FAO(OS)665/2009 Page 1 of 51 * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) No.665/2009 & CM No.18944/2009 The Executive Engineer ….Appellant through (Irrigation & Flood Control) Ms. Aruna Tiku & Ms. Ruby Nahar, Advs. versus Shree Ram Construction Co. .…Respondent through Mr. G.K. Sharma, Adv. WITH FAO(OS) No.444/2009 & CM No.13776/2009 Power Grid Corpn. of India Ltd. …..Appellant through Mr.A.T.M. Rangaramanujam, Sr. Adv. with Mr. Pawan Upadhyay, Adv. versus BWL Limited …..Respondent through Ms. Tanya Khare, Adv. WITH FAO(OS) No.132/2009 & CM No.5212/2009 Union of India …..Appellant through Mr.Parag P. Tripathi, ASG with Ms. Arti Gupta & Ms. Prem Lata Bansal, Advs. versus Ogilvy & Mather Ltd. …..Respondent through Mr. Vinod Bhagat with Mr. Amiet Andley, Advs. FAO(OS)665/2009 Page 2 of 51 WITH FAO(OS) No.259/2010 & CM No.7202/2010 Union of India …..Appellant through Mr. Anshuman Sinha, Adv. versus Harbhagwan Harbhajan Lal & …..Respondent through Arun Construction Co. Mr. A.K. Singla, Sr. Adv. with Mr. J.K.Sharma, Adv. WITH FAO(OS) No.49/2009 & CM Nos.11595/09 & 5016/10 Saibaba CGHS Ltd. …..Appellant through Mr. S.S. Mishra, Adv. versus Vishnu Promoters Pvt. Ltd. …..Respondent through Ms. Rashmi Jain & Mohd. Amanullah, Advs. % Date of Decision : November 12, 2010 CORAM: * HON'BLE MR. JUSTICE VIKRAMAJIT SEN HON'BLE MS. JUSTICE MUKTA GUPTA 1. Whether reporters of local papers may be allowed to see the Judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the Judgment should be reported in the Digest? Yes VIKRAMAJIT SEN, J. 1. This Appeal assails the Order dated 5.9.2007 wherein the learned Single Judge has taken the view that the filing of the Objections under Section 34 of the A&C Act in the Court of the FAO(OS)665/2009 Page 3 of 51 District Judge, Delhi was not carried out in good faith; and that the refiling in the Court possessing jurisdiction, that is, the High Court of Delhi was carried out after 45 days of its return disclosed lack of diligence. The learned Single Judge held that even assuming that the period of one year and seven months could be excluded for filing (refiling) while computing the period of limitation, by availing Section 14 of the Limitation Act, 1963, the Objections were nevertheless time barred. 2. The facts of the case are that the subject arbitral Award was published on 10.11.2004 and was received by the Appellant on 17.11.2004. The period of three months set-down in Section 34(3) of the A&C Act commenced running from 17.11.2004 and in its ordinary course culminated on 15.2.2005. The Objections were filed in the Court of District Judge, Delhi on 25.1.2005, that is, leaving unutilized/unavailed twenty two days in the permissible period. The Respondent filed an application in the Court of the Additional District Judge, Delhi to whom the lis was assigned, predicated on Section 42 of the A&C Act, praying that the Objections should not be entertained as Court of District Judge did not possess jurisdiction for their adjudication. Indubitably, since the appointment of the Arbitrator had been made by this Court, “all subsequent applications arising out of that agreement and the arbitral proceedings” would have to be FAO(OS)665/2009 Page 4 of 51 filed in the High Court of Delhi. The Appellant did not contest this position and asked for the withdrawal of the Objections on 14.8.2006. It has been clarified that the Objections were filed in the Court of District Judge because the Award had granted ` 5,37,160/- and the pecuniary jurisdiction of the High Court of Delhi is from ` 20,00,001/- and upwards. It is also not in dispute that the Objections alongwith the entire records were returned by the Additional District Judge, Delhi to the Appellant on 25.8.2006 and were filed/refiled in this High Court on 10.10.2006. Mr. G.K. Sharma, learned counsel for the Respondent, however, submits that when the filing/refiling was carried out by the Petitioner in this Court on 10.10.2006, the Objections already stood time barred. 