IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL (L) NO. 300 OF 2008
CHAMBER SUMMONS NO. 745 OF 2008
EXECUTION APPLICATION NO. 69 OF 2008
ARBITRATION PETITION (L) NO. 163 OF 2007
AWARD DATED 23RD DECEMBER, 2006
C.A.NO. CEPZ/BOM/04 OF 1995-96
M/s. D.Gowadia & Co. ]
a partnership firm registered under ]
the Indian Partnership Act, having ]
their office at Plot No.20, Four ]
Bungalows, Andheri (West), ]
Mumbai - 400 052. ] ....Appellants. (Orig.Respondents)
Union of India, ]
Through -The Chief Engineer, Pune ]
Manekji Mehta Road, Pune 411011] ....Respondents. (Orig. Petitioners)
Mr.Mahendra Shah, Sr.Advocate i/by Mr. Harshad Palve for the Appellants. Mr.S.R. Rajguru a/w Ms. Rutuja Ambekar and Mr. S.S. Kanetkar for the Respondents.
CORAM :- S. B. MHASE &
R. V. MORE, JJ.
DATE OF RESERVING:- 14-08-2008
DATE OF PRONOUNCEMENT :- 06-03-2009.
JUDGMENT: (Per S.B. Mhase, J.)
1. The Arbitration Petition (Lodging) No. 163 of 2007 was filed by the Union of India against the appellants, challenging the award passed by the Sole Arbitrator Shri S.R. Hosalkar in Civil Application No. CEPZ/BOM/04 of 1995-96. The said Award was passed on 23rd December, 2006 and it was served on the parties on 26th December, 2006. The said Arbitration Petition was filed under Section 34 of the Arbitration & Conciliation Act,1996 (for short "Arbitration Act'"). The Union of India-Respondents filed these Arbitration proceedings on 22nd March, 2007. Thus at this stage, we note that the Arbitration proceedings were filed by the Union of India within a period of three months as provided in Section 34 (3) of the Arbitration Act.
2. On 23rd March, 2007, the Chamber Registrar has scrutinized the Petition and has drawn the office objections which are 10 in number and since then, the Petition was pending for removal of office objections. It appears from the book maintained by the Board Clerk that on 3rd April, 3
2007, the Petition was taken by the Advocate for Union of India for office compliance and to that effect the Board Clerk has obtained signature of the Advocate for the Union of India.
3. The matter then appeared before the Prothonotary and Senior Master on 31st July, 2007. At that time, the counsel for the Union of India was present and the Prothonotary and Senior Master passed an order that the Petitioner and/or their advocate to remove the office objections on the petition and get the same numbered and registered on or before 7th August, 2007 failing which the Petition would stand rejected under Rule 986 of the Original Side Rules. (It is to be noted that at that time, the Original Arbitration Petition (Lodging) No. 163 of 2007 viz. the original proceedings in which the Prothonotary and Senior Master passed an order, was not placed before the Prothonotary and Senior Master because the said proceeding was with Advocate for Union of India. Simply the Board was prepared and the Prothonotary passed an order on the Board, which was subsequently transmitted into the books maintained by the Prothonotary and Senior Master, wherein the original orders are to be maintained).
4. Then it appears that there is an endorsement on the said Petition that all objections are complied with and the said endorsement has been made 4
on 8th August, 2007, that is one day later than 7th August, 2007. It appears further that the said endorsement has been signed by an advocate of the Union of India. In view of this endorsement, the Chamber Registrar also made an endorsement "'filed'" and accordingly, signed on the original proceedings. In spite of office objections being complied in this manner and the order has been passed by the Chamber Registrar to the effect that the Petition could not proceed further for registration because advocate for Union of India had not re-submitted the Petition to office. It must not have been handed over to office by said advocate because said endorsement would not have protected the petition as said endorsement was made one day later than the period granted by the Prothonotary and Senior Master.
