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High Court of Judicature at Bombay
R.D. DHANUKA, J.
E-Square Leisure Pvt. Ltd.
Versus
K.K. Dani Consultants and Engineers Pvt. Ltd.
Arbitration Appeal No. 43 of 2012 In Civil Misc. Application No. 314 of 2012 In Petition No. 5 of 2011
Decided on: 01-02-2013
It is not in dispute that in this case a signed copy of the award was not delivered by the Arbitral Tribunal (Council) to the appellant. On reading of Section 34(3), it is clear that application for setting aside can be made within three months from the date on which the party making an application had received a signed copy of the arbitral award from the Arbitral Tribunal. As the signed copy of the award was not delivered by the Arbitral Tribunal (Council) to the appellant, limitation for filing application under Section 34(3) for challenging that award did not commence. Merely because a copy of the award was subsequently delivered by the respondent to the appellants would not commence period of limitation. The District Judge has committed a patent error in overlooking the provisions of 31(5) read with Section 34(3) of the Act and has proceeded on the erroneous premise that there was delay in filing application under Section 34.
Arbitration and Conciliation Act, 1996 - Section 34 - Micro, Small & Medium Enterprises Development Act, 2006, Section 19 - Filing of application under Section 34. - Held, filing of an application under Section 34 of Act, 1996 for setting aside arbitral award, not barred by Section 19 of Act, 2006. In so far as the next submission of the counsel of respondent that in view of non-deposit of 75% under Section 19 of the Micro Small and Medium Enterprises Development Act, 2006 by the appellant admittedly, the District Judge could not have entertained the petition is concerned, there is bar under Section 19 from entertaining the petition under Section 34 for non-deposit of 75% but there is no bar from filing an application under Section 34 of the Act.
The stage of entertaining the petition would arise only after it is filed before the District Court. Such objection of non-deposit of 75% could have been entertained by the District Judge only if he would have allowed the application for condonation of delay in filing Section 34 application. Since the application for condonation of delay itself was rejected, that stage did not arise.
Arbitration and Conciliation Act, 1996 - Sections 34 and 37(1)(b) - Maintainability of appeal. - Held, appeal under Section 37 of Act against order rejecting petition filed under Section 34 of Act on ground of delay is maintainable. The proper remedy of the appellant was to file application under Section 34 to challenge the impugned award, the appellant had filed writ petition in this Court which was not in good faith and with due diligence. The counsel would then submit that as the application under Section 34 has not been disposed of by the District Judge and an order rejecting an application for condonation of delay is not an appealable order under Section 37, present appeal is not maintainable. The counsel submits that appeal under Section 37(1)(b) of the Arbitration and Conciliation Act is maintainable only if an order refusing to set aside or setting aside an award is passed.
In so far as the submission of the counsel appearing for the respondent that there was no order passed by the District Judge refusing to set aside an award and thus no appeal could be filed under Section 37(1)(b) of the Act is concerned, the application for condonation of delay itself is rejected, as a consequence thereof, the application filed under Section 34 is also rejected. An order refusing to condone delay in filing application for setting aside award would amount to an order refusing to set aside award. Appeal is thus maintainable under Section 37(1)(b) of the Act against such an order refusing to condone the delay resulting in dismissal of application for setting aside an award.
By this appeal filed under section 37 of the Arbitration and Conciliation Act, 1996, appellant seeks to challenge order dated 1st August, 2012 passed by the learned District Judge, Pune rejecting the application filed by the appellants seeking condonation of delay in filing arbitration application under section 34 of the Act. Some of the relevant facts for the purposes of deciding this appeal are as under:-
2. The disputes between the the parties were referred to the arbitration under the provisions of Micro Small and Medium Enterprises Development Act, 2006. By an award dated 12th October, 2011, the Micro and Small Enterprises Facilitation Council (for short ‘Council’) directed the appellant to pay certain amounts to the respondent (original claimant before the Council).
3. It is the case of the appellant that a copy of the award was received by the appellant from the respondent on 12th December, 2011. The appellant filed a writ petition in this court challenging the said award (1057 of 2012). By an order dated 7th March, 2012 passed by this court, the appellant was allowed to withdraw the said writ petition with liberty to file arbitration petition. This court observed that the time spent in filing and prosecuting the writ petition will have to be excluded in view of the law laid down by the Supreme Court in case of State of Goa vs. M/s. Western Builders, AIR 2006 SC 2525 and permitted the appellant to make that request to the court before which the arbitration petition was to be filed.
4. The appellant filed an application under section 34 before the learned District Judge on 9th April, 2012 with application for condonation of delay which was resisted by the respondent on various grounds including a ground that under section 19 of the Micro Small and Medium Enterprises Development Act, 2006, application under section 34 could not be entertained by any court unless the appellant had deposited 75% of the amount in terms of the award. By the impugned order dated 1st August, 2012, the learned District Judge rejected the application for condonation of delay of 23 days on various grounds.
5. Mr. Kantawala, the learned counsel appearing for the appellant submits that the appellant had filed writ petition instead of filing arbitration application under section 34 of the Act and such proceeding was filed in good faith and with due diligence. The learned counsel placed reliance upon the judgment of the Supreme Court in case of State of Goa vs. M/s. Western Builders (AIR 2006 SC 2525) and more particularly paragraphs 18, 24 and 25 in which the Supreme Court has held that section 14 of the Limitation Act would apply in Arbitration and Conciliation Act, 1996. The said paragraphs read thus:-
“18. 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
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