Dismissed

The Managing Director Capex v. M/S. Saba Trading Pvt. Ltd.

Kerala HC15 Nov 2016WP(C)/17555/2014

Case brief

AI extract

What is this about?

Challenging a Kerala Co-operative Tribunal award confirming an arbitration decree regarding a dispute for raw cashew supply, the writ petition argued the claim was time-barred by Section 69(4) of the Co-operative Societies Act and sought interference with interest rates. The Court held the limitation bar was not retrospective for ongoing proceedings and dismissed the petition.

What did the court decide?

The writ petition was dismissed. The petitioner is permitted to discharge the entire liability in ten equal monthly instalments.

The Managing Director Capex Vs M/S. Saba Trading Pvt… — Cooperative Societies | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE

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TUESDAY, THE 15TH DAY OF NOVEMBER 2016/24TH KARTHIKA, 1938

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WP(C).No. 17555 of 2014 (T)

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PETITIONER(S):

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THE MANAGING DIRECTOR, KERALA CASHEW WORKERS' APEX INDUSTRIAL CO-OPERATIVE SOCIETY LIMITED, P.B. NO. 262 (CAPEX), MUNDACKAL WEST, H & C COMPOUND, KOLLAM - 1.

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BY ADVS.SRI.PIRAPPANCODE V.S.SUDHIR SRI.JELSON J.EDAMPADAM

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RESPONDENT(S):

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1. M/S. SABA TRADING PVT. LTD., FLAT D, NUTECH HEIGHTS - 6, THAMBUSAMY ROAD, KILPAUK, CHENNAI - 600 010.

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2. DEPUTY REGISTRAR, DISTRICT INDUSTRIES CENTRE, ASRAMAM, KOLLAM-691 001.

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3. KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM-695 001.

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R1 BY ADVS. SRI.P.MARTIN JOSE

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SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA SRI.A.JANI(KOLLAM) R2 & R3 BY GOVERNMENT PLEADER SRI.T.S.SHYAM PRASANTH

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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msv/

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WP(C).No. 17555 of 2014 (T)

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APPENDIX

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PETITIONER(S)' EXHIBITS

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EXHIBIT-P1-TRUE COPY OF THE PLAIN IN ARBITRATION CASE NO.1/2011

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EXHIBIT-P2-TRUE COPY OF THE WRITTEN STATEMENT FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.

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EXHIBIT-P3-TRUE COPY OF THE ORDER DATED 24/05/2013 IN ARBITRATION CASE NO. 1/2011.

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EXHIBIT-P4-TRUE COPY OF THE APPEAL MEMORANDUM NO. 91/2013 FILED BY THE PETITIONER BEFORE THE KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM.

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EXHIBIT-P5-TRUE COPY OF THE HIGH SEAS SALE AGREEMENT.

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EXHIBIT-P6-TRUE COPY OF THE COMMON ORDER DATED 24/05/2014 IN APPEAL NO. 88/2013 AND 91/2013.

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RESPONDENT(S)' EXHIBITS

NIL

//TRUE COPY//

P.S.TO JUDGE

msv/

A. MUHAMED MUSTAQUE, J.

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W.P.(C) No. 17555 of 2014

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Dated this the 15^th day of November, 2016

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J U D G M E N T

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1.This writ petition is filed, challenging the arbitration

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award passed under the Co-operative Societies Act (for short, “the Act”), which is confirmed and modified by the Kerala Co-operative Tribunal, Thiruvananthapuram in appeals filed by both the plaintiff and the defendant.

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2.The writ petitioner is the defendant in the arbitration

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claim filed by the 1^st respondent herein. The petitioner and the 1^st respondent entered into a contract for supply of raw cashew, pursuant to which, the 1^st respondent supplied raw cashew to the petitioner. On account of non payment of the amount pursuant to the supply of raw cashew, the 1^st respondent filed the claim under Sections 69 & 70 of the Act r/w Rule 67 of

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the Cooperative Societies Rules and Circular No.42/2003 of the Registrar of Cooperative Societies

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W.P.(C) No. 17555 of 2014

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..2..

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before the Registrar of Cooperative Societies, Thiruvananthapuram. The total demand was ₹2,05,21,087/- together with interest @ 12.5%. This amount also comprised interest for the belated payment as well. The arbitrator, vide Ext.P3, awarded a sum of ₹1,56,58,122/-, which includes the principal amount of ₹1,36,52,072/- and interest of 19,79,550/- @ 6% on the₹ principal amount from 20.12.2010 to 31.05.2013, costs of 1,500/- and the earnest money deposit of 25,000/-.₹ ₹ Aggrieved by the award, the petitioner and the 1^st respondent herein filed Appeal Nos.91/2013 & 88/2013 respectively, which were heard together and disposed of by a common judgment produced as Ext.P6. By the impugned award, both the appeals were disposed of, as follows;

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“1.The impugned award is confirmed subject to the modification that Plaintiff is entitled to realise interest at the rate of 6% per annum for the prereference period from 07-02-2006 to 20-12-2010 and that the post decree interest is reduced to 6% per annum. The plaintiff is also allowed to realise cost of the Arbitration Case and the notice charge of 5,000/- from the Defendant.”

