Union of India v. M/S Associated Construction Co

3.[1] The concept of commercial court – a dedicated forum aimed at resolving complex commercial disputes between parties – is an idea that has merit in its own right. This can be seen from the fact that around the world, many nations have adopted commercial courts as a means to ensure speedy delivery of justice in commercial cases. A more elaborate discussion covering many countries that have set up commercial courts can be found in the 188th Report of the Commission and the same is not being repeated here for the sake of brevity. However, it would be worthwhile to briefly restate the justifications for a commercial court in India.

(i) Economic growth

3.2.[1] The importance of a stable, efficient and certain dispute resolution mechanism to the growth and development of trade and commerce is well established. Quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered are absolutely critical to encourage investment and economic activity, which necessarily involves the taking of financial and enforcement risks. A stable, certain and efficient dispute resolution mechanism is therefore essential to the economic development of any nation. […] 3.2.[3] Finally, slow or over-burdened judicial systems hamper growth by fostering an inefficient use of (time and monetary) resources and technology; increasing transaction costs such as enforcement costs or delays; and moving countries away from their best possible output. When contract and property rights are not properly enforced, firms may decide not to pursue certain activities, foregoing the opportunity to specialise and exploit economies of scale; and not allocating their production among clients and markets in the most efficient fashion, thus keep resources unemployed.

(ii) Improving the international image of the Indian justice delivery system

As the 188th Report of the Law Commission also discussed in some detail, there is an impression among foreign investors and companies that India is a difficult place to do business, inter alia, for reasons of the slowness and inefficiency of the judicial system. This is also reflected in the World Bank’s annual “Doing Business” report, which measures business regulations. This report, inter alia, looks at the ease or difficulty of enforcing contracts in a given nation. Among 189 nations surveyed in the 2014 report, India was ranked 186th in the category of “Enforcing Contracts”, unchanged from its 2013 position. According to the data collected by the Bank, contract enforcement takes 1,420 days (i.e. nearly four years) and costs of enforcement aggregate to nearly 40% of the value of the claim. Since the World Bank first started the series of reports in 2004, these numbers have not changed, either in terms of number of days it takes to enforce the contract or the costs involved. The Report also finds that there has been no major reform in India in the last six years in contract enforcement.

(iii) Improving legal culture

3.4.[1] The approach of the redrafted Bill as proposed in this Report will therefore be to set up Commercial Courts and Commercial Divisions within High Courts, which will function as model courts establishing new practices and norms of practice in commercial litigation that can, over time, be scaled up and extended to all civil litigation in India. The changes being suggested are not intended to be limited only to high value commercial disputes but should be extended to all disputes over a period of time after assessing the functioning of the Commercial Courts. The Commercial Courts, apart from being ends in themselves, are also a pilot project to reform civil litigation across the country and tackle the twin issues of delay and pendency. Ideally, the Commercial Courts should be a model for the functioning of all civil courts in India and the procedure followed here could be the basis for a larger reform of the CPC. Thus, concerns that commercial courts only serve “elitist” concern will be addressed in the long run. 3.4.[2] That India needs commercial courts for the effective and efficient resolution of high value commercial disputes is beyond doubt. The criticism of the 2009 Bill is aimed at the structure and functioning of the commercial courts. 3.6.[2] The Model Court Report came up with the concept of a model court whose core requirements would be efficiency and justice. The five generic principles governing model courts are; (i) it should be citizen friendly in its access to information; (ii) it must be efficient in terms of time for litigants; (iii) it must be fair and just; (iv) the litigants should be reasonably certain as to when their case would come up for trial; and (v) when it would conclude. Recommendations to achieve this were made in three areas, namely process related reforms; physical and technical infrastructure improvement; and grooming of professional and accountable personnel.” [Emphasis Supplied]

12. Dr. George extensively relying on the report of the Law Commission submits that the objective is to highlight that a need was felt for establishing Commercial Courts in India. The Law Commission had taken the following factors into account while preparing the report:

(i) Economic growth,

(ii) Improving the international image of the Indian justice delivery system

(iii) Improving legal culture.

