Kotak Securities Ltd. , Bangalore v. Chethan Bhandary
2010-07-02
B.S.PATIL, MANJULA CHELLUR
body2010
DigiLaw.ai
Judgment :- B.S. Patil, J. In this appeal, the appellant is calling in question the order dated 25.01.2010 passed by the learned Single Judge allowing the writ petition filed by respondent No.1 herein by setting aside the proceedings before the learned Trial Judge in Arbitration Suit No.22/2009. 2. The facts involved in this case stated in brief are, that respondent No.1 availed security trading facility with the appellant. After execution of necessary documents, respondent No.1 was admitted as a customer with effect from April 2006. It is alleged that respondent No.1 also executed disclosure agreement and availed the services of the appellant through respondent No.3 by carrying out various trades. According to the appellant, when respondent No.1 failed to discharge his admitted liability under the transaction entered into between them, the appellant submitted a claim before the Arbitration Department of National Stock Exchange of India Limited. Respondent No.1 disputed the claim and also made a counter claim. The Arbitrator having enquired into the matter, passed an award dismissing the claim of the appellant and allowing the counter claim of respondent No.1, directing the appellant herein to pay a sum of Rs.9,24,750/- with interest at 18% per annum from the date of award. The said award was challenged by the appellant before the High Court of Judicature at Bombay in Arbitration Petition No.13/2008 under Section 34 of the Arbitration and Conciliation Act, 1996. 3. The High Court of Judicature at Bombay, by order dated 25.11.2008 ordered return of the petition for presentation to the proper forum. It is the case of the appellant that though the order returning the petition was passed on 25.11.2008, the petition was returned to the appellant only on 24.02.2009 for presentation before the proper Court. However, based on the order returning the petition, the appellant took steps to file another petition containing verbatim reproduction of the petition filed by it before the high Court of Judicature at Bombay, before the City Civil Court at Bangalore, only with such necessary changes that were required as per the Civil Rules of Practice. The fact remains that the appellant did not represent the petition that was filed before the High Court of Judicature at Bombay, but filed another petition. The fresh petition was filed on 20.03.2009 before the City Civil Court, Bangalore, which came to be numbered as Arbitration Suit No.22/2009.
The fact remains that the appellant did not represent the petition that was filed before the High Court of Judicature at Bombay, but filed another petition. The fresh petition was filed on 20.03.2009 before the City Civil Court, Bangalore, which came to be numbered as Arbitration Suit No.22/2009. Only on 17.06.2009, an application was filed by the appellant seeking permission to file the original documents returned by the Bombay High Court. Respondent No.1 filed objections and contended that the petition filed at Bangalore was barred under Section 34 of the Arbitration Act. The City Civil Court by order dated 25.06.2009 held that the petition filed was not barred by limitation. The said order was challenged in W.P.No.22502/2009, out of which the present writ appeal arises. 4. The learned Single Judge has allowed the writ petition setting aside the order of the City Civil Court, holding that the arbitration proceedings instituted before the Trial Judge were barred by statue. It is this order that is challenged in this appeal. 5. It is the contention of the learned Senior Counsel Sri Udaya Holla appearing for the appellant, that the petition under Section 34 of the Arbitration Act was filed at Bombay within 85 days from the date of passing of the award by the Arbitrator and after the return of the petition on 24.02.2009, the petition before the City Civil Court at Bangalore was filed on 20.03.2009 i.e., to say after a lapse of 24 days, hence if the time during which the appellant was bona fide prosecuting the case at Bombay is excluded, the petition filed before the City Civil Court, Bangalore, would be within 112 days which is well within the period of limitation of 120 days as fixed under Section 34 of the Arbitration Act.
