Case: Municipal Corporation Of Delhi  Vs. Intnl.Security &amp; Intelligence Agency Ltd

3. It appears that originally when the agreement was entered into between the parties the respondents were a sole proprietory concern and the appellant no.1 was an institution known as Delhi Development Authority (Slum Wing). Subsequently, the respondents, the sole proprietory concern, was taken over by a private limited company as the respondents presently are while the DDA (Slum Wing) was taken over by the Municipal Corporation of Delhi. Whether or not the arbitration clause incorporated in the contract entered into between the parties as they were then, would be binding on and available to be invoked by the present parties, was the subject matter of controversy raised by the appellants but we need not enter into the details thereof inasmuch as that is irrelevant for adjudicating upon the neat questions of law arising for decision in these appeals.4. Disputes arose between the parties and on a petition under Section 8 of the Act filed by the respondents, the Court directed the same to be determined through arbitration by a retired Judge of the High Court. The order of the Court appointing the arbitrator and referring the disputes for determination by him achieved a finality as the appellants did not file any appeal thereagainst and both the parties submitted to the jurisdiction of the arbitrator. On 14.3.1997, the arbitrator gave an award. The award is a non speaking one. The arbitration agreement between the parties does not require the arbitrator to make a reasoned award. The respondents filed an application under Section 14 of the Act for making the award a rule of the Court. On 26.5.1997, objections were filed by the appellants seeking setting aside of the award. Though the objection petition is styled as one under Sections 30 and 33 (both) of the Act, a perusal of the contents of the objection petition shows that all the objections raised therein fall within the scope of Section 30 of the Act. During the pendency of the hearing on the said objection petition, on 20.1.2000 the appellants filed another objection petition styled as one under Section 33 of the Act wherein for the first time a plea was raised that so far as the respondents company is concerned it was not a party to the contract and therefore appointment of arbitrator at its instance and all the subsequent proceedings upto the date of making of the award were without jurisdiction and nullity and were liable to be adjudged so. By judgment dated 17.1.2001, the Court directed the objection raised on behalf of the appellants to be dismissed and the award to be made a rule of the Court. A decree in terms of the award as upheld by the judgment was later drawn up and dated as 17.1.2001.5. On 20.2.2001, the respondents moved an application seeking review of the judgment. The judgment and the decree drawn up did not award future interest on the decretal amount to the respondents and the only relief sought for in the review petition was to suitably modify the operative part of the judgment and the decree so as to include therein a direction for payment of interest from the date of decree till realization of the decretal amount. On 25.9.2001, the learned single Judge directed the review petition to be dismissed.6. On 8.10.2001, the respondents filed an appeal before the Division Bench of the High Court feeling aggrieved by the judgment and decree dated 17.1.2001. Condonation of delay in filing the appeal by excluding the time lost in prosecuting the review petition was sought for. A perusal of the memo of appeal shows that the only relief sought for in the appeal was for a suitable modification in the decree so as to include therein direction to pay future interest from the date of decree till realization. On 27.10.2001, the appellants too filed an appeal against the judgment and decree dated 17.1.2001 laying challenge to the order of the original court rejecting the objection petition filed by it and directing the award to be made a rule of the Court. The appeal was filed with a delay of 230 days. The appellants sought for condonation of delay in filing the appeal on the ground that it was awaiting the result of review petition and was persuaded to file an appeal because of the respondents having filed an appeal. The cause assigned by the appellants for seeking condonation of delay did not apparently amount to sufficient cause within the meaning of Section 5 of the Limitation Act. When the matter came up for hearing, the appellants submitted that the memo of appeal filed on 27.10.2001, if barred by time and hence not maintainable as an appeal, could still be treated as a cross objection under Order 41 Rule 22 of the CPC which having been filed within the prescribed period of limitation for filing cross objection the same deserved to be heard and decided on merits along with the first appeal filed by the respondents herein.7. On 12th July, 2002, the first appeal filed by the appellants has been directed to be dismissed by the Division Bench as barred by time consequent upon the dismissal of its application under Section 5 of the Limitation Act. Feeling aggrieved by the judgment dated 12.7.2002, SLP(C) 20508/2002 has been filed by Municipal Corporation of Delhi.8. Subsequently by an order dated 20 September, 2002, the first appeal filed by the respondents has been directed to be dismissed by the Division Bench as not maintainable on the Division Bench forming an opinion that the order put in issue by the respondents (herein and appellant in the High Court) and the relief sought for in appeal did not fall within the purview of clauses (i) to (vi) of sub-Section (1) of Section 39 of the Act and, therefore, the appeal was not maintainable and was incompetent.9. On the respondents taking out execution of the decree based on award, the appellants preferred an objection petition under Section 47 of