High CourtSingle Judge2006-10-17Appeal allowed; remanded to District Judge to d...

Union of India v. Shring Construction Company Private Limited

Case / Petition Number:Civil Appeal No. 4516 of 2006

Neutral Citation:/

Case Details & Bench

Court: High Court
Hon'ble Judges: A.K. Mathur
Judgment Date: 2006-10-17
Court Decision / Holding: Appeal allowed. The matter is remitted to the District Judge to decide, in light of State of Goa v. Western Builders, whether the application under Section 34 of the Arbitration and Conciliation Act, 1996, could be considered within the period of limitation after deducting the time spent by the appellant in pursuing remedies before the High Court. The District Judge is to dispose of the application on its merits expediently, without prejudice to observations in the order. No order as to costs.
Final Disposition: Appeal allowed; remanded to District Judge to determine limitation issue in light of Western Builders; no costs.

Parties to the Case

Appellants / Petitioners

Union of India

Respondents

Shring Construction Company Private Limited

Legal Representation & Advocates

Counsels for Petitioners

• B. Dutta, A.S.G.; Pumima Bhat Kak; Anil Katiyar

Counsels for Respondents

• Vijay Hansaria; Jatinder Kumar Bhatia

Case Synopsis & Summary

Union of India entered into contract No. CEB/DDN/14 of 1993-94 with Shring Construction Company Private Limited for construction of residential accommodation for officers and staff at Lansdowne. The work was to be completed in three phases, but delay occurred; final bill was settled, yet a dispute arose, leading to arbitration. The High Court of Uttaranchal appointed an arbitrator (Justice K. D. Shahi) on 21 July 2003, and the award was published on 30 November 2004, directing the Union to pay Rs. 28,94,720 with 18% interest. The Union challenged the award under Section 34 before the District Judge, Dehradun, filing an application for setting aside along with a delay-condonation petition; the District Judge rejected both, and the High Court’s First Appeal affirmed that decision in 2005. The central issue was whether Section 14 of the Limitation Act is applicable to proceedings under the Arbitration and Conciliation Act, 1996. Appellant argued that although Section 5 of the Limitation Act is inapplicable, Section 14 remains applicable and was not examined by lower forums. The respondents contended that time limitations under Section 34(3) govern, and that any extension would be exceptional. Citing State of Goa v. Western Builders (2006) Supreme Court, the appellant urged reading Section 14 into the 1996 Act to promote justice. The Court remitted the matter to the trial court to determine whether the application could be within the period of limitation after deducting time spent before the High Court, and allowed the appeal with no costs.

Provisions of Law Cited

Limitation Act, 1963 - Section 14Limitation Act, 1963 - Section 5Limitation Act, 1963 - Section 33Arbitration and Conciliation Act, 1996 - Section 34Arbitration and Conciliation Act, 1996 - Section 34(3)Arbitration and Conciliation Act, 1996 - Proviso to Section 34(3)Arbitration and Conciliation Act, 1996 - Section 33Arbitration and Conciliation Act, 1996 - Section 43

Legal Doctrines & Maxims

Bona fide error; deference to legislative intent in applying Limitation Act to proceedings under Arbitration Act, 1996 (Section 43)
Western Builders doctrine: Section 14 of the Limitation Act is not excluded from applicability to the Arbitration Act, and should be read in to advance justice.

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that Section 14 of the Limitation Act applies to proceedings under the Arbitration and Conciliation Act, 1996, despite Section 34’s three-month period and the possibility of extension under Section 34(3). It argues that Section 43 of the 1996 Act preserves the Limitation Act’s application, and that the decision in State of Goa v. Western Builders (2006) supports including Section 14 to prevent injustice. The appellant asserts that neither the High Court nor the District Court adequately considered whether the delay could be excluded by accounting for the period spent in pursuing remedies in the High Court, and that the matter requires remand for proper calculation of limitation; the bona fide belief of approaching the High Court does not bar a Section 34 challenge. The remedy is to determine, with reference to Western Builders, whether the petition for setting aside lies within the permissible period after excluding prior litigation time.

Contentions of Respondents

The document primarily presents the appellant’s contention; explicit respondent arguments are not elaborated in the excerpt. It can be inferred that the respondents supported the time-bar under Section 34(3) and the District Judge’s dismissal for delay, arguing that the remedy under Section 34 must adhere to the statutory three-month period and that any condonation must be grounded in sufficient cause; the writ petition before the High Court, if any, was not a proper vehicle for challenging an arbitral award under Section 34.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
State of Goa v. Western Builders	[2006] 6 SCC 239	Positive	The court relies on the Western Builders decision to hold that Section 14 of the Limitation Act is not excluded from application to the Arbitration Act, 1996, and should be read to advance justice.