It is his submission that when a Court or Tribunal directs return of petition for presentation to proper Court, the limitation begins to run from the date on which the plaint is returned and the records are made available to the plaintiff, in the present case, as the High Court of Judicature at Bombay, made available the petition filed under Section 34 of the Arbitration Act before it for re-presentation only on 24.02.2009, the period spent between 19.12.2007, the date on which the petition was filed before the Bombay High Court and 24.02.2009, the date when the petition was actually returned to the appellant by the Bombay High Court, has to be excluded. It is his further contention that the learned Single Judge erred in holding that the appellant ought to have re-presented the very petition filed before the High Court of Judicature at Bombay before the City Civil Court, Bangalore, and having filed a fresh petition, the benefit of Section 14 of the Limitation Act was not available. His contention is that there is no legal requirement for the appellant to re-present the very papers which were returned to him. At any rate, he contends, that on 17.06.2009, the appellant presented the very papers which were returned by the Bombay High Court. He has placed reliance on the judgment of this Court in the case of Seenappa & Others Vs. Subbiah and Others, 2000 (1) Kar.LJ. 584 . 6. Sri Holla placing reliance on Section 14 of the Limitation Act, submits that if the provisions of Section 14 are applied, the petition filed before the City civil Court, Bangalore, by the appellant herein on 20.03.2009 was well within time. It is his contention that the provisions of CPC as per order VII, Rule 10 are not required to be looked into while excluding the time taken as provided under Section 14 of the Limitation Act. In this regard, he has placed reliance on the Judgment of the Apex Court in the case of India Electric Works Ltd. Vs.
It is his contention that the provisions of CPC as per order VII, Rule 10 are not required to be looked into while excluding the time taken as provided under Section 14 of the Limitation Act. In this regard, he has placed reliance on the Judgment of the Apex Court in the case of India Electric Works Ltd. Vs. James Mantosh and Another ( 1971 (1) SCC 24 , He has drawn our attention to paragraph 7, wherein it is stated as under “It is well settled that although all questions of limitation must be decided by the provisions of the Act and the Courts cannot travel beyond them, the words ‘or other cause of a like nature’ must be construed liberally. Some clue is furnished with regard to the intention of the Legislature by the Explanation III in Section 14(2). Before the enactment of the Act in 1908, there was a conflict amongst the High Courts on the question whether misjoinder and non-joinder were defects which were covered by the words ‘or other case of a like nature’. It was to set at rest this conflict that Explanation III was added. An extended meaning was thus given to those words. Strictly speaking misjoinder or non-joinder of parties would hardly be regarded as a defect of jurisdiction or something similar or analogous to it.” 7. Reliance was also placed by him on the judgment in the case of gurdit Singh and Others Vs. Munsha Singh & Others, (1977) 1 SCC 791 , to emphasize that the three conditions which are required to be satisfied for application of Section 14, are, (a) Prosecution of civil proceeding with due diligence: (b) The former proceeding having been prosecuted with good faith in Court having no jurisdiction; (c) The earlier proceeding and later proceeding having been based on the same cause of action. 8. Sri Holla has also contended inviting our attention to the decision of the Allahabad High Court in the case of Raghunath & Others Vs. Ram Khelawan and Others, AIR 1970 Allahabad 26, that the decision rendered by the Trial Court with reference to Section 14 of the Limitation Act cannot constitute a matter over which a writ petition could lie under Article 226 of the Constitution of India. He has also placed reliance on the judgment of the Apex Court in the case of Ram Ujarey Vs.
He has also placed reliance on the judgment of the Apex Court in the case of Ram Ujarey Vs. Union of India, (1999) 1 SCC 685 , to contend that limitation runs from the date on which the plaint is returned and not from the date of the order by which the plaint is directed to be returned. 9. Respondent No.1 has appeared before us and has addressed the Court in person. He has supported the order of the learned Single Judge. 10. We have carefully considered the entire materials placed before us. 11. The questions that arise for consideration in this appeal are, “1) whether the appellant is entitled for exclusion of time taken from the date of filing the arbitration petition before the High Court of Judicature at Bombay on 19.12.2007 till the date the papers were actually returned to him on 24.02.2009 under the provisions of Section 14(1) and (2) of the Limitation Act, despite the fact that they did not re-present the very petition returned to them, but filed a fresh petition on 20.03.2009 under Section 34 of the Arbitration Act? 2) Whether the fresh petition filed by the appellant under Section 34 of the Arbitration Act is within the period stipulated? 12. To answer the above questions, it is necessary to refer to Section 34(3) of the Arbitration and Conciliation Act, 1996 and as also to Section 14 of the Limitation Act, 1963. They are extracted hereunder, respectively. “34(3) An application for setting aside may not be made after three months have elapsed form the date on which the party 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. 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 if may entertain the application within a further period of thirty days, but not thereafter.” “14.
