FAO/470/2016 of UNION OF INDIA Vs M/S SURESH CONSTRUCTION CO

*IN THE HIGH COURT OF DELHI AT NEW DELHIDate of decision: 05.12.2016

+FAO 470/2016 & CM APPL. 35285/2016

UNION OF INDIA AppellantThrough Mr J.K. Singh, Standing Counsel forUOI

versus

M/S SURESH CONSTRUCTION CO. RespondentThrough Mr Raman Kapoor, Sr. Adv. with MrAviral Tiwari, Advs.

CORAM:

HON'BLE MS. JUSTICE SUNITA GUPTA

: SUNITA GUPTA. J. tORALl

1. Challenge in this appeal is to the order dated 27'*^ February,2016 passed by the learned Additional District Judge-I (Central) TisHazari Courts whereby the objections filed by the appellant u/s 34 ofthe Arbitration and Conciliation Act, 1996 (hereinafter referred to as'the Act') for setting aside the arbitral award dated 9'^ June, 2015 forRs.l 0,12,200/- in favour of the respondent was dismissed beingbarred by time.

2. The contract for the work at "Zone-Ill -All civil works likeearthwork in filling/cutting with contractor/railway earth inembankment to the required profile, const./extn. of Hume pipe bridgesof 1x0.400 m span box bridges of 0.61 m span, RCC slabs bridges ofsizes varying from 0.915 m to 2.44 m including slab sub-structures of

Signature Not Verified

bridges of span 3.05 m and above and other allied works between Km.126.300 to Km. 120.000 in connection with line work ofGhaziabad-Hapur BG doubling was awarded by the petitioner to M/s.Suresh Construction Co.-Respondent herein vide letter dated 4.3.1977with stipulated date of completion of entire work by 3.12.1997 i.e.,within 9 months. Accordingly the contract agreement No. 119-W/Dy.CE/C/PTNR dated 11.6.1997 was executed between thepetitioner and the respondent and contract value was forRs.61,66,444.50 as per the agreement. The work was awarded to therespondent subject to applicability of GCC and the terms andcondition of GCC was also part of the contract which was bindingupon both the parties.

3. Disputes arose between the parties. The respondent invokedarbitration clause and arbitral tribunal was formed. After completionof proceedings before the arbitral tribunal, award dated 9^*^ June, 2015was given by the Tribunal. The petitioner filed petition u/s 34 of theAct before the learned Additional District Judge, Delhi. Along withthe petition, an application u/s 34(3) of the Act was also moved by thepetitioner stating therein that impugned award dated 09.06.2015, wasreceived on 26.6.2015, which was assigned to Railway AdvocateSh.Ashok Singh for filing the objection petition vide letter dated09.10.2015 who has returned the file on 08.12.2015 on the groundthat amount involved in the impugned award was less than mpees onecrore and the same could be challenged before District Court and hewas not on the panel of District Court. Accordingly, case file wasassigned to Sh.Neeraj Kumar, Panel Advocate vide letter dated16.12.2015 for filing objection before the competent court of law.But said case file was returned vide letter dated 22.12.2015 by saidSh. Neeraj Kumar, Advocate as he was unable to do the same due tosudden demise of his grandmother. Finally, case was assigned to thepresent counsel on 12.01.2016 and case file was handed over to himon 15.01.2016, who requested concerned department to provide theother connected file. Since, the case was very old, as such, theconcerned officials took ten days in tracing out all the concerned filesand thereafter on 20.01.2016 the requisite file was traced out.Objection petition was filed on 03.02.2016. It has been averred thatthe certified copy of impugned award was received on 26.06.2015through daak and inadvertently the same could not be put up beforethe concerned Deputy Chief Engineer by the dealing assistant, whichwas bonafide mistake of the dealing assistant and due to this reasonthe step could not be taken within stipulated period of three months.The petitioner is Central Covemment Organization, working for theinterest of public at large, hence, the petitioner sought condonation ofdelay submitting that petitioner would suffer irreparable loss andinjury, if present application is not allowed and party should not sufferfor the fault of their counsel.

4. After hearing learned counsel for the petitioner, the applicationseeking condonation of delay in filing the petition was dismissedbeing hopelessly barred by the limitation. Resultantly, the petition u/s34 of the Act was also dismissed.

5. Aggrieved by the said order, present appeal has been filed bythe petitioner, inter alia, on the ground that the petitioner is CentralGovernment Department and public money is involved. In case thedelay in filing the objection is not condoned, then the petitioner willsuffer an irreparable loss and injury. Non filing of the objectionpetition within stipulated period of limitation was neither intentionalnor deliberate but occasioned due to circumstances as averred in theapplication. As such, it is submitted that the impugned order be setaside. The Award dated 9^^ June, 2015 passed by the Arbitrator bealso set aside.

