Dismissed

Suman Devi v. Additional Commissioner Administration

Allahabad HC8 Dec 2017FAFOD/1715/2017

Case brief

AI extract

What is this about?

In an appeal against an order dismissing an application to set aside an arbitration award due to delay, the Court held that Section 5 of the Limitation Act, 1963, does not apply. The Court ruled that the limitation period under Section 34(3) of the Arbitration and Conciliation Act, 1996 is absolute and unextendable.

What did the court decide?

The appeal was dismissed; the order of the District Judge rejecting the application to set aside the award due to limitation bar was upheld.

Suman Devi Vs Additional Commissioner Administration — Arbitration | Allahabad HC (2017)

AFR

Court No. - 34

Case :- FIRST APPEAL FROM ORDER DEFECTIVE No. - 1715 of 2017

¶5

Appellant :- Suman Devi Respondent :- Additional Commissioner (Administration) Counsel for Appellant :- Shadab Ali

¶6

Hon'ble Sudhir Agarwal,J. Hon'ble Ajit Kumar,J.

¶7

Defect in appeal is that certified copy of formal order has not been filed. An application for exemption has been filed. Exemption is granted and we proceed to hear appellant under Order 41 Rule 11 C.P.C.

¶8

Heard learned counsel for appellant and perused the record.

¶9

This appeal under Section 37 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act, 1996”) has arisen from judgment and order dated 25.08.2017 passed by District Judge, Moradabad dismissing appellant's application under Section 34 of of Act, 1996 on the ground that same was filed after period of limitation prescribed under Section 35 of Act, 1996 and Section 5, Limitation Act, 1963 (hereinafter referred to as “Act, 1963”) is not applicable to application preferred under Section 34 since maximum period of limitation prescribed therein is not extendable, hence there is no power of condonation of delay.

¶10

Brief facts as is evident from record are that appellant is owner of Gata No. 439 having 1/4 share, area 1146 square meters. For widening of road and construction of four lane at National Highway-24 (hereinafter referred to as the “NH-24”) , acquisition proceedings were commenced under National Highways Act, 1956 (hereinafter referred to as the “Act, 1956”). Special Land Acquisition Officer, Moradabad (hereinafter referred to as the “SLAO”) made award dated 19.10.2011 determining compensation as Rs. 68,76,228/- of Gata No. 439, area

¶11

¶12

0.2292 hectare. Compensation was determined with mutual consent of one, Ram Gopal, who was also having 1/4 share in aforesaid land and market value for compensation was determined at Rs. 3000/- per square meter.

¶13

National Highway Authority of India (hereinafter referred to as the “NHAI”) through its Project Director filed objection before Additional Commissioner (Administration)/ Arbitrator against award dated 19.10.2011, whereupon Arbitrator made award dated 29.09.2012 determining compensation of Rs. 3,11,494 at the rate of Rs. 247.10 per square meter.

¶14

Appellant filed objection under Section 34 of Act, 1996 alongwith delay condonation application on 10.10.2013 before District Judge, Moradabad registered as Objection No. 399 of 2013. This objection and application has been rejected by District Judge on the ground that limitation prescribed under Section 34(3) of Act, 1996 is mandatory and Section 5 of Act, 1963 is not applicable, therefore, objection, if filed beyond the period of limitation, delay in filing such objection cannot be condoned. This order dated 25.08.2017 passed by District Judge is under challenge.

¶15

Learned counsel for appellant placed reliance on Supreme Court's decision in Union of India Vs. Shring Construction Company Private Limited (2006) 8 SCC 18 to contend that Act, 1963 is made applicable to the proceedings under Act, 1996 in view of Section 43 of Act, 1996 and, therefore, Court below has erred in law in rejecting application seeking condonation of delay.

¶16

Facts not disputed are that objection under Section 34 has been filed by appellant after expiry of period of limitation prescribed under Section 34(3) of Act, 1996.

¶17

Sub-section(3) of Section 34 of Act, 1996 reads as under:

¶18

"(3) An application for setting aside may not be made after three months have elapsed from the date on which the party

¶19

¶20

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:

¶21

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 .”

¶22

(emphasis added)

¶23

Apparently Section 34(3) provides a period of three months for filing an objection for setting aside award under Section 34(1). By virtue of proviso to Section 34(3), if there exists sufficient cause, Court can entertain an application within a further period of 30 days but not thereafter. Meaning thereby, three months and thereafter 30 days is the maximum period of limitation prescribed under Section 34(3) of Act, 1996 within which an application under Section 34(1) could have been filed, failing which it is bound to be dismissed as barred by limitation. There is no provision under Section 34 condoning delay beyond the aforesaid period of three months and 30 days.

¶24

Applicability of Section 5 of Act, 1963 to application filed under Section 34(1) of Act, 1996 filed after period of limitation prescribed under Section 34(3) of Act, 1996 came to be considered before Supreme Court in Union of India vs. M/s Popular Construction Co. (2001) 8 SCC 470. Court held that Section 5 of Act, 1962 is not applicable to an application challenging award filed under Section 34(1) and period of limitation prescribed under Section 34(3) is absolute and unextendable. In para 12 of the judgment, Court said:

¶25

“12. 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 sub-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

¶26

¶27

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 . ”

¶28

(emphasis added)

¶29

Aforesaid exposition of law was reiterated in State of Maharashtra vs. Hindustan Construction Company Ltd. (2010) 4 SCC 518 wherein Court held that application for setting aside arbitral award under Section 34 of Act, 1996 has to be made within the period prescribed under sub-section (3) of Section 34, i.e., three months and a further period of 30 days on sufficient cause being shown and not thereafter.

