SUPREME COURT OF INDIA
State of Goa
Vs
Messrs Western Builders
Appeal (Civil) 1457 of 2004 (Ca. Nos1458, 1459-1460, 1461, 1462, 1463, 1464, 1465/2004)
(H. K. Sema and A. K. Mathur, JJ)
05.07.2006
A. K. MATHUR, J.
All these batch of appeals are disposed of by a common judgment as same
question of law involves in these appeals.
The basic question which involves in these appeals is applicability of Section
14 of Limitation Act, 1963 in The Arbitration and Conciliation Act, 1996.
However in order to appreciate the controversy involve in these appeals it is
necessary to give few facts for that purpose the facts given in the C.A. No.
1457 of 1004 are taken into consideration.
A dispute arose between M/s. Western Builders Bito's Compound & The State
of Goa, represented by The Executive Engineer, Works Division XX (PHE), Public
Works Department, Fatorda, Margoa, Goa. Mr. P.K. Mohan, Ex- Executive Engineer,
Goa P.W.D. residing at House No. 1505, Dr. Rego Bag, P.O. Barbolim Complex, Goa
- 403202 was appointed as the Sole Arbitrator. He gave an award on 7th
February, 1995 in favour of claimant and against the State of Goa and directed
that the claimant is entitled to a sum of Rs. 89763/- and he further directed
the State to pay simple interest on Rs. 75553/- from 4th January, 1993 at the
rate of 15% per annum. This interest was payable till the date of decree of the
award and till payment whichever is earlier.
Aggrieved against this award, a petition was filed before Civil Court, Civil
Judge, Margao under sections 30 and 53 of the Arbitration
Act, 1940
Thereafter the State of Goa filed a petition before the District Judge, South
Goa along with the application under Section 14 read with Section 5 of The Limitation Act, 1963
Aggrieved against this order an appeal was preferred by the State of Goa before
the High Court of Bombay, Panaji Bench at Goa under Section 37(1b) of The Arbitration and Conciliation Act, 1996. This appeal came
to be dismissed by the Ld. Single Judge by order dated 26.9.2002, in view of
his detail reasons given in of the judgment delivered on 26.9.2002. It was held
that Section 14 of the Limitation Act is not maintainable in view of
sub-section 3 of Section 34 of the Act, 1996. Hence the present appeal.
In this background a common question of law arises in all these appeals,
whether Section 14 of the Limitation Act, 1963 is
applicable to the Arbitration Act, 1996 or not.
The learned counsel for the appellant has submitted that since the Arbitration
proceedings are of civil nature & in view of Section 43 of 1996 Act Limitation Act 1963
34. Application for setting aside arbitral award. : (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 furnishes proof 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- Without prejudice to the generalityof sub-clause (ii) it is hereby
declared, for the avoidance of any doubt, than an award is in conflict with the
public policy of India if the making of the award was induced or affected by
fraud or corruption or was in violation of section 75 or section 81.
(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."
We are primarily concerned with sub-section (3) of Section 34 read with
proviso. Reading of sub-section 3 alongwith the proviso of Section 34, it
clearly transpires that the application for setting aside the award on the
grounds mentioned in sub-section (2) of Section 34 should be made within 3
months and the period can be further extended on sufficient cause by another
period of 30 days & not thereafter that means so far as application for
making setting aside the award the period of limitation has been prescribed in
sub-section (3) i.e. 3 months but it can be extended for another period of 30
days on sufficient cause be shown to the satisfaction of court. Therefore, the
applicability of Section 5 of the Limitation Act stands excluded & the
application for condonation of delay upto a period of 30 days can be made by
the court and not beyond that. Therefore, it was submitted that there is no
scope for applicability of Section 14 of Limitation Act in these proceedings by
virtue of sub-section (2) of Section 29 of the Limitation Act.
Sub-section (2) of Section 29 of the Limitation Act reads as under –
" (2) Where any special or local law prescribes for any suit, appeal or
application a period of limitation different from the period prescribed by the
Schedule, the provisions of section 3 shall apply as if such period were the
period prescribed by the Schedule and for the purpose of determining any period
of limitation prescribed for any suit, appeal or application by any special or
local law, the provisions contained in sections 4 to 24 (inclusive) shall apply
only in so far as, and to the extent to which, they are not expressly excluded
by such special or local law."
