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2011 DIGILAW 614 (GAU)

State of Tripura and Ors. v. Himangshu Bikash Saha

2011-07-22

I.A.ANSARI

body2011
1. When an application, made under section 34 of the Arbitration and Conciliation Act, 1996, ('the Act'), seeking to get set aside an arbitral award, is rejected by the District Judge, on the ground that the application is barred by limitation as prescribed by section 34(3), whether such an order can be challenged by way of an application made under article 226 of the Constitution of India, when an order, made under section 34, setting aside or refusing to set aside the arbitral award is, otherwise, appealable under section 37 of the Act. 2. Embedded in this question is also the question as to what is the period of limitation for the purpose of making, under section 34 of the Act, an application seeking to get set aside an arbitral award? 3. I have heard Mr. B. Das, learned senior counsel, for the petitioners, and Mr. S.M. Chakraborty, learned senior counsel, for the respondent. 4. Before I enter into the merit of the questions, which have been raised challenging, in effect, the very maintainability of the writ petition, it is imperative that certain facts, which are essential for the purpose of disposal of this writ petition, be taken note of and are, therefore, set out, in brief, as under : (i) A work order was issued, on 6.1.2004, by the petitioners in favour of the respondent for some construction work for estimated cost of Rs.1,68,54,171. The date of commencement of the work was 20.10.2004 and the period, stipulated for completion of the work, being two years, the work was to be completed on or before 19.1.2006. The work order was covered by an agreement, which had an arbitration clause if dispute arose between the parties concerned. (ii) A dispute having arisen between the parties with regard to the execution of the work on the ground of alleged belated handing over of the site resulting into delay in completion of the work leading to escalation of the cost of construction, a sole arbitrator was, in course of time, appointed. The arbitrator accordingly passed an order, on 13.4.2008, allowing the claim of the respondent. (iii) The petitioners, then, filed, in the court of District Judge, West Tripura, Agartala, an application, under section 34 of the Act, seeking to get the award set aside on the ground that the impugned award was against the public policy of India. The arbitrator accordingly passed an order, on 13.4.2008, allowing the claim of the respondent. (iii) The petitioners, then, filed, in the court of District Judge, West Tripura, Agartala, an application, under section 34 of the Act, seeking to get the award set aside on the ground that the impugned award was against the public policy of India. As the application, so made under section 34, was already barred by limitation, an application was also made by the petitioners, under section 34(3) of the Act, seeking condonation of delay of a period of 29 days. The learned District Judge, West Tripura, Agartala, upon hearing the parties concerned, returned the said application on the ground that he had no territorial jurisdiction to decide the said application with further direction to present application in the court of competent jurisdiction. (iv) The application, so returned, was, then, presented by the petitioners in the court of the learned District Judge, South Tripura, Udaipur, who, by a speaking order, dated 10.6.2010, dismissed the application holding the same as time barred and the delay, in the light of the provisions of section 34(3), not being condonable. (v) Without preferring any appeal against any of the two orders, dated 13.4.2008, and/or 10.6.2010, passed by the learned District Judge, West Tripura, Agartala, and the learned District Judge, South Tripura, Udaipur, respectively, the present petitioners have impugned the award by making this writ application, under article 226, seeking to get the award set aside and quashed. 5. Is the present writ petition maintainable in law? This is the principal question. This question, in turn, brings us to yet another question and the question is : what is the period of limitation for the purpose of making an application, under section 34 of the Act, seeking to get set aside an arbitral award? 6. While considering the present writ petition, what needs to be clearly borne in mind is that an application, under section 34, seeking to get set aside an arbitral award, has to be made, in the light of the provisions of section 4(3), within a period of three months from the date, when the party making the application received the arbitral award. The proviso to section 3(4) allows condonation of delay of a period of 30 days if the applicant was prevented by sufficient cause from making the application within the said period of three months, but no more. 7. In Union of India v. Popular Construction Co., (2001) 8 SCC 470 , the Supreme Court, while considering the question as to whether the provisions of section 5 of the Limitation Act, 1963, are applicable to an application, made under section 34, challenging an arbitral award, concluded that section 5 of the Limitation Act, 1963, has no application to an award made under section 34. The Supreme Court also concluded that an application, under section 34, seeking to get an arbitral award set aside, has to be made within a period of three months from the date on which the party, making the application, had received the award and the court, where the application is filed, may condone the delay in making the application if the applicant is prevented by sufficient cause from making the application within a period of 30 days from the date, when the period of three years, as contemplated by section 34(3), expires by efflux of time; but not thereafter. 8. In its latter decision, in Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission and Others, AIR 2010 SCW 2680, the court, while referring to the case of Popular Construction Co. (supra), has reiterated that section 5 of the Limitation Act does not apply to an application covered by section 34 of the Act inasmuch as it has in its earlier decision, in Popular Construction Co. (supra), observed, at para 12, thus : "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 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." 9. The view, taken in Popular Construction Co. 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." 9. The view, taken in Popular Construction Co. (supra), has, thus, been followed in Chhattisgarh State Electricity Board (supra). 10. In the present case, apart from the fact that requisite period of three months, as envisaged by section 34(3), was already over, even the additional period of 30 days, which the proviso to section 34 makes available to an applicant, had expired inasmuch as the application, in the present case, was made 29 days after the additional period of 30 days, as prescribed by the proviso to section 34(3), had already expired. In such circumstances, the learned court below was wholly justified in taking the view that the application, made under section 34, was barred by limitation. In fact, this position could not be disputed and the correctness of this finding has not even been challenged at the time of moving of the writ application. 