6. Opposing the appeal, learned counsel for the respondentsubmits that proviso to Section 34 of the Act provides for periodwithin which the Court can exercise its discretion for condonation ofdelay. Legislature itself prescribed special limitation for thepurpose of appeal and the period of limitation is 3 months from thedate of receipt of arbitral award. The delay can be condoned for aperiod of 30 days on showing sufficient cause but not thereafter. Inthe instant case, the arbitral award was received by the petitioner on26 thJune, 2015 whereas the petition u/s 34 of the Act accompanied byapplication u/s 34(3) of the Act seeking condonation of delay wasfiled only on 3"* February, 2016. That being so, the Court was notcompetent to condone the delay, therefore, the application was rightlydismissed by the Trial Court which does not warrant any interference.Reliance has been placed on Union of India vs. M/s. PopularConstruction Co., AIR 2001 SC 4010.

7. It is undisputed case of the parties that the arbitral award was

passed by the arbitral tribunal on 9"^ June, 2015. The award wasreceived by the petitioner on 26"^ June, 2015. Challenging the award,petition u/s 34 of the Act was filed on 3'"'^ February, 2016. Along withpetition, an application u/s 34(3) of the Act was also filed seekingcondonation of delay in filing the petition.

8. Section 34(3) of the Act reads as under:-

"(3) An application for setting aside may not be made after threemonths have elapsed from the date on which the party making thatapplication had received the arbitral award or, if request had beenmade under section 33, from the date on which that request had beendisposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant wasprevented by sufficient cause from making the application within the saidperiod of three months it may entertain the application within furtherperiod of thirty days, but not thereafter."

9. bare perusal of the Sub-Section goes to show that anapplication for setting aside the award is to be filed within threemonths from the date on which the arbitral award is received by theparty. Proviso appended to this Sub-Section, however, empowers theCourt to extend the period of 30 days on showing sufficient cause bythe applicant which prevented him from making the applicationwithin the said period of three months. Undisputedly, the petition u/s34 of the Act was filed much after the expiry of period of threemonths as stipulated under this Sub-Section and even after the expiryof 30 days as the same has been filed only on 3'^'' February, 2016.

10. The question which arises for determination is whether theTrial Court was competent to extend the period of limitation u/s 34 of

the Act. In Union of /rtf//fl(supra), delay was sought to be condonedby the appellant by invoking the provisions of Section 5 of theLimitation Act, 1963. After referring to Section 34(3) of the Act, itwas held by the Supreme Court that

"8. Had the proviso to Section 34 merely provided for period withinwhich the Court could exercise its discretion, that would not have beensufficient to exclude Sections 4 to 24 of the Limitation Act because "mereprovision of period of limitation in howsoever peremptory or imperativelanguage is not sufficient to displace the applicability of Section 5.

12. As far as the language of Section 34 of the 1996 Act is concerned, thecrucial words are 'but not thereafter' used in the proviso to sub-section(3). In our opinion, this phrase would amount to an express exclusionwithin the meaning of Section 29(2) of the Limitation Act, and wouldtherefore bar the application of section 5 of that Act. Parliament did notneed to go further. To hold that the Court could entertain an applicationto set aside the Award beyond the extended period under the proviso,would render the phrase 'but not thereafter' wholly otiose. No principle ofinterpretation would justify such result.

13. Apart from the language, 'express exclusion' may follow from thescheme and object of the special or local law. Even in case, where thespecial law does not exclude the provisions of Sections 4 to 24 of theLimitation Act by an express reference, it would nonetheless be open tothe Court to examine whether and to what extent the nature of thoseprovisions or the nature of the subject-matter and scheme of the speciallaw exclude their operation.

Here by history and scheme of the 1996 Act support the conclusion thatthe time limit prescribed under Section 34 to challenge an Award isabsolute and unextendable by Court under Section 5 of the LimitationAct. The Arbitration and Conciliation Bill, 1995 which preceded the 1996Act stated as one of its main objectives the need "to minimise thesupervisory role of courts in the arbitral process". This objective has foundexpression in Section 5 of the Act which prescribes the extent of judicialintervention in no uncertain terms:

"5. Extent of Judicial intervention. Notwithstanding anything containedin any other law for the time being in force, in matters governed by this

Part, no judicial authority shall intervene except where so provided in thisPart."

14. The 'Part' referred to in Section 5 is Part I of the 1996 Act which dealswith domestic arbitrations. Section 34 is contained in Part I and istherefore subject to the sweep of the prohibition contained in Section 5 ofthe 1996 Act.