That means if special period of limitation has been prescribed for making
application for any condonation of delay or for any other purpose then that
period of limitation prescribed under the special law shall prevail and to that
extent the provisions of Limitation Act shall stand excluded. To this extent
there is no dispute. But the question is whether there is any provision to
cater for present controversy or not. The Limitation Act applies to the
arbitral provisions because of Section 43 of the Arbitration
and Conciliation Act, 1996. Section 43 reads as under:
"43.Limitation.- (1) The Limitation Act, 1963
(36 of 1963), shall apply to arbitrations as it applies to proceedings in
Court.
(2) For the purposes of this section and the Limitation
Act, 1963 (36 of 1963) an arbitration shall be deemed to have commenced
on the date referred in section 21.
(3) Where an arbitration agreement to submit future disputes to arbitration
provides that any claim to which the agreement applies shall be barred unless
some step to commence arbitral proceedings is taken within a time fixed by the
agreement, and a dispute arises to which the agreement applies, the Court, it
if is of opinion that in the circumstances of the case undue hardship would
otherwise be caused, and notwithstanding that the time so fixed has expired,
may on such terms, if any, as the justice of the case may require, extend the
time for such period as it thinks proper."
(4) Where the Court orders that an arbitral award be set aside, the period
between the commencement of the arbitration and the date of the order of the
Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of
the proceedings (including arbitration) with respect to the dispute so
submitted."
Therefore, as general proposition Limitation Act, 1963
applies but still question is as to what extent. Section 14 of Limitation Act
which deals with exclusion of time spent in prosecuting the remedy before wrong
forum bona fide reads as under:
"14. Exclusion of time of proceeding bona fide in court without
jurisdiction : (1) In computing the period of limitation for any suit the time
during which the plaintiff has been prosecuting with due diligences another
civil proceeding, whether in a court of first instance or of appeal or
revision, against the defendant shall be excluded, where the proceeding relates
to the same matter in issue and is prosecuted in good faith in a court which,
from defect of jurisdiction or other cause of a like nature, is unable to
entertain it.
(2) In computing the period of limitation for any application, the time during
which the applicant has been prosecuting with due diligence another civil
proceeding, whether in a court of first instance or of appeal or revision,
against the same party for the same relief shall be excluded, where such
proceeding is prosecuted in good faith in a court which, from defect of
jurisdiction or other cause of a like nature, is unable to entertain it.
(3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions
of sub-section (1) shall apply in relation to a fresh suit instituted on
permission granted on the ground that the first suit must fail by reasons of a
defect in the jurisdiction of the court or other cause of a like nature."
The question is whether Section 14 of the Limitation Act has been excluded by
this special enactment i.e. Arbitration and Conciliation
Act, 1996Limitation Act, 1963 shall apply to arbitration as it applies
to the proceedings in court.
Therefore, general proposition is by virtue of Section 43 of the Act of 1996
The Limitation Act 1963 applies to the Act of 1996
but by virtue of sub-section (2) of Section 29 of the Limitation Act, if any
other period has been prescribed under the special enactment for moving the
application or otherwise then that period of limitation will govern the
proceedings under that Act, and not the provisions of the Limitation Act. In
the present case under the Act of 1996 for setting aside the award on any of
the grounds mentioned in Sub-Section (2) of Section 34 the period of limitation
has been prescribed and that will govern. Likewise, the period of condonation
of delay i.e. 30 days in proviso.
But there is no provision made in The Arbitration and
Conciliation Act, 1996 that if any party has bona fidely prosecuted its
remedy before the other forum which had no jurisdiction then in that case
whether the period spent in prosecuting the remedy bona fidely in that Court
can be excluded or not. As per the provision sub-section (3) of Section 34
which prescribes the period of limitation (3 months) for moving the application
for setting aside the award before the court then that period of limitation
will be applicable and not the period of limitation prescribed in schedule
under section 3 of the Limitation Act, 1963. Thus
the provision of moving the application prescribed in Limitation Act, shall
stand excluded by virtue of sub-section (2) of Section 29 as under this special
enactment the period of limitation has already been prescribed. Likewise the
period of condonation of delay i.e. 30 days by virtue of proviso.
Therefore, by virtue of sub-section (2) of section 29 of the Limitation Act
what is excluded is the applicability of Section 5 of the Limitation Act &
under Section 3 read with Schedule which prescribes the period for moving
application. Whenever two enactments are overlapping each other on same area
then courts should be cautious in interpreting those provisions. It should not
exceed the limit provided by statute. The extent of exclusion is however,
really a question of construction of each particular statute & general
principles applicable are subordinate to the actual words used by legislature.
