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2018 DIGILAW 1033 (ALL)

U. P. STATE SUGAR CORPORATION LTD. v. SUMAC INTERNATIONAL LTD.

2018-04-26

PANKAJ MITHAL, RAJIV JOSHI

body2018
JUDGMENT By the Court.—The appellant U.P. Sugar Corporation Ltd. has preferred this appeal under Section 39 of the Arbitration Act, 1940 against the order of the Court of first instance dated 17.3.2018 by which the application of the appellant, paper No. 4-Ga for condoning the delay in filing application for setting aside the award dated 1.10.2017 and consequently the application paper No. 6-Ga under Section 30 of the Act have been rejected. 2. There was an agreement between the appellant and the respondent No. 1 dated 2.8.1989 containing an arbitration clause. In connection with the said agreement, the first respondent filed an application before the Civil Court under Section 20 of the Act as also an application for some interim protection under Section 41 of the Act which was registered as Case No. 652 of 1995. The said case gave rise to Civil Appeal No. 15357 of 1996 U.P. State Sugar Corporation Ltd. v. M/s. Sumac International Ltd. before the Supreme Court. The Apex Court vide judgment and order dated 4.12.1996 reported in 1997(1) SCC 568 allowed the appeal and disposed of the case pending before the Chief Judicial Magistrate/Civil Judge, Muzaffarnagar under Section 20 of the Act by appointing an Arbitrator with the consent of the parties. 3. The original Arbitrator appointed by the Supreme Court died and was substituted by the new Arbitrator who on consideration of the claim petition and the counter claim which was duly entertained, made an award on 1.10.2017 allowing the claim of the respondent No. 1 and rejecting the counter claim of the appellant. 4. The appellant preferred an application/objections under Section 30 of the Act for setting aside the aforesaid award but with the delay of about 18 days alongwith an application under Section 5 of the Limitation Act. The aforesaid delay condonation application has been rejected by the impugned order dated 17.3.2018 as also the application filed under Section 30 of the Act. 5. The appeal came up for consideration before us for the first time as a fresh matter on 10.4.2018. On the said date the appellant and the respondent No. 1, the main contesting parties represented by their respective counsel made a statement that the respondent No. 2 is a formal party and that the appeal may be heard finally and decided at the stage of the admission itself. On the said date the appellant and the respondent No. 1, the main contesting parties represented by their respective counsel made a statement that the respondent No. 2 is a formal party and that the appeal may be heard finally and decided at the stage of the admission itself. Thus, to enable the parties to prepare the case and to argue finally, on their request we posted the matter for 16th April, 2018. 6. We heard Sri Shakti Swarup Nigam, learned counsel for the appellant and Sri R.K. Sinha, learned counsel for respondent No. 1. 7. Sri Nigam has argued that the delay in filing the application under Section 30 of the Act was duly explained and, as such, the Court below could not have rejected the delay condonation application. Secondly, if the Court was rejecting the delay condonation application it was not within its domain to touch the merits of the case and to dismiss the application under Section 30 of the Act. Lastly, the award is completely unreasoned and rejects the counter claim of the appellant without even dealing with it despite prolonged hearing on the counter claim itself. 8. Sri Sinha in reply to the above arguments submitted that the delay was not at all explained. The Court below has not committed any illegality in rejecting the delay condonation application. The Act does not provide for a reasoned award unless so agreed by the parties or directed by the Court. Neither the agreement nor the order of the Court contemplates for a speaking award yet the award of the Arbitrator is a reasoned award. 9. It is admitted to the parties that the award was pronounced on 1.10.2017. The appellant had received a copy of the award on 10.10.2017. The limitation for filing application under Section 30 of the Act is thirty days. It was filed on 28.11.2017 with the delay of 18 days. 10. The appellant in the application had accepted that it received the notice under Section 14(1) of the Act on 10.10.2017. In between the respondent No. 1 moved an application under Section 15 of the Act before the Court for modification of the award without giving any notice or information to the appellant by serving a copy upon the D.G.C. (Civil) only. The appellant received all the papers only on 20.11.2017. In between the respondent No. 1 moved an application under Section 15 of the Act before the Court for modification of the award without giving any notice or information to the appellant by serving a copy upon the D.G.C. (Civil) only. The appellant received all the papers only on 20.11.2017. In the meantime, it proceeded with the departmental proceedings for the purposes of filing application under Section 14 of the Act which took some time. The application is being filed promptly excluding the time consumed in completing the formalities and that there is no wilful or deliberate delay in filing the same. 11. In short, the explaination of the appellant is that it acquired knowledge of the award on 10.10.2017 but received all the documents on 20.11.2017. The delay in filing the appeal, if any, had occurred due to time taken in completion of departmental formalities for filing application under Section 30 of the Act. 12. In counter to the above explanation furnished by the appellant, respondent No. 1 stated that the award was filed by the Arbitrator on 1.10.2017 before the Court at Muzaffarnagar. The appellant acquired knowledge of the award on 10.10.2017 but the application was filed on 28.11.2017. Therefore, the appellant has not at all explained the delay. 