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2010 DIGILAW 93 (KAR)

Chethan Bhandary v. Kotak Securities Ltd.

2010-01-25

AJIT J.GUNJAL

body2010
Judgment :- A dispute arose between the petitioner and the respondent. Since the subject matter was covered by an agreement, which had an arbitral clause, matter was referred to sole arbitrator one Mr. M.V. Badrinath in terms of the By-laws. Rules and Regulations of the National Stock Exchange of India Limited. The sole arbitrator passed an award directing the 1st respondent to pay a sum of Rs.8,74,750/- while the claim of the respondent No.1 as against the petitioner was rejected. Since the 1st respondent had a registered office in Mumbai, a petition was filed in Arbitration Petition No.13/08 before the High Court of Judicature at Bombay under Section 34 of the Arbitration and Conciliation Act, 1996. 2. The petitioner entered appearance and filed his objections to the proceedings inter alia contending that the High Court of Judicature at Bombay has no jurisdiction to deal with the matter inasmuch as the dispute had arisen in the jurisdiction of Karnataka. The preliminary objection of the petitioner was accepted by the High Court of Judicature at Bombay and pursuant to the order dated 25.11.2008, directed the return of the petition for presentation before the proper Court. It is not in dispute that the plaint in the arbitral suit was returned to the 1st respondent on 24.02.2009. During this interregnum, having regard to the order passed by the Bombay High Court, the respondent filed a petition, which would be termed as a fresh petition on 20th March 2009. The 1st respondent’s case is that it could not take back the papers at the earliest and in these circumstances a fresh petition was filed on 20th March 2009. The petitioner being served with the notice of the arbitration suit, again appeared before the Court and raised a preliminary objection on 26.5.2009 to the effect that the suit which is filed by the respondent is barred by statute and the same is required to be dismissed. The said objection did not find favour with the learned Trial Judge who pursuant to his order dated 25.06.2009 rejected the preliminary objection of the petitioner and held that the Arbitration Suit 22/2009 filed in Bangalore was within time. The said contention was raised having regard to the scope of Section 14 of the Limitation Act. The petitioner is questioning the said order. 3. I have heard Mr. Bhandary, party-in-person as well as Mr. The said contention was raised having regard to the scope of Section 14 of the Limitation Act. The petitioner is questioning the said order. 3. I have heard Mr. Bhandary, party-in-person as well as Mr. S.P. Shankar, learned Senior Counsel appearing for the respondents. 4. Mr. Bhandary, party-in-person submits that the award was passed on 18.09.2007 and the respondent was served with the same on 24.09.2007. The arbitration petition was filed on 19.12.2007 in the Bombay High Court and the plaint was returned by the Bombay High Court on 24.02.2009 and the plaint, which was returned by the Bombay High Court was presented by the 1st respondent on 17.06.2009. Thus, according to him assuming that Section 14 of the Limitation Act is made applicable to the present proceedings, the 1st respondent is not entitled for the said benefit inasmuch as even excluding the time spent in the Bombay High Court, the suit in the City Civil Court would be barred by time. 5. Mr. S.P. Shankar, learned Senior counsel appearing for the 1st respondent submits that having regard to the scope of Section 14 of the Limitation Act and the respondent was diligently prosecuting the proceedings before the Bombay High Court in good faith, Section 14 of the Limitation Act is applicable. He submits that what was presented before the City Civil Court on 20th March 2009 was the plaint returned by the Bombay High Court. Even otherwise, he submits that assuming that the plaint, which was returned by the Bombay High Court having been presented on 17.06.2009 and the papers having been taken on 24.02.2009, the plaint would be still in time. 6. The moot question, which falls for consideration in these proceedings, is whether the plaint presented by the 1st respondent in the City Civil Court at Bangalore is barred by statute or is entitled for the benefit of Section 14 of the Limitation Act. In this regard, Section 14 of the Limitation Act is required to be looked into. Section 14 of the Act would relate to exclusion of time of proceeding bona fide in Court, which has no jurisdiction. Sub-Sections (1) & (2) of Section 14 of the Limitation Act are relevant for our purpose. In this regard, Section 14 of the Limitation Act is required to be looked into. Section 14 of the Act would relate to exclusion of time of proceeding bona fide in Court, which has no jurisdiction. Sub-Sections (1) & (2) of Section 14 of the Limitation Act are relevant for our purpose. Indeed a perusal of Sub-Sections (1) & (2) would clearly indicate that in computing the period of limitation the time spent during which the party has been prosecuting with due diligence another civil proceeding against the defendant or respondent shall be excluded and the said prosecution is in good faith. 