FAO No.3620 of 2008 -1 - IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH FAO No.3620 of 2008 Date of decision : 20.3.2009 M/s Rajpura Gas House (Indane LPG Distributor) Rajpura, ..Appellant. Vs. Sh.B.S.Koli and another ..Respondents. CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN Present : Mr.Amit Jhanji and Mr.Pankaj Katia, Advocates for the appellant. Mr.Ashish Kapoor, Advocate for the respondents. RAKESH KUMAR JAIN, J.(Oral) This appeal is directed against the order passed by Additional District Judge, Chandigarh dated 12.9.2008 on an application filed under Section 5 of Limitation Act, 1963 (for short `the Act') for condonation of delay of 839 days in filing the application under Section 34 of the Arbitration and Conciliation Act, 1996 (for short `Act of 1996') against the award of Arbitrator dated 3.5.2005. The dispute between the parties was referred to Sole Arbitrator who gave his award dated 3.5.2005. The appellant filed a Civil Suit No.292 dated 18.5.2005 titled as M/s Rajpura Gas House Vs. M/s Indian Oil Corporation Limited for mandatory injunction to direct the respondents to forthwith restore distributorship of Pawan Kumar, sole proprietor of M/s FAO No.3620 of 2008 -2 - Rajpura Gas House, Rajpura on the ground that reference covering all the dispute between the parties directly and substantially in issue have been finally decided by the Arbitrator by his impugned award dated 3.5.2005 which has become enforceable under the Code of Civil Procedure, 1908 (for short `CPC') in the same manner as if it were a final decree of the Court. In the suit, as many as six issues were framed, which are reproduced as under : 1. Whether the plaintiff is entitled for mandatory injunction as prayed for? OPP. 2. Whether the suit is not maintainable? OPD. 3. Whether the plaintiff has no locus standi to file his suit? OPD. 4. Whether the plaint is liable to be rejected u/o 7 R 11 CPC? OPD. 5. Whether the Court has no jurisdiction to try and decide the suit? OPD. 6. Relief. The learned trial Court vide its judgment and decree dated 2.8.2006 dismissed the suit on issue No.1 on the ground that plaintiff is not entitled for mandatory injunction. However, while deciding issues No.2 and 3, it was held that suit of the plaintiff is maintainable and has got locus standi to file the suit. Aggrieved against the judgment and decree of the trial Court, the appellant filed First appeal under Section 96 of CPC on 29.8.2006. While the appeal was pending, the appellant filed a writ petition bearing CWP No.11942 of 2007 titled as M/s Rajpura Gas House Vs. M/s Indian Oil Corporation on 4.8.2007 before this Court in which following prayer was made : a) summon the records of the case; b) quashing the public notice dated 18.9.2006 FAO No.3620 of 2008 -3 - (Annexure P-8) whereby the LPG Distributorship at Rajpura Location in the physically handicapped category has been advertised by showing the same to have been terminated, though the termination of the Gas Agency stands declared null and void by the Sole Arbitrator vide Award dated 3.5.2005 and for a direction to the authorities to restore the dealership in the favour of the petitioner with all consequential benefits flowing there from; c) grant any other relief which this Hon'ble Court deems fit in the facts and circumstances of the case; d) dispense with the service of advanced notices on the respondents; e) award costs of the petition in favour of the petitioner; f) exempt the filing of the certified copies of the Annexures; It is still further respectfully prayed that the respondent- Corporation be restrained from allotting the Distributorship at Rajpura in pursuance to the public notice dated 18.9.2006 (Annexure P-8) during the pendency of the present petition.” However, the said writ petition was disposed of on 6.8.2007. In the meanwhile the appellant pursued his appeal before the Civil Court, which was ultimately dismissed as withdrawn on 7.11.2007 and thereafter Objections under Section 34 of the Act of 1996 were filed along with application under Section 5 of the Act for considering Objections u/s 34 of the Act of 1996 after condoning delay of 839 days in its filing. The said application has been rejected by the Court below vide impugned order dated 12.9.2008 against which the present appeal has been filed. FAO No.3620 of 2008 -4 - Mr.Amit Jhanji, learned counsel for the appellant contends that the learned trial Court has observed in the impugned order that Section 5 of the Act is not applicable as the limitation of three months as provided in Section 34(3) of the Act of 1996 could only be extended for 30 days. However, the learned trial Court has observed that in view of decision of the Supreme Court in the case of State of Goa Vs. M/s Western Builders 2006 (3), RCR (Civil), 475. Provisions of Section 14 of the Act are applicable to the provisions of the Act of 1996 and the period spent in pursuing wrong remedy before a wrong forum can be excluded and the delay caused can be condoned. He further contends that though his application was filed under Section 5 of the Act but in paras 4 and 5 of the application, it was categorically averred as under : “That the petitioner on erroneous legal advise instituted civil suit for mandatory injunction on 18.5.2005 and the said suit came to be dismissed on 2.8.2006. Thereafter, the petitioner was again advised by his counsel to file an appeal, which was filed on 29.8.2006. The above cases were instituted well within the period of limitation and under a bonafide mistake being not aware of the legal technicalities. That the petitioner has now been advised that the appropriate statutory remedy available to the petitioner is to file the petition under Section 34 of the Arbitration & Conciliation Act, 1996 seeking setting aside of