Full Text
HIGH COURT OF DELHI
Date of order : 7th December 2022
PRABHAT DAIRY LIMITED ..... Petitioner
Through: Mr. T. K. Prabhakaran and Mr. Ketan Madan, Advocates
Through: Mr. Vipul Agrawal, Mr. Sooraj Sharma, Mr. Jatin Kochhar, Mr. Shaurya Dhoundiyal and Mr. Anirudha Das, Advocates
CHANDRA DHARI SINGH, J (Oral)
ORDER
1. The instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter “Arbitration Act”) has been filed on behalf of the petitioner seeking setting aside of Award dated 29th June 2019 passed by the Sole Arbitrator.
2. A perusal of the record reveals that an Agreement was entered into between the parties on 2nd June 2016 for supply of Ghee, which was valid for 2 years. The parties exchanged e-mails and telephonic conversations to work the terms and conditions of the agreement as well as to discuss the quantity, price and other relevant details of the order to be placed. Thereafter, disputes arose between the parties with respect to the quantity requirement and the price thereto and it is the claim of the petitioner that the respondent neither remitted the entire decided amount nor did it comply with certain conditions of the agreement.
3. Ultimately, the respondent terminated the agreement vide communication/e-mail dated 29th August 2017. Subsequent thereto, the Arbitration Clause was invoked and the parties commenced the Arbitration proceedings for resolution of their dispute. The learned Sole Arbitrator made the Award dated 29th June 2019 observing that the cancellation of Purchase Order was without any risk/cost and did not amount to provisions of the agreement, there was no breach of contract on the part of the respondent herein under the Clause 5(a) governing the Delivery Schedule, non-service of formal notice did not cause any prejudice to the petitioner herein, amongst others. The learned Sole Arbitrator also held that the claimant, i.e. the respondent herein, was entitled to recover the following amount from the petitioner herein:a. a sum of Rs. 1,05,000/- paid by the former claimant, Ameet Metaplast; b. a sum of Rs. 20,00,000/- paid to the respondent as advance payment towards the proposed second Purchase Order; c. a sum of Rs. 34, 82,460/- for loss of profit; and d. a sum of Rs. 20,00,000/- towards loss of goodwill and reputation.
4. The petitioner being aggrieved by the order passed by the learned Sole Arbitrator has approached this Court assailing the same.
5. Learned counsel appearing on behalf of the petitioner submitted that the impugned Award is contrary to law and facts and has led to serious miscarriage of justice.
6. It is submitted that the Agreement entered into between the parties was in the nature of a Memorandum of Understanding and was not an executable contract stipulating any final price, quantity, quality, delivery schedule etc. There was no confirmed Purchase Order to be executed and it was impossible for the petitioner to deliver the products since the factors like procurement price of milk, delay in delivery of packaging materials, price escalation and delivery schedules were all debated between the parties. The learned Arbitrator failed to consider that the delay was on the account of the respondents changing the size and type of containers/packaging material and hence, the observation that the respondent could not be held liable for deficiency and delay as well as the change of size and delivery of packaging material is erroneous.
7. It is further submitted that the respondent terminated the said agreement without observing the terms and conditions of the agreement which required a notice of 90 days prior to the termination. Further, the learned Sole Arbitrator failed to consider that the Clause 14 of the Agreement which provided that novation of contract would no longer be binding on the parties merely because the parties did not agree to the terms in writing. The learned Arbitrator fell in grave error by not appreciating that the parties had already, by their own conduct, carried out the novation of the Agreement and no part thereof was effectively acted upon.
8. It is also submitted on behalf of the petitioner that the Purchase Order dated 29th June 2016 and termination notice dated 29th August 2017 were in complete violation of the Clauses 1, 2 and 5-7 of the Agreement dated 2nd September 2016. The learned Arbitrator incooretly held that the petitioner was liable to pay the sum as aforesaid to the respondent.
9. It is, therefore, submitted that the impugned Award is liable to be set aside for being unsustainable, for having been passed contrary to the public policy, for being based on surmises and conjectures.