There is no provision in whole of the Act which prohibit discretion of the
court. Under section 14 of the Limitation Act if the party has been bona fidely
prosecuting his remedy before the court which has no jurisdiction whether the
period spent in that proceedings shall be excluded or not. Learned counsel for
the respondent has taken us to the provisions of the Act of 1996; like section
5, section 8(1), section 9, section 11 sub-section (4), (6), (9) and
sub-section (3) of section 14, section 27, sections 34, 36, 37, 39 (2) (4),
section 41, sub-section (2) section 42 & 43 and tried to emphasis with
reference to the aforesaid sections that the legislature wherever wanted to
give power to the Court that has been incorporated in the provisions,
therefore, no further power should lie in the hands of the court so as to
enable to exclude the period spent in prosecuting remedy before other forum. It
is true but at the same time there is no prohibition incorporated in statute
for curtailing the power of the court under Section 14 of the Limitation
Act> Much depends upon the words used in statute & not general
principles applicable. By virtue of section 43 of the Act of 1996, the
Limitation Act applies to the proceedings under the Act of 1996 and the
provisions of Limitation Act can only stand excluded to the extent wherever
different period has been prescribed under the Act, 1996. Since there is no
prohibition provided under Section 34, there is no reason why Section 14 of
Limitation be read in Act of 1996, which will advance the cause of justice. If
statute is silent and there is no specific prohibition then statute should be
interpreted which advances the cause of justice. Our attention was invited to
various decisions of this Court but we shall refer to a few of them which has
some relevance.
Union of India vs. Popular Construction Co. in This is a case with
regard to the applicability of section 5. His Lordship while interpreting the
provision of sub- section 3 of section 34 has clearly observed that the words
" but not thereafter" clearly indicate prohibition of applicability
of Section 5 of Limitation Act to that extent. His Lordship observed as
follows:
“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 subs-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."
National Aluminum Co. Ltd. vs. Pressteel & Fabrication (P) Ltd. and Another
reported in 2. In that case unilateral
appointment of the arbitrator under the Arbitration Act
1940 was challenged. This Court in the said appeal after hearing the
parties appointed a sole arbitrator. Before the sole arbitrator both the
parties by consent agreed that the proceedings should be governed by the
provisions of the Arbitration and Conciliation Act, 1996.
The arbitrator proceeded on that basis and gave a final award. That final award
was challenged. The question arose whether the proceeding shall be governed by
the 1940 Act or of 1996 Act? and which is the appropriate Court. The dispute
prolonged for nearly 16 years. This Court dismissed the appeal and held that in
the present case proceedings should go on under the provisions of the Act, 1996
though the dispute arose prior to coming into force of the Act 1996, the
appropriate forum for challenging the award under Section 34 was Principal
Civil Court of original jurisdiction as contemplated under Section 2(e) of the
Act, 1996. However, with regard to delay in filing objection before the
principal civil court of original jurisdiction , this Court directed that the
petitioner shall file objection for setting aside the award before the Court
concerned within 30 days from this date, the delay in regard to filing of the
petition as contemplated under Section 34 of the Act, 1996 shall be condoned by
the said Court since the time consumed was bona fide in prosecution of its
remedy.
The exact observation of this Court is as under: "This application fails
and the same is dismissed with a direction to the applicant to file its
objections to the award before the court concerned and if the same are filed
within 30 days from this date, the delay in regard to the filing of the
objections as contemplated under Section 34 of the 1996 Act shall be condoned
by the said Court since the time consumed was in bona fide prosecution of the
application in a wrong forum."
While interpreting the provisions of statute their Lordships in case of
Nasiruddin and Others vs Sita Ram Agarwal in have observed in this
context as follows:
"In a case where the statutory provision is plain and unambiguous, the
court shall not interpret the same in a different manner, only because of harsh
consequences arising therefrom."
It further observed: "Rent control statutes are welfare legislation not
entirely beneficial enactments for the tenant but also for the benefit of the
landlord. Therefore balance has to be struck while interpreting the provisions
of Rent Acts."
Therefore, in the present context also it is very clear to us that there is no
two opinion in the matter that the Arbitration and
Conciliation Act, 1996Limitation Act, 1963
J