the award to the extent it refuses to restore the distributorship. The petitioner has withdrawn the appeal vide order dated 7.11.2007. The FAO No.3620 of 2008 -5 - petitioner is a physically handicapped person and had no legal knowledge and therefore, had been acting on the advice of the counsel.” Counsel for the appellant has further submitted that if the application filed under Section 5 of the Act in which averments have been made in the tone and tenor of Section 14 of the Act is accepted and the period spent in the forum having no jurisdiction is excluded then the delay caused would be justified and the Objections filed herein would be within limitation. He contends that learned Court below has wrongly recorded in para 10 of the judgment that “after going through the records and contentions of both the parties, it comes out that there is nothing on record to say that the applicant-petitioner was pursuing a remedy in the wrong forum on the basis of a wrong advice. To buttress his argument, counsel for the appellant has relied upon a decision of the Supreme Court in the case of Union of India Vs. Shring Construction Co.(P) Ltd. (2006) 8 SCC 18 to contend that an application filed under Section 5 of the Act having averments of Section 14 of the Act can be considered under Section 14 of the Act and matter was remanded by the Supreme Court to Civil Court for deciding the application under Section 34 of the Act of 1996. As against this, Sh.Ashish Kapoor, learned counsel for the respondents has contended that limitation prescribed under Section 34 of the Act of 1996 is three months' from the date of receipt of the copy of the award which can only be extended upto period of one month on a sufficient cause shown by the appellant. He contends that provisions of Section 5 of FAO No.3620 of 2008 -6 - the Act are not applicable and in this regard, he cites two decisions of the Supreme Court in the case of Union of India Vs. M/s Popular Construction Co.2002(1) RCR(Civil) 124 and Chief Engineer of B.P.D.P./R.E.O., Ranchi Vs. M/s Scoot Wilson Kirpatrick India Pvt. Ltd. 2007(1) RCR(Civil) 283. He further contends that reference under Section 14 of the Act is conspicuously absent in the body of the application filed under Section 5 of the Act. Therefore, findings recorded by the Court below do not call for any interference as there is no application before the Court below under Section 14 of the Act for the purpose of considering a bonafide mistake on the part of the appellant for pursuing his legal remedies before a wrong forum. I have heard learned counsel for the parties and have perused the record with their assistance. Before adverting to the respective contentions, it is worthwhile to refer to some provisions of the Act. Section 34 of the Arbitration and Conciliation Act, 1996 deals with the right of an aggrieved party against the arbitral award and the jurisdiction of the Civil Court to set it right. Section 34(3) of the Act of 1996 is reproduced as under: “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 FAO No.3620 of 2008 -7 - was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.” Section 5 of the Act is reproduced as under : “Extension of prescribed period in certain cases -Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be admitted after the prescribed period, if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.” Section 14 of the Act is reproduced as under : “Exclusion of time of proceeding bona fide in court without jurisdiction – (1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of FAO No.3620 of 2008 -8 - first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it. (3) Notwithstanding anything contained in rule 2 of Order XXXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature.” As per section 34 of the Act of 1996, an aggrieved party has a right and remedy against an arbitral award but his right is subject to limitation of preferring Objections within a period of three months' from the date of receipt of the copy of the award and in case it is not done within three months then the period can be extended upto one month on the party showing to the Court that he has been prevented by the sufficient cause. Section 5 of the Act also provides extension of prescribed period in certain cases wherein any appeal or any application other than an application under any of the provisions of the Code of Civil Procedure, 1908 may be admitted after the prescribed period, if the appellant or the applicant satisfies the Court that he had sufficient cause for not preferring the appeal or making the application within such period. It was also explained that in case the appellant or the applicant was misled by any order, practice or judgment of FAO No.3620 of 2008 -9 - the High Court in ascertaining or computing the prescribed period, would be sufficient cause within the meaning of this Section. Since proviso to Section 34(3), provisions of the Act of 1996 and Section 5 of the Act provide for extension of period for filing lis before the Court after the expiry of the prescribed period of limitation, therefore, the Act of 1996 which is a self contained Code, provides that the period of limitation beyond the extended period of one month, can not be extended in any case. Thus, I agree with the contention raised by the counsel for the respondent that Section 5 of the Act would not be applicable but insofar as Section 14 of the Act is concerned, even the trial Court has observed that the same is applicable to the Act of 1996 in view of decision of the Supreme Court in the case of State of Goa Vs. M/s Western Builders (supra), therefore, the argument raised by the counsel for the respondent that Section 5 of the Act is not applicable, is unquestionable but insofar as Section 14 of the Act is concerned that definitely is applicable. Now question is as to whether the finding recorded by the trial Court that nothing has come on record to say that the appellant was pursuing wrong remedy in the wrong forum is in consonance with the record or not. In this regard, I have already referred to paras 4 and 5 of the application in which appellant has categorically stated that earlier a Civil suit was pursued in a wrong forum on a wrong advice. Thus, the pleadings are there. At this stage, a decision of the Supreme Court in the case of Union of India Vs. Shring Construction Co.