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IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
J.J. MUNIR, J.
Moradabad Development Authority - Appellant
Versus
M/s. V.R. Construction And Engineering Company - Respondent
First Appeal From Order No. 460 of 2021
Decided On : 02-03-2022
Arbitration - Delay Condonation - Arbitration and Conciliation Act, 1996 - Section 34(2) - The appellant entered into a civil works contract with the respondent. The appellant claimed that the respondent submitted a false experience certificate and committed various irregularities in the execution of the contract. The contract carried an arbitration clause. The appellant served a notice of arbitration under Section 11(5) of the Act. The Vice-Chairman of the appellant cancelled the appointment of the sole Arbitrator and declared the contract null and void. The sole Arbitrator pronounced an award ex parte. The appellant filed an application under Section 34(2) of the Act to set aside the award. The Commercial Court declined to condone the delay, holding that it had no jurisdiction to do so. The appellant contended that the application was an application seeking to exclude the period of time spent in pursuing remedies bona fide. The respondent argued that the application was under Section 5 of the Limitation Act, seeking condonation of delay. The Supreme Court held that the application was not entitled to the benefit of Section 14 of the Limitation Act, as the appellant did not prosecute any civil proceedings in good faith and with due diligence to set aside the award within the prescribed period of limitation. The Court found no merit in the appeal and dismissed it.
Fact of the Case:
The appellant entered into a civil works contract with the respondent. The appellant claimed that the respondent submitted a false experience certificate and committed various irregularities in the execution of the contract. The contract carried an arbitration clause. The Vice-Chairman of the appellant cancelled the appointment of the sole Arbitrator and declared the contract null and void. The sole Arbitrator pronounced an award ex parte. The appellant filed an application under Section 34(2) of the Act to set aside the award.
Finding of the Court:
The Court found that the appellant did not prosecute any civil proceedings in good faith and with due diligence to set aside the award within the prescribed period of limitation.
Issues: The main issue was whether the appellant's application under Section 34(2) of the Act was entitled to the benefit of Section 14 of the Limitation Act.
Ratio Decidendi: The Court held that the appellant's application was not entitled to the benefit of Section 14 of the Limitation Act, as the appellant did not prosecute any civil proceedings in good faith and with due diligence to set aside the award within the prescribed period of limitation.
Final Decision: The Court found no merit in the appeal and dismissed it.
JUDGMENT :
1. Heard Mr. K.M. Asthana, learned Counsel for the appellant and Mr. Manu Khare, learned Counsel appearing on behalf of the respondent.
2. This is an appeal from an order of the Presiding Officer, Commercial Court, Moradabad dated 05.03.2020, refusing to condone the delay in making an application by the appellant under Section 34(2) of the Arbitration and Conciliation Act, 1996, [for short, 'the Act of 1996].
3. The facts leading to the present appeal are these:
The Moradabad Development Authority, Moradabad, hereinafter referred to as 'the appellant', entered into an agreement with M/s. V.R. Construction and Engineering Company for a civil works contract on 28.03.2009. The subject matter of the contract was construction of a 'Sourcing Hub and Warehouse' in Sector 4, Naya Moradabad Yojna, Delhi-Moradabad Road. The project subject matter of the contract is said to be worth Rs.26,03,84,722.93 only. The project was to be completed within a period of two years w.e.f. 03.03.2009. The said period would end on 02.03.2011, but was extended from time to time, as the appellant say, on the request of M/s. V.R. Construction and Engineering Company, hereinafter referred to as 'the respondent'.
4. It is the appellant's claim that the time for completion of the contracted project was last extended up to 31.03.2016 subject to a penalty of Rs.7.20 lakhs. It is the appellant's case that the respondent submitted an affidavit, saying that they were A-Category contractors and also submitted a certificate of experience dated 10.02.2009 issued by a certain M/s. Arch Add Consultants, New Delhi certifying them as A-Class contractors. Besides, other testimonials were also attached in response to the tender notice for the works contract in question that was published on 27.02.2009. It appears that on 02.03.2009, a letter was issued by the appellant to the respondent that the respondent's tender has been approved, with a specific condition that if the experience certificate submitted by the respondent is found to be false upon verification, the earnest money deposited shall be forfeited and appropriate proceedings drawn in accordance with law.
5. It is the appellant's further case that the contract, that was later on executed, carried an arbitration clause, being Clause No.32. Clause 32(b) provides that if the respondent is dissatisfied with the final decision of the Engineer-in-Charge taken under Clause 32(a), the respondent may, within twenty-eight days of receipt of the decision, give notice in writing, requiring the matter to be submitted to arbitration, furnishing detailed particulars of the dispute or differences. The notice would clearly indicate the point(s) in issue. It was further a term in the contract that if the respondent failed to serve a notice of arbitration within the time stipulated, the decision of the Engineer-in-Charge of the appellant, shall be conclusive and binding on the respondent. The appellant say that upon inquiries made from M/s. Arch Add Consultants, New Delhi with regard to the letter dated 27.01.2016 issued by the Managing Director of a certain Kashi Vishwanath Steel Private Limited, the appellant were informed that the experience certificate under reference was never issued by M/s. Arch Add Consultants, New Delhi.
6. It is also said that the respondent committed various irregularities of a serious nature in the execution of the works contract. The appellant issued a letter dated 09.02.2016 to the Secretary, Awas Evam Sahari Niyojan, Anubhag-3 of the State Government, requesting him to institute an inquiry into the irregularities committed by the respondent in the construction of Sourcing Hub and Warehouse Complex in Sector-4 of the Moradabad Residential Scheme under the works contract.
7. On 10.05.2016, the State Government constituted an Inquiry Committee to go into the allegations of irregularities committed by the respondent vis-à-vis the execution of the contracted work. The Inquiry Committee, after notice to the
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