15. Furthermore, section 34 (1) itself provides that recourse to courtagainst an arbitral award may be made only by an application for settingaside such award "in accordance with" sub Section 2 and sub Section 3.Sub Section 2 relates to grounds for setting aside an award and is notrelevant for our purposes. But an application field beyond the periodmentioned in Section 34, sub-section (3) would not be an application "inaccordance with" that sub section. Consequently by virtue of Section34(1), recourse to the court against an arbitral award cannot be madebeyond the period prescribed. The importance of the period fixed underSection 34 is emphasised by the provisions of Section 36 which providethat "where the time for making an application to set aside the arbitralaward under Section 34 has expired...the award shall be enforced and theCode of Civil Procedure 1908 in the same manner as if it were decree ofa court". This is significant departure from the provisions of theArbitration Act, 1940. Under the 1940 Act, after the time to set aside theaward expired, the court was required to "proceed to pronouncejudgment according to the award and upon the judgment so pronounceda decree shall follow". Now the consequence of the time expiring underSection 34 of the 1996 Act is that the award becomes immediateiyenforceable without any further act of the Court. If there were anyresidual doubt on the interpretation of the language used in Section 34,the scheme of the 1996 Act would resolve the issue in favour ofcurtailment of the Court's powers by the exclusion of the operation ofSection 5 of the Limitation Act."

11. Applying the ratio of this judgment to the factual matrix of the presentcase, the Court was not vested with any power to condone the delay in filingthe petition u/s 34 of the Act.

12. Much emphasis has been laid by the learned counsel for the appellantfor submitting that the petitioner is Central Government department and it

is not necessary for the Government department to explain each and everyday's delay. Hence the petitioner seeks indulgence of the Court to takelenient view and to condone the delay in filing the objections as well as theappeal. There are catena of decisions to the effect viz. Union of India v. N.Das R. Israni, 1993 AIR SCW 2573; State of Haryana v. Chandra Maniand Ors., 2002 (143) fL l 249(SC); Pundiik Jalant Patil(D) by LRs rv.Exe. Eng. Jalgaon Medium Project and Am(2008) 17 SCC 448 that lawmakes no distinction between private party and Government. Stateaccorded the same treatment in an even-handed manner, and no separatestandards to determine the cause laid down by the State vis-a-vis privatelitigant could be laid to prove strict standards of sufficient cause, however,the Apex Court observed that in view of the procedural red-tapisni in theprocess of making decisions and in order to see that ultimately the publicinterest does not suffer, certain amount of latitude to the appeal brought bythe State is not impermissible. It was held that the expression "sufficientcause" should be considered with pragmatism in justice-oriented approachrather than the technical detection of "Sufficient cause" for explaining everyday's delay. Nevertheless, in none of its decisions the Supreme Court hasheld that since liberal approach is normally adopted while dealing withsuch applications filed by public authority, the delay in filing appeal bythem is to be condoned on mere asking. Irrespective of the fact whether alitigant is the State or private party, "sufficient cause" has to be shown forthe delay in filing the appeal. The only difference would be some amount oflatitude to the State on account of procedural red-tapism and the largerpublic interest.

13. Tested on the touchstone of the afore-noted broad principles to bekept in view while dealing with such applications, the Court is of the viewthat the appellant has miserably failed to show any cause, much less asufficient cause for delay in filing the petition as well as the appeal.Undisputedly, the impugned award was received on 26"^ June, 2015. After alapse of approximately 3'A months, it was assigned to Sh. Ashok Singh,Advocate for filing the objection petition vide letter dated 9'^ October, 2015.After merely two months, the Advocate returned the file vide letter dated 8'*^December, 2015 on the ground that the award being less than Rs. 1 crore hasto be challenged before the District Court and he was not on the panel of theDistrict Court. Thereafter it was handed over to the panel advocate on 16thDecember, 2015 who returned the file on 22"'' December, 2015 due tothpersonal reasons. Thereafter the file was handed over to the counsel on 12January, 2016 and thereafter objections were filed on J"'' February, 2016.No sufficient explanation except for casual approach adopted by thedealing assistant for putting up the file before the Dy. Chief Engineer fortaking necessary steps has been alleged by the petitioner. This is not the endof the matter. After the petition u/s 34 of the Act was dismissed on theground of limitation even the present appeal has not been filed within thestipulated period and an application seeking condonation of 87 days delay infiling the appeal has been moved. The grounds for delay in filing the appealis narrated in para 2 of the application to the following effect:

"2. That the appellant has got certified copy on 2"^ March,2016. The department decided to file appeal against theimpugned order dated 2/^ February, 2016. The departmentapproached the counsel Mr. J.K. Singh on 26^^ July, 2016 to fileappeal against the impugned order. The draft appeal preparedand sent to the department on 10^^ August, 2016. The

th department sent back to the signed on 19August, 2016. nd Thereafter the present appeal was filed on 22August, 2016 before this Court. In the process, delay has occurred in filing the present appeal."

14. The ground so stated in the application shows that it is simple case of inaction or negligence for which no indulgence can be given to the appellant. In any case, in view of the specific provisions incorporated uls 34 (3) of the Act, the delay could not have been condoned.

15. In this view of the matter , the impugned order does not suffer from any infirmity which warrants interference. Accordingly the appeal is dismissed.

DECEMBER 05, 2016 rs

(1Im1- rt1-1 GUP A;J

FAO 47012016