(P) Ltd. (supra) comes to the rescue of the appellant in which it was held as under : “The appellant Union of India entered into a contract with the respondent herein for construction of certain buildings. FAO No.3620 of 2008 -10 - However, the respondent failed to complete the contract work within the stipulated period despite grant of extension of time by the appellant. After the bill of the respondent Company was duly settled, it raised a dispute and at its instance the High Court appointed an arbitrator. By his award, the arbitrator awarded a certain amount and also awarded interest thereon in favour of the respondent and against the appellant. The appellant then filed a writ petition before the High Court challenging the arbitrator's award. The appellant did so under a bona fide belief that since the arbitrator had been appointed by the High Court, the award could be challenged only in the High Court by filing a writ petition. The High Court dismissed the writ petition as not maintainable and observed that the award ought to have been challenged under section 34 of the Act by filing objections in the Court of District Judge. Hence, the appellant filed before the District Judge an objection under Section 34 of the Arbitration and Conciliation Act, 1996 (for short “the Act”) along with an application under Section 5 of the Limitation Act for condonation of delay. Since the application was filed even beyond the extended limitation period prescribed in Section 34(3), the District Judge dismissed the application for condonation of delay as well as the main application for setting aside the award as time barred. That order was upheld by the High Court. The Union of India then filed the present appeal by special leave. FAO No.3620 of 2008 -11 - Before the Supreme Court, the appellant Union of India contended that although in view of the limitation period prescribed by Section 34(3) of the Act, Section 5 of the Limitation Act was not applicable in the present proceedings but Section 14 of the Limitation Act had not been excluded from its ambit, that it was a bona fide error on the part of the Union of India to have approached the High Court under a misplaced impression that the arbitrator having been appointed by the High Court, his award could be challenged before the High Court only. That therefore, the application filed by the appellant for condonation of delay should have been considered and the delay should have been condoned. The question raised by the appellant seems to have not been examined by the trial Court as well as by the High Court. In view of the decision in Western Builders case, (2006) 6 SCC 239 it is just and proper to remit the matter back to the trial Court to decide whether the application for setting aside the award under Section 34 of the Act filed by the appellant could be considered to be within the period of limitation i.e. deducting the period spent by the appellant in prosecuting the remedy before the High Court.” Now the question is if the appellant was pursuing his remedy in a wrong forum and if that period is excluded whether the Objections are within the prescribed period of limitation. In this case, the arbitral award is dated 3.5.2005 which was challenged in the suit on 18.5.2005, thus 15 days FAO No.3620 of 2008 -12 - had expired. Thereafter, the said suit was dismissed on 6.8.2007 against which an appeal was filed on 29.8.2006 which was withdrawn on 7.11.2007. However, the Objection under Section 34 of the Act with application under Section 5 of the Act was filed on 20.11.2007. In this way, at the time of filing of the suit from the date of award, 15 days' has expired and from the date of dismissal of suit to the filing of the appeal, 23 days' had expired and from the dismissal of the appeal to filing of the Objections on 20.11.2007, 13 days' has expired then the total days which have been spent are 51 days' which comes within the parameters of three months as provided in Section 34(3) of the Act of 1996. In view of the above discussion, the present appeal is allowed. Order dated 12.9.2008 is set aside and the matter is remanded back to the trial Court/Civil Court to decide the Objections filed by the appellant in accordance with law. The parties are directed to appear before the Court below on 16.4.2009. Learned counsel for the respondent also prays that the trial Court be directed to decide the Objections within the stipulated period to which counsel for the appellant has no objection. In view of the above, the trial Court is directed to decide Objections filed under Section 34 of the Act of 1996 within a period of three months from the date of appearance of appellant i.e. 16.4.2009. No costs. (RAKESH KUMAR JAIN) 20.3.2009 JUDGE Meenu FAO No.3620 of 2008 -13 - FAO No.3620 of 2008 -14 - “Application for setting aside arbitral award. - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An Arbitral award may be set aside by the Court only if - (a) the party making the application furnishes proof that - (i)a party was under some incapacity, or (ii)the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii)the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv)the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission