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2015 DIGILAW 539 (ALL)

STATE OF U. P. v. HARNAM SINGH

2015-03-24

KRISHNA MURARI, PRATYUSH KUMAR

body2015
JUDGMENT By the Court.—This First Appeal From Order is directed against the order dated 10.12.2014 passed by the District Judge, Kanpur Dehat rejecting application filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 (in short ‘Act, 1996’) for setting aside the award dated 22.12.2010. 2. We have heard Sri S.K.Mehrotra, learned Standing Counsel for the appellant. The question which arises for consideration is whether the provisions of Section 5 of the Limitation Act, 1963 are attracted in case of an application challenging an award under Section 34 of the Act, 1996 filed beyond the prescribed period of limitation. 3. Shorn of unnecessary details, facts relevant for the purpose of the case are as under : Two agreements dated 25.11.1997 and 19.6.1999 in respect of construction of drain-cum-inspection path under ‘Usar Bhumi Sudhar Yojna’ and in respect of construction of roads, drain and culverts were executed between the appellant on one hand and claimant-respondent on the other. The agreement contained an arbitration clause. There arose a dispute between the parties and the matter was referred to the sole arbitrator, a retired Judge of this Court appointed under Section 11 of the Act, 1996. The arbitrator gave a final award on 22.12.2010. The appellant challenged the award by filing an application under Section 34 of the Act, 1996 on 10.12.2014 alongwith an application under Section 5 of the Limitation Act seeking condonation of delay in filing the application. The District Judge held that the provision of Section 5 of the Limitation Act in proceedings under Section 34 of the Act, 1996 will not apply, hence, the delay in making the application cannot be condoned and consequently, rejected the application as not maintainable. It may be relevant to quote Section 34 at this stage which reads as under : “34. Application for setting aside arbitral award.—(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). It may be relevant to quote Section 34 at this stage which reads as under : “34. Application for setting aside arbitral award.—(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if - (a) the party making the application furnishes proof that - (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case, or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration : Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) The Court finds that, - (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation.—Without prejudice to the generality of sub-clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81. Explanation.—Without prejudice to the generality of sub-clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81. (3) An application for setting aside may not be made after three months have elapsed from 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 it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside arbitral award. A plain and simple reading of the provisions makes it clear that legislature provided a limitation of three months from the date copy of the arbitral award is received by the party for making an application for setting aside the award. The application can be entertained by the Court beyond further period of thirty days provided the applicant is able to demonstrate that it was prevented from moving the application within the period of three months by sufficient cause and not thereafter. 4. Learned Standing Counsel vehemently submitted that the provision of Section 29(2) of the Limitation Act makes the provision of Section 5 of the Limitation Act applicable to special laws such as Act, 1996 and since the Act of 1996 does not expressly exclude applicability of Section 5 of the Limitation Act and sufficient cause was shown for delay in filing the application under Section 34 of the Act, 1996, the District Judge wrongly and illegally rejected the same. 5. 5. The issue is no longer res integra and directly came up for consideration before the Hon’ble Apex Court in the case of Union of India v. M/s. Popular Construction Co., AIR 2001 SC 4010 , where also the application under Section 34 of the Act, 1996 to set aside the arbitral award was made much after the prescribed period of limitation. The Hon’ble Apex Court answered the issued as under : “5. The issue will have to be resolved with reference to the language used in Sections 29(2) of the Limitation Act, 1963 and Section 34 of the 1996 Act. Section 29(2) provides that : “Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law.” 6. On an analysis of the section, it is clear that the provisions of Section 4 to 24 will apply when : (i) there is a special or local law which prescribes a different period of limitation for any suit, appeal or application; and (ii) the special or local law does not expressly exclude those Sections. 7. There is no dispute that the 1996 Act is a ‘Special law’ and that Section 34 provides for a period of limitation different from the prescribed under the Limitation Act. The question then is - is such exclusion expressed in Section 34 of the 1996 Act? 7. There is no dispute that the 1996 Act is a ‘Special law’ and that Section 34 provides for a period of limitation different from the prescribed under the Limitation Act. The question then is - is such exclusion expressed in Section 34 of the 1996 Act? The relevant extract of Section 34 reads : 34 “Application for setting aside arbitral award.—(1) xxx xxx xxx xxx xxx (2) XXX XXX XXX XXXX XXX (3) An application for setting aside may not be made after three months have elapsed from 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 it may entertain the application within a further period of thirty days, but not thereafter.” 8. Had the proviso to Section 34 merely provided for a period within which the Court could exercise its discretion, that would not have been sufficient to exclude Section 4 to 24 of the Limitation Act because “mere provision of a period of limitation in howsoever peremptory or imperative language is not sufficient to displace the applicability of Section 5”. 6. The Hon’ble Apex Court relying upon the Constitution Bench judgment in Vidyacharan Shukla v. Khubechand Baghel, AIR 1964 SC 1099 , observed in paragraph 10, 11 and 12 as under : “10. This decision recognizes that it is not essential for the special or local law to, in terms, exclude the provisions of the Limitation Act. It is sufficient if on a consideration of the language of its provisions relating to limitation, the intention to exclude can be necessarily implied. As has been said in Hukum Narain Yadav v. Lalit Narain Mishra. “If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act” 11. As has been said in Hukum Narain Yadav v. Lalit Narain Mishra. “If on an examination of the relevant provisions it is clear that the provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of the Act” 11. Thus, where the legislature prescribed a special limitation for the purpose of the appeal and the period of limitation of 60 days was to be computed after taking the aid of Sections 4, 5 and 12 of the Limitation Act, the specific inclusion of these sections meant that to that extent only the provisions of the Limitation Act stood extended and the applicability of the other provisions, by necessary implication stood excluded. 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.” 7. The issue having been settled by the decision of the Hon’ble Apex Court in M/s. Popular Construction Co. (Supra), the argument advanced by the learned Standing Counsel for the appellant that the provisions of the Limitation Act will be applicable in proceedings under Section 34 of the Act, 1996 is rendered without any force and are not liable to be accepted. We find no illegality in the impugned order passed by the District Judge rejecting the application of the appellant for setting aside the arbitral award as barred by limitation. The First Appeal From Order stands dismissed summarily. ——————