13. Dr. George further submits that the purpose of setting up Model Courts is to improve the image and to ensure that the commercial justice is provided to all the litigants throughout the country, commercial or otherwise, as early as possible. Learned counsel submits that the Model Courts as per the report of the Law Commission should be citizen friendly, efficient, fair and just and the litigants should be reasonably certain as to when would their cases come up for trial and be concluded. In the backdrop of the Report learned Counsel relies on Section 13 of Commercial Courts Act, 2015 with a view to highlight that this is the only provision which is available to a litigant to assail the order passed while rejecting the objections to the award under Section 34 of the Act. He submits that Section 37 which provides for filing of an appeal, unlike Section 34, does not provide period of limitation. The period of limitation is only provided under Section 13 of the Commercial Courts Act. We deem it appropriate to reproduce Section 37 of the Act and also Section 13 of the Commercial Courts Act:

14. Additionally, Dr. George has relied on Section 14 of the Commercial Courts Act to highlight that an appeal is to be disposed of expeditiously within a period of six months from the date of its filing, and this expeditious disposal is in sync with the aims and objectives of the Commercial Courts Act. However, in the present appeal, the time period of six month has already lapsed.

15. It is further pointed out that prior to the coming into force of Commercial Courts Act, an appeal in the form of FAO was maintainable and the period of limitation was 30 days. However, this period of 30 days has now been enlarged to 60 days by the Commercial Courts Act. It is also contended that Section 21 of the Commercial Courts Act, further makes it clear that the act has an overriding effect on the general laws. It is thus, contended that while deciding the present application, the Court must keep in mind the genesis of the Commercial Courts Act, the scheme and object of the Act and the spirit behind the Commercial Courts Act. One of the main aims and objectives was to do away with administrative red tapism.

16. Dr. George submits that the introduction of Commercial Courts Act was born out of the normative shift in the conduct of the commercial litigation in India. Counsel draws attention to the observations made by a Division Bench of this Court in the case of HPL (India) Limited & others Vs. QRG Enterprises and another reported in 2017 SCC Online Del 6955 to highlight that the Commercial Courts Act is a special act pertaining to the commercial disputes of a specified valued and lays down an independent mechanism of dispute resolution. Section 13(1) of the Commercial Courts Act provide for both; a forum for appeal and, a period of limitation. Thus, the special procedure under the Commercial Courts Act is a departure from the normal procedure envisaged under CPC, Reliance has been placed on following paras:

15. We have already pointed out that in the case of appeal to the Commissioner, Section 35 provides 60 days' time and in addition to the same, the Commissioner has power to condone the delay up to 30 days, if sufficient cause is shown. Likewise, Section 35-B provides 90 days' time for filing appeal to the Appellate Tribunal and subsection (5) therein enables the Appellate Tribunal to condone the delay irrespective of the number of days, if sufficient cause is shown. Likewise, Section 35-EE which provides 90 days' time for filing revision by the Central Government and, proviso to the same enables the revisional authority to condone the delay for a further period of 90 days, if sufficient cause is shown, whereas in the case of appeal to the High Court under Section 35-G and reference to the High Court under Section 35-H of the Act, total period of 180 days has been provided for availing the remedy of appeal and the reference. However, there is no further clause empowering the High Court to condone the delay after the period of 180 days. xxxx xxxx xxxx

32. As pointed out earlier, the language used in Sections 35, 35-B, 35-EE, 35-G and 35-H makes the position clear that an appeal and reference to the High Court should be made within 180 days only from the date of communication of the decision or order. In other words, the language used in other provisions makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning the delay only up to 30 days after expiry of 60 days which is the preliminary limitation period for preferring an appeal. In the absence of any clause condoning the delay by showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. The High Court was, therefore, justified in holding that there was no power to condone the delay after expiry of the prescribed period of 180 days.