the Code of Civil Procedure before the Executing Court submitting that in the absence of any arbitration agreement between the parties, the reference to arbitration, the award and the decree incorporating the award were all invalid and hence the decree was not executable. By order dated 5.3.2002 the Executing Court over ruled the objection. Feeling aggrieved thereby, the appellants preferred an appeal before the High Court which has been dismissed by the High Court as devoid of any merit vide its decision dated 12th July, 2002. SLP(C) No. 20511/2002 impugns the decision dated 12.7.2002 of the High Court.10. It is not disputed by the learned senior counsel for the parties that so far as appeal filed by the respondents before the Division Bench is concerned, the same was not maintainable under Section 39 of the Act and has, therefore, been rightly dismissed as not maintainable. Two questions arise for decision in these appeals: firstly, whether in an appeal under Section 39 of the Arbitration Act, 1940, a respondent has a right to file cross objection and, if so, whether the cross objection must be heard and decided on merits though the appeal by reference to which cross object has been filed is itself dismissed as not maintainable?11. When the matter came up for hearing before a two-Judge Bench of this Court, reliance was placed on behalf of the respondents on Superintending Engineer & others vs. B. Subba Reddy, (1999) 4 SCC 423 , wherein a two-Judge Bench of this Court has held that cross objection in an appeal under Section 39 of the Arbitration Act are not maintainable. On 9.12.2002, the two-Judge Bench entertaining some doubt about the correctness of the view taken in B. Subba Reddys case deemed it proper for this appeal to be placed for hearing before a three-Judge

Reasoning:
17. With advantage, we may also refer to observations of this Court made in Shri Baru Ram vs. Smt. Prasanni & others, 1959 SCR 1403. Section 116A of the Representation of the People Act, 1951 contemplates an appeal being laid before the Supreme Court from every order made by High Court under Section 98 or Section 99 of that Act. Section 116C provides for every such appeal being heard and determined by the Supreme Court as nearly as may be in accordance with the procedure applicable to the hearing and determination of any appeal from any final order passed by the High Court in exercise of its original civil jurisdiction subjected to the provisions of that Act and the Rules, if any. All the provisions of the Code of Civil Procedure, 1908 and rules of the Court shall, so far as may be, apply in relation to such appeal, P.B. Gajendragadkar, J. (as His Lordship then was) speaking for the Court observed"There is no doubt that, in any ordinary civil appeal, the respondent would be entitled to support of the decree under appeal on grounds other than those found by the trial court in his favour. Order 41, Rule 22 of the Code of Civil Procedure which permits the respondent to filerecognizes the respondents right to support of the decree on any of the grounds decided against him by the court below. In the present case no appeal could have been preferred by respondent 1 because she had succeeded in obtaining the declaration that the appellants election was void and it should therefore be open to her to support the final conclusion of the High Court by contending that the other finding recorded by the High Court which would go to the root of the matter is erroneous. Prima facie there appears to be some force in this contention." However, the Court did not express any final opinion thereon as it was considered not necessary to decide the point in that appeal.18. We have, therefore, no doubt in our mind that right to take a cross objection is the exercise of substantive right of appeal conferred by a statute. Available grounds of challenge against the judgment, decree or order impugned remain the same whether it is an appeal or aThe difference lies in the form and manner of exercising the right; the terminus a quo (the starting point) of limitation also differs.19. In Superintending Engineer & others vs. B. Subba Reddy (supra) aBench of this Court observed (vide para 24) "if there is no right ofgiven under Section 39 of the Act, it cannot be read into Section 41 of the Act. Filing of cross objection is not procedural in nature. Section 41 of the Act merely prescribes that the procedure of the Code would be applicable to the appeal under Section 39 of the Act. We are, therefore, of the opinion that cross objection by the respondent was not maintainable..." Such observation is not correct and proceeds on certain wrong premises. Firstly, form of cross objection is procedural and is only a manner of exercising right of appeal which is substantive, as we have already stated. Secondly, it is not merely the procedure prescribed by the Code of Civil Procedure which has been made applicable to proceedings under the Arbitration Act by Section 41(a) of the Act; the entire body of the Code of Civil Procedure, 1908 has been made applicable to all proceedings before the Court and to all appeals under the Arbitration Act, 1940. The provision is general and in its applicability which cannot be curtailed; the only exception being where the provisions of the Arbitration Act and/ or of rules made thereunder may be inconsistent with the provisions of the Code of Civil Procedure, 1909 in which case the applicability of the latter shall stand excluded but only to the extent of inconsistency. We may hasten to add that to the extent of our disagreement with the law laid down in B. Subba Reddys case, the proposition appears to have been rather widely stated in that case. In fact the question before the Court in B. Subba Reddys case was whether cross objection seeking the relief of award of interest at a higher rate was maintainable though such an order did not fall within the purview of Section 39(1) of the Act.20. Once we hold that by taking cross objection what is being exercised is the right of appeal itself, it follows that theof cross objection and the relief sought therein must conform to the requirement of Section 39(1). In other words, a cross objection can be preferred if the applicant could have sought for the same relief by filing an appeal in conformity with the provisions of Section 39(1) of the Act. If theof the cross objection is to impugn such an order which does not fall within the purview of any of the categories contemplated by clauses (i) to (vi) of(1) of Section 39 of the Act, the cross objection shall not be maintainable.What happens to cross objections if the appeal itself is found to be incompetent or not maintainable?