Dismissed

Smt. Sairabanu v. Prakash Acharya

Karnataka HC7 Oct 2021MFA/5701/2019

Case brief

AI extract

What is this about?

The First Appeal challenging the rejection of a limitation condonation application was dismissed as the 31-day delay was unsatisfactorily explained. The court held that postal acknowledgments proved service of the arbitration award, barring the claim that limitation ran from service. Costs were awarded.

What did the court decide?

The appeal and I.A.No.1/2019 were dismissed with costs of Rs.25,000/-. I.A.No.2/2019 was disposed of accordingly.

Smt. Sairabanu Vs Prakash Acharya — Arbitration | Karnataka HC (2021)

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M.F.A.No.5701/2019

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 7^TH DAY OF OCTOBER 2021

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BEFORE

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THE HON’BLE MRS JUSTICE K.S.MUDAGAL

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MISCELLANEOUS FIRST APPEAL NO.5701/2019 (AA)

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BETWEEN:

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SMT.SAIRABANU W/O. LATE T.M.THAHIR AGED ABOUT 60 YEARS R/AT PENTA HEIGHTS FLAT NO.801, 8^TH FLOOR NEAR PASHUPATHI KRIPA TEMPLE INDRALI, KUNJIBETTU POST UDUPI-576 102

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SRI T.M.TANVEER S/O. LATE T.M.THAHIR AGED ABOUT 36 YEARS R/AT PENTA HEIGHTS FLAT NO.801, 8^TH FLOOR NEAR PASHUPATHI KRIPA TEMPLE INDRALI, KUNJIBETTU POST UDUPI-576 102

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T.M.SHOAIB

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S/O. LATE T.M.THAHIR AGED ABOUT 34 YEARS R/AT PENTA HEIGHTS FLAT NO.801, 8^TH FLOOR NEAR PASHUPATHI KRIPA TEMPLE INDRALI, KUNJIBETTU POST UDUPI-576 102 …APPELLANTS

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(BY SRI K.PRASAD HEGDE, ADVOCATE)

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AND:

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PRAKASH ACHARYA S/O. MOHANA ACHARYA AGED ABOUT 46 YEARS

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R/AT PRAKASHA NILAYA KUNJIBETTU, SHIVAJI VILLAGE UDUPI- 576 102 …RESPONDENT

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(BY SRI MADHUKAR DESHPANDE, ADVOCATE)

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THIS MFA IS FILED UNDER SECTION 37(1)(c) OF THE ARBITRATION AND CONCILIATION ACT, 1996 PRAYING TO SET ASIDE THE ORDER DATED 27.02.2019 PASSED BY THE PRINCIPAL DISTRICT JUDGE, UDUPI IN A.S.NO.11/2018 ON I.A.NO.III FILED UNDER SECTION 5 OF THE LIMITATION ACT, 1963.

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THIS MFA COMING ON FOR FURTHER HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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J U D G M E N T

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Aggrieved by the rejection of their application for condonation of delay and consequent dismissal of the suit in AS No.11/2018, the plaintiffs have preferred the above appeal. There is delay of 31 days in filing the appeal. Therefore they have filed I.A.No.1/2019 for condonation of delay.

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Appellant No.1 is the wife and appellant Nos.2 and 3 are sons of late T.M.Thahir. T.M.Thahir was the registered owner of two buses bearing No.KA-20-D-4444 and KA-20-D-3333. Those buses were purchased by Sundaram Finance Limited under hire purchase agreements.

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M.F.A.No.5701/2019

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According to the appellants, the respondent

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had taken those buses on oral lease agreement for plying for a period of two years between 01.02.2003 and 01.02.2005. It is their further case that the respondent did not operate the buses properly and caused damage to them and did not even pay the lease amount. According to the appellants on 18.11.2004, T.M.Thahir terminated the lease and directed the respondent to return the vehicles. T.M. Thahir died on 30.01.2005.

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The respondent got issued notice dated 04.03.2005 to the appellants claiming that T.M.Thahir had entered into agreement of sale with respect of the aforesaid two buses and received consideration of Rs.16,70,000/-. It was his further contention that as agreed between the parties, the respondent remitted Rs.4,00,000/- to Sundaram Finance the hire purchaser as the advance sale consideration. Still the appellants did not sell the vehicle and issued the reply denying the agreement.

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Again on 02.04.2005, the respondent issued another notice demanding payment of Rs.4,00,000/-. The matter was referred to the Arbitrator. The Arbitration proceedings took place in Arbitration Petition No.7/2005. The appellants though appeared before the Arbitrator did not contest the case. Therefore the Arbitrator by his award dated 22.02.2006 allowed the claim petition of the respondent awarding Rs.4,07,855/- with 18% interest per annum on the Principal award amount of Rs.4,00,000/-.

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The appellants challenged the said award in AS No.24/2006 before the District Judge, Udupi. On 11.09.2018 the learned District Judge decreed the said arbitration suit and set aside the award dated 22.02.2006. The District Judge granted liberty to the respondent to refer the dispute again to the Arbitrator as per the agreement of sale.

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Again the respondent nominated the

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Arbitrator and fresh arbitration proceedings were conducted in Arbitration Petition No.7/2005. In the second round also, the appellants though engaged an

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advocate did not contest the matter. Again the Arbitrator passed award on 10.03.2014 allowing claim petition of Rs.4,00,000/- with interest at the rate of 18% per annum.

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The respondent filed Execution Petition No.55/2016 against the appellants and the notice of the execution petition was served on them in 2016 only. They filed AS No.11/2018 on 04.06.2018. Since there was delay of four years, they filed I.A.No.3 under Section 5 of the Limitation Act to condone the delay.

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The learned District Judge on hearing the parties by order dated 14.06.2018 allowed the application for condonation of delay. The respondent challenged that order before this Court in CRP No.333/2018.

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In Arbitration Suit No.11/2018, the appellants had filed I.A.No.2 for stay of the proceedings in Execution Case No.55/2016. The learned District Judge allowed I.A.No.2 and I.A.No.3 simultaneously.

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The order granting stay was challenged before this Court in W.P.No.30657/2018. This Court allowed C.R.P. No.333/2018 on 17.12.2018 holding that to the proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’), Section 34(3) of the Act applies, the order in question was without application of mind and remanded the matter to the Trial Court to decide the application by a speaking order.

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After such remand, the Trial Court again heard both side and by impugned order rejected the application for condonation of delay with cost of Rs.3,000/- and consequently, Arbitration Suit No.11/2018 was also dismissed.

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The ground urged in the suit for condonation of delay was that the copy of the Arbitration award was not served on the appellants. They further contended that they obtained the copy of the award on 02.06.2018 and suit was filed on 04.06.2018, therefore, the suit was in time. They claimed that the period of limitation has to

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be reckoned from the date of the service of award. They denied the service of the award.

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In Arbitration Suit No.11/2018, the respondent contended that the Arbitration award was served on the appellants on 20.04.2015. At the instance of the appellants, the Trial Court summoned the records of Execution Case No.55/2016. On perusing those records, the Trial Court held that there were postal acknowledgments in proof of service of award on the appellants on 20.04.2015.

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Challenging the said order dated 27.02.2019, the above appeal is preferred again with delay of 31 days. Seeking condonation of such delay, I.A.No.1/2019 is filed. The cause of delay is sought to be explained in para 5 of the affidavit filed by appellant No.2 in support of I.A.No.1/2019. In that paragraph, he says that on dismissal of the suit on 27.02.2019, the appellants approached the respondents for amicable settlement and respondents postponed the meeting for one or the other reasons. He further states that in Execution Case

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No.55/2016 even though the order of attachment was passed on 16.03.2019, the respondent did not pay the process fee, therefore, the appellants were under the bona fide belief that respondent will not take any coercive steps for attachment of appellants property, in view of the proposed settlement. It is alleged that however the respondent got attached the bus of the appellants on 08.07.2019, therefore, they have taken steps to file the appeal. Needless to say that the respondent has denied such contentions raised in the affidavit. Respondent contests the application and the appeal on the ground that they smack of mala fides .

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In view of the grounds urged for condonation of delay, the background of the case has to be looked into to find out whether the said ground is acceptable. The appellants in their application before the Trial Court for condonation of delay contended that the Arbitration award was not served on them, therefore, there was delay in filing the suit.

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In para 18 of their present appeal memo,

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they have contended that in Execution Case the matter was referred for conciliation, therefore, they were under the impression that respondent would settle the matter. They further claim that the respondent with an intention to extract money from them, did not agree for terms of settlement, thereafter, they applied for the certified copy of the award under the RTI that caused delay in filing the Arbitration suit. To explain the delay in filing this appeal, again the same reason is assigned.

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It is the settled proposition of law that the applicants shall explain each days delay satisfactorily whether the delay was for short time or long time. The dates and events mentioned above go to show that the parties are fighting since 2005.

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The respondent had issued notice to T.M.Thahir as long back as 02.04.2005 claiming Rs.4 lakhs. There are multiple rounds of litigations before this Court, before the Arbitrator and before the District Judge. Under such circumstances, it goes difficult to accept that

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the appellants tried for conciliation and the respondent responded to that.

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According to the appellants own statement in

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para 18 of their appeal memo, before filing of the Arbitration suit, already once conciliation was tried and that had failed, therefore, they were forced to file Arbitration Suit No.11/2018. If such conciliation had failed before institution of Arbitration Suit No.11/2018, it goes hard to accept that again there was an attempt of conciliation.

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The affidavit with regard to the alleged conciliation is as bald as possible. Particulars of such negotiations/conciliation like the name of the person who initiated the proposal, to whom it was made, the names of the conciliators, time and place of such proposal are conspicuously absent in the affidavit. By that time, the respondent had already initiated the execution proceedings and had the benefit of order of attachment of the buses of the appellants.

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Having regard to the history of the case, it

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goes difficult to assume that the respondent was in a mindset to attempt for cordial settlement. Therefore, the contention of the appellants that they were under the impression that the respondent would not take coercive steps in view of the alleged proposal of settlement is apparently a fertile imagination of the appellant without any basis. That is a dry statement invented to gain the advantage.

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Sri. K.Prasad Hegde, learned counsel for the appellants contends that the arbitrator had not served the copy of the award, therefore the suit was in time and there is every chance of the appellants succeeding in the suit. In support of his contention that time starts to run only from the date of service of award, he relies on the following judgments:

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i) Sri Kempegowda vs. The National Highway Authority and Others¹

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ii) The State of Maharashtra and Others vs. M/s. Ark Builders Pvt. Ltd.²

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1 ILR 2007 KAR 3700

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2 (2011) 4 SCC 616

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M.F.A.No.5701/2019

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iii) Dakshin Haryana Bijli Vitran Nigam Ltd. vs. M/s. Navigant Technologies Pvt. Ltd.³

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iv) N. Balakrishnan vs. M.Krishnamurthy⁴

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v) Smt Sairabanu and others vs. Prakash Acharya⁵

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Coming to the chance of the appellants succeeding in the appeal, the Trial Court in para 11 of the judgment refers to the records of Execution Case No.55/2016. The Trial Court relies upon the registered postal acknowledgments found in the records, which show that they were served on appellants on 20.04.2015. Therefore, the Trial Court accepted the contention of the respondent that the award copies were served on 20.04.2015.

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Section 3 of the Act, which deals with the

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Receipt of the written communications reads as follows:

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“ 3. Receipt of written communications.- (1) Unless otherwise agreed by the parties,-

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(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his

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3 AIR 2021 SC 2493

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4 (1998) 7 SCC 123

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5 W.P.No.41287/2019 DD dated 05.04.2021

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M.F.A.No.5701/2019

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place of business, habitual residence or mailing address, and

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(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.

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(2) The communication is deemed to have been received on the date it is so delivered.

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(3) This section does not apply to written communications in respect of proceedings of any judicial authority.”

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Section 3(2) of the Act clearly states that a communication is deemed to have been received on the date so delivered. Referring to the footnote in the award of the Arbitrator to the effect that the petitioner shall send a copy of the award to all the respondents under acknowledgment, the counsel for the appellant tried to contend that the Arbitrator had directed the respondent to serve the copies, therefore, it has to be presumed that the Arbitrator did not send the copies. In the said note, it is not said that the Arbitrator will not send a copy to the appellants. Moreover, the appellants did not explain for

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what purpose they signed on the postal acknowledgments

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found in the records of Execution Case No.55/2016.

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Sections 2 to 6 of the Act fall under chapter I of the Act, which deals with general provisions. As already pointed out, Section 3 deals with the communications and their service. Section 5 of the Act, which deals with the Extent of judicial intervention in such matters reads as follows:

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“5. Extent of judicial intervention.Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”

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The reading of the above provision makes it clear that in the matters governed by part I Judicial Authority cannot intervene except as provided in the said part.

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Since there were postal acknowledgments and having regard to Sections 3 and 5 of the Act, the chances of the appellants succeeding in the appeal and their challenge to the order of the Trial Court on I.A.No.3 are very bleak or virtually nil.

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This Court is of the view that delay of 31 days

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is not satisfactorily explained. The appellants have already dragged the proceedings for more than 16 years and it is their another attempt. There are no grounds to allow the application.

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In the light of the discussions made above, the judgments relied upon by the learned counsel for the appellants cannot be justifiably applied to the facts of the case.

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Therefore, I.A.No.1/2019 and consequently, the appeal are dismissed with costs of Rs.25,000/-.

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In view of the dismissal of the appeal, I.A.No.2/2019 does not survive for consideration and disposed of accordingly.

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Sd/JUDGE

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KSR/KG

Smt. Sairabanu v. Prakash Acharya

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Smt. Sairabanu v. Prakash Acharya

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