Union Of India V/S Simplex Infrastructure Ltd

 REPORTABLE IN THE CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 4892 4893 OF 2017 Arising out of SLPNos. 33363 333616 Union of India …. Appellant M S. Simplex Infrastructures Ltd. .... Respondent JUDGMENT A.M.KHANWILKAR J The short question that arises for consideration in this appeal is: whether an intra Court Letters Patent Appeal under clause 15 of the Letters Patent of High Court at Calcutta can be maintained against an order passed by the Single Judge on an application for condonation of delay filed along with the petitionunder Section 34 of the Arbitration and Conciliation Act 1996Briefly stated the Respondent being the lowest bidder was allotted a contract by the Appellant in respect of work styled as “Construction of Tsunami Reconstruction Project in A & N Islands SH: Construction of 821 units of permanent sheltersRE TRP Kamorata 07 08 638 dated 25th February 2008. The Respondent then invoked the arbitration clause in the agreement pursuant to which the competent authority appointed an Arbitrator vide letter no. 23(6)TRP 08 09 469 dated 27th August 2008. The arbitration hearing concluded on 27th March 2014. An Award was published vide letter No.ARB RKM TRP Case 005 2014 20 dated 27th October 2014 The Appellant received a hard copy of the Award on 31st October 2014 wherein the Arbitrator held that the rescindment order passed by the Appellant was illegal as time was not the essence of the contract and further directed the Appellant to pay the final bill submitted by the Respondent. Aggrieved the Appellant filed a petition for setting aside the arbitral award before the District Court at Port Blair being Appeal No. 15. The Respondent on the other hand filed an execution proceeding in relation to the self same Award before the High Court at Calcutta being EC Case No.734 of 2015. The Appellant then preferred an application in Appeal No.15 before the District Court for stay of the Award The District Judge allowed the said application. That fact was brought to the notice of the High Court at Calcutta in execution proceedings initiated by the Respondent. The High Court vide order dated 15th September 2015 disposed of the Execution petition filed by the Respondent and gave liberty to the Respondent to appear before the District Court and to resist the proceedings pending in that court. The Respondent then filed objections in the proceedings before the District Court. According to the Respondent the appeal before the District Court was not maintainable as the application under Section 9 of the Arbitration Act with regard to the subject matter of the arbitration proceedings was filed before the High Court at Calcutta. It was then contended that the District Court did not have territorial jurisdiction as per Section 42 of the Act and that the petition under Section 34 against the subject award can proceed only before the High Court. The District Court vide order dated 12 th February 2016 accepted that objection. It held that the petition filed by the Appellant under Section 34 of the Act was not maintainable on account of territorial jurisdiction The Appellant then challenged the Award by filing Arbitration Petition No. 2216 before the High Court at Calcutta under Section 34 of the Act and prayed for setting aside the Arbitral Award. The Appellant also filed an application being G.A. No: 958 of 2016 for condoning delay mentioning the circumstances in which the Appellant had to approach the High Court under Section 34 of the Act. The learned Single Judge after hearing the parties allowed the said application for condonation of delay being satisfied that sufficient cause was made out by the Appellant for condoning the delay of 131 days. The said order reads thus “The Court: After considering the submissions made by the learned advocate for the applicant petitioner and upon perusing the application for condonation of delay it appears that sufficient cause has been shown to explain the delay in filing the application being AP No.2216 and as such the delay is Page 5 condoned. The application for condonation of delay being GA No.9516 is accordingly allowed.” Aggrieved by the aforementioned order dated 27th April 2016 the Respondent preferred an intra court letters patent appeal being G.A: No.16516. This appeal was contested by the Appellant inter alia on the ground that such letters patent appeal was not maintainable. The Division Bench adverted to the relevant decisions pressed into service by both the sides including the decision of this Court in Fuerst Day Lawson Limited v. Jindal Exports Limited.1 It has also noted that the order under appeal is not appealable under Section 37 of the Act. The Division Bench however relied on the judgment of the Division Bench of the High Court at Calcutta in the case of Modi Korea Telecommunication Ltd. V. Appcon Consultants Pvt. Ltd.2 and of the special Bench of three Judges in M s. Tanusree Art Printers & Anr. V. Rabindra Nath Pal 3 to hold that the three Judge Bench decision of the High Court was directly on the point and was binding on it. It then proceeded to conclude that the order passed by the learned Single 18 SCC 333 22 CHN 107 32 CHN 213 Judge sensu stricto was not falling within the provisions of the Act and was without jurisdiction. On that logic the Division Bench reversed the order of the learned