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 if may entertain the application within a further period of thirty days, but not thereafter.” “14. Exclusion of time of proceeding bona fide in Court without jurisdiction.- (1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a Court of first Instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anything contained in Rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the Court under Rule 1 of that order, where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the Court of other cause of a like nature. Explanation-For the purposed of this Section. (a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted; (b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding; (c) mis-joinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction. 13. There is no dispute as to the relevant dates involved in the case. The award of the Arbitrator is passed on 18.09.2007. The same was served on respondent No.1 on 24.09.2007.
13. There is no dispute as to the relevant dates involved in the case. The award of the Arbitrator is passed on 18.09.2007. The same was served on respondent No.1 on 24.09.2007. Petition under Section 34 of the arbitration Act was filed in the Bombay High Court on 19.12.2007. The Bombay High Court returned the petition on 25.11.2008. Papers were actually furnished to the appellant on 24.02.2009 and the said papers were re-presented before the City Civil Court at Bangalore on 17.06.2009. It is also not in dispute that prior to re-presenting the papers at Bangalore on 17-06-2009, the appellant had filed a fresh petition on 20.03.2009 before the City Civil Court, Bangalore, asserting almost the same state of affairs in the petition. 14. The appellant contends that though the Bombay High Court ordered for return of plaint on 25.11.2008, the papers were actually returned on 24.02.2009, and therefore, the date on which the order came to be passed on 25.11.2008 returning the plaint cannot be treated as the date uptil which the proceedings were pending in the wrong forum but the same extends till 24.02.2009 for the purpose of exclusion of time as per Section 14 of the Limitation Act. There is no difficulty in accepting this contention as the appellant cannot be expected to re-present the petition returned by the Bombay High Court, before the City Civil Court, Bangalore, without being furnished with the papers by the registry of the Bombay High Court, although the order directing the return of papers was passed on 25.11.2008. But, the admitted fact in this case is that the appellant has not re-presented the returned papers on 24.02.2009 or soon thereafter. Instead, it has filed a fresh petition at Bangalore under Section 34 on 20.03.2009. It has not filed any application explaining the reasons that prevented it from re-presenting the very papers that were returned by the Bombay High Court. It has also not sought permission to file another petition though containing the same averments in the place of the papers returned, for some acceptable reasons. It is also not its case before the learned Single Judge that it was prevented by any sufficient cause from re-presenting the returned papers on 20.03.2009. 15.
It has also not sought permission to file another petition though containing the same averments in the place of the papers returned, for some acceptable reasons. It is also not its case before the learned Single Judge that it was prevented by any sufficient cause from re-presenting the returned papers on 20.03.2009. 15. The Trial Court has held that the endorsement dated 24.02.2009 issued by the Registrar (OS), Prothonotary and Senior Master of the Court at Bombay, showed that the arbitration petition with enclosures was returned to the appellant for presentation before the proper Court as per the Court order dated 25.11.2008 and therefore, the time started running from 24.02.2009. The Trial Court has also found that instead of filing the same petition filed before the Bombay High Court with enclosures, the appellant had filed a fresh arbitration suit before the City Civil Court, Bangalore, on 20.03.2009. However, it has come to the conclusion that as the fresh petition was filed within one month after taking the return of papers from the Bombay High Court, merely because the same papers were not re-represented as returned by the Bombay High Court it will not non-suit the appellant. The Trial Court has held that as per the decision rendered in the case of Seenappa and Others Vs. Subbaiah and Others, 2000 (1) Kar. L.J. 584, when a suit is filed in a Court having no jurisdiction to entertain the suit, the plaint can be returned for presentation before the proper Court within the time prescribed by the Court as provided under Order VII Rule 10 CPC, This is only a concession given to the parties to take the return of the plaint to present the same in proper Court, so that they need not pay fresh Court free and file a fresh suit before the Court of competent jurisdiction, if the plaintiff fails to avail the concession given by presenting the same plaint on which he had paid the Court fee, it does not bar him from filing a fresh suit by again paying Court fee in a Court of competent jurisdiction. 16. The Trial Court has lost sight of the fact that the question of application of Section 14 of the Limitation Act was not involved in the case Seenappa & Others Vs. Subbaiah & Others – 2000 (1) Kar. L.J. 584.