10. Per Contra, the learned counsel appearing on behalf of the respondent vehemently opposed the instant petition on the ground of delay and defects and submitted that the petition is liable to be rejected or dismissed on that ground solely.
11. It is submitted that the impugned Award was passed on 29th June 2019 and the instant petition by the petitioner was filed on 27th September 2019, i.e. the 90th day, and the same remained in objections/defects till 7th November 2019 for a long list of defects. On the 7th of November 2019, it was again noted that wrong re-filing was done. Again on 8th November 2019, about 20 defects were found by the registry in the petition filed by the petitioner, which were allegedly removed in re-filing done. Subsequent thereto, the petitioner re-filed the petition with certain defects left unrectified as noted by the registry which were then finally removed on 14th November 2019, whereafter, the matter came up before this Court.
12. It is submitted that the comprehensive list of defects noted continuously upon filing and re-filing, placed before this Court during arguments, shows that the petitioner filed the defective petition with the intention to mislead the Court only to be saved from the sanction of limitation. Despite noting the same objections/defects more than once, the petitioner did not exercise due diligence, delayed the re-filing and even thereafter, re-filed the defective petition, in contravention of Section 34(3) of the Arbitration Act as well as the mandate of the Delhi High Court Rules.
13. Learned counsel for the respondent relied upon the following judgments passed by the Division and Co-ordinate Benches of this Court to give force to his arguments:a. Delhi Development Authority vs. Durga Construction Co., 2013 SCC OnLine Del 4451 b. Government of NCT Of Delhi vs. Y.D Builder & Hotel Pvt. Ltd., 2017 SCC OnLine Del 6812 c. Tanaria Infrastructure Pvt. Ltd. vs. National Highways Authority Of India, 2018 SCC OnLine Del 11198 d. Haji Banda Hasan v. Gupta and Gupta Pvt. Ltd., 2019 SCC OnLine Del 10018 e. Director-cum-Secretary, Department of Social Welfare vs. Sarvesh Security Pvt. Ltd., 2019 SCC OnLine Del 8503 f. Oil and Natural Gas Corporation Ltd. vs. Joint Venture of M/s Sai Rama Engineering Enterprises (Sree) and Megha Engineering & Infrastructure Ltd. (MEIL), 2019 SCC OnLine Del 10456 g. Food Corporation of India vs. Pratap Rice & General Mills, 2013 SCC OnLine Del 5183 h. Union Of India vs. Bharat Biotech International Ltd., 2013 SCC OnLine Del 483 i. Oriental Insurance Co. Ltd. Ors. vs. Air India Ltd., 2019 SCC OnLine Del 11634 j. Jay Polychem (India) Ltd. & Ors. vs. S.E. Investment Ltd., 2018 SCC OnLine Del 8848 k. Iron International Ltd. vs. Reacon Engineers (India) Pvt. Ltd., 2022 SCC OnLine Del 1860 l. Executive Engineers National Highway Division vs. S&P Infrastructure Developers (P) Ltd., 2022 SCC OnLine Del
14. It is, therefore, submitted that the instant petition may be dismissed on the grounds of significant deficiencies in filing and re-filing with the intention to stop the limitation from running.
15. Heard learned counsel for the parties and perused the record.
16. The learned counsel for the respondent has raised a preliminary objection to the petition on the ground that the petitioner has filed and refiled defective petition with the sole intention to stop the period of limitation from running.