Single Judge by invoking its jurisdiction under Letters Patent Appeal The Appellant contends that the Division Bench committed manifest error in entertaining the appeal disregarding the settled legal position restated by this Court in Fuerst Day Lawson Limited supra). It is submitted that the Act is a self contained code. It provides for a remedy against the arbitral award including for condonation of delay in filing of the petition under Section 34 of the Act. The order passed by the learned Single Judge on the subject application for condonation of delay in filing petition under Section 34 was therefore in relation to the arbitration proceedings. Even if the discretion or for that matter jurisdiction is misapplied and is not in accordance with law that can be no reason to hold that the order in such proceedings was not under the provisions of the Act as such. It would nevertheless come within the ambit of the Act Further such order has not been made appealable under Section 37 of the Act as applicable at the relevant time. The correctness whereof could be assailed before the appropriate forum but not by way of a Letters Patent Appeal under clause 15. The Appellant has stoutly relied on the dictum of this Court in the case of Fuerst Day Lawson Limitedto buttress this contention The Respondent on the other hand has supported the view taken by the Division Bench in the impugned judgment being in conformity with the dictum of the special bench of the High Court of three Judges in the case of M s. Tanusree Art Printers & Anr supra). It is submitted that as the order passed by the learned Single Judge is not in terms of the provisions of the Act and thus without jurisdiction the exercise of powers under clause 15 of the letters patent appeal was just and proper. It was submitted that Section 34 of the Act gives no jurisdiction to the court to condone delay in filing of the petition for setting aside the award beyond the period prescribed in sub Section thereof. After expiry of the prescribed period it is submitted that even though it may be a case of gross hardship caused to the Appellant because of the ill advised remedy pursued before the District Court and virtually being rendered remediless that is the inevitable consequence of the mandate of Section 34 of the Act. Further the explanation offered by the Appellant in the application for condonation of delay cannot be reckoned as a sufficient cause in law. Thus the learned Single Judge committed manifest error in entertaining the same to show indulgence to the Appellant by condoning the delay of 131 days in filing of the petition under Section 34 of the Act After hearing the counsel for the parties and going through the decisions relied upon by both sides we have no hesitation in allowing this appeal. The efficacy of the provisions of the Act has been expounded by this Court in the case of Fuerst Day Lawson Limited 11 SCC 672 be clear from the following para 10 of the judgment:andof the Arbitration Act as the same is a self contained code relating to 89. It is thus to be seen that Arbitration Act 1940 from its inception and right through to 2004in the case of Arun Dev Upadhyaya V s. Integrated Sales Service Ltd & Anr.5 11. The Division Bench of the High Court however made a fine distinction by holding that the judgment of the learned Single Judge of condoning delay in filing of the petition under Section 34 of the Act was without jurisdiction and not in terms of the provisions of the Act. It is not possible to countenance this approach. The Division Bench in our opinion was not right in observing that the decision in M s. Tanusree Art Printers & Anr. being of a special bench of three Judges of the same Court was binding in spite of having noticed the decision of this Court in Fuerst Day Lawson Limited which is directly on the point and was pressed into service by the Appellant. Neither the Division Bench of the High Court at Calcutta which dealt with the case of Modi Korea Telecommunication Ltd. nor the three Judges Bench which decided the case of M s. Tanusree Art Printers & Anr supra) had the benefit of the judgment of this Court in Fuerst Day Lawson Limitedwhich is later in time. 59 SCC 524 Page 11 12. The Act as applicable to the present case provides for a remedy of appeal in terms of Section 37 of the Act. The same reads “37. Appealable orders. An appeal shall lie from the following orders to the Court authorized by law to hear appeals from original decrees of the Court passing the order namely: a) Refusing to refer the parties to arbitration under section 8 b) granting or refusing to grant any measure under section 9 c) setting aside or refusing to set aside an arbitral award under section 34 2) An appeal shall also lie to a Court from an order of the arbitral tribunal a) accepting the plea referred to in sub section or sub sectionof section 16 or b) granting or refusing to grant an interim measure under 3) No second appeal shall lie from an order passed in appeal under this section but nothing in this section shall affect or take away any right to appeal to the Supreme 13. On a bare reading of this provision it is noticed that remedy of appeal has been provided only against an order of setting aside or refusing to set aside an arbitral award under Section 34(1)of the Act for condoning delay in filing of the petition for setting aside the arbitral award. Hence the remedy of Letters Patent Appeal against that decision is unavailable. The question as to whether the learned Single Judge had rightly exercised the discretion or otherwise could be assailed by the Respondent before this Court by way of special leave petition. But certainly not by way of a Letters Patent Appeal under clause 15 For even if the learned Single Judge may have committed manifest error or wrongly decided the application for condonation of delay that judgment is ascribable to exercise of jurisdiction under Section 34(3) of the Act. In other words whether the prayer for condonation of delay can be accepted or whether the application deserves to be rejected is a matter well within the jurisdiction of that court. 