5. Thereafter, it appears that the Appellants who are the Original Respondents in the Arbitration proceedings became aware of the fact that in view of the orders of the Prothonotary & Senior Master dated 27th July, 2007 referred to above, the Petition stands disposed of for non-compliance of said order on or before 7th August, 2007. Therefore, the Respondents filed an Execution Application No. 69 of 2008 on 27th February, 2008 and obtained an attachment order some time in May-2008 and all the Accounts of the present Respondents viz. the Applicant in the Arbitration proceedings were seized and therefore, on or about 5th May, 2008, the Union of India 5
viz. the Respondents filed a Chamber Summons No. 745 of 2008 for restoration of the Arbitration Petition (Lodging) No. 163 of 2007 and for vacating the attachment order passed in Execution Application No. 69 of 2008. The said matter appeared before the learned Single Judge of this Court during the vacation on 28th May, 2008 and the learned Single Judge of this Court, after hearing the parties, restored the Arbitration Petition (Lodging) No.163 of 2007 and the attachment was raised subject to deposit of amount of Rs.46,84,335/- (Rupees forty six lacs eighty four thousand three hundred thirty five only). (Even at this time also the original Arbitration proceeding was not in the office and it was with advocate for Union of India).
6. Being aggrieved and dissatisfied with the orders of the learned Single Judge passed in Chamber Summons No. 745 of 2008, the Original Respondent in the Arbitration Petition, and the Applicant in the Execution Application No. 69 of 2008 has filed the present Appeal.
7. The chronological events in respect of the Arbitration Petition have been stated earlier. But it is interesting to note that after the restoration orders were passed as stated above, it was found that the original Arbitration Proceeding is not traceable in the office. It appears from the 6
original Arbitration Petition that there is an endorsement made by the Board Clerk on 9th June, 2008 that this matter has been received from the Petitioner on 9th June, 2008 at 11.30 a.m. but he does not know who presented it. From this endorsement, it cannot be gathered as to who has given this Petition to the Board Clerk. It can only be said that somebody on behalf of the Union of India has submitted the Petition. However, the fact remains that from 3rd April, 2007 to 9th June, 2008, the Petition was with the same officer of the Union of India and it was submitted to the office on 9th June, 2008. One another inference is equally possible in view of the endorsement made on 8th October, 2007 that on 8th October, 2007, the Petition was brought to this office. Therefore, on 8th October, 2007, the Chamber Registrar has made endorsement of filing. However, in view of the endorsement on 9th June, 2008, it has to be inferred that again from 8th October, 2007 onwards, the Petition was not in the office. We are placing these facts on record because on this Petition there are further endorsement viz. "'Rejected under Rule 986'" on 8th August, 2007 singed by the Prothonotary and Senior Master and below that "'Set aside by order dated 28th May, 2008'". The order dated 28th May, 2008 is the order under challenge before this Court.
8. However, the question remains that if the Petition was not in the 7
office after 3rd April, 2007 till 8th October, 2007 and/or 9th June, 2008, then how the endorsement of rejection of the Petition under Rule 986 on 8th August, 2007 appeared on the Petition. Naturally, an inference follows that when the Petition was re-submitted on 9th June, 2008, for making the record straight, the office has made those endorsements after 9th June, 2008. The endorsement of the rejection by the Prothonotary and Senior Master on 8th August, 2007 cannot be assumed to have been made prior to 8th October, 2007 because in that event the Chamber Registrar would not have allowed the compliance of the office objection and would not have made an endorsement on the filing in the teeth of the said endorsement on the Appeal. Therefore, the only inference which can be drawn is that the endorsement in respect of the Prothonotary and Senior Master's orders were passed on this Petition after 9th June, 2008, in order to make the record straight.
9. These are the facts since the institution of the Arbitration proceedings till the orders for the restoration of the Arbitration Proceedings are passed by the learned Single Judge of this Court on 20th May, 2008. As referred above, the said order of the learned Single Judge passed on 20th May, 2008 is under challenge. By this order passed in Chamber Summons No. 745 of 2008 in Execution Application No.69 of 2008 in Award dated 23rd 8
December, 2006, the learned Single Judge has restored the Arbitration Petition No. 255 of 2008 and has also vacated the order of the attachment passed in Execution Petition on deposit of principal amount of Rs.46,84,335/- (Rupees forty six lacs eighty four thousand three hundred thirty five only) and also imposed costs of Rs. 2,500/- (Rupees two thousand five hundred only) upon the Union of India.
