act, 1963 as objection petition filed before the District Court, Ambala was not maintainable in view of the bar contained in Section 42 of Act, 1996, which reads as under: “42. Jurisdiction. -Notwithstanding anything contained elsewhere in this part or in any other law for the time being in force, where with respect to an agreement any application under this Part has been made in a court, that alone shall have jurisdiction over the arbitral proceedings and all applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court.”
12. Mr. Sharma stated that the objection petition filed by the petitioner-objector before Ambala Court was rejected on filing of an application by the respondent-claimant under Section 42 of Act, 1996 read with Order 7 Rule 11 of CPC which was contested by the petitioner-objector. Mr. Sharma submitted that in view of the aforesaid order, petitioner-objector could not claim benefit of Section 14 of Act, 1963 as Section 34 proceedings were certainly not proceeded with either in good faith or with due diligence. The petitioner-objector even filed an application for review of the order dated 16th May, 2001 rejecting objection petition under Section 42 of Act, 1996 read with Order 7 Rule 11 CPC.
13. Having heard the parties at some length, I am of the opinion that it would be appropriate to first refer to Section 34(3) of Act, 1996 which provides a period of limitation for filing objections to an arbitral award. The said sub-section is reproduced hereinbelow:- “34. Application for setting aside arbitral award. – xxxx xxxx xxxx xxxx (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.”
14. Consequently, three months is the period of limitation for filing objections to an arbitral award. However, Courts have the power to condone a further delay of thirty days if sufficient cause is shown. Accordingly, three months plus thirty days is the maximum period within which an objection petition challenging an arbitral award can be filed. In fact, Supreme Court in Union of India vs. Popular Construction Co. reported in (2001) 8 SCC 470 after referring to Section 34 of the Act, 1996 has held as under:- “12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result. xxx xxx xxx
14. Here the history and scheme of the 1996 Act support the conclusion that the time-limit prescribed under Section 34 to challenge an award is absolute and unextendible by court under Section 5 of the Limitation Act. The Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main objectives the need “to minimize the supervisory role of courts in the arbitral process”. This objective has found expression in Section 5 of the Act which prescribes the extent of judicial intervention in no uncertain terms: “5. Extent of judicial intervention– Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”
15. The “Part” referred to in Section 5 is Part I of the 1996 Act which deals with domestic arbitrations. Section 34 is contained in Part I and is therefore subject to the sweep of the prohibition contained in Section 5 of the 1996 Act.
16. Furthermore, Section 34(1) itself provides that 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). Subsection (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, sub-section (3) would not be an application “in accordance with” that subsection. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The importance of the period fixed under Section 34 is emphasized by the provisions of Section 36 which provide that “where the time for making an application to set aside the arbitral award under Section 34 has expired… the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court”.
15. Undoubtedly, keeping in view the observations of Supreme Court in Consolidated Engineering Enterprises’ case (supra), petitioners would certainly be entitled to exclusion of time that they spent in prosecuting with due diligence a proceeding in another Court even though the said Court did not have jurisdiction to entertain the same. The necessary ingredients of Section 14 of Act, 1963 which have to be complied with by petitioner before it can avail of the said benefit have been stipulated in Consolidated Engineering Enterprises’ case (supra) itself. The relevant observations of Supreme Court in Consolidated Engineering Enterprises’ case (supra) read as under:- “21. Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. On analysis of the said section, it becomes evident that the following conditions must be satisfied before Section 14 can be pressed 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. xxxx xxxx xxxx xxxx
31. To attract the provisions of Section 14 of the Limitation Act, five conditions enumerated in the earlier part of this judgment have to co-exist. There is no manner of doubt that the section deserves to be construed liberally. Due diligence and caution are essential prerequisites for attracting Section
14. Due diligence cannot be measured by any absolute standards. Due diligence is a measure of prudence or activity expected from and ordinarily exercised by a reasonable and prudent person under the particular circumstances. The time during which a court holds up a case while it is discovering that it ought to have been presented in another court, must be excluded, as the delay of the court cannot affect the due diligence of the party. Section 14 requires that the prior proceeding should have been prosecuted in good faith and with due diligence. The definition of good faith as found in Section 2(h) of the Limitation Act would indicate that nothing shall be deemed to be in good faith which is not done with due care and attention. It is true that Section 14 will not help a party who is guilty of negligence, lapse or inaction. However, there can be no hard-and-fast rule as to what amounts to good faith. It is a matter to be decided on the facts of each case. It will, in almost every case be more or less a question of degree. The mere filing of an application in wrong court would not prima facie show want of good faith. There must be no pretended mistake intentionally made with a view to delaying the proceedings or harassing the opposite party. In the light of these principles, the question will have to be considered whether the appellant had prosecuted the matter in other courts with due diligence and in good faith.”