15. The learned counsel for the Respondent was at pains to persuade us that the decision of the learned Single Judge is palpably wrong and cannot be sustained in law. However we cannot permit the Respondent to agitate that plea in the present appeal preferred by the Appellant challenging the impugned decision of the Division Bench. Instead we deem it appropriate to leave all contentions available to both sides open and give liberty to the Respondent to challenge the judgment of the learned Single Judge dated 27th April 2016 in G.A.No.9516 if so advised 16. Accordingly the impugned judgment of the Division Bench of the High Court at Calcutta dated 20th June 2016 passed in G.A.No.16516 in APOT No. 183 2016 in A.P. No. 224 2016 is set aside with liberty to the Respondent to challenge the judgment of the learned Single Judge dated 27th April 2016 in G.A No. 9516 in AP No.: 2216. All contentions available to both sides with regard to the correctness of the Judgment of the Learned Single Judge dated 27th April 2016 are kept open. 17. While parting we may take note of the order dated 7th November 2016 passed by this Court directing the Appellant to deposit Rs. 5 00 00 000 in the Registry of this Court and further to invest the same in a short term fixed deposit. We are informed that the Appellant has complied with the said order and deposited the amount in the Registry. That has been invested by the Registry. The said amount along with interest accrued thereon be transferred to an escrow account linked to the proceedings pending before the High Court at Calcutta being A.P No.2216. The High Court will be free to pass appropriate directions regarding disbursement or investment of the said 18. The appeals are allowed in the above terms with no order as to ….. …..J (Dipak Misra .….. ..J New Delhi Dated: April 13 2017

Summary: “A negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done” The factual matrix of this case is the Respondent being the lowest bidder was allotted a contract by the Appellant in respect of work styled as “Construction of Tsunami Reconstruction Project in A &amp; N Islands. SH: Construction of 821 units of permanent shelters (single stories) including internal water supply sanitary installation &amp; internal Electrification in the Island of Teressa.“The contract agreement was entered into between the parties on 5th October, 2006. According to the Appellant, the Respondent failed to adhere to the time frame for completion of the contract.As a result, a show cause notice was issued to the Respondent on 27th April, 2007 to show cause as to why the contract should not be rescinded by invoking clause 3 of the agreement. The Respondent submitted its response thereto on 8th May, 2007.Despite the dismal performance of the Respondent, the Appellant gave it one more opportunity to improve on the performance vide a letter dated 20th June, 2007. ISSUE BEFORE THE COURT:Whether an intra-Court Letters Patent Appeal under clause 15 of the Letters Patent of High Court at Calcutta can be maintained against an order passed by the Single Judge on an application for condonation of delay filed along with the petition (for setting aside an Arbitration Award) under Section 34 of the arbitration an concillation act hereinafter referred to as ‘the Act’)?Whether the prayer for condonation of delay can be accepted?Whether the application deserves to be rejected, is a matter well within the jurisdiction of that court? RATIO OF THE COURT:The Appellant held some points that he had filed a petition for setting aside the arbitral award before the District Court at Port Blair being Appeal No. 2 of 2015. The Respondent, on the other hand, filed an execution proceeding in relation to the self same Award before the High Court at Calcutta being EC Case No.734 of 2015.The Appellant then preferred an application in Appeal No.2 of 2015 before the District Court, for stay of the Award. The District Judge allowed the said application. That fact was brought to the notice of the High Court at Calcutta in execution proceedings initiated by the Respondent. The High Court vide order dated 15th September, 2015, disposed of the Execution petition filed by the Respondent and gave liberty to the Respondent to appear before the District Court and to resist the proceedings pending in that court.The Appellant contends that the Division Bench committed manifest error in entertaining the appeal disregarding the settled legal position restated by this Court in Fuerst Day Lawson Limited (supra). It is submitted that the Act is a self contained code. It provides for a remedy against the