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..3..

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W.P.(C) No. 17555 of 2014

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Challenging Ext.P6 award, the petitioner/defendant filed this writ petition.

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3.The main contention in the writ petition is that in the light of Section 69(4) of the Act, the claim put forward by the 1^st respondent is barred by limitation. According to the petitioner, the claim was laid by the 1^st respondent after a period of three years from when the goods were delivered. Therefore, it is submitted that in the light of Schedule III to Clause 9 of the Act, the claim ought to have been dismissed having barred by limitation. In addition to the above challenge, the learned counsel for the petitioner also submits that the appellate tribunal erred in awarding interest for the pre-reference period.

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4.However, the learned counsel for the 1^st respondent submits that Section 69(4) has been brought in the statute only by Act 8/2013 and it cannot have any impact upon a proceeding initiated prior to Act 8/2013. It is further submitted that the interest awarded is, in

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W.P.(C) No. 17555 of 2014

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..4..

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fact, at a lower rate as the 1^st respondent is entitled for interest at the rate in par with the commercial transaction.

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5.It is to be noted that Act 8/2013 was brought in the statute as a bar to entertain any claim before the competent arbitration court after the period of limitation. This bar is not having a retrospective effect. It is settled principle of law that limitation cannot extinguish a debt, it bars only a remedy. In view of the fact that the claim was made much before enactment of the Act 8/2013, it cannot be said that the claim is barred by limitation. The limitation law is a procedural law and it only extinguishes a right to remedy and it does not extinguish any liability.

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6.In this context, it is appropriate to refer a decision of the apex court in Thirumalai Chemicals Ltd. v. Union of India & Others [(2011) 6 SCC 739]. The learned counsel for the petitioner, referring to paragraph 24 of the above judgment, submits that an

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W.P.(C) No. 17555 of 2014

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..5..

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aggrieved person cannot claim any vested right claiming that he should be governed by the old provision pertaining to period of limitation. On the other hand, the learned counsel for the 1^st respondent, relying on paragraph 29 of the judgment, submits that the law of limitation has to be considered as a procedural law as it would only operate as a bar for instituting claim and it will not bar an ongoing proceedings before the arbitrator or the tribunal, as the case may be, unless the statute prescribes otherwise.

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7.It is to be noted that paragraph 24, relied on by the learned counsel for the petitioner, states that limitation cannot be called as a substantive right and no one can claim any vested right based on the old provisions of the Act to get over the period of limitation. On the other hand, paragraph 29, relied on by the learned counsel for the 1^st respondent, clearly establishes that it only operates like a procedural law and cannot have an impact upon a proceeding already initiated before a

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W.P.(C) No. 17555 of 2014

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..6..

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competent authority. Therefore, the argument of the petitioner on this cannot be upheld.

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8.Now, the only question to be considered is whether the interest awarded by the tribunal is appropriate. It is seen that the tribunal has only awarded interest @ 6% for the pre-reference period and interest @ 6% from the post decree. This Court is of the view that the interest awarded by the tribunal cannot be said to be exorbitant. This Court cannot interfere with such award of interest in a proceeding initiated under Article 226 of the Constitution. This Court finds no infirmity with the procedure adopted by the tribunal.

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9.Accordingly, this writ petition is dismissed. No costs. 10.Further, considering the request made by the petitioner, the petitioner is permitted to discharge the entire liability, deducting the amount already deposited, in ten equal monthly instalments starting from 10.01.2017 followed by every month.

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11.The learned counsel for the 1^st respondent submits

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W.P.(C) No. 17555 of 2014

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..7..

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that the arbitrator had only released the principal amount deposited by the petitioner pursuant to the interim order passed by this Court and refused to release the interest accrued on the amount. In view of the dismissal of the writ petition, this Court is of the view that any interest, accrued on the amount deposited by the petitioner pursuant to the interim order, shall also be released to the 1^st respondent without any delay.

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Sd/- A. MUHAMED MUSTAQUE JUDGE

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bka/-

The Managing Director Capex v. M/S. Saba Trading Pvt. Ltd.

Case brief

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The Managing Director Capex v. M/S. Saba Trading Pvt. Ltd.

Case brief

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