16. Upon a perusal of the original arbitral record, I find that the Arbitrator on 7th August, 2000 had passed the impugned arbitral Award in favour of the respondent-claimant. Since the Arbitrator had passed two arbitral awards between the same parties on the same day, the suit numbers in the two awards had got interchanged. Accordingly, respondent-claimant filed an application for correction of suit numbers in the impugned Award under Section 33(1)(a) of Act, 1996. The arbitral record further reveals that a copy of the application for rectification had been served in the office of petitioner-objector-DOT on 21st August, 2000 and the said typographical correction was carried out by the Arbitrator on 22nd August, 2000. From Item No. 24 of the Index of papers which states “copy of the Award sent through UPC to Ms. Rashmi Gulati, Advocate for the respondent dated 22nd August, 2000” read with UPC receipt at page 233(C) of the arbitral record, I am of the view that a signed copy of the impugned Award had been despatched to petitioner-objector. In view of Section 114 of Evidence Act, 1872 and Section 27 of General Clauses Act, 1897 a presumption would have to be drawn that petitioner-objector were served with a corrected copy of the Award in compliance with Sub-section (5) of Section 31 of Act, 1996. Undoubtedly, the said presumption is a rebuttable one but in the present case I find that the petitioner-objector have till date not taken any steps to place on record any letter from its previous lawyer to show that she had not received a signed copy of the impugned Award. I am also of the opinion that delivery on any person expressly or impliedly authorised by a “party” is delivery on that party. In fact in S. Maharaj Baksh Singh Vs. Charan Kaur reported in AIR 1987 Punjab & Haryana 213 (DB) the Court held that a lawyer is understood to embody his client in his own person. Order 3 of CPC also entitles the advocate, appearing for one of the parties, to receive service of process. A learned Single Judge of this Court in OMP 51/2005 tiled as Karmyogi Shelters Pvt. Ltd. Vs. Benarsi Krishna Committee & Anr decided on 28th August, 2009 has held that to hold that the award has to be delivered personally to the party and cannot be delivered to the advocate representing the party would create unnecessary delay/drag in the arbitration proceedings. Consequently, in my opinion, deemed service of a signed copy of the arbitral Award would have to be presumed upon the petitioner-objector’ counsel and the said service, to my mind, would constitute compliance of Subsection (5) of Section 31 of Act, 1996.
17. In any event, photocopy of the letter dated 29th September, 2000 placed on record by Mr. Agnani would show that another duly corrected copy of the impugned Award had been received by the Chairman/Secretary of DOT on 29th September, 2000. The letter dated 29th September, 2000 along with official noting is reproduced hereunder:- BY HAND DELIVERY 29-9-2000 Union of India, Through Secretary, Department of Telecommunications, Ministry of Communications, Govt. of India, Sanchar Bhavan, 20-Ashok Road, NEW DELHI-110001 Dear Sir, Sub: Arbitration Cases No.113/98 & 114/98 in the matter of Arbitration between M/s. Haryana Telecom Ltd. v/s Union of India Copies of Awards passed in the abovementioned two cases were dispatched to you from the office of Hon’ble Mr. Justice P.K. Bahri (Retd), Arbitrator, by UPC, vide their Index Ref No.Vol.[1] page 233C for case No.114/98 and Vol.I page-165-B for case No.113/98 both on 22nd August, 2000. However, we also enclose herewith a copy each of both the Awards passed in favour of Haryana Telecom Ltd., The Awards were filed in the Hon’ble High Court on 26-8-2000 by the Ld. Arbitrator under Diary No.13453 for Case No.114/98 and 1342 for case No.113/98. One copy each of the Ist page of both Awards in which Suit Nos. were corrected have also been enclosed with the Awards. Kindly arrange to reimburse a sum of Rs.1,16,37,288/- awarded in case No.113/98 and a sum of Rs.1,49,78,142/- awarded in case No.114/98 immediately. Thanking you, we remain, Yours faithfully, FOR HARYANA TELECOM LIMITED, AUTHORISED SIGNATORY Encl: Copies of Awards as above.
18. It is pertinent to mention that in the arbitral proceedings, Union of India, Department of Telecommunication through the Secretary was Sd/- DDG/MM.I DDG(MMII) Sd/- 3477/DDG.MM.I 2736/DDGMM2/20 4.10.2000 356/CH(TC)/2000 CC ADG(ST) Examined & P/u Dir (MMS) Award has to be honour & Amount should be refunded within 2 months P/u immediately. Sd/- 4/10/2k Pl. put up in correct file for examination Sd/- 5/10 the respondent-claimant. Accordingly, in my view, service of the impugned Award on the Chairman/Secretary of DOT constitutes service of notice of the Award upon the officer who was in-charge of and against whom the claim had been filed. I am further of the opinion that service of the impugned Award on the Chairman/Secretary of DOT constitutes sufficient notice upon the DOT to take steps in respect of and with regard to the impugned Award passed by the Arbitrator to constitute starting point of limitation for the purposes of Section 34(3) of Act, 1996 as clarified by the Supreme Court in Tecco Trichy Engineers’ case (supra).
19. In fact, in National Projects Constructions Corporation Limited’s case (supra) this Court clarified that Section 31(5) of the Act, 1996 did not contemplate a punctilious or fastidiously formal connotation to the word 'delivered'. A substantial and authentic compliance of Sub-section (5) of Section 31 of Act, 1996 would be sufficient. In the present instance, I find that not only the Arbitrator but also the respondent-claimant had given sufficient and adequate notice of the impugned Award to petitioner-objector. Consequently, the judgments cited by the learned counsel for petitioner-objector are not applicable to the facts and circumstances of the present case.
20. There is yet another aspect namely, petitioner-objector had filed two objection petitions against the same Award, one before District Court, Ambala, Haryana and the other at High Court of Himachal Pradesh at Shimla even though the first proceeding under Section 11 of the Act, 1996 had been filed by respondent-claimant before this Court. Consequently, in view of the categorical language of Section 42 of Act, 1996, both objection petitions were clearly without jurisdiction and it cannot be said that the said proceedings had been filed in good faith and prosecuted in a bona fide manner. Accordingly, in my opinion, petitioner-objector would not be entitled to the benefit of Section 14 of Act, 1963 for the period 12th December, 2000 to 09th July, 2001. Consequently, if benefit of this period is not given to petitionerobjector, then also the present petition would be beyond limitation.
21. Accordingly, present objection petition having been filed beyond the limitation period is dismissed, but with no order as to costs. MANMOHAN,J MARCH 15, 2010. rn