33. Even otherwise, for filing an appeal to the Commissioner, and to the Appellate Tribunal as well as revision to the Central Government, the legislature has provided 60 days and 90 days respectively, on the other hand, for filing an appeal and reference to the High Court larger period of 180 days has been provided with to enable the Commissioner and the other party to avail the same. We are of the view that the legislature provided sufficient time, namely, 180 days for filing reference to the High Court which is more than the period prescribed for an appeal and revision.

34. Though, an argument was raised based on Section 29 of the Limitation Act, even assuming that Section 29(2) would be attracted, what we have to determine is whether the provisions of this section are expressly excluded in the case of reference to the High Court.

35. It was contended before us that the words “expressly excluded” would mean that there must be an express reference made in the special or local law to the specific provisions of the Limitation Act of which the operation is to be excluded. In this regard, we have to see the scheme of the special law which here in this case is the Central Excise Act. The nature of the remedy provided therein is such that the legislature intended it to be a complete code by itself which alone should govern the several matters provided by it. If, on an examination of the relevant provisions, it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act. In our considered view, that even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the court to examine whether and to what extent, the nature of those provisions or the nature of the subject-matter and scheme of the special law exclude their operation. In other words, the applicability of the provisions of the Limitation Act, therefore, is to be judged not from the terms of the Limitation Act but by the provisions of the Central Excise Act relating to filing of reference application to the High Court.

36. The scheme of the Central Excise Act, 1944 supports the conclusion that the time-limit prescribed under Section 35-H(1) to make a reference to the High Court is absolute and unextendable by a court under Section 5 of the Limitation Act. It is well-settled law that it is the duty of the court to respect the legislative intent and by giving liberal interpretation, limitation cannot be extended by invoking the provisions of Section 5 of the Limitation Act.

18. Dr. George contends that a careful reading of the aforesaid paragraphs, would show that the Apex Court was ceased of a matter arising out of the Central Excise Act,1944. The bone of contention was whether Section 5 of Limitation Act would apply to Section 35-H of the Central Excise Act and whether the delay in filing the appeal beyond 180 days could be condoned. Learned counsel contends that the Apex Court held that this period of 180 days could not be condoned. While reaching such a conclusion, the Apex Court had taken into consideration the provisions of Section 35, 35-B, 35-EE, & 35-G, in contrast to the provisions under Section 35-H, which was subject matter before them. Relying on the aforesaid judgment, Dr. George, submits that firstly the Bombay High Court has failed to correctly apply the ratio of the judgment in the case of M/S Hongo India Pvt. Ltd. (supra) and secondly the facts of this case are to be considered in the backdrop of the report of the Law Commission. The manner in which another Division Bench of this Court has highlighted the provisions of Commercial Courts Act, the aims and objects of the Commercial Courts Act and considered that the Commercial Courts Act is a Court in itself and thus, Section 13 as far as it relates to period of limitation has an implied exclusion. Another reason why the judgment of the Bombay High Court would not apply and would not come to the rescue of the appellant is for the reasons recorded in paras 11 & 30 of the judgment, rendered in the case of Kalpesh R. Jain (supra). There was sufficient cause for condonation of delay in the judgment and sufficient discussion with regard to reasons for condoning the delay was made, whereas in the facts of the present case the appellant has failed to establish that the delay was on account of bonafide reasons.