13. The Court below has rejected the application only for the reason that the appellant has failed to explain the day to day delay. 14. In Collector Land Acquisition v. Mst. Katiji and others, 1987 (2) SCC 107 , it has been laid down that the Courts should adopt liberal and justice oriented approach in dealing with delay condonation applications and substantial justice must be advanced rather than sticking to technical considerations. The Court should not draw any presumption or inference that the delay has been caused deliberately as no one gains by filing an appeal or any application with delay and to run a serious risk of cause being defeated on technical ground. There is no point in insisting that each days delay be explained and that a pragmatic approach should be taken in such matters as refusing to condone delay may result in throwing out a meritorious matter out of the Court. 15. There is no point in insisting that each days delay be explained and that a pragmatic approach should be taken in such matters as refusing to condone delay may result in throwing out a meritorious matter out of the Court. 15. In Union of India v. Manager M/s. Jain Associates, 2001 (3) SCC 277 , it was held that where objections are filed under Section 30 of the Act within the prescribed period of 30 days the application can still be entertained provided sufficient cause for non filing of it within time is established and that short delay of 12-13 days ought to be condoned ordinarily. 16. In view of the above legal position and the facts and circumstances of the case, as the application under Section 30 of the Act was filed, if at all with the delay of only 18 days, the Court below ought to have condoned the delay in filing the same rather than rejecting it which undoubtedly leads to closing the doors of justice on technical grounds. 17. Now we come to the second aspect of the matter as to whether the Court below could have proceeded with the merit of the application under Section 30 of the Act when it had refused to condone the delay in its filing. 18. A bare reading of the impugned order reveals that the Court below has not only rejected the delay condonation application of the appellant but had dealt with the merits of the application filed under Section 30 of the Act and has dismissed the same as well. 19. It is settled in law that an appeal or application not filed or presented in accordance with the statutory provisions is not a valid appeal or application on which any cognizance could be taken by the Court. Thus, an appeal or an application which is defective is no appeal or application in the eyes of law which may permit the Court to deal with it on merits. 20. The Supreme Court in Tin Plate Co. Thus, an appeal or an application which is defective is no appeal or application in the eyes of law which may permit the Court to deal with it on merits. 20. The Supreme Court in Tin Plate Co. of India Ltd. v. State of Bihar and others, 1998 (8) SCC 272 , held that when the writ petition was dismissed by the High Court on the ground of alternate remedy it was not open for it to have expressed any opinion on the merits of the petition as it may have the effect of influencing the decision of the alternate forum. 21. The Supreme Court in Noharlal Verma v. District Cooperative Central Bank Ltd. Jagdalpur, 2008 (14) SCC 445 , clearly laid down that if application is barred by limitation the Court has no jurisdiction to decide it on merits. The relevant paragraphs of the above decision are quoted below: “32. Now, limitation goes to the root of the matter. If a suit, appeal or application is barred by limitation, a Court or an adjudicating authority has no jurisdiction, power or authority to entertain such suit, appeal or application and to decide it on merits. 33. Sub-section (1) of Section 3 of the Limitation Act, 1963 reads as under: “3. Bar of limitation.—(1) Subject to the provisions contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed although limitation has not been set up as defence.” (emphasis supplied) Bare reading of the aforesaid provision leaves no room for doubt that if a suit is instituted, appeal is preferred or application is made after the prescribed period, it has to be dismissed even though no such plea has been raised or defence has been set up. In other words, even in absence of such plea by the defendant, respondent or opponent, the Court or authority must dismiss such suit, appeal or application, if it is satisfied that the suit, appeal or application is barred by limitation.” 22. The aforesaid decision has been followed in numerous other decisions by various High Courts specially the Allahabad High Court. 