11. From the position of law as discussed above, it becomes clear that in the present case, the application, made under section 34, was barred by limitation and could not have, therefore, been entertained. No wonder, therefore, that the petitioners do not challenge the correctness of the finding that their application, made under section 34, was barred by limitation. 12. What is, now, necessary to note is that a person, if dissatisfied by an order refusing to set aside an award on the ground that the application under section 34 is barred by limitation, can prefer an appeal against an order refusing to extend the period of limitation, because such an order is also an appealable order under section 37 of the Act. The petitioners have not preferred any appeal under section 37, obviously, because their application, made under section 34, was really barred by limitation and the order, passed by the learned District Judge, on 10.6.2010, was an order made in accordance with law. 13. Thus, when the application was, otherwise, not enterainable under section 34, whether a writ application under article 226 can be maintainable to get the award set aside? 13. Thus, when the application was, otherwise, not enterainable under section 34, whether a writ application under article 226 can be maintainable to get the award set aside? While dealing with this question, it needs to be noted that sub-clause (ii) of clause (b) of section 34(2) shows that an arbitral award may be set aside by the court if the award is, amongst others, in conflict with the 'public policy of India'. What is the meaning of 'public policy of India'? 14. From a bare reading of section 34(2)(b)(ii), it becomes clear, and it is, in fact, not in dispute before me, that under sub-clause (ii) of clause (b) of sub-section (2) of section 34, a court may set aside an award if it is in conflict with the 'public policy of India'. The phrase 'public policy of India' has not been defined in the Act and, hence, the expression, 'public policy of India', shall be given a meaning, which serves the scheme of the Act, in general, and the purpose of section 34, in particular. 15. What follows from the above discussion is that 'public policy of India' would mean law in India and the law in India is that an arbitral award can be set aside only if it is challenged by making an application under section 34 within the period of limitation as prescribed by sub­section (3) thereof. No award can, therefore, be challenged by way of an application under article 226 if such an award can be challenged or could have been challenged by taking recourse to section 34. 16. It needs to be recalled that Jeevan Reddy, J, in his majority judgment, on behalf of a Constitution Bench of nine-Judges of the Supreme Court, in Mafatlal Industries Ltd. v. Union of India, (1979) 5 SCC 536, held that where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff by misinterpreting or misapplying any of the rules, regulations or notifications, such a claim has necessarily to be preferred under, and in accordance with, the provisions of the respective enactments before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under article 226 and of the Supreme Court under article 32 cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of the respective statutory provisions. This is for the reason that the power, under article 226, has to be exercised to effectuate the rule of law and not for abrogating it. Even while acting in exercise of its constitutional power, under article 226, the High Court cannot ignore the law nor can it override it. The power, under article 226, is conceived to serve the ends of law and not to transgress them. 17. From what has been discussed above, it becomes transparent that it is not open to the High Court, under article 226, to set aside an award if an application to get the award set aside could have been made validly and had, in fact, been made, as in the present case, under section 34. In fact, in SBP & Co. v. Patel Engineering Ltd. and Another, (2005) 8 SCC 618 , the majority, speaking through Balasubramanyan, J, observed that some High Courts have proceeded on the basis that any order, passed by an arbitral tribunal, would be capable of being challenged by way of article 226 or 227, but there is no warrant for such an approach inasmuch as section 37 makes certain orders of the arbitral tribunal appealable and the aggrieved party, even during the course of the arbitration proceeding, has an avenue for ventilating its grievances against the award by preferring an appeal under section 37. The majority has also taken the view that a party, aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under section 37 of the Act, has to wait until the award is passed by the Tribunal, because this appears to the scheme of the Act. The Supreme Court has, in SBP & Co. (supra), seriously disapproved as impermissible the course, adopted by the High Courts, of interfering with the orders passed by the Arbitral Tribunal by taking recourse to articles 226 and 227. The Supreme Court has, in SBP & Co. (supra), seriously disapproved as impermissible the course, adopted by the High Courts, of interfering with the orders passed by the Arbitral Tribunal by taking recourse to articles 226 and 227. The relevant observations, appearing at para 45, in SBP & Co. (supra), read as under : "45. It is seen that some High Courts have proceeded on the basis that any order passed by an arbitral tribunal during arbitration, would be capable of being challenged under article 226 or 227 of the Constitution. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appelable under section 34, the aggrieved party has an avenue for ventilating its grievances against the award including any in-between orders that might have been passed by the arbitral tribunal acting under section 16 of the Act. The party aggrieved by any order of the arbitral tribunal, unless has a right of appeal under section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The arbitral tribunal is, after all, a creature of a contract between the parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under article 226 or 227 of the Constitution. Such an intervention by the High Courts is not permissible." 18. In tune with its decision, in Mafatlal Industries Ltd. (supra), the Supreme Court, at para 47, in SBP & Co. (supra), observed that the object of section 34 is to minimize judicial intervention. Though these observations have been made in relation to interim orders against which the High Courts have been interfering, the same logic applies, with equal vigour, in a case, where final award has been made. (supra), observed that the object of section 34 is to minimize judicial intervention. Though these observations have been made in relation to interim orders against which the High Courts have been interfering, the same logic applies, with equal vigour, in a case, where final award has been made. So long as such an award remains challengeable under section 34 and, in the case at hand, as already indicated above, there can be no dispute that the award was challengeable under section 34, no application, under article 226, seeking to get set aside and quashed the award, can be maintained. 19. Because of what have been discussed and pointed out above, this court is of the firm view that the present writ application is not maintainable and shall accordingly stand dismissed. 20. No order as to costs. 21. With the above observations and directions, this writ petition as well as the connected miscellaneous cases shall stand disposed of.