17. Section 34 (3) of the Arbitration Act, provides the limitation for assailing an Award and reads as under:-
18. The provision stipulates that the application seeking setting aside an arbitral award shall be made within three months from the date when the party making application had received the award. The provision also provides for powers with the Court to condone the delay, if any, upon being satisfied of the reasons/cause shown for such delay, however, there is also a limitation to this effect, which mandates that such delay can only be for a further period of 30 days and not any further. This essentially means that an application assailing an arbitral award shall be filed within the total period of 120 days, with 3 months of limitation and another 30 days if the Court is satisfied of the delay caused. In the instant case, the petitioner approached this Court by way of filing the instant petition during the very last few days of the limitation period, as stipulated in the provision of the Arbitration Act, which saved him from being barred by the same. However, the petition though filed within the period of limitation, in accordance with the Act, did not come before the Court for the subsequent 2 months for the reason of the several defects found in the petition by the registry. These defects, as pointed out by the registry were not mere technical or formal defects, but were of such nature which needed to be rectified for the purposes of listing before the Court. Moreover, a perusal of the list of defects placed before this Court reveals that the defects enlisted at the first instance on 1st October 2019 were not removed even at the time of re-filing on 8th November 2019 and again certain same defects for the third time were also found upon re-filing on 13th November 2019.
19. At this juncture, it is also found pertinent to refer to the Delhi High Court Rules and Orders, Volume V Chapter 1 Rule 5, which provides as under:- “5(1) The Deputy Registrar/Assistant Registrar, In-charge of the Filing Counter, may specify the objections (a copy of which will be kept for the Court Record) and return for amendment and re-filing within a time not exceeding 7 days at a time and 30 days in the aggregate to be fixed by him, any memorandum of appeal, for the reason specified in Order XLI, Rule 3, Civil Procedure Code. (2) If the memorandum of appeal is not taken back, for amendment within the time allowed by the Deputy Counter under sub-rule (1), it shall be registered and listed before the Court for its dismissal for non-prosecution. (3) If the memorandum of appeal is filed beyond the time allowed by the Deputy Registrar/Assistant Registrar, in charge of the Filing Counter, under sub-rule (1) it shall be considered as fresh institution.”
20. A Division Bench of this Court in the judgment Government of NCT of Delhi vs. Y.D Builder & Hotels Pvt. Ltd., 2017 SCC Online Del 6812, while adjudicating upon a similar issue observed as under:-
21. Hence, the provisions under the Delhi High Court Rules and Orders would be applicable to the instant case as well.
22. To this effect, the Hon’ble Supreme Court of India in Union of India vs. Popular Construction Co., (2001) 8 SCC 470, observed as under:
”
23. As noted above, the petitioner filed the instant petition on 27th September 2019. However, the same kept lying before the registry in objections due to several defects. The petitioner despite being aware of the defects, re-filed the petition without curing the same and removing all the objections pointed out by the registry. As stipulated in the Rule 5(1) and 5(3) as aforesaid, the petitioner was required to remove the defects and re-file the petition within an aggregate of 30 within days, however, from the date of filing, i.e., 27th September 2019 till the final re-filing after removal of all defects/objections, i.e., on 14th November 2019, the said period of 30 days lapsed. Therefore, even though the petition was not barred by limitation at the first instance, the petitioner could not meet the requirement for re-filing by removing the defects even after re-filing the same twice. Accordingly, it is found that the petition is hit by Rule 5(3) as aforesaid.
24. This Court as well as the Hon’ble Supreme Court have time and again reiterated the principles regarding condonation of delay in filing and re-filing of petitions, especially under Arbitration Act. The Division Bench of this Court in Delhi Development Authority vs. Durga Construction Co., 2013 SCC OnLine Del 4451, expressed its view and held as follows:- “21. Although, the courts would have the jurisdiction to condone the delay, the approach in exercising such jurisdiction cannot be liberal and the conduct of the applicant will have to be tested on the anvil of whether the applicant acted with due diligence and dispatch. The applicant would have to show that the delay was on account of reasons beyond the control of the applicant and could not be avoided despite all possible efforts by the applicant. The purpose of specifying an inelastic period of limitation under section 34(3) of the Act would also have to be borne in mind and the Courts would consider the question whether to condone the delay in re-filing in the context of the statute. A Division Bench of this High Court in Competent Placement Services through its Director/Partner v. Delhi Transport Corporation through its Chairman, 2011 (2) R.A.J. 347 (Del) has held as under:
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25. Thus, in our view a Court would have the jurisdiction to condone delay in re-filing even if the period extends beyond the time specified in section 34(3) of the Act. However, this jurisdiction is not to be exercised liberally, in view of the object of the Arbitration and Conciliation Act to ensure that arbitration proceedings are concluded expeditiously. The delay in re-filing cannot be permitted to frustrate this object of the Act. The applicant would have to satisfy the Court that it had pursued the matter diligently and the delays were beyond his control and were unavoidable. In the present case, there has been an inordinate delay of 166 days and in our view the appellant has not been able to offer any satisfactory explanation with regard to the same. A liberal approach in condoning the delay in refiling an application under section 34 of the Act is not called for as it would defeat the purpose of specifying an inelastic period of time within which an application, for setting aside an award, under section 34 of the Act must be preferred.”
