Case: Commissioner, M.P. Housing Board &amp; Others Vs. M/s. Mohanlal &amp; Company

3. The present litigation has a history. The respondent had entered into a contract for construction of a commercial complex at Bittan Market,Arera Colony, Bhopal on 29th June, 2009. During the subsistence of the contract, certain disputes arose between the parties and the matter was arbitrated upon. Clause 29 of the contract, on the basis of which the matter was referred to arbitration, reads as follows:"29Except as otherwise provided in this contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions, herein before mentioned and as to thing whatsoever, in any way, arising out of or relating to the contracts, designs, drawings, specifications, estimates, concerning the work, or the execution or failure to execute the same, whether arising during the progress of the work or after the completion or abandonment thereof, shall be referred to the Dy. Housing Commissioner in writing for his decision within a period of thirty days of such occurrence. Thereupon, the Dy. Housing shall give his written instructions and/or decision within a period of sixty days of such written request. This period can be extended by mutual consent of the parties. If decided amount is more than Rs. 25,000/When the matter stood thus, as it appears, wisdom dawned upon the respondent and he thought that he could take a somersault. And that propelled him to file an application under Section 11 of the 1996 Act before the High Court of Madhya Pradesh, which formed the subject matter of Arbitration Case No.135 of 2010, for seeking appointment of an arbitrator to adjudicate the disputes. It was contended before the High Court that clause 29 of the contract could not be treated as an arbitration clause and, therefore, the court should appoint an arbitrator. To bolster the said stand, reliance was placed on M.P. Housing Board and Another v. Sohanlal Chourasia and Another (2008) 2 M.P.L.J. 103.6. The learned Single Judge reproduced the relevant passages from the said judgment and came to hold as follows:"From the aforesaid clause, it is seen that if any dispute arises between the parties, the matter has to be resolved by reference to the Dy. Housing Commissioner and, thereafter, to the Addl. Housing Commissioner. The provisions of Arbitration Clause clearly indicates that the Arbitrator appointed under the agreement is a named arbitration namely the Addl. Housing Commissioner and he has to exercise, powers available under the Arbitration Act of 1940. Available on record is an award passed by the Arbitrator i.e. the Addl. Housing Commissioner vide Annexure P5 and once in terms of clause 29 of the Agreement, the arbitrator i.e. the Addl. Housing Commissioner has adjudicated the dispute and has passed an award, no further action is to be taken in these proceedings against u/s 11, as the sole arbitrator in accordance with Arbitration Agreement has already adjudicated the dispute between the parties. If the petitioner is aggrieved by the adjudication of the dispute, he can now challenge the award of the Arbitration in accordance with law.In the light of the resolution of the dispute by the sole Arbitator in accordance with clause 29 of the agreement, this court does not find any ground to interfere into the matter. The judgment relied upon by Sh. Shashank Shekhar is clearly distinguishable. In that case the question and the power is exercised by the Addl. Housing Commissioner u/s 29 of the agreement in question. In the said case, it is only held that a Dy. Housing Commissioner deciding the claim under clause 29 is not an Arbitrator."7. We must immediately state that the said order was not assailed and, has been allowed to attain finality.8. After facingbefore the High Court in his effort to get an arbitrator appointed, the respondent thought it appropriate to file an objection under Section 34(2) of the 1996 Act to challenge the award. The said application was filed on 26th September, 2011. It is apt to note here that the award was passed on 11th November, 2010.9. The respondent, along with his objection, filed an application under Section 14 of the Act seeking exclusion of the time consumed in the proceedings asserting that he was bonafidely prosecuting the case in the court having no jurisdiction. The learned Additional District Judge, upon hearing the learned counsel for the parties, allowed the application on the foundation that the respondent was entitled to exclusion of time under Section 14 of the Act.10. Being grieved by the aforesaid order, the appellant preferred civil revision before the High Court and, as has been stated earlier, the High Court did not find any infirmity in the order passed by the learned Additional District Judge and, accordingly, gave the stamp of approval to the same.