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Extracted Judgment Text

Exact text extracted from official judgment records.

UNION OF INDIA M/S. SHRING CONSTRUCTION COMPANY PRIVATE LIMITED OCTOBER 17, 2006 **==> picture [168 x 10] intentionally omitted <==** _Limitation Act; Section 14/Arbitration and Conciliation Act, 1996; Section 34:_ _A private company entering into a contract with Union of India for_ C _construction of residential accommodation-Completion of work-Settling of accounts-Raising of dispute by the Company-Appointment of an Arbitrator-Award-Challenge to-Dismissed_ in limine _by High Court on the ground that award could be challenged by filing objection in the District Court-Filing of objections with application for condonation of delay-_ D _Dismissed by District Court-First Appeal dismissed by High Court-On appeal, Held: The question regarding condonation of delay seems not to have been examined by the Courts be/ow-Hence, the matter is remitted to trial Court to decide as to whether the application filed for setting aside the award could be considered to be within the period of limitation after_ E _deducting the period elapsed in prosecuting the remedy before the High Court._ The question which arose for consideration in this appeal was as to whether Section 14 of the Limitation Act is applicable to the proceedings under the Arbitration and Conciliation Act, 1996 or not. F Appellant contended that it is true that Section 5 of the Limitation Act will have no application in the proceedings under the Arbitration and Conciliation Act because period of limitation has already been prescribed under Section 34(3) of the Arbitration and Conciliation Act but Section 14 of the Limitation Act has not been excluded from its ambit; that the question G with regard to applicability of Section 14 of the Limitation Act was not examined by the High Court as well as the District Judge; that it was _bona fide_ error on the part of the Union oflndia to have approached the High Court; that it was a misplaced impression that since the High Court has appointed the arbitrator, therefore, its award can be challenged before the High Court H 273 274 SUPREME COURT REPORTS [20061 SUPP. 7 S.C.R. - A only; and that this Court recently in the case of _State of Goa_ v. _Western Builders,_ (2006( 6 SCC 239 has taken a view that applicability of Section 14 of the Limitation Act is not excluded from the Act of 1996. ## Allowing the appeal, the Court ## B HELD: In view of the decision in the _State of Goa_ v. _Western Builders,_ it is just and proper to remit this matter back to the trial Court to decide whether the application for setting aside the award under Section 34 of the Arbitration and Conciliation Act filed by the appellant could be considered to be within the period of limitation after deducting the period spent by the appellant in C prosecuting the remedy before the High Court. Hence, the appeal is allowed by remitting the matter to the District Judge. The District Judge is directed to examine the matter in the light of the said decision and dispose of the application filed by the appellant expeditiously on its merit, without prejudice to any observation made in this order. (276-H; 277-A-B( D _State of Goa_ v. _Western Builders,_ (2006( 6 sec 239, relied on. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4516 of2006. From the Judgment and Order dated 17 .8.2005 of the High Court of Uttaranchal at Nainital in First Appeal No. 67 of 2005. E B. Dutta, A.S.G., Pumima Bhat Kak and Anil Katiyar for the Appellant. Vijay Hansaria and Jatinder Kumar Bhatia for the Respondent. The Judgment of the Court was delivered by F ## A.K. MA THUR, J. Leave granted. The short question involved in this appeal is whether Section 14 of the Limitation is applicable to the Arbitration and Conciliation Act, 1996 (hereinafter to be referred to as the "Act") or not ? G This appeal is directed against the judgment and order passed by the Division Bench of High Court of Uttaranchal at Nainital in First Appeal No.67 of 2005 on 17 .8.2005 whereby the Division Bench has affirmed the order dated 6.8.2005 passed by the District Judge, Dehradun in Arbitration Case No.170 of 2005 dismissing the application filed by the appellant under Section 34 of H the Act for setting aside the arbitral award on account of being barred by U .0.1. r. SHRING CONSTRUCTION COMPANY PRIVATE LTD. [AK MATHUR, J.] 275 A time. Brief facts which are necessary for disposal of the present appeal are that the appellant-Union of India entered into a contract i.e. No. CEB/DDN/ 14 of 1993-94 ( for a value of Rs.82,34,789/-) with the respondent herein through the Chief Engineer, Bareilly Zone for construction of residential accommodation for Officers and staff of Defence Accounts Department at B Lansdowne. The work was to be completed by the respondent in three phases by the dates specified in the contract. However, the respondent failed to complete the contract work within the stipulated period despite grant of extension of time by the appellant- Union of India. However, the final bill of the respondent was duly settled. Subsequently, the respondent raised a C dispute and filed an application before the High Court of Uttaranchal at Nainital for appointment of an arbitrator. The High Court by its order dated 