7. The Apex Court in the case of Gulbarga University V-s. Mallikarjun S. Kodagali & Another reported in 2008 AIR SCW 6389 has observed that Section 14 of the Limitation Act would be applicable to arbitral proceedings inasmuch as the arbitration proceedings does not expressly exclude its applicability. Thus, we proceed on the premise that Section 14 of the Act is applicable. Few dates are relevant to see whether the time spent by the 1st respondent in the Bombay High Court is required to be excluded for purpose of computing Limitation on the ground that it was being prosecuted in good faith. There is no dispute regarding the following dates: Date of award -18.09.2007 The award was served on the 1st respondent on -24.09.2007. Petition filed in the Bombay High Court on -19.12.2007 The order passed by the Bombay High Court returning the plaint, on – 25.11.2008 Papers were taken back on – 24.02.2009 and The plaint is re-presented in Bangalore on 17.06.2009. 8. Incidentally, it is also to be noticed that the respondents have filed another fresh petition on 20th March 2009 questioning the award passed by the Arbitrator on 18.09.2007. Indeed in the case on hand, it is to be noticed that the time, which is required to be excluded would be the time spent prosecuting the proceedings in a wrong forum, which certainly has no jurisdiction. Indeed a contention is raised by Mr. S.P. Shankar, learned Senior counsel appearing for the 1st respondent that the time spent prior to the institution of the proceedings before the Bombay High Court is also required to be taken note of and excluded. 9. Indeed a contention is raised by Mr. S.P. Shankar, learned Senior counsel appearing for the 1st respondent that the time spent prior to the institution of the proceedings before the Bombay High Court is also required to be taken note of and excluded. 9. Apparently, a reading of the language of Section 14 of the Limitation Act would indicate that the time spent in prosecuting the proceedings in a wrong forum is required to be excluded. Indeed it is to be noticed that prosecuting before the wrong forum would necessarily mean the initiation of proceedings in the wrong forum. The proceedings in a wrong forum was initiated on 19.12.2007. Hence, I am of the view that the time, which is spent between 24.09.2007 and 19.12.2007 prior to the filing of the petition on 19.12.2007, the benefit thereof cannot be extended to the respondent. What is to be excluded is the time spent in prosecuting a matter before a wrong forum. Section 14 does not itself prescribe any period of limitation, but provides only for a method of calculation of that period where a suit has been instituted bonafide in a Court without jurisdiction. The effect of the Section is not to render the suit after refilling in the proper Court a continuation of the original suit and consequently, the period of limitation has to be determined for that suit as if it was a new suit and the period will be that which was prescribed for the original suit, but excluding the period during which the suit was being prosecuted bona fide in a wrong Court. What is to be excluded is only the period during which the prior proceedings was actually pending. Under Section 14(1) in order to ascertain the date of the expiration of the prescribed period, the days excluded from operating by way of limitation have to be added to what is primarily the prescribed period. Where a plaint, presented in a wrong Court is returned to be presented to the proper Court the plaintiff is entitled to exclude the time between the date of institution in the wrong Court. Limitation would not run from the date of order, but would only run from the date in which the plaint was actually returned and made available to the party. Limitation would not run from the date of order, but would only run from the date in which the plaint was actually returned and made available to the party. When the plaint returned for presentation to the proper Court, but the plaintiff filing a separate suit after lapse of few year, the benefit of this Section cannot be given. The subsequent suit cannot be regarded as continuation of earlier plaint, which was returned. Section 14 applies only where a period of limitation had been prescribed. The period under Section 14 is to be added to the period prescribed. 