16. The Trial Court has lost sight of the fact that the question of application of Section 14 of the Limitation Act was not involved in the case Seenappa & Others Vs. Subbaiah & Others – 2000 (1) Kar. L.J. 584. This was a case where a suit for partition was filed, but the plaint came to be returned on the ground of lack of territorial jurisdiction. The plaintiff did not choose to take the papers back and re-present the same, but filed a fresh suit before the Court having jurisdiction by paying fresh set of Court fee. The defendant filed an application contending that without withdrawing the suit reserving right to file another suit as contemplated under Order XXIII, Rule 3 CPC, the plaintiff could not have filed another suit on the same cause of action. This contention was repelled stating that in a suit for partition, there was recurring cause of action and even thought the plaintiff had abandoned his earlier suit, he could file a fresh suit and the provisions of order XXIII Rule 4 CPC was inapplicable. It is in this context that the learned Single Judge of this Court in the said case made the observations stating that returning the plaint to present the same before the proper Court within a particular period fixed is only a concession shown to the plaintiff, so that he need not pay fresh Court-fee by filing a fresh suit for the same relief in a Court of competent jurisdiction and that his omission to re-present the plaint does not bar him from filing a fresh suit by again paying Court-fee before the Court of competent jurisdiction. The question of bar of limitation or for that matter exclusion of time taken in prosecuting the proceedings before a wrong forum as provided under Section 14 of the Limitation Act did not arise for consideration in the said case. Therefore, the learned Single Judge has rightly come to the conclusion that this decision had no application to the facts of the present case. 17. As per Section 34(3) of the Arbitration Act, the period of limitation prescribed for filing an application seeking to set aside the arbitral award is three months.
Therefore, the learned Single Judge has rightly come to the conclusion that this decision had no application to the facts of the present case. 17. As per Section 34(3) of the Arbitration Act, the period of limitation prescribed for filing an application seeking to set aside the arbitral award is three months. The Court can permit the person concerned to file the petition by condoning the delay by a maximum period of 30 days thereafter, it is thus clear that the period of limitation is only three months and a party is entitled to seek condonation by making necessary application showing sufficient cause for another period of 30 days. Beyond the period of 120 days, no such petition can be entertained. In fact this is the position of law well-established. The appellant is entitled for exclusion of time spent in prosecuting the petition before a wrong forum as per Section 14, As stated above, the period between 17.12.2007, the date on which petition under Section 34 was filed before the Bombay High Court till 24.02.2009, the date on which the petition was actually returned to the appellant can be excluded as per Section 14. For the purpose of exclusion of this period, the simple method that could have been adopted is to re-present the returned petition. As Section 14(1) and (2) require due diligence and good faith, the Court is also required to be satisfied about the same. However, Sri Holla contends that it is not necessary to re-present the returned papers and the plaintiff would be entitled to file a fresh petition once an order is passed holding that it had no jurisdiction and the petitioner could present it before the Court having jurisdiction.
