India Insurance Co. Ltd. Vs. J.A.Infra Structure Pvt.Ltd.  Insc 552 (30 August 2006)
Ar. Lakshmanan & Tarun Chatterjee
out of SLP(C) No.6470 of 2006) Dr. AR. LAKSHMANAN, J.
learned counsel appearing on behalf of both sides.
appeal is directed against the final judgment and order dt.21.12.2005 passed by
the High Court of Judicature at Bombay, Nagpur Bench in Writ Petition No.5454 of 2005. The respondent is the
respondent invoked arbitration as per Condition No.7 of the Policy. The
respondent appointed one Shri V.P.Shah as Arbitrator. The appellant-Insurance
Company appointed Shri A.Sankaran as Arbitrator. Both the Arbitrators appointed
Shri B.R.Mehta as Presiding Arbitrator.
10.10.2003, the Majority Award was passed by the Presiding Arbitrator, Shri B.R.Mehta
and Co-Arbitrator Shri V.P.Shah awarding Rs.2,12,49,336.00 (Rupees two crore
twelve lakh forty nine thousand three hundred thirty six only) with future
interest @ 18%. The Minority Award was passed by Co-Arbitrator Shri A.Sankaran
who awarded a sum of Rs.1,23,08,104/- and interest of Rs.43,57,066/- upto
10.10.2003 and cost of arbitration of Rs.4 lacs and further interest on the
aggregate of all these amounts @ 15% from the date of Award till the date of
payment of decree whichever is earlier.
by both the Awards, the appellant filed Arbitration Petition under Section 34
of the Arbitration and Conciliation Act, 1996 (for short 'the Act') in the High
Court of Judicature at Bombay. The petition was listed before a
learned Single Judge of the High Court who after hearing the parties dismissed
the petition for want of jurisdiction.
appellant-Insurance Company thereafter filed a fresh petition under Section 34
of the Act before the District Court, Nagpur along with application under Section 14 of the Limitation Act on
17.01.2005. The District Court, Nagpur dismissed the application filed by the appellant- Insurance Company
under Section 14 of the Limitation Act and consequently, the application filed
under Section 34 of the Act also stood dismissed. Aggrieved against the order
passed by the District Court, the appellant filed again a Writ Petition before
the High Court of Bombay at Nagpur Bench which was also dismissed on 21.12.2005.
by the said Judgment dt.21.12.2005, the appellant preferred the above appeal.
High Court by the impugned judgment dismissed the Writ Petition No.5454 of 2005
following the earlier judgment of the Bombay High Court in H.M.P.Engineers Ltd.
and Ors. vs. Ralies India Ltd. and Ors., reported in 2003(4) MH.L.J.931.
Learned counsel for the appellant submitted that in view of the recent judgment
of this Court in State of Goa vs. M/s.Western Builders, reported in JT 2006 (6)
SC 125, the view taken by the Bombay High Court in H.M.P.Engineers Ltd. and
Ors. vs. Ralies India Ltd. and Ors. (supra) and followed by the High Court in
the impugned judgment is not correct.
Court in the Judgment in State of Goa vs. M/s.Western Builders (supra) was considering
the question as to what extent Section 14 of the Limitation Act, 1963 which
deals with exclusion of time spent in prosecuting the remedy before wrong forum
is applicable to the Arbitration and Conciliation Act, 1996 or not. Section 14
of the Limitation Act reads thus :-
"Exclusion of time of
proceeding bona fide in court without jurisdiction –
In computing the
period of limitation for any suit the time during which the plaintiff has been
prosecuting with due diligences another civil proceeding, whether in a court of
first instance or of appeal or revision, against the defendant shall be
excluded, 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.
In computing the
period of limitation for any application, the time during which the applicant
has been prosecuting with due diligence another civil proceeding, whether in a
court of first instance or of appeal or revision, against the same party for
the same relief shall be excluded, where such proceeding 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.
anything contained in rule 2 of Order XXIII of the Code of Civil Procedure,
1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to
a fresh suit instituted on permission granted on the ground that the first suit
must fail by reasons of a defect in the jurisdiction of the court of other
cause of a like nature."
Court also in para 13 of the said Judgment has observed that Section 14 of the
Limitation Act has been excluded by this special enactment i.e. Arbitration and
Conciliation Act, 1996 and that Section 43 of the Arbitration and Conciliation
Act, 1996 clearly says that the Limitation Act, 1963 shall apply to arbitration
as it applies to the proceedings in court. This Court has also followed few
other Judgments of this Court in support of the view taken by them. In the
concluding portion this Court has observed that in the present context, there
is no two opinion in the matter that the Arbitration and Conciliation Act, 1996
does not expressly excluded the applicability of Section 14 of the Limitation
Act and that the prohibitory provision has to be construed strictly.
result, this Court was of the opinion that the view taken by the court below
excluding the applicability of Section 14 in the said proceeding was not
correct. This Court held that Section 14 of the Limitation Act, 1963 was
applicable in the Arbitration and Conciliation Act, 1996 and accordingly this
Court set aside the judgments and order and remanded the matters back to the
District Court for deciding the application under Section 14 of the Limitation
Act on merit. In view of the Judgment in State of Goa vs. M/s.Western Builders (supra), the counsel for
the respondent has not seriously opposed to the applicability of Section 14 of
the Limitation Act which deals with exclusion of time spent in prosecuting the
remedy before the wrong forum bona fide. Therefore, we set aside the order
passed by the High Court and remit the matter back to the District Court, Nagpur to decide the objections raised by
the appellant-Insurance Company under Section 34(3) of the Arbitration and
Conciliation Act, 1996 and decide the same on merit after affording opportunity
to the respondent herein.
the matter is pending for very long time before one forum or the other, we
direct the District Court, Nagpur to
dispose of the matter within six months from today.
make it clear that we have not decided the objections and other issues raised
Civil Appeal stands disposed of accordingly with the above observation.
However, pending disposal of the matter by the District Court, we direct the
appellant-Insurance Company to deposit the amount awarded by the Arbitrator Shri
A.Sankaran to the credit of Arbitration Petition No.164/2005 on the file of the
District Court, Nagpur. The Appellant-Insurance Company
shall now deposit Rs.1,70,65,170/- (Rupees one crore seventy lakhs sixty five
thousands, one hundred seventy only) to the credit of Arbitration Petition
No.164/2005 within one month from today. On such deposit, the District Court shall
invest the same in a nationalised bank in a short term deposit.
also reserve liberty to the respondent to move an application for withdrawal of
the said amount before the said court and if such an application is filed, the
District Court is directed to dispose of the same on merits and in accordance