Court's reasoning:
14. The aforesaid authority makes it absolutely clear that the scheme of limitation provided under the 1996 Act is different than 1940 Act; and, therefore, an application filed beyond the period of limitation under Section 34(3) of 1996 Act would not be an application in accordance with the said provision. As is evident from factual narration, the application was filed beyond the period prescribed in the said provision. Therefore, it could not have been entertained under the 1996 Act. However, the appellants sought exclusion of the time spent in the proceedings in court as envisaged under Section 14 of the Act. It is settled in law that Section 14 of the Act applies to Section 34(3) of the 1996 Act. It has been so held in State of Goa v. Western Builders, 2006(3) R.C.R.(Civil) 475 : (2006) 6 SCC 239  and Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department and others, 2008(2) R.C.R.(Civil) 897 : (2008) 7 SCC 169. From the aforesaid passage, it is clear as noon day that there has to be a liberal interpretation to advance the cause of justice. However, it has also been laid down that it would be applicable in cases of mistaken remedy or selection of a wrong forum. As per the conditions enumerated, the earlier proceeding and the latter proceeding must relate to the same matter in issue. It is worthy to mention here that the words "matter in issue" are used under Section 11 of the Code of Civil Procedure, 1908. As has been held in Ramadhar Shrivas v. Bhagwandas, 2005(2) R.C.R.(Rent) 584 : 2005(4) R.C.R.(Civil) 793 : (2005) 13 SCC 1  the said expression connotes the matter which is directly and substantially in issue. We have only referred to the said authority to highlight that despite liberal interpretation placed under Section 14 of the Act, the matter in issue in the earlier proceeding and the latter proceeding has to be conferred requisite importance. That apart, the prosecution of the prior proceeding should also show due diligence and good faith.18. In the case at hand, the respondent appeared before the learned arbitrator and after the award was passed, chose not to file any objection to the award immediately. On the contrary, the respondent filed an application under Section 11 of 1996 Act before the High Court for appointment of an arbitrator. As has been stated earlier, the learned Single Judge of the High Court distinguished the decision in the case of Sohanlal Chourasia and Another (supra) and came to hold that the application was not maintainable. However, he granted liberty to the respondent to file an objection in accordance with law. The words "in accordance with law" gain significance. It allows an argument to be canvassed by the respondent that the time spent in earlier proceeding deserved exclusion while computing the period of limitation. But, an ominous one for the respondent, whether Section 14 is at all attracted? Had the learned Single Judge stated that the period consumed for pursuing the remedy under Section 11 of the 1996 Act, would be excluded for filing objection, possibly the matter would have been different. In any case, we do not intend to dilate further on that aspect. It is quite clear that the quoted portiondoes not so indicate. It only grants liberty to the respondent to file an objection in accordance with law. Section 14(1) of the Act which we have reproduced, lays down that the proceedings must relate to the same matter in issue. It emphasises on due diligence and good faith. Filing of an application under Section 11 of the 1996 Act for an appointment of arbitrator is totally different than an objection to award filed under Section 34 of the 1996 Act. To put it differently, one is at the stage of initiation, and the other at the stage of culmination. By no stretch of imagination, it can be said that the proceedings relate to "same matter in issue". Additionally, the respondent had participated in the arbitral proceeding and was aware of passing of the award. He, may be, by design, invoked the jurisdiction of the High Court for appointment of an arbitrator. We are absolutely conscious that liberal interpretation should be placed on Section 14 of the Act, but if the fact situation exposits absence of good faith of great magnitude, law should not come to the rescue of such a litigant. We say so because the respondent instead of participating in the arbitration proceedings, could have immediately taken steps for appointment of arbitrator as he thought appropriate or he could have filed his objections under Section 34(2) of the Act within permissible parameters but he chose a way, which we are disposed to think, an innovative path, possibly harbouring the thought that he could contrive the way where he could alone rule. Frankly speaking, this is neither diligence nor good faith. On the contrary, it is absence of both.