10. The grievance of the learned counsel appearing for the Appellants is that the matter was moved in vacation and the Appellants could not engage an advocate and his regular Advocate was out of station and therefore, the Appellant was not given a fair opportunity of pleading and arguing his case. The Appellant could not point out the facts and circumstances under which the Arbitration Petition was dismissed. We do not find any substance in this argument because the Respondents had served a notice to the effect that the matter is coming before the vacation Court on 27th May, 2008 at 11.00 hours and the said notice was served on 26th May, 2008. According to the said notice, it is admitted by the Appellant that one of the partner of the Appellants - M/s. Gowadia & Co. appeared in the Court and requested for an adjournment to enable them to engage the Advocate and to file necessary affidavit and, accordingly, the matter was adjourned for one day i.e. it was kept on 28th May, 2008 and on that day after hearing the parties, 9
the matter was decided by the Court. Since the Court granted an adjournment to enable appellant to file a reply and or to engage a lawyer, it was the duty of the Appellant to engage a lawyer but instead of that Appellant appeared in person and argued the matter before the Court. On going through the order of the Court also we find that the Court has taken a note of the fact that the order was passed on 31st July, 2007 by the Prothonotary and Senior Master wherein the Respondents were directed to comply the office objection on or before 7th August, 2007 failing which the matter would stand rejected automatically. The Court has also taken a note of the fact that thereafter the matter was entertained and held that it was the negligence on the part of the Union of India and its Officers. The Court has taken a view that in the interest of justice and since the public funds are involved, it is necessary to restore the matter. The Court observed that by restoring such matter, the Appellants would not be put into any loss and interest of justice would be sub-served if a time of two weeks is granted to the Union of India to remove all the office objections. What is to be noted is that the Union of India has lodged the Arbitration Petition within time. Office objections were raised and those office objections were not removed within a stipulated time and, therefore, the Petition was rejected in view of the order passed by the Prothonotary and Senior Master on 31st July, 2007, invoking Rule No. 986 of the Original 10
Side Rules. Therefore, the Petition was not rejected on merit but on technical ground and, therefore, the learned Single Judge has rightly, in order to make substantial justice to the matter, allowed the Respondent- Union of India to remove the office objections and restored the Petition. The said power has been exercised for substantial justice to be made in a public interest so as to protect the public funds and, therefore, we do not find any substance in the contention of the learned counsel appearing for the Appellants that the learned Single Judge has not offered an appropriate opportunity to oppose the Chamber Summons. The said contention is rejected.
11. The learned counsel appearing for the Petitioner submitted that the Arbitration Petition was lodged on 22nd Day of March, 2007 for setting aside the award passed by the Arbitrator Mr. S.R.Hosalkar, dated 23rd December, 2006 in the matter of Arbitration between Mr. D. Gowadia & Co. and Union of India, through the Chief Engineer, Pune regarding the dispute arising out of the contract work of Sainik Aaramgarh at Navy Nagar, Colaba, Mumbai under the Contract agreement No. CEPZ/BOM/04/95-96. However, the contention of the learned counsel appearing for the Appellant is that the lodging of the Petition cannot be said to be an institution of the Petition. It is submitted that unless and until the Petition is admitted, it cannot be said 11
that the Petition is filed. The learned counsel submits that whenever the endorsement is made, under the Rule No.47 of the Original Side Rules, the plaint is admitted, it can be said that the proceedings has been instituted. He has submitted that in the present matter the Petition was lodged on 22nd March, 2007 and thereafter it was under objection and since the objections were not complied as per the order dated 31st July, 2007, the Petition stands rejected on 7thAugust, 2007 as per the order of the Prothonotary and Senior Master and in the result he has submitted that the Petition was not instituted as provided in Section 34 Sub Section 3 of the Arbitration and Conciliation Act, 1996. The learned counsel submits that the Application for setting aside may not be made after three months have elapsed from the date on which the party had received the Arbitral Award or if request has been made under Section 34 from the date on which that request has been disposed of by the Arbitral Tribunal. He has submitted that an Application for setting aside has to be made within three months viz. the Petition under Rule 47 could have been admitted simplicitor lodging cannot be taken to mean that the Petition was filed and admitted and, therefore, it is his submission that since the Petition was rejected for non-compliance of the office objections, the said Petition is time barred under sub-section (3) of Section 34. The said restoration Application could not have been entertained. It is further contended by the learned counsel that the proviso 12
of Sub-section (3) of Section 34 contemplates the condonation of delay. That Application is required to be made within a period of 30 days but not thereafter. Therefore, he has submitted that since the Petition was not instituted within a period of three months and as it was rejected for non- compliance of the office objections, the Respondent-Union of India could have filed the Application for condonation of delay within a period of 30 days after the period of three months has elapsed. The grievance that such application is never made by the Union of India and, therefore, he has submitted that the order of restoration which was passed by the learned Single Judge is not just and proper and requires to be set aside. Thus, the sum and substance of the argument of the learned counsel is that there was no proper institution within a period of three months from the receipt of the Arbitral Award and, therefore, the delay condonation Application is a must.
12. Mr. Rajguru, the learned counsel appearing for the Respondent submitted that the contention raised by the learned counsel appearing for the Appellant relying upon Sub-section (3) of Section 34 of the Arbitration and Conciliation Act, 1996 is misconceived. He has submitted that for the purpose of the limitation, the date of lodging of the Arbitration Proceedings under the Rule No. 45 of the Original Side Rules is relevant date. He has 13
submitted that once the Petition is lodged within a period of three months from the date of the Arbitral Award, the same is within limitation and thereafter, it is not necessary for the Union of India to file delay condonation application as provided under the proviso to sub-section (3) of Section 34. In support of the contentions of the Appellant, the learned counsel appearing for the Appellant relied upon 2001 (3) Arb. L. R. 345 (Supreme Court) in the matter of Union of India Vs. Popular Construction Co. This case deals with the provisions of Section 34(3) of the Limitation Act, 1963, Section 5 and Section 29 (2) and after going through these provisions, the Court has observed that the provisions of Section 29 (2) are not applicable to the proceedings instituted under sub- section 3 of Section 34 of the Limitation Act, giving the emphasis on the words "'but not thereafter' appearing in Section 34 sub-section (3). Neither the ratio nor the facts of this case are applicable to the facts and circumstances of which we are dealing with the present matter. Since we find that the said ratio is not applicable to the present case, we are ignoring the said case. The learned counsel appearing for the Respondent has relied upon AIR 1927 Bombay, 480 in the matter of Dharamasi Morarji Chemical Co. Ltd. Vs.Occhavlal Hargovandas Shah, wherein the meaning of the word 'presented' has been considered and the Court has observed that the moment a Plaint is lodged, it is presented to the Court within the 14
meaning of the Section 3 and once we find that lodging is equivalent to the present Plaint, it is a presentation for the purpose of limitation. Therefore, what we find is that the lodging of the Arbitration Petition on 22nd March, 2007 is within a period of three months from the date of the receipt of the award and subsequent rejection on a ground of non-compliance of the office objections will not debar the Respondent-Union of India from filing the Chamber Summons for restoration of the said Petition and therefore, we find that there is no substance in the ground raised by the learned counsel appearing for the Appellant. We find that the Arbitration Petition was within limitation and the restoration Application was perfectly in accordance with law and the learned Single Judge has not committed any error in entertaining the Application for the restoration and the restoring the matter.