25. Further, in Tanaria Infrastructure Pvt. Ltd. vs. National Highways Authority Of India, 2018 SCC OnLine Del 11198, the Division Bench of this Court observed as under:-
26. In the landmark judgment of Bharat Barrel and Drum Mfg. Co. Ltd. vs. ESI Corpn., (1971) 2 SCC 860, the Hon’ble Supreme Court held as under:- “The law of limitation appertains to remedies because the rule is that claims in respect of rights cannot be entertained if not commenced within the time prescribed by the statute in respect of that right. Apart from Legislative action prescribing the time, there is no period of limitation recognised under the general law and therefore any time fixed by the statute is necessarily to be arbitrary. A statute prescribing limitation however does not confer a right of action nor speaking generally does not confer on a person a right to relief which has been barred by efflux of time prescribed by the law. The necessity for enacting periods of limitation is to ensure that actions are commenced within a particular period, firstly to assure the availability of evidence documentary as well as oral to enable the defendant to contest the claim against him; secondly to give effect to the principle that law does not assist a person who is inactive and sleeps over his rights by allowing them when challenged or disputed to remain dormant without asseting them in a court of law. The principle which forms the basis of this rule is expressed in the maximum vigilantibus, non dermientibus, jura subveniunt (the laws give help to those who are watchful and not to those who sleep). Therefore the object of the statutes of limitations is to compel a person to exercise his right of action within a reasonable time as also to discourage and suppress stale, fake or fraudulent claims While this is so there are two aspects of the statutes of limitation the one concerns the extinguishment of the right if a claim or action is not commenced with a particular time and the other merely bare the claim without affecting the right which either remains merely as a moral obligation or can be availed of to furnish the consideration for a fresh enforceable obligation.”
27. Therefore, upon a reading of Section 34(3) of the Arbitration Act, as well as the observations of this Court, it is evident that condonation of delay in arbitration proceedings and as well as in the proceedings challenging an award made consequent to the arbitration proceedings must not be granted liberally since the same would defeat the very purpose, aim and object of the Arbitration Act, which is to dispose arbitration and conciliation proceedings expeditiously.
28. In the case at hand, the petitioner while filing the petition, attempted to be saved from the bar of limitation imposed by Section 34(3) of the Arbitration Act and in this attempt filed an extremely defective petition. The petitioner further failed to remove the defects, as pointed by the registry, and without exercising due diligence, re-filed the petition twice. Therefore, this Court does not find any cogent reason to entertain the instant petition, considering the conduct and intent of the petitioner to evade the administration of justice by bypassing the formal procedure of law.
29. In view of the aforesaid discussion, submissions made on behalf of the parties, contentions raised, observations made by the Division Benches of this Court qua delay in filing and re-filing petitions pertaining to Arbitral Award under Section 34 of the Arbitration Act, this Court finds that the instant petition is liable to be dismissed for the reason of being time barred. The petitioner failed to approach the Court assailing the Award passed by the learned Sole Arbitrator dated 29th June 2019 within the stipulated time as per the provisions of the Arbitration Act, with reference to the Delhi High Court Rules and Order. It attempted to mislead the Court by filing a defective petition on the very last day of the limitation period with an intention to seek extension in the garb of curing such defects.
30. Accordingly, the instant petition is dismissed alongwith pending applications, if any.
31. The order be uploaded on the website forthwith.
JUDGE DECEMBER 7, 2022 gs/ms