However, Sri Holla contends that it is not necessary to re-present the returned papers and the plaintiff would be entitled to file a fresh petition once an order is passed holding that it had no jurisdiction and the petitioner could present it before the Court having jurisdiction. His contention is that in all cases where the petitioner application is returned, the petitioner or the applicant need not re-present the very papers for availing the benefit of Section 14 of the Limitation Act, Sri Holla may be right in contending that Order VII, Rule 10 or 10-A does not control the application or operation of Section 14(1) & (2) the Limitation Act, Order VII, Rule 10 deals with return of plaint and mentions the procedure to be followed on returning the plaint, Rule 10-A of Order VII provides for power in the Court returning the plaint to fix a date of appearance in the Court where the plaint is to be filed after it is returned, Section 14(1) & (2) of the Limitation Act provide for exclusion of time taken during which the applicant was prosecuting with due diligence another proceeding in good faith in Court which could not have entertained it due to defect of jurisdiction or other causes of like nature, Sub-Clause(3) of Section 14 and Explanation-C to sub-clause (3) of Section 14 make it clear that even where a fresh suit is instituted on permission granted by the Court as per Order XXIII, Rule 1 of CPC on the ground that the suit must fail by reason of a defect in the jurisdiction of the Court or other cause of a like nature, which may include misjoinder of parties or of causes of action exclusion of time as per Section 14 (1) and (2) is permissible. Therefore, the exclusion of time taken, in prosecuting a matter before another Court may arise not only when the plaint is returned under order VII, rule 10, but also under other circumstances such as where a suit is dismissed as withdrawn with permission of the Court to file a fresh suit correcting the mistake made in approaching the wrong Court or due to mistake committed in joining wrong parties or causes of action or for causes of similar nature.
In the circumstances mentioned in Section 14(3) and Explanation-C to Section 14(3), the party will not be required to present the very petition or the plaint which he had filed earlier, but that will not absolve him from satisfying the Court about his prosecuting the matter with due diligence and good faith in a Court which did not have jurisdiction or that his suit would have failed due to other causes of like nature. 18. In the instant case, the appellant while filing the fresh petition has not explained the circumstances regarding prosecution of the petition at Bombay let alone its prosecution in good faith with due diligence before the Bombay High Court. Even in the body of the fresh petition filed, there is no explanation offered. It has also not stated anywhere as to under what circumstances it could not file the papers that were returned by the Bombay High Court. It has styled its petition as a fresh one under Section 34 of the Arbitration and Conciliation Act, 1996. Only on 17.06.2009, it has filed an application under Section 151 CPC seeking permission to file the original documents returned by the Bombay High Court along with the Memorandum of Facts sworn to by the Advocate for the appellant, wherein it is stated that on 24.02.2009, the entire file was returned to the appellant to be presented before the appropriate Court. It is further stated therein that by oversight a fresh petition was filed before the City Civil Court, Bangalore and only typed copy of the original documents were produced and that the non-filing of the original documents was neither intentional nor deliberate. This application was objected to by respondent No.1 contending that since fresh petition is filed under Section 34 before the City Civil Court after a gap of 17 months 24 days from the date of receipt of the award on 24.09.2007 till the date of filing of the petition at Bangalore on 20.03.2009, the petition filed was barred by time and that the original papers returned by the Bombay High court cannot be considered. He has also contended that as per Section 34 of the Arbitration and Conciliation Act, the proceedings were barred by time. 19.