3. We had occasion to consider this interesting question of law in Bharat Sanchar Nigam Limited –vs- Haryana Telecom Limited, 2010 VII AD (Delhi) 331. We think it necessary to reproduce the relevant paragraphs of the said Judgment: 11. We have expressed the opinion, hereinabove, that since the Arbitral Award was not delivered by the Arbitral Tribunal [as envisaged in Section 31(5) of the A&C Act] to the party, the period for filing of Objections must be held not to have commenced. Would this view remain steadfast even in circumstances where Objections have actually been filed by the concerned party albeit in the wrong Court. FAO(OS)665/2009 Page 5 of 51 This is the legal nodus which remains to be answered. It is axiomatic jurisprudence that there is no estoppel against the statute. In this case, however, this principle would not apply for the reason that the party concerned, upon having filed Objections, has exercised a right vested and bestowed upon it by virtue of a statute. Moreover, law unhesitatingly and unquestionably acts on admissions made by a litigating party. In this case the Appellant has itself stated that copies of the Award were received by it (from the Respondent/Decree Holder) on 6.11.2000, and thus, we find good reason to take this date as the commencement of the period of limitation. On principles analogous to Section 14 of the Limitation Act, 1963, the period expended in a Court not possessing jurisdiction would have to be excluded. Exclusion of time is an exercise totally distinct from condoning the delay in filing an action. On the rejection or return of the Plaint/Objections, the period for refiling cannot be left open-ended. High Courts have taken the position that the Court rejecting the plaint/petition is not possessed with powers to fix a date within which the action must be filed in another Court. By the introduction of Section 10(a) in Order VII, by Act 104 of 1976, this position has been changed and the vacuum has been filled. It is now open to the Plaintiff/Petitioner to move an application in the First Court, thereby specifying the Court in which he proposes to present the plaint or refile the action after its return, and pray that the First Court may fix a date for the appearance of the parties. If the First Court FAO(OS)665/2009 Page 6 of 51 passes such orders, Sub-rule(4) clarifies that in this event the transferee Court would not be required to once again issue notice to the Defendant/Respondent. 12. It is trite that the Plaintiff/Petitioner may consider it expedient or prudent to challenge the return or rejection order before the Appellate forum; or it may decide to abide and comply with the Order. In the first case, the time spent before the Appellate Court may also have to be excluded. In the latter case, the question that arises is how much time should be reasonably allowed to the Plaintiff/Petitioner to file the rejected Plaint in the Court which it considers rightly possesses territorial jurisdiction. It seems incongruent to us that if the Petitioner stands restricted to an initial period of 90+30 days, a larger period can be allowed for the purpose of such refiling. So far as this is concerned, we are in virgin legal territory as no statutory provision appears to have been prescribed by any legislation. We would, in these circumstances, hold that the refiling must be carried out within the total span of 90 days, leaving the Court with the discretion to condone any delay restricted to a further period of 30 days provided sufficient cause has been disclosed. The date of rejection in Ambala Court was 16.5.2001; in Chandigarh on 19.11.2001 and in the High Court of Himachal Pradesh on 16.7.2001. As already noted above, the Objections were initiated in this Court in OMP No.215/2001 on 31.8.2001 and in OMP No.17/2002 on 3.1.2002 respectively. 13. Mr. Sharma, learned counsel for the Respondent/Decree Holder, has contended that since FAO(OS)665/2009 Page 7 of 51 the Objections were rejected under Order VII Rule 11 of the CPC in the Ambala Court, the relief permitted by Section 14 of the Limitation Act would not be available. After the filing of the Objections in this Court, the Appellant avowedly preferred a Review before the Ambala Court praying that the Objections ought to have been returned under Order VII Rule 10 and not rejected under Order VII Rule 11 of the CPC. Where a Court arrives at a conclusion that it does not possess jurisdiction, it should not proceed further and should only pass orders which would consequentially ensue; in most cases for the rejection of the plaint/petition/Objection or with the dismissal thereof, with liberty for filing them in a competent court in accordance with law. The Review was dismissed on the ground that it had been preferred beyond the period of limitation; secondly that the High Court of Delhi was already seized of the Objections and no prejudice was shown to have been caused. Therefore, the Review was not dismissed on merits. This being the situation, we think that there is no alternative but to treat the action of the Ambala Court as one standing and predicated on Order VII Rule 11 of the CPC, thereby rejecting the Objections and not