10. A perusal of Section 34(3) of the Arbitration and Conciliation Act, 1996 indicates that it would relate to filing the application for setting-aside an arbitral award is to be made within a period of three months and a further period of thirty days. Indeed a perusal of Sub-Section (3) would indicate that an aggrieved party cannot maintain a petition after the expiry of three months and if Court permits, can maintain the petition within a further period of thirty days but certainly not thereafter. 11. In the case on hand, as observed, the time, which is spent, would necessarily mean that prosecuting the proceedings. As of between 24.09.2007 and 19.12.2007 the 1st respondent certainly was not prosecuting any proceedings. The prosecution of the proceedings has commenced only after 19.12.2007, which ended on 25.11.2008 when the Bombay High Court found that it had no inherent jurisdiction to deal with the matter. Thus returned the file for the presentation before the proper Court. The 1st respondent however it appears did not wait for the return of the papers but presented a fresh plaint on 20th March 2009. 12. Indeed if a fresh petition is filed, the question would be whether plaintiff is entitled for the benefit of Section 14 of the Limitation Act so as to exclude the time spent in prosecuting before a wrong forum. Indeed it cannot be said so. What is contemplated is, the “exclusion of time” would necessarily mean that when the claim, which was presented in the original jurisdiction is returned, the same papers are required to be represented seeking the benefit of Section 14 of the Act. Once the party exercises his discretion and files a fresh petition, he looses the benefit of Section 14 of the Act. Indeed that is the case here. Once the party exercises his discretion and files a fresh petition, he looses the benefit of Section 14 of the Act. Indeed that is the case here. We will have to proceed on the premise regarding applicability of Section 14 of the Limitation Act. Indeed what is required to be excluded is only the period during which the prior proceedings was actually pending. 13. Now this takes us to the impugned order passed by the learned Trial Judge. Apparently, the learned Trial Judge has also relied on Section 14 of the Limitation Act as well as a ruling of this Court is case of Seenappa and others V/S. Subbaiah and others reported in 2000(1) Kar.L.J. 584 . Apparently, the learned Trial Judge has not considered the scope of Section 14 of the Limitation Act in respect of the date of the award and the return of the plaint by the Bombay High Court. In so far as the decision, which is sought to be pressed into service, it is to be noticed that, that was a situation where an application was moved under Order 23 Rule 1 of the Code of Civil Procedure while returning of the plaint on the ground that it had no Territorial jurisdiction. This Court was of the view that it was open for the plaintiff either to take return of the plaint filed or institute a fresh suit on payment of the Court fee in appropriate Court. In doing so, he is only foregoing concession of credit of Court see already paid and he has not abandoned the suit. 14. Obviously, the said decision has no application to the case on hand. Now the present case, with which we are concerned is, whether the respondent is entitled for benefit of Section 14 of the Limitation Act. The time spent in the Bombay High Court is required to be excluded on the ground that he was prosecuting his proceedings in good faith. Assuming that he was prosecuting the said proceedings bonafide, it is necessary to observe that the plaint was directed to be returned on 25.11.2008 and the plaint having been taken on 24.02.2009 and the same having been re-presented on 17.06.2009 obviously the proceedings are barred by statute. Indeed the respondent is not entitled for the benefit of the time spent by him before filing of the suit before the Bombay High Court. Indeed the respondent is not entitled for the benefit of the time spent by him before filing of the suit before the Bombay High Court. Thus, the 1st respondent stands to loose 85 days. So what remains with him is hardly about 30 days and if the time is to be computed from 24.02.2009 to 17.06.2009, the plaint of the respondent would certainly be barred by statute. 15. Having given my anxious consideration. I am of the view that the learned Trial Judge was not justified in holding that the plaint, which is filed by the 1st respondent is in time giving him the benefit of Section 14 of the Act. Hence, the following order is passed: (a) Petition stands allowed. (b) The impugned order is set-aside and the proceedings before the learned Trial Judge stands dismissed as barred by statute. Rule is issued and made absolute.