arbitral award, including for condonation of delay in filing of the petition under Section 34 of the Act. The order passed by the learned Single Judge on the subject application for condonation of delay in filing petition under Section 34 was, therefore, in relation to the arbitration proceedings.Even if the discretion or for that matter jurisdiction is misapplied and is not in accordance with law, that can be no reason to hold that the order in such proceedings was not under the provisions of the Act as such. It would nevertheless come within the ambit of the Act. Further, such order has not been made appealable under Section 37 of the Act as applicable at the relevant time. The correctness whereof could be assailed before the appropriate forum, but not by way of a Letters Patent Appeal under clause 15. The Appellant has stoutly relied on the dictum of this Court in the case of Fuerst Day Lawson Limited (supra) to buttress this contention.The Respondent, on the other hand, has supported the view taken by the Division Bench in the impugned judgment being in conformity with the dictum of the special bench of the High Court of three-Judges in the case of M/s. Tanusree Art Printers &amp;Anr.(supra). It is submitted that as the order passed by the learned Single Judge is not in terms of the provisions of the Act and thus without jurisdiction, the exercise of powers under clause 15 of the letters patent appeal was just and proper. It was submitted that Section 34 of the Act gives no jurisdiction to the court to condone delay in filing of the petition for setting aside the award, beyond the period prescribed in sub-Section (3) thereof.After expiry of the prescribed period, it is submitted that even though it may be a case of gross hardship caused to the Appellant because of the ill advised remedy pursued before the District Court and virtually being rendered remediless, that is the inevitable consequence of the mandate of Section 34 of the Act. Further, the explanation offered by the Appellant in the application for condonation of delay cannot be reckoned as a sufficient cause in law. Thus, the learned Single Judge committed manifest error in entertaining the same to show indulgence to the Appellant by condoning the delay of 131 days in filing of the petition under Section 34 of the Act.This court held after hearing all the submissions that the efficacy of the provisions of the Act has been expounded by this Court in the case of Fuerst Day Lawson Limited (supra). After analyzing the relevant provisions and the decisions on the subject and in particular the decision in P.S. Sathappan v. Andhra Bank Ltd.[4], it has been held that the Act is a self contained Code relating to arbitration. In paragraphs 88 and 89 of the reported judgment, this Court opined:It is, thus, to be seen that Arbitration Act, 1940, from its inception and right through to 2004 (in P.S. Sathappan) was held to be a self- contained code. Now, if the Arbitration Act, 1940 was held to be a self- contained code, on matters pertaining to arbitration, the arbitration act which consolidates, amends and designs the law relating to arbitration bring it, as much as possible, in harmony with the UNCITRAL Model must be held only to be more so.Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapurkar, J., that it carries with it “a negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done”. In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special Act sets out a self-contained code the applicability of the general law procedure would be impliedly excluded.”The court stated that after this decision, there is no scope to contend that the remedy of Letters Patent Appeal was available in relation to judgment of the learned Single Judge in question. This legal position has been restated in the recent decision of this Court (to which one of us was party, Justice Dipak Misra), in the case of Arun Dev Upadhyaya V/s. Integrated Sales Service Ltd &amp;Anr.[5]The Division Bench of the High Court, however, made a fine distinction by holding that the judgment of the learned Single Judge of condoning delay in filing of the petition under Section 34 of the Act was without jurisdiction and not in terms of the provisions of the Act. It is not possible to countenance this approach.The court observed that the issue is squarely answered against the Respondent by the decision of this Court in Fuerst Day Lawson Limited (supra). In that, the Judgment of the learned Single Judge dated 27th April, 2016, was passed on an application purported to be under Section 34(3) of the Act, for condoning delay in filing of the petition for setting aside the arbitral award. Hence, the remedy of Letters Patent Appeal against that decision is unavailable. DECISION HELD BY COURT:The court stated that the order dated 7th November, 2016 passed by this Court directing the Appellant to deposit Rs. 5,00,00,000/- (Rupees Five Crores) in the Registry of this Court and further to invest the same in a short term fixed deposit.The said amount along with interest accrued thereon be transferred to an escrow account linked to the proceedings pending before the High Court at Calcutta being A.P. No.224 of 2016.The High Court will be free to pass appropriate directions regarding disbursement or investment of the said amount. The appeals are allowed in the above terms with no order as to costs