dismissing them. 4. Ms. Aruna Tikku, learned counsel for the Appellant, has argued that since the filing of the Objections in the Court of District Judge was carried out within the statutory period of three months, the provisions of Section 34(3) of the A&C Act, FAO(OS)665/2009 Page 8 of 51 which vests power in the Court to condone a delay of thirty days beyond the initial three months period, do not come into play. It is her argument that since the Objections had been filed in Court within the period allowed in the statute, the refiling would have to be carried out within a reasonable period. She submits that the Additional District Judge, Delhi was duty-bound to prescribe the period within which the Objections could be filed in the competent Court and having failed to do so, this Court should only consider whether the filing/refiling was effected within reasonable time. It is her contention that since the Objections were returned by the Orders of the learned Additional District Judge, Delhi on 25.8.2006 and were refiled within forty-five days, on 10.10.2006, it would not be justifiable to take the view that an inordinate or unreasonable time had been taken for the refiling of Objections in this Court. Therefore, without alluding to Section 34(3) of the A&C Act, she submits that there is no delay in preferring the Appeal before the High Court of Delhi. 5. The Appeal is strongly opposed by learned counsel for the Respondent. Firstly, it is contended by Mr. G.K. Sharma, learned counsel for the Respondent, that the action of filing of Objections in the Court of the District Judge, Delhi was not bonafide and, therefore, the provisions of Section 14 of the FAO(OS)665/2009 Page 9 of 51 Limitation Act cannot be resorted to. Secondly, the filing of the Objections in this Court do not attract Order VII Rule 10A of the Code of Civil Procedure, 1908 (CPC for short) as neither of the two Courts can be viewed as transferor or transferee courts. In this regard reliance has been placed on Harshad Chimanlal Modi –vs- DLF Universal Limited, 2006(1) SCC 364. No doubt, the Court held that presentation of a plaint in the correct Court after its return is not a case of „transfer‟ but those observations were made in a totally different context. The argument was that the proceedings in the transferee Court should continue from the very stage it was at when the transfer was ordered. It was in these circumstances that the Hon‟ble Supreme Court clarified that where a Court lacks jurisdiction to an extent that the litigation requires to be transferred, none of the actions taken by it would have the status necessitating the Court properly possessing jurisdiction to take up proceedings from the stage they stood in the wrong Court. This is no wise the case before us and, therefore, Harshad is not relevant. It is further contended by Mr. Sharma that the initial filing in the Court of the District Judge, Delhi must be treated as non est with the result that when the Petition came to be preferred in this Court on 10.10.2006, it constituted the first filing and it was clearly barred by time. Reliance is sought to be placed by Mr. Sharma FAO(OS)665/2009 Page 10 of 51 on Vishnu Horticultural Pvt. Ltd. –vs- Shampiyan Viniyard Ltd., 2010(2) CCC 128 (Bombay). We are of the view, however, that this case is also not of relevance. It is true that there are observations to the effect that a lis will always be treated as having been filed afresh, thereby making it subject to limitation, pecuniary jurisdiction and payment of Court Fee etc., as opined in Hanamanthappa –vs- Chandrashekharappa, AIR 1997 SC 1307. In Vishnu, the learned Single Judge of the Bombay High Court has applied Harshad. We think that the observations alluding to pecuniary jurisdiction and payment of Court Fee have not been relied upon contextually. In both these cases different High Courts or State Courts have prescribed varying stipulations. Let us take the instance of a matter being filed in the Delhi High Court. If it is found that Delhi has no territorial jurisdiction and Uttar Pradesh does, it cannot be contended that the Court Fee already paid would be proper in that State and/or that the case must be heard in the High Court of Uttar Pradesh. 