19. Dr. George has also relied upon a decision in the case of Pawan Kumar v. State of Haryana reported in (1998)3 SCC 309, more particularly, para 13, wherein the Court laid down the principles in case words in a statute are referable to more than one meaning. Paras 13 & 14 are reproduced below:

20. Elaborating his arguments further, while relying on para 13 of Pawan Kumar (supra) as detailed above, Dr. George submits that four aspects, which have been highlighted would squarely apply to the facts of the present case and the issue at hand i.e. “A. The 188th Report of the Law Commission” is reproduced below:

21. As far as issue-A, i.e. “A. The 188th Report of the Law Commission”, is concerned, the Law Commission had taken into consideration the law prior to the coming into force of the Commercial Courts, highlighted the mischief or defect behind making of the new law. The Law Commission and the new law also suggest the remedy of law and the reasons of the remedy, which can be summarized by taking into consideration the aims and objectives of the Commercial Courts Act. Dr. George further submits that it is no longer res-integra that the specific law would override the general law. The provisions of the Commercial Courts Act should, therefore, be given precedence over the provisions of the Limitation Act. Reliance is placed on para 18 in the case of Suresh Nanda v. CBI reported at (2008) 3 SCC 674, which we reproduce below:

22. On the merits of the matter, it is strenuously urged before us that appellant has failed to establish any sufficient cause for delay in filing the present appeal. It is contended that reading of the application would show that the same is casual in nature and bereft of any grounds of condonation of delay including material particulars or timelines. It is contended that the delay is unexplained. There is nothing on record to show that the department acted in a diligent manner. It is further contended that at every stage, the department acted in a careless manner showing no sense of urgency. The files were in fact pushed from one desk to another showing scant respect for the law of Limitation as though the Limitation Act did not exist or that delay would be condoned mechanically as a matter of right. Reliance is placed on Postmaster General v. Living Media India Ltd., reported in (2012) 3 SCC 563, more particularly paras 28, 29 & 30, which we reproduce below:

23. We have heard the learned counsel for the parties, considered their rival submissions, material placed on record and has also given our thoughtful consideration to the matter.

24. The first issue, which has been raised by Dr. George with regard to the applicability of Limitation Act in the commercial appeals has been dealt by the Apex Court in detail in the case of Consolidated Engineering Enterprises vs. The Principal Secretary Irrigation Department & Ors. reported at (2008) 7 SCC 169. It has been held that Section 9 of the Act deals with interim measures and the question of limitation does not arise in it. Section 34(3) of the Act provides for three months of limitation and the proviso further extends it to another 30 days. Section 37of the Act does not prescribe any limitation for filing such appeals. If the Limitation Act becomes inapplicable to the Act, there will be no limitation for filing. If the Limitation Act is applicable to the Act, then the same shall be governed by Article 116 of the Schedule to the Limitation Act, which prescribes the period of 90 days for appeals to High Court and period of 30 days for appeals to any other court under the provisions of Code of Civil Procedure, 1908 (“CPC”). It is the settled principle of law that the words of Article 116 such as ‘appeals under the CPC, not only refers to appeals under CPC but also to the appeals, where the procedure of filing such appeals and powers of the court to deal with such appeals are also governed by CPC. The court further held that Limitation Act would be applicable to the Arbitration Act until otherwise expressly barred by some provisions.

25. Commercial Courts Act is a special law introduced to enhance the efficiency of the Indian Judicial System. The intention and the urgency behind putting the Commercial Courts Act into force was to streamline and stimulate the growth of business, which can be gauged from the fact that the parliament went through the ordinance route to ensure that there is no delay in initiating the process for setting up ‘Commercial Courts’ for adjudication of ‘Commercial Disputes’. An attempt has been made to make the proceedings efficient in stipulated time by enforcing strict timelines. In order to ensure that the parties must not misuse the process of law, stringent rules have been laid and cost imposition has been introduced at places where the Court finds that the claim put forward by any of the party is frivolous and vexatious.

26. This Court has been of a consistent view as has also been held in the case of M/s Lifelong Mediatech Pvt. Ltd vs. M/s United India Insurance Co. Ltd. reported in 2018 SCC OnLine Del 9559, that the aim and objective of the Commercial Courts Act is to provide speedy disposal of commercial disputes, so as to create a positive image and to improve the international image of the Indian Justice Delivery System. The Apex Court has though, consistently spoke about the liberal approach to Section 5 of the Limitation Act, but the essence of ‘sufficient cause’ has always been given the importance, while deciding the applications on delay.

