Case Note & Summary
The dispute arose from an arbitral award passed on 25 February 2014. The respondent, Globe Capital Market Ltd., challenged the award by filing an arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Patiala House Court, New Delhi on 21 May 2014. After nearly 16 months, on 17 September 2015, the Delhi Court returned the petition under Order VII Rule 10 CPC for lack of territorial jurisdiction, granting liberty to file in the appropriate court. The respondent then obtained certified copies and filed the petition in the Bombay High Court on 20 January 2016. There was a delay of 129 days beyond the limitation period prescribed under Section 34(3). The respondent sought condonation of delay by invoking Section 14 of the Limitation Act, 1963, arguing that the time spent in the Delhi Court should be excluded because the proceedings there were prosecuted in good faith. The Single Judge accepted this plea, condoned the delay subject to costs of Rs. 25,000, which were paid and accepted. The appellant, HRIM Finance and Securities Pvt. Ltd., appealed under Section 37 of the Act, contending that the Delhi filing was not bona fide and that the benefit of Section 14 could not be extended, and that Section 5 of the Limitation Act was inapplicable beyond 30 days under Section 34(3). The Division Bench examined the three-month limitation under Section 34(3) and the further period of thirty days condonable only on sufficient cause, and distinguished the absolute bar on Section 5. It noted that the Supreme Court in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department had settled that Section 14 of the Limitation Act is applicable to Section 34 applications, permitting exclusion of time spent in a wrong forum if the earlier proceedings were in good faith. The court considered the entire chronology, including email correspondence showing due diligence, and found no material to suggest mala fides. The Delhi Court’s order itself recorded that the defect was one of territorial jurisdiction, not lack of merits. The court observed that the procedural irregularities under Order VII Rule 10A CPC did not detract from the overall good faith. Accordingly, the Division Bench held that the Single Judge’s order was correct and dismissed the appeal, with the delay condonation upheld. The decision reaffirms that a party approaching a wrong forum with due care and in good faith can claim exclusion of time under Section 14 of the Limitation Act even in the strict limitation regime of Section 34 of the Arbitration Act.
Headnote
A) Arbitration - Setting Aside Award - Limitation - Section 34(3) of the Arbitration and Conciliation Act, 1996, read with Section 14 of the Limitation Act, 1963 - The Supreme Court in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department held that Section 14 of the Limitation Act applies to an application under Section 34, and the time spent in prosecuting proceedings in a court without jurisdiction can be excluded if the proceedings were prosecuted in good faith. The High Court followed this precedent and upheld the condonation of delay of 129 days because the earlier filing in Delhi, though in the wrong forum, was bona fide. Held that the Single Judge correctly applied the law. (Paras 11-12)
B) Limitation - Exclusion of Time - Good Faith - Section 14(2) of the Limitation Act, 1963 - The court examined the chronology of events, including the filing in Delhi on 21.05.2014 and its return on 17.09.2015 due to lack of territorial jurisdiction, and the subsequent filing in Bombay on 20.01.2016. The appellant argued lack of bona fides, but no evidence of mala fides was produced. The sequence showed that the respondent acted with due diligence, obtained certified copies, and refiled promptly. The court held that the earlier proceedings were prosecuted in good faith. (Paras 4, 9-10)
C) Civil Procedure - Return of Plaint - Procedure - Order VII Rule 10, 10A of the Code of Civil Procedure, 1908 - The court noted the procedural requirements under Order VII Rule 10A regarding fixing a date for appearance in the proper court after return of the plaint. Though these formalities were not fully complied with, the court observed that this did not negate the overall good faith of the earlier proceedings. The focus remained on whether the earlier filing was bona fide, which it was. (Paras 7-10)
Issue of Consideration
Whether the delay of 129 days in filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 could be condoned by applying Section 14 of the Limitation Act, 1963, where the earlier application was filed in a court lacking territorial jurisdiction and was returned for presentation to proper court.
Final Decision
The Division Bench dismissed the appeal and upheld the order of the Single Judge. It held that Section 14 of the Limitation Act applies to applications filed under Section 34 of the Arbitration Act, and the time spent in prosecuting the earlier petition in a court without jurisdiction can be excluded if the proceedings were conducted in good faith. On the facts, the court found no evidence of mala fides; the respondent had acted with due diligence throughout. The procedural irregularities under Order VII Rule 10A CPC did not affect the bona fide nature of the earlier filing. The condonation of delay of 129 days was therefore proper.
Law Points
- Section 14 of Limitation Act applies to applications under Section 34 of the Arbitration Act
- exclusion of time spent in a court without jurisdiction if prosecuted in good faith
- Section 5 of Limitation Act not applicable to Section 34(3) beyond 30 days
- liberal interpretation of Section 14
- bona fides to be determined on facts
Case Details
2017 LawText (BOM) (01) 15
Appeal (L) No. 431 of 2016 in Notice of Motion No. 1459 of 2016 in Arbitration Petition (L) No. 89 of 2016
Anoop V. Mohta, P.R. Bora
Karl Tamboly with Sunil A. Vyas i/by M/s Mansukhlal Hiralal & Co. for Appellant, Dr. Anurag Agrawal with Ms. Kokila Kalra for Respondent
HRIM Finance and Securities Pvt. Ltd.