6. Order VII Rule 10A of the CPC now ordains that if the initial Court is of the opinion that the plaint/objections/petition should be returned, the Court shall, before doing so, intimate its decision to the plaintiff. This is for the reason that the second sub-section obliges the Court, no doubt on the application of the plaintiff, to specify and indicate the Court in which the plaintiff FAO(OS)665/2009 Page 11 of 51 proposes to present the plaint. Order VII Rule 10A(2) further states that the Plaintiff can make an application to the Court requesting it to specify the Court in which the returned Plaint is to be filed, the date on which the parties are to appear before the said Court and that the notice of the date filed to be given to him and the Defendant. Sub-section(3) of Order VII Rule 10A thereafter mandates that these actions should be taken by the Court on an application being made by the Plaintiff. Sub- section(4) of Order VII Rule 10A removes the rigour of having to serve the Defendant/Respondent once again for the simple reason that the latter is put to notice of the transferee Court as well as the next date of hearing. All these provisions, it appears to us, are salutary in nature and have the avowed purpose of protecting the interests of all the parties to the lis. 7. The last and fifth sub-section of Order VII Rule 10A should not be lost sight of. It clarifies the position that where a Court is of the opinion that it does not possess jurisdiction, pecuniary or otherwise, it is duty-bound to return the plaint or petition or objection, as the case may be, after giving due prior notice of its decision to the Plaintiff. The Plaintiff may or may not agree with this decision. If, as a consequence of the prior intimation by the Court of its prima facie view, the Plaintiff is of the opinion that the return of the plaint is in consonance with law, and an FAO(OS)665/2009 Page 12 of 51 application under sub-section(2) is moved, then an appeal stands disallowed under sub-section (5) of Order VII Rule 10A of the CPC. The Plaintiff may not agree that the Court in which he had initiated the lis is devoid of jurisdiction and hence he has the right to challenge an Order returning a plaint. It is for this simple reason that he has been allowed the option to file applications under Order VII Rule 10A(2) of the CPC. 8. In the event, the Appellant did not file an application under Order VII Rule 10A(2) of the CPC and, therefore, the next date of hearing in this Court was not fixed by the Additional District Judge, Delhi before whom the Objections were initially filed. However, the Appellant obviously accepted the Order since it was not assailed by him in Appeal. The nodus which arises relates to the manner in which the period of limitation is to be computed. We may reiterate that Section 14 of the Limitation Act provides an exclusion and not extension of time. If the provisions are advantageously available to the Plaintiff/Petitioner/ Objectioner, the time expended bonafide in the Court which was not possessed of jurisdiction would have to be excluded, which, in the present case, is one year and seven months. The manner of calculation is akin to that of computing the period of limitation so far as applying for and obtaining a certified copy of the Order sought to be impugned. If, for FAO(OS)665/2009 Page 13 of 51 example, if a period of three months is prescribed for filing an appeal and the certified copy is applied for fifteen days later, and is made available after fifteen days thereof, the period of limitation would expire after 90+15 days. The rationale may be different but the result is the same. So far as the certified copy is concerned, the Appellant would be deemed to be capable of taking requisite action only on the perusal of the certified copy. 9. We are unable to accept the submission of learned counsel for the Appellant that the very factum of having filed Objections within three months would render other provisions of the A&C Act superfluous and irrelevant. This argument would defeat the purpose of the A&C Act which is for the expeditious conclusion of the arbitration proceedings. It is a tenet of our jurisprudence that procedure is merely a handmaid of the law. Procedure cannot defeat the purpose of the law. On the other hand, it will be available to alleviate an apparent miscarriage of justice because of a pedantic or punctilious reading of the law. Order VII Rule 10A of the CPC provides for harmonizing hardship. Without it, the taking of an ill advised but bonafide action would result in the remedy being rendered nugatory. Rule 10A of Order VII of the CPC steps in by permitting the plaint/petition/objection filed in a Court not possessing jurisdiction to be returned for filing in a Court actually FAO(OS)665/2009 Page 14 of 51 possessed of jurisdiction. This empowerment is bestowed by Rule 10. These provisions do not recognize or articulate the fiction that the filing of the action in the initial Court shall be deemed to be a filing in the Court contemplated under Rule 10A. Despite this lacuna, that this is what occurs is obvious from Rule 11 to 13 of Order VII of the CPC which deal with the case of the rejection of the plaint. 