27. The Supreme Court in catena of judgments has emphasized the importance of the principle of limitation, by repeatedly holding that condoning the delay is a matter of discretion which can only be available if the person does not sleep over his right and also is able to show sufficient cause or explanation for such delay, which was missing in the present case scenario. In the case of Prabhakar vs. Joint Director Sericulture Department and Ors. reported in AIR 2016 SC 2984, the Apex Court has observed that:

28. It is the case of the appellant that he had no knowledge about the impugned order and acquired the knowledge about the same in the first instance when the impugned order was uploaded on the web. Thereafter, certain rounds in the government department also led to the delay. We find these grounds baseless and vague and the same fail to show any valid sufficient cause for the delay. In Basawaraj and Anr vs. Special Land Acquisition Officer, reported at (2013) 14 SCC 81, the Supreme Court in paras 9 to 15 held that while dealing with an application seeking condonation of delay the Court must ensure that there is a sufficient cause, while condoning the delay. Relevant paras are reproduced below:

14. In P. Ramachandra Rao v. State of Karnataka, AIR 2002 SC 1856, this Court held that judicially engrafting principles of limitation amounts to legislating and would fly in the face of law laid down by the Constitution Bench in A.R. Antulay v. R.S. Nayak, AIR 1992 SC 1701

15. The law on the issue can be summarised to the effect that where a case has been presented in the court beyond limitation, the applicant has to explain the court as to what was the "sufficient cause" which means an adequate and enough reason which prevented him to approach the court within limitation. In case a party is found to be negligent, or for want of bonafide on his part in the facts and circumstances of the case, or found to have not acted diligently or remained inactive, there cannot be a justified ground to condone the delay. No court could be justified in condoning such an inordinate delay by imposing any condition whatsoever. The application is to be decided only within the parameters laid down by this Court in regard to the condonation of delay. In case there was no sufficient cause to prevent a litigant to approach the court on time condoning the delay without any justification, putting any condition whatsoever, amounts to passing an order in violation of the statutory provisions and it tantamounts to showing utter disregard to the legislature.”

29. Moreover, the Apex Court in the case of Brijesh Kumar & Ors. Vs. State of Haryana & Ors. reported at (2014) 11 SCC 351 held that the appellant could not take the benefit of approaching the Court at a belated stage without giving any satisfactory reasons. Paragraphs 6- 8 have been reproduced below to emphasize the time period for limitation: - “6. The issues of limitation, delay and laches as well as condonation of such delay are being examined and explained everyday by the courts. The law of limitation is enshrined in the legal maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time.

7. The Privy Council in General Accident Fire and Life Assurance Corpn. Ltd. v. Janmahomed Abdul Rahim [(1939-40) 67 IA 416: (1941) 53 LW 212: AIR 1941 PC 6], relied upon the writings of Mr Mitra in Tagore Law Lectures, 1932 wherein it has been said that: (IA p. 426) A law of limitation and prescription may appear to operate harshly and unjustly in a particular case, but if the law provides for a limitation, it is to be enforced even at the risk of hardship to a particular party as the Judge cannot, on equitable grounds, enlarge the time allowed by the law, postpone its operation, or introduce exceptions not recognised by law.

8. In P.K. Ramachandran v. State of Kerala [(1997) 7 SCC 556: AIR 1998 SC 2276], the Apex Court while considering a case of condonation of delay of 565 days, wherein no explanation much less a reasonable or satisfactory explanation for condonation of delay had been given, held as under: (SCC p. 558, para 6)

30. In view of the above discussion, we find no cogent grounds to condone the delay in the present case. According the present appeal and CM APPLs 3178/2018 and 2180/2018 stand dismissed. G.S.SISTANI, J. SANGITA DHINGRA SEHGAL, J.