21.7.2003, appointed Justice K.D. Shahi (former Judge of Allahabad High Court) as the arbitrator. The award was published on 30.11.2004 and a copy thereof was received by the appellant on 3.12.2004. As per the award, a sum of Rs.28,94, 720/- was awarded in favour of the respondent to be paid by the D appellant-Union of India with interest at the rate of 18% per annum. The appellant being aggrieved with the aforesaid award filed a writ petition i.e. Writ Pe it ion No.283 of 2005 challenging the award before the High Court of Uttaranchal, at Nainital under a _bona fide_ belief that since the arbitrator had been appointed by the High Court, the award could be challenged in the High E Court by fili!lg writ petition. However, the writ petition was dismissed on 4.4.2005 in _limine_ being not maintainable on the ground that the award ought to have been challenged under Section 34 of the Act by filing objections in the court of District Judge, Dehradun. Hence, an objection under Section 34 of the Act was filed before the District Judge, Dehradun along with an application for con donation of delay and the same came to be registered as F Arbitration Case No.170 of 2005. According to sub-section (3) of Section 34 of the Act for setting aside an arbitral award, an application may be made within three months from the date on which the party making 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 G tribunal. There is further proviso to sub-section (3) of Section 34 that the period for filing the application can be extended if the applicant could show that he was prevented by sufficient cause from making the application within the said period of three months by further 30 days but not thereafter. In the present case, admittedly the application was filed beyond even the extended period of 30 days. Hence, the District Judge dismissed the application for H 276 SUPREME COURT REPORTS [2006] SUPP. 7 S.C.R. A condonation of delay as well application for setting aside the award being barred by time. The first appeal preferred against that order before the High Court by the appellant was also dismissed. Aggrieved against that order, the present appeal has been filed. Mr. B. Dutta, learned Additional Solicitor General for the appellant B submitted that it is true that Section 5 of the Limitation Act will have no application in these proceedings because period of limitation has already been prescribed under section 34(3) of the Act but Section 14 of the Limitation Act has not been excluded from its ambit. It is pointed out that the impugned award was challenged by filing a writ petition before the High Court but later C on it was found that the writ petition was not maintainable and accordingly, after dismissal of the writ petition the present application was filed under section 34 of the Act along with application under section 5 of the Limitation Act. It appears that the question with regard to applicability of Section 14 of the Limitation Act was not examined by the High Court as well as the District Judge. In fact, it was _bona fide_ error on the part of the Union of India to have D approached the High Court. It was a misplaced impression that since the High Court has appointed the arbitrator, therefore, its award can be challenged before the High Court only. This Court recently in the case of _State of Goa_ v. _Western Builders,_ reported in [2006] 6 SCC 239 has taken a view that applicability of Section 14 of the Limitation Act is not excluded from the Act E of 1996. This Court in _Western Builders_ (supra) has observed as follows : F "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 the Limitation Act can only stand excluded to the extent wherever different period has been prescribed under the Act of 1996. Since there is no prohibition provided under Section 34, there is no reason why Section 14 of the Limitation Act should not be read in the Act of 1996, which will advance the cause of justice." Therefore, Mr. Dutta, learned ASG submitted that the application filed by the appellant for condonation of delay contending that the appellant was G prosecuting remedy before the High Court by filing writ petition should have been considered and delay should have been condoned. This question seems not to have been examined by the trial court as well as by the High Court. In view of the decision in the _Western Builders_ (supra) we think it just and proper to remit this matter back to the trial court to decide whether the application for setting aside the award under section 34 of the Act filed by H the appellant could be considered to be within the period of limitation _i.e._ after U .O.l. _v._ SHRING CONSTRUCTION COMPANY PRIVATEL TD. [A.K. MA THUR).] 277 deducting the period spent by the appellant in prosecuting the remedy before A the High Court. As a result of our above discussion, we allow this appeal and set aside the impugned order of the High Court and that of the District Judge and remit the matter before the District Judge. The learned District Judge is directed to examine the matter in the light of the decision in _Western Builders_ (supra) and dispose of the application filed by the appellant as expeditiously as possible on its merit, without prejudice to any observation made in this order. There would be no order as to costs. S.K.S. Appeal allowed.