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2016 (7) TMI 1147 - SUPREME COURT

2016 (7) TMI 1147 - SUPREME COURT - TMI - Appointment of arbitrator - Held that:- 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 portion herein-above does not so indicate. It only grants liberty to the respondent to file an objection in accord .....

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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 litig .....

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good faith. On the contrary, it is absence of both. - In view of the aforesaid analysis, we find that the High Court has fallen into grave error by concurring with the opinion expressed by the learned Additional District Judge and, therefore, both the orders deserve to be lancinated and, accordingly, we so direct. - CIVIL APPEAL NO.6573 OF 2016 - Dated:- 19-7-2016 - Dipak Misra ANDRohinton Fali Nariman JJ JUDGMENT: Leave granted. 2. The present appeal, by special leave, is directed against .....

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e present litigation has a history. The respondent had entered into a contract for construction of a commercial complex at Bittan Market, E-5, 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: 29 - Except as otherwise provided in this contract all questions and disputes relating to .....

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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 ₹ 25,000/- the same shall be referred to the Housing Commissioner for his perusal. Upon receipt of written instructions, or decision, the parties shall promptly proceed without delay to comply such decision or instructions. If the Dy. Housing Com .....

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ion of Addl. Housing Commissioner he shall then act as sole arbitrator, and he shall pass an award after hearing both the parties, strictly in accordance with the provisions of the Arbitration Act, 1940 and the rules made thereunder for the time being in force. If the contractor does not make any demand for arbitration in respect of claim(s) in writing within ninety days on receiving information from the Executive Engineer that the final bill is ready for payment, the claim of the contractor sha .....

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assed an award on 11th November, 2010. Be it stated, both the parties appeared before the learned arbitrator and on the basis of the materials brought on record, the learned arbitrator passed the award. As is manifest from record, the arbitrator did not find any justification to allow any of the claims of the respondent-contractor. 5. 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 appl .....

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nother. 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 .....

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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. Housi .....

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he 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 foundatio .....

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or the respondent. 12. The singular issue that emerges for consideration is whether in the obtaining factual scenario, Section 14 of the Act would be applicable. To appreciate the controversy, it is necessary to refer to Section 34(3) of the 1996 Act. It reads as follows: 34(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, fr .....

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oncerned, the crucial words are but not thereafter used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase but not thereafter wholly otiose. .....

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accordance with that sub-section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The importance of the period fixed under Section 34 is emphasised by the provisions of Section 36 which provide that where the time for making an application to set aside the arbitral award under Section 34 has expired the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of .....

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d 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 vs. Western Builders and Consolidated Engineering Enterprises vs. Principal Secretary, Irrigation Department and others. 15. Having stated thus, we are ob .....

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uded, 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. 16. In Consolidated Engineering Enterprises (supra), the Court, while dealing with the conditions in which Section 14 will be applicable, enumerated five conditions which are as follows:- (1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party; (2) The prior .....

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to be interpreted so as to advance the cause of justice rather than abort the proceedings. It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the section is intended to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bona fide litigious acti .....

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ure, 1908. As has been held in Ramadhar Shrivas vs. Bhagwandas 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 th .....

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tainable. 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 .....

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