23. The aforesaid decision has been followed in numerous other decisions by various High Courts specially the Allahabad High Court. 23. Thus, in view of the above, we are of the opinion that once the Court below rejected the application of the appellant to condone the delay in filing the application under Section 30 of the Act it was not open for it to have adjudicated the application on merits. 24. The decision of the application filed under Section 30 of the Act on merits by the Court below would not be without jurisdiction in the facts of the present case as we have already opined that the delay in filing the application was sufficiently explained and the appellant was prevented by sufficient cause from filing the application within time in which case the delay condonation application stand allowed. Thus enabling the Court in this appeal to test the reasoning of the Court below in deciding the application under Section 30 of the Act. 25. On merits, it has been argued that the award is non-speaking which assigns no reason for rejecting the counter claim of the appellant even though it was heard for many days by the Arbitrator. 26. In Raipur Development Authority v. Chokhamal Contractors, 1989 (2) SCC 721 , the five Judge Constitution Bench of the Supreme Court observed as under: “19. It is now well-settled that an award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitration agreement or the deed of submission requires him to give reasons. The arbitrator or umpire is under no obligation to give reasons in support of the decision reached by him unless under the arbitration agreement or in the deed of submission he is required to give such reasons and if the arbitrator or umpire chooses to give reasons in support of his decision it is open to the Court to set aside the award if it finds that an error of law has been committed by the arbitrator or umpire on the face of the record on going through such reasons. The arbitrator or umpire shall have to give reasons also where the Court has directed in any order such as the one made under Section 20 or Section 21 or Section 34 of the Act that reasons should be given or where the statute which governs an arbitration requires him to do so. 27. Learned counsel for the parties accepted that the Act does not contemplate for a speaking award unless it is so agreed by the parties or is directed by the Court. 28. In the case at hand, it is no ones case that the agreement which contained the arbitration clause provided for a speaking award. 29. The order of the Supreme Court appointing the Arbitrator also does not say that the Arbitrator has to give a reasoned award. The order of the Supreme Court dated 4.12.1996 is quoted below: “Both sides are agreed that for a speedy resolution of their disputes thy are willing to refer all their disputes under or arising from the said contact to the sole arbitration of justice R.M. Sahai (retd.), a retired Judge of this Court. We accordingly refer all disputes between the parties under or arising from the contract to the sole arbitration of Justice R.M. Sahai (retd.).” 30. In view of the above, it is plain and simple that the award could be a non-speaking award and that it cannot faulted with on the ground that it fails to assign reasons for rejecting the counter claim. 31. In addition to the above, we find that the counter claim of the appellant was based upon the allegation that the respondent No. 1 had breached the agreement. It thus claimed for an amount of Rs. 5818.24 lac as losses due to non-execution/implementation of the agreement dated 2.8.1989 in its terms. Thus, the counter claim of the appellant would be justified only if the breach of agreement is established to be on part of the respondent No. 1. 32. The Arbitrator on consideration of submissions of the parties and the evidence both documentary as well as oral returned a finding that the appellant alone was guilty of breach of contract. Thus, the counter claim of the appellant would be justified only if the breach of agreement is established to be on part of the respondent No. 1. 32. The Arbitrator on consideration of submissions of the parties and the evidence both documentary as well as oral returned a finding that the appellant alone was guilty of breach of contract. The agreement was never terminated by the appellant on the ground of any breach or on the ground that the work under it was not required to be completed under the letter dated 6.12.1995 of the Government of U.P. In other words, no breach of agreement/contract was found established on part of the respondent No. 1. Thus, obviously the counter claim based upon breach of contract on part of respondent No. 1 was not maintainable and admissible and was rightly rejected. 33. The aforesaid reasons are not implicit but explicit in the award. Thus, we do not find any legal flaw in the award on the above score. 34. The Court below has further recorded that the award of the Arbitrator can only be set aside on the limited grounds specified under Section 30 of the Act. The appellant has not made out a case which may fall under any of those grounds and we are in full agreement with the aforesaid reasoning of the Court below. 35. Thus, in the overall facts and circumstances as narrated above, we do not find any merit in the appeal and the same is dismissed.