(4) of Order 22 of the CPC provides for only two situations in which the cross objection may be heard in spite of the original appeal having not been heard on merits. These situations are two: (i) the original appeal being dismissed as withdrawn, (ii) the original appeal being dismissed for default (default in appearance or any other default). Just as the enabling provisions of cross objection contained in(1) of Order 22 of the CPC are applicable to appeals under Section 39 of the Act the disabling provision contained in(4) too would apply to appeals under Section 39 of the Act in view of the generality of the provisions contained in Section 41 of the Act. To put it briefly, if the Appellate Court forms an opinion that the original appeal itself was incompetent or not maintainable as it was filed against an order not falling within one of the clauses (i) to (vi) of(1) of Section 39 then the cross objection shall also fall to the ground and cannot be adjudicated upon on merits. It has to be remembered that law of limitation operates will all its rigour and equitable considerations are out of place in applying the law of limitation. Theought to have filed appeal within the prescribed period of limitation calculated from the date of the order if he wished to do so. Having allowed that opportunity to lapse he gets another extended period of limitation commencing from the date of service of the notice of the appeal enabling him putting in issue for consideration of the Appellate Court the same grounds which he could have otherwise done by way of filing an appeal. This extended period of limitation commences from the date of service of the notice of appeal and such notice ought to be in a valid or competent appeal.22. If the appeal cannot be heard on merits for the reason that it was no appeal in the eye of law, service of notice in such appeal would not furnish cause for commencement of a new period of limitation for filing appeal in the form of cross objection. The only exception in which the cross objection can still be heard is one where the memo of cross objection can be said to have been filed within the period prescribed for filing an original appeal against the impugned order and the memo also independently satisfies all the requirements of a memo of appeal. Just as a belated oreal can be treatedand taken up for considerationas cross objection subject to its satisfying the requirements ofmemo so also acan be treated asand heard as such subject to its satisfying the requirements as to maintainability of an appeal with regard to limitation and otherwise.23. Illustratively, we may refer to some judicial opinion as toof cross objections consequent upon theof the original appeal. In M/s. Malhati Tea Syndicate Limited vs. Revenue Officer, Jalpaiguri and others, AIR 1973 Calcutta 78, a Division Bench of Calcutta High Court presided over by P.B. Mukherji, CJ (as His Lordship then was) held the cross objection liable to fail in view of the original appeal itself failing in view of its having been filed in the name of a company which was no longer in existence. In Dhani Ram vs. Smt. Sushila Devi, AIR 1977 HP 83 , R.S. Pathak, CJ (as His Lordship then was) held that though Order 41 Rule 22 speaks of an appeal, it contemplates a valid appeal which ordinarily calls for consideration on its merits. It is such an appeal the pendency of which would entitled the respondent to file a cross objection. An appeal which is barred by time is not a valid appeal and the cross objections too shall have to be rejected. In Chanchalgauri Ramanlal and others vs. Narendrakumar Chandulal and others, AIR 1986 Gujarat 55, a Division Bench presided over by Honble the Chief Justice held that a cross objection filed in a validly instituted appeal against a decree is as good as an appeal and shall have to be disposed of on merits but if an appeal does not lie any cross objection in such an appeal would not call for adjudication on merits. In CharityCJ speaking for the Division Bench held that in aappeal where the delay was refused to be condoned the appeal itself was rendered not maintainable and the cross objection would not survive for consideration. In A.L.A. Alagappa Chettiar vs. Chockalingam Chetty & others (supra), Wallis, C.J. opined that the right of respondent to proceed by way of memorandum of objections is strictly incidental to the filing of the original appeal in time and it is open to a party against whom a memorandum of objections has been filed to set up the bar that the original appeal was filed out of time. We are in respectful agreement with the view of the law taken by several High Courts and noticed hereinabove. The cross objection is available to be heard if the original appeal is available for hearing on merits. A view to the contrary has been taken by a Division Bench of Allahabad High Court in Shankar Lal and Anr. vs. Sarup Lal and Anr. (1912) 34 ILR Allahabad 140, and Nanak Bakhsh and others vs. Wazir Singh and others, (1909) 4 IC 625 (Punjab Chief Court). Both the decisions are not supported by any convincing reasoning or logic and to say the least do not lay down the correct law, in our opinion.