¶30

In a subsequent decision in Assam Urban Water Supply and Sewerage Board vs. Subash Projects and Marketing Ltd. (2012) 2 SCC 624 an argument was raised with reference to Section 43 of Act, 1996 that provisions of Act, 1963 have been made applicable to Arbitrators and when application is made for setting aside award hence all provisions of Act, 1963 should be held applicable but it was negatived. In aforesaid judgment an attempt was made to attract Section 4 of Act, 1963 but rejecting said contention, Court said:

¶31

“13. The above Section enables a party to institute a suit, prefer an appeal or make an application on the day court reopens where the prescribed period for any suit, appeal or application expires on the day when the court is closed. The crucial words in Section 4 of the 1963 Act are 'prescribed period '. What is the meaning of these words? Section 2(j) of the 1963 Act defines 'period of limitation' which means the period of limitation prescribed for any suit, appeal or application by the Schedule, and 'prescribed period' means the period of limitation computed in accordance with the provisions of this Act. Section 2(j) of the

¶32

¶33

1963 Act when read in the context of Section 34(3) of the 1996 Act, it becomes amply clear that the prescribed period for making an application for setting aside arbitral award is three months. The period of 30 days mentioned in proviso that follows Sub-section (3) of Section 34 of the 1996 Act is not the 'period of limitation' and, therefore, not 'prescribed period' for the purposes of making the application for setting aside the arbitral award . The period of 30 days beyond three months which the court may extend on sufficient cause being shown under the proviso appended to Sub-section (3) of Section 34 of the 1996 Act being not the 'period of limitation' or, in other words, 'prescribed period', in our opinion, Section 4 of the 1963 Act is not, at all, attracted to the facts of the present case . ” (emphasis added)

¶34

We also find from Section 43(4) of Act, 1996 that provisions of Act, 1963 which are in respect of period to be excluded for the purpose of computing period of limitation have been made applicable. It cannot be extended to Section 5 of Act, 1963. Section 43(4) reads as under:

¶35

“(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.”

¶36

(emphasis added)

¶37

Recently in Commissioner, M.P. Housing Board and Ors. vs. Mohanlal and Company, AIR 2016 SC 3592 issue of condonation of delay in respect of an application under Section 34 came up for consideration before Court. After arbitral award was given on 11.11.2010, Contractor being aggrieved therefrom, instead of filing application/ objection under Section 34(1) of Act 1996, in the Court, preferred to file an application under Section 11 of Act, 1996 in High

¶38

¶39

Court seeking appointment of Arbitrator to adjudicate the dispute. Application was rejected by Court observing that there is already an arbitral award, hence no further action under Section 11 can be allowed. Thereafter Contractor filed objection before Court challenging award on 26.09.2011. He also filed an application under Section 14 requesting to exclude time consumed in the proceedings before High Court when he filed application under Section 11 and the same was rejected. This application was allowed by District Judge by taking recourse to Section 14 of Act, 1963. M.P. Housing Board challenged order of District Judge in Civil Revision before High Court but failed and that is how matter came to Supreme Court. Relying on its earlier decision in Union of India vs. M/s Popular Construction (supra), Court held that period of limitation under Section 34(3) is mandatory and would bar application of Section 5 of Act, 1963. It reiterated the observations made in Union of India vs. M/s Popular Construction (supra) to hold that Court could entertain an application to set aside award beyond the extended period under proviso, would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result. Court in para 14 of judgment in Commissioner, M.P. Housing Board (supra) said as under:

¶40

“14. The aforesaid authority makes it absolutely clear that that the scheme of limitation provided under the 1996 Act is different than 1940 Act; and, therefore, an application filed beyond the period of limitation under section 34(3) of 1996 Act would not be an application in accordance with the said provision . As is evident from factual narration, the application was filed beyond the period prescribed in the said provision. Therefore, it could not have been entertained under the 1996 Act.”

¶41

Having said so, Court then proceeded to examine, whether Section 14 of Act, 1963 was applicable to the facts of the case in Commissioner, M.P. Housing Board (supra). There was no dispute on

¶42

¶43

the proposition that Section 14 would apply for computation of period of limitation for the purpose of Section 43 and it was so held in State of Goa v. Western Builders (2006) 6 SCC 239; Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department and Ors. (2008) 7 SCC 169 ; and, Union of India Vs. Shring Construction Company Private Limited (supra). Applying law laid down in these cases to the facts of the case in Commissioner, M.P. Housing Board (supra), Court observed that it was open to Contractor to file objection against award in Court but instead he chose a novel method of filing another application under Section 11 of Act, 1996 before High Court for appointment of an Arbitrator which was held by Court not maintainable. While dismissing application High Court permitted Contractor to file objection in “accordance with law”. Court held that filing of application under Section 11 was totally a different matter than objection of award filed under Section 34. In that case Court did not find that Contractor can be allowed to take advantage of Section 14 by stating that he was pursuing a remedy in wrong forum since he had already aware that he was participated in arbitral proceedings wherein award is passed and that be so, even if a liberal interpretation is placed on Section 14, the situation exposits absence of good faith of great magnitude and hence law could not come to rescue such litigant. Consequently, Court allowed appeal of M.P. Housing Board and held objection filed by Contractor as barred by limitation.

¶44

The authority relied by learned counsel for appellant is with respect to applicability of Section 14 i.e. for computation of period of limitation and not for condonation of delay by applying Section 5 of Act, 1963. In view of discussion made above it is evident that said authority cannot help appellant in the present case where Section 14 as such has no application.

¶45