Globe Capital Market Ltd.
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Nature of Litigation
Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order of the Single Judge condoning delay of 129 days in filing an application under Section 34 of the Act to set aside an arbitral award.
Remedy Sought
The appellant (original respondent in arbitration) sought to set aside the order passed by the Single Judge on 6 October 2016, which allowed the respondent's notice of motion and condoned the delay subject to costs.
Filing Reason
The respondent had initially filed the Section 34 petition in a Delhi court which lacked territorial jurisdiction under the arbitration agreement. After the Delhi court returned the petition under Order VII Rule 10 CPC, the respondent filed the petition in the Bombay High Court beyond the limitation period and therefore sought condonation of delay by invoking Section 14 of the Limitation Act.
Previous Decisions
The learned Single Judge of the Bombay High Court, by order dated 6 October 2016, allowed the notice of motion and condoned the delay of 129 days, subject to payment of costs of Rs.25,000 to the appellant. The costs were paid and accepted.
Issues
Whether the delay of 129 days in filing the arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996 could be condoned by applying Section 14 of the Limitation Act, 1963, when the earlier petition was filed in a court lacking territorial jurisdiction and was returned for presentation to the proper court.
Whether the filing of the arbitration petition in the Delhi court was prosecuted in good faith so as to attract the exclusion of time under Section 14 of the Limitation Act.
Submissions/Arguments
The appellant argued that the filing in the Delhi court was not bona fide and therefore the benefit of Section 14 of the Limitation Act could not be extended. The appellant also contended that the mandatory time limit under Section 34(3) of the Arbitration Act barred any condonation beyond 30 days on the ground of sufficient cause alone.
The respondent contended that the provisions of Section 14 of the Limitation Act are applicable to applications under Section 34 of the Arbitration Act, and the earlier proceedings in Delhi were prosecuted with due diligence and in good faith. The respondent relied on the Supreme Court's decision in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department.
Ratio Decidendi
The Supreme Court's decision in Consolidated Engineering Enterprises establishes that Section 14 of the Limitation Act, 1963 is applicable to applications under Section 34 of the Arbitration and Conciliation Act, 1996, and the time spent in prosecuting proceedings in a court without jurisdiction can be excluded if the applicant acted in good faith and with due diligence. The test of bona fides is to be assessed on the facts of each case. The mere fact that the earlier court returned the petition for want of territorial jurisdiction does not by itself indicate lack of good faith.
Judgment Excerpts
"The interpretation of Section 14 has to be liberal. The language of beneficial provision contained in Section 14 of the Limitation Act must be construed liberally so as to suppress the mischief and advance its object. Therefore, it is held that the provisions of Section 14 of the Limitation Act are applicable to an application submitted under Section 34 of the Act of 1996 for setting aside an arbitral award."
"As per jurisdiction clause of Trading MemberClearing Member Agreement, this Court lacks territorial jurisdiction to try and entertain the present objection petition. The petition is accordingly, directed to be returned u/o 7 rule 10 of the Code of Civil Procedure with liberty to file afresh in the Court of appropriate jurisdiction."
"the Apex Court considering the scheme of provisions of the Arbitration Act, specifically Section 34(3) and 43(1) r/w Sections 5,14 and 29(2) of the Limitation Act has elaborated and reiterated that the benefit of exclusion of time under Section 14 of the Limitation Act is available. Where application under Section 34(3) of the Arbitration Act, is moved/filed in a Court without jurisdiction, the provisions of Section 5 of the Limitation Act, as such is not applicable."
Procedural History
The arbitral award was passed on 25 February 2014 and a copy received by the respondent on 10 March 2014. On 21 May 2014, the respondent filed Arbitration Appeal No. 331 of 2014 before the District Judge, Patiala House Court, Delhi. The appellant appeared in those proceedings on 28 October 2014. On 17 September 2015, the Delhi court held it lacked territorial jurisdiction and directed the petition to be returned under Order VII Rule 10 CPC with liberty to file afresh in the proper court. The respondent obtained certified copies of the entire file, which were ready on 1 December 2015. After preparing the petition in the format prescribed by the Bombay High Court Original Side Rules, the respondent filed the arbitration petition in the Bombay High Court on 20 January 2016. As this was beyond the period of limitation prescribed under Section 34(3) of the Arbitration Act, the respondent filed a notice of motion seeking condonation of delay of 129 days. The Single Judge, by order dated 6 October 2016, condoned the delay subject to costs of Rs.25,000. The appellant challenged this order by filing the present appeal under Section 37 of the Act.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34, Section 34(3), Section 37, Section 43(1)
- Limitation Act, 1963: Section 5, Section 14, Section 29(2)
- Code of Civil Procedure, 1908: Order VII Rule 10, Order VII Rule 10A
