Coal India Limited & Anr vs M/S Ujjal Transport Agency & Ors

COAL INDIA LIMITED & ANR. ....APPELLANTS

Vs

UJJAL TRANSPORT AGENCY & ORS. ...RESPONDENTS

ORDER

R. V. Raveendran J.,

Leave granted. Heard.

2. Certain disputes having arisen between first respondent and appellants,

the first respondent filed an application under Section 11 of the Arbitration and

Conciliation Act, 1996 ('Act' for short) and an arbitrator was appointed. The

Arbitrator made an Award dated 6.2.2009. The appellants, being under an

impression that the proceedings under Section 34 of the Act for setting aside the

Award was in the nature of an appeal against the Award, filed an `appeal' under

Section 34 of the Act before the Guwahati High Court on 6.5.2009 (numbered

as Arbitration Appeal No.10/2009). On receiving the notice in the execution

levied in regard to the Award dated 6.2.2009, the appellants realised that the 2

proceedings under Section 34 of the Act was not by way of an appeal before the

High Court, but by way of an original application before the District Court.

However, as by then the courts were closed for the 'Puja Holidays' between

25.9.2009 and 19.10.2009, the appellants filed the application

(A.C.No.512/2009) under Section 34 of the Act before the District Court,

Kamrup, Gauhati, for setting aside the said award, on 19.10.2009 when the

courts re-opened. Alongwith the said application appellants filed an application

under Section 5 of the Limitation Act, 1963 (instead of filing an application

under Section 34(3) of the Act) for condonation of the delay in filing the

application under Section 34 of the Act. On 29.10.2009, they filed an

application before the High Court for withdrawal of the appeal and the High

Court permitted them to withdraw the appeal on 30.10.2009 on the ground that

it was not maintainable with an observation that the question of condonation of

delay will be considered by the District Court, Kamrup before which the

application had to be filed. The appellants took back the application for

condonation filed under a wrong provision of law (Section 5 of Limitation Act)

and filed an application under Section 34(3) of the Act on 3.11.2009. At the

hearing of the said application on 21.12.2009, as the court was of the view that

application should have been filed under Section 34(3) of the Act read with

Section 14 of Limitation Act, the appellants filed yet another application on

8.1.2010 under Section 34(3) of the Act read with Section 14 of the Limitation

Act, 1963 for excluding the time spent bonafide in prosecuting the proceedings 3

before the High Court and withdrew the earlier application for condonation of

delay. The District Judge, Kamrup by order dated 26.2.2010, dismissed the

application for condonation of delay. The appeal filed by the appellants against

the said order refusing to condone the delay was rejected by the High Court by

the impugned order dated 7.4.2010. The appellants have challenged the said

order of the High Court in this appeal by special leave.

3. Section 34 (3) of the Act provides that an application for setting aside an

award may not be made after three months from the date of receipt of the

arbitral award. The proviso thereto enables the court, if satisfied that the

applicant was prevented by sufficient cause, to entertain the application within a

further period of thirty days but not thereafter. This Court in M/s. Consolidated

Engineering Enterprises Vs. The Principal Secretary (Irrigation Department)

& Ors., (2008) 7 SCC 169 held that neither Section 34(3) nor any other

provision of the Act excludes the application of Section 14 of Limitation Act,

1963 and the provisions of Section 14 of Limitation Act would apply to

applications under Section 34 of the Act. This court held that even where there

is jurisdiction for applying Section 14 of Limitation Act, the period of limitation

will continue to be three months (subject to extension under the proviso to sub-

section (3) of Section 34 of the Act) but in computing the limitation period of

three months for the application under Section 34(1) of the Act, the time during

which the applicant was prosecuting the matter bonafide and with due diligence 4

before the wrong court will have to be excluded.

4. In this case the Award was passed on 6.2.2009. The petition under

Section 34 before the District Court was filed on 19.10.2009. The appeal before

the wrong forum was filed on 6.5.2009 and withdrawn on 30.10.2009. If the

appellants are able to demonstrate that they were bona fide and with due

diligence pursuing the remedy before a court without jurisdiction, they will be

entitled for exclusion of time from 6.5.2009 to 30.10.2009 (or till 19.10.2009

when they filed the application before the proper forum). If the said period is

excluded, it will be seen that the application was filed within three months

which is the period of limitation, even without the benefit of extension under

the proviso to Section 34(3) of the Act.

5. The question that therefore would arise for consideration is whether the

appellants were bona fide and diligently pursuing the remedy before a wrong

forum. The first respondent contended that different causes were shown and

different explanations were given by the appellants in the application for

condonation of delay filed by the appellant before the District Court on

3.11.2009, the subsequent application under Section 34(3) of the Act read with

Section 14 of Limitation Act filed on 8.1.2010 and the application dated

29.10.2009 for withdrawal of the appeal filed before the High Court. But a

careful examination of these applications shows that there is, in fact, no 5

inconsistency. The first appellant is a Corporation and it has to act through its

Board of Directors and not at the level of individual officers. It is true that the

appellants have stated that they became aware that the appeal was not

maintainable before the High Court when they came to know about the

execution proceedings. But thereafter, there was some uncertainty as to whether

the application under Section 34 of the Act had to be filed in the District Court

only after the withdrawal of `appeal' under Section 34 of the Act before the

High Court, or whether the withdrawal and filing of fresh application under

Section 34 of the Act should be simultaneous, or whether to avoid delay, the

application under Section 34 of the Act should be filed in the District Court

immediately even before the application for withdrawal could be moved before

the High Court. In fact the appellants demonstrated their diligence and bona

fides by filing the application under Section 34 of the Act on 19.10.2009 itself

immediately on reopening of court, without waiting for a formal order of

withdrawal of the `appeal' under Section 34 before the wrong forum. Therefore,

it cannot be said that filing of the application under Section 34 of the Act on

19.10.2009 was belated. Further if the period spent before wrong forum is

excluded, the application is filed within three months and there is no question of

explaining any delay. The filing of an application for condonation under a

wrong provision of law will not vitiate the application. In fact though the

application for condonation of delay was initially filed under Section 5 of

Limitation Act, that was subsequently replaced by an application under Section 6 34(3) of the Act, and again by an application under Section 34(3) of the Act

read with Section 14 of the Limitation Act.

6. We therefore allow this appeal, set aside the judgment dated 9.4.2010 of

the High Court affirming the order dated 26.2.2010 of the District Court. We

hold that the application under Section 34 of the Act was filed in time, by

excluding the time spent before the wrong forum. The District Court, Kamrup

shall now consider the application under Section 34 of the Act filed by the

appellants on merits, in accordance with law.

_____________________J.

( R. V. RAVEENDRAN )

New Delhi; _____________________J. October 21, 2010. ( H. L. GOKHALE )