He has also contended that as per Section 34 of the Arbitration and Conciliation Act, the proceedings were barred by time. 19. In the facts and circumstances as narrated herein above, it cannot be said that where the appellant has, without any acceptable cause or reason failed to file the papers returned by the Bombay High Court, but has taken the risk of filing a fresh petition without even making any averments in the body of the petition regarding prosecution of similar petition before the Bombay High Court, let alone filing an application seeking exclusion of time taken in that regard, the contention of the Counsel for the appellant that even in the absence of the same, the appellant is entitled for exclusion of time spent in prosecuting the arbitration petition before the Bombay High Court, can be accepted. 20. Even assuming that in certain circumstances, the filing of the same petition which was returned with an endorsement stating that the said Court had no jurisdiction is not mandatory in all cases and that a fresh petition could be presented before the Court having jurisdiction, ultimately it is for the Court which is to be satisfied about the cause shown. Therefore, it has to be stated that in the facts and circumstances of this case, where the appellant has not chosen to re-present the original papers, it was incumbent upon him to explain the circumstances under which it could not re-present the papers and chose to file a fresh petition. Therefore, we hold that in appropriate cases, appellant whose petition is returned due to want of jurisdiction can seek exemption from representing the very papers on the Court being satisfied of the loss or destruction of papers for reasons beyond the control of the appellant and that the exclusion of time under Section 14 is not conditional on the appellant re-presenting the very papers in all cases, but if the appellant chooses to file a fresh petition, it is incumbent upon him to explain to the satisfaction of the Court the reasons for his omission in not re-presenting the papers and to satisfy the requirements mentioned under Section 14(1) & (2) of the Limitation Act, as the case may be to avail the benefit of exclusion of time taken in prosecuting the previous petition. In the instant case, there is no such explanation.
In the instant case, there is no such explanation. Therefore, the appellant cannot avail the benefit of Section 14(1) or 14(2) of the Limitation Act. 21. Yet another aspect of the matter that deserves to be noticed in this case is that even assuming that despite the appellant not re-presenting the returned papers on 20.03.2009, they were entitled for exclusion of time taken for prosecuting the case before the wrong forum till it was actually returned on 24.02.2009, the fresh petition filed on 20.03.2009 will not be within the period of three months as prescribed under Section 34(3) of the Arbitration and Conciliation Act, 1996. Admittedly, the award was served on respondent No.1 on 24.09.2007 and the petition is filed before the Bombay High Court on 19.12.2007. Thus, there is a gap of 85 days. The Bombay High Court returned the plaint on 25.11.2008, but actually the papers were allegedly furnished to the appellant on 24.02.2009. Even if the appellant is help entitled for exclusion of this period till 24.02.2009, the petition filed on 20.03.2009 will not be within three months from the date of receipt of the award as required under Section 34(3) of the Arbitration Act. After actual return of papers on 24.02.2009. The appellant has filed the fresh petition before the City Civil Court at Bangalore on 20.03.2009 i.e., after a period of 24 days. Thus, the total period taken is 111 days. Whereas, as per Section 34(3), the limitation prescribed is 90 days. Admittedly, no application is filed for condoning the delay seeking the held of the proviso to Section 34(3). In that view of the matter, even assuming that a fresh petition has been filed on 20.03.2009 and the appellant is entitled for exclusion of time from 24.09.2009 till 24.02.2009, the petition filed is not within time. Accordingly, we answer both the points raised for consideration in the negative and against the appellant. 22. The contention urged by the appellant that the writ petition itself was not maintainable as regards the issue of limitation in the light of the judgment of the high Court of Allahabad, is untenable. The said judgment has no application to the present case wherein different fact situations involving Section 34 of the Arbitration and Conciliation Act read with Order VII, Rule 10 CPC and also the effect of Section 14 of the limitation Act are involved. 23.
The said judgment has no application to the present case wherein different fact situations involving Section 34 of the Arbitration and Conciliation Act read with Order VII, Rule 10 CPC and also the effect of Section 14 of the limitation Act are involved. 23. None of the judgments relied upon by the learned Senior Counsel for the appellant have any bearing on the fact situation that has arisen in this case as adverted to herein above. Therefore, they have no application to the facts of the present case. The Trial Court has committed a serious illegality in placing reliance on the judgment in the case of Seenappa & Others Vs. Subbaiah & Others – 2000 (1) Kar. L.J. 584 as it had no relevance to the facts involved in the present case. We do not find any error or illegality in the conclusion reached by the learned Single Judge. 24. In the light of the above, the writ appeal being devoid of merit is dismissed.