13. The learned counsel appearing for the Appellant relying upon Section 36 of the Arbitration and Conciliation Act, 1996 has submitted that where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 in the same matter as if it were a decree of the Court. The crux was since the application which was made under Section 34 was refused, the award became enforceable under Section 36 as a decree of the Court. 15
Therefore, his submission was that once the award becomes enforceable under Section 36, the restoration Application cannot be entertained and executability of the award cannot be withdrawn by the Court by entertaining the restoration application. Mr. Rajguru the learned counsel appearing for the Respondents submitted that this submission of the learned counsel appearing for the Appellant is not just and legal. He has submitted that the award in the present case has been challenged by filing Arbitration Proceedings within a period of limitation as provided in sub- section (3) of Section 34 of the Limitation Act. He submits that refusal in the present case was because of the non-compliance of the office objections. He also submits that at the office objections are also complied with. However, the endorsement was made that the office objections are not complied with and the matter was rejected. He submits that even assuming that the Petition was rejected for non-compliance of the office objections, yet the Court has a power to restore the Petition for making substantial justice between the parties. He submits that it is well settled principle of law that the parties cannot be denied the justice of the matter on technicalities. He submits that the procedure is made for enabling provision for getting a substantial justice and therefore, for non-compliance of the mere technical objections, the parties cannot be denied the substantial justice. We are in agreement with the learned counsel 16
appearing for the Respondent but we find that the Arbitration Proceedings was rejected on technicalities and in order to sub-serve the interest of justice, the learned Single Judge has restored the Petition. Now, the office objections have been also complied with and therefore, the substantial justice can be delivered to the parties by hearing Arbitration proceedings instead of dismissing it for non-compliance of the office objections and refusing the restoration of such Petition. What we find that the Award though became executable and enforceable can be stayed by this Court in the interest of justice and therefore, we do not find any substance in the ground raised by the Appellant relying upon Section 36. And therefore, we reject the said submission of the said counsel.
14. Even though we are not in favour of the Appellant and we are inclined to dismiss the Appeal, however, we do not part with this appeal without making observations in respect of the manner in which the matter was handled by the Officers of the Union of India. The facts which we have stated in the earlier paragraphs of the Judgment, show that the Officers of the Union of India were negligent in prosecuting the matter, at least of removal of the office objections. We further find that office of this Court was equally negligent. When in fact, normally practice should be that the Advocates and or clerks of the Advocates should be asked to comply with 17
the office objections, as a rule for compliance of the office objections. The Petition which was presented in this Court should not have been given to the Advocate or the Clerk of the Advocate. Much more so, it is noticed that in the present case the Petition was given on 3rd April, 2007 to the Advocate of the Union of India and it was not presented to this Court till 9th June, 2008. That is practically for a period of 13 months, the original Petition was with the Advocate of the Union of India and or with the Officers of the Union of India and they did not submit it to the office. What we find that to keep the original files which were presented in this Court for inordinate delay for removal of this office objections, is a contempt act on the part of the office. That shows that the office is absolutely reckless in dealing with the files. In fact, within a reasonable period at least the concerned Clerk should have asked the Advocate of Union of India when it is not returned and the appropriate notice should have been issued to the Advocate of the Union of India. No action on the part of the Prothonotary and Senior Master was taken in finding out the said file, even though the record shows that there is opposition to the endorsement of the Advocate for taking the file. It is surprising to note that when the file was submitted in the Court on 9th June, 2008, the office did not bother to make an endorsement that who has filed/submitted the file i.e. Advocate of Union of India and or Officers of Union of India and or Clerk of Advocate for Union of India. Such an 18
information ought to have been obtained from officer on record so as to fix the liability of a non-production of a file for a period of 13 months. We find that the said file was neither produced before the Prothonotary and Senior Master when the Prothonotary passed an order on 31st March, 2007. It was equally not presented when the endorsement was made on 8th August, 2007 in respect of the compliance of the orders and the endorsement was made by the Registrar to the effect "'filed'. It was equally not presented when the restoration application was heard by the learned Single Judge. It was presented by the Union of India to the office on 09th June, 2008 when restoration orders were passed in favour of Union of India. This conduct on the part of Union of India requires to be contempted. This is a misuse of the process of the Court by the Union of India. Equally the office is also responsible for all these latches and disorderly things and behaviour in the office. This requires us to direct the office that henceforth, whenever any matter is presented and there are office objections, the office will not hand over the Petition to the concerned Clerk and/or the Advocate. They should be asked to comply with the office objections sitting in the presence of the Clerk or the Registrar and in any case the Officials shall not part with the file. We direct the Prothonotary and Senior Master to issue directions and appropriate instructions to the Concerned Clerks and the Registrars in the office that such a instance shall not be repeated and they shall be given 19
understand that such if instances recur in the office, the appropriate disciplinary action will be taken against all the concerned for such negligent behaviour on their part.
15. With this remarks and observations, we find that there is no substance in the Appeal. The Appeal is hereby dismissed. (R.V.MORE, J.) (S.B.MHASE, J.)