10. In Haryana Telecom, we had expressed the opinion that the filing of the Objections in the Court possessing jurisdiction cannot possibly extend to a period beyond what has been prescribed by the statute. We think that this statement needs to be further amplified. The period for refiling cannot be left open- ended, with the only requirement being that the refiling or fresh filing should be carried out within a reasonable time, as if the Court has not specified any period while deciding an application under Order VII Rule 10A of the CPC. We reiterate that the period spent bonafide in the Court not possessing jurisdiction has to be excluded. In the case before us, it is exactly one year and seven months. The effect will be that this period would have to be added to the prescribed period of three months together with the discretionary thirty days. Since the period of limitation in the case in hand would ordinarily have expired on 15.2.2007, a period of one year and seven months (that is 25.1.2005 to FAO(OS)665/2009 Page 15 of 51 25.8.2006) would have to be added, thus bringing it to 15.9.2008. Since 68 days had been exhausted in the initial filing, if the Objections had been filed in this Court within the remainder of 22 days, no delay would have been occasioned, bringing us to 9.9.2006. The Objections, in the case in hand, however, were filed in this Court only on 10.10.2006, that is, beyond the period of three months after allowing exclusion of one year and seven months as prescribed by Section 34 of the A&C Act. 11. Learned counsel for the Respondent has vociferously and repeatedly reminded us that no application has been filed by the Appellant under Section 34(3) of the A&C Act. This provision, we think, ought to be reproduced for a comprehensive analysis of the law:- Section 34 : Application for setting aside arbitral award …. (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 with the said period of three FAO(OS)665/2009 Page 16 of 51 months it may entertain the application within a further period of thirty days, but not thereafter. In contradistinction to the opening words of sub-section(3), the proviso does not postulate the filing of an application. It only contemplates the Court‟s satisfaction that the Applicant/Objector was prevented by sufficient cause from making the application/Objections within the said period of three months. We do not find ourselves constrained in any manner whatsoever from doing complete justice because of the absence of an application seeking condonation of delay if we are otherwise satisfied that sufficient cause exists. While doing so, we are fully mindful of the fact that we are not expanding the scope of the main provision. We say this despite the fact that learned counsel for the Appellant had argued that Section 34(3) of the A&C Act has no application to the present case for the reason that the initial filing had been carried out within the prescribed period of three months, albeit in the wrong Court. It also appears to us that where a remedy of an appeal has been provided for, the interpretation of the provision for computation of the period should be carried out liberally so that the remedy is not rendered illusory (See State of Bihar –vs- Kameshwar Prasad Singh, (2000) 9 SCC 94, Bhag Mal –vs- Munshi, (2007) 11 SCC 285 and Sandhya Rani Sarkar –vs- Sudha Rani Debi, FAO(OS)665/2009 Page 17 of 51 (1978) 2 SCC 116. This is why the Hon‟ble Supreme Court has, time and again, condoned the delay in filing appeals sometimes even beyond a period of a year. 12. This brings us to the question of whether the case for the exclusion of time envisaged in Section 14 of the Limitation Act has been made out by the Appellant. The test is that the Plaintiff should have been prosecuting the proceedings all through out with due diligence. This perforce will cover the initial filing as well as the manner in which the action was prosecuted in that Court. It is no longer res integra that Section 14 of the Limitation Act applies to the A&C Act as it has explicitly been held so in State of Goa –vs- Western Builders, (2006) 6 SCC 239. Their Lordships, inter alia, opined that the “general proposition is by virtue of Section 43 of the Act of 1996 the Limitation Act, 1963 applies to the Act of 1996 but by virtue of sub-section(2) of Section 29 of