In the instant case, neither there was an arbitration agreement
nor a mutual consent between the competent parties to the
agreement. Thus it cannot be said that in the above fact situation the
appellant/plaintiff was prosecuting the arbitration proceeding with
due diligence. On the contrary it would appear from the conduct of
the appellant/plaintiff, as per pleadings taken in the plaint vide
Para-45 and other paragraphs, that the appellant/plaintiff did not
do things with due care and attention and the arbitration
proceeding was not prosecuted in good faith.
HIGH COURT OF CHHATTISGARH, BILASPUR
Division Bench:
Hon’ble Shri Sunil Kumar Sinha &
Hon’ble Shri R.N. Chandrakar, J J:
F.A. No. 104 of 2003
APPELLANT
Plaintiff
Brij Bhushan Verma, S/o
Versus
South Eastern Coalfields Ltd.
Dated; 28.01.2014
Citation;AIR 2014 chhattis 34
Following
judgment
of
the
Court
was
delivered
by
Sunil Kumar Sinha, J.
(1)
The appellant’s concern was awarded a civil contract for
widening
and
strengthening
of
Gevra-Katghora
Road.
An
agreement was executed and work order was issued on 11/16-3-
1998. The date of commencement of work was 26-3-1998 and period
of completion was 6 months, i.e. upto 25-9-1998, from the date of
commencement. The time granted for completion was extended,
however the work could not be completed and ultimately the
contract
was
terminated
on
6-5-1999.
According
to
the
appellant/plaintiff, he sustained various losses which were on
account of breach of contract by the defendant/respondent.
Thereafter, many correspondence took place. According to the
appellant, discussions were held on 30-5-2000 with SO(C), Gevra, in
which it was suggested that it was not feasible to settle the dispute
through discussion and the later will take action for appointment of
Arbitrator by the C.M.D., S.E.C.L.. A communication dated 25-5-
2000 agreeing for settlement of dispute through arbitration was sent
by the appellant. When the C.M.D. did not respond to the said
communication, an application u/S 11 (6) of the Arbitration and
Reconciliation Act, 1996 (Act 1996) was filed by the appellant in the
Court of District Judge Bilaspur on 5-5-2001. It was registered as
Civil Suit No. 5-A/2001. An objection was taken by the respondent
in the said arbitration matter that the arbitration clause having been
struck out in the agreement, the appellant had no reason
whatsoever for filing the application u/S 11 (6) of the Act 1996. The
said application filed by the appellant for appointment of Arbitrator
was dismissed by the concerned District Judge on 16-8-2002 holding
that there was no arbitration clause in the agreement, therefore,
question of appointment of arbitrator does not arise. Thereafter the
appellant/plaintiff filed the instant suit on 16-8-2002 before the
District Judge Bilaspur claiming an amount of Rs.12,00,246/-. In the
civil suit, Para-45, the time spent by the appellant/plaintiff, in the
above manner, was explained. However by way of abundant
caution, the appellant/plaintiff also filed an application u/S 14 of
the Limitation Act. The said civil suit was registered as MJC No.
6/2002. The District Judge, firstly took application u/S 14 of the
Limitation Act for decision. The said application was dismissed and
consequently it was held that the civil suit was barred by limitation.
Thus on the decision of the said application on 4-3-2003, the entire
civil suit of the appellant/plaintiff was dismissed as barred by
limitation. Hence this appeal.
(2)
The District Judge (trial Court) has held that proceeding u/S
11 of the Act 1996 was not a proceeding of civil nature and the
appellant/plaintiff was not prosecuting the said proceeding
bonafidely, therefore, the time spent in the proceeding for
appointment of arbitrator was not liable to be excluded for
computing the period of limitation for the civil suit. It was held that
the appellant/plaintiff, knowing fully well that there was no
arbitration clause in the agreement, filed the above proceeding for
appointment of arbitrator. Thus it was not a case of prosecuting the
said proceeding with due diligence. The trial Court relied on the
decision of Konkan Railway Corporation Ltd. and Another –Vs-
Rani Construction Pvt. Ltd., (2002) 2 SCC 388.
(3)
Mr. Arvind Dubey, learned counsel appearing on behalf of the
appellant/plaintiff, firstly contended that Konkan Railway (supra)
has been overruled by a Seven Judges Bench in SBP & Co. –Vs-
Patel Engineering Ltd. and Another, (2005) 8 SCC 618. Thus the first
ground taken for not condoning the delay u/S 14 stands unfounded.
About the other grounds, he submitted that the appellant/plaintiff
on the assurance of the officers of the respondent in a discussion
before them and thereafter on non appointment of the arbitrator on
his letter to C.M.D., had filed the arbitration proceeding. Therefore,
it was a case in which the appellant/plaintiff prosecuted the
proceeding with due diligence and all bonafides, and the time spent
in the arbitration proceeding was required to be condoned.
(4)
On the other hand, learned counsel for the respondent have
opposed these arguments and supported the order passed by the
trial Court.
(5) We have heard counsel for the parties.
(6) The decision rendered in the Konkan Railway (supra) has been
overruled, (per majority) by a Seven Judges Bench in SBP & Co.
(supra) and it has been held that the power exercised by the Chief
Justice of the High Court or the Chief Justice of India under Section
11 (6) of the Act 1996 is not an administrative power. It is a judicial
power. Thus, in the later view of the Supreme Court in SBP & Co.,
the view taken by the trial Court based on Konkan Railway cannot be
accepted.
(7)
Section 14 of the Limitation Act, 1963 provides for exclusion of
the time of proceeding bona fide in court without jurisdiction. It
provides that in computing the period of limitation for any suit the
time during which the plaintiff has been prosecuting with due
diligence 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.
(8)
In Zafar Khan and others –Vs- Board of Revenue, U.P., and
others, AIR 1985 SC 39, it was held that “In order to attract the
application of S. 14 (1), the parties seeking its benefit must satisfy
the Court that : (i) the party as the plaintiff was prosecuting another
civil proceeding with due diligence; (ii) that the earlier proceeding
and the later proceeding relate to the same matter in issue and (iii)
the former proceeding was being prosecuted in good faith in a
Court which, from defect of jurisdiction or other cause of a like
nature, is unable to entertain it. When the expression in S. 14 as a
whole reads “from defect of jurisdiction or other cause of a like
nature is unable to entertain it”, the expression “cause of a like
nature” will have to be read ejusdem generis with the expression
“defect of jurisdiction”. So construed the expression “other cause of
a like nature” must be so interpreted as to convey something
analogous to the preceding words “from defect of jurisdiction”.
Prima facie it appears that there must be some preliminary objection
which if it succeeds, the Court would be incompetent to entertain
the proceeding on merits, such defect could be said to be “of the like
nature” as defect of jurisdiction. Conversely if the party seeking
benefit of the provision of S. 14 failed in the earlier proceeding on
merits and not on defect of jurisdiction or other cause of a like
nature, it would not be entitled to the benefit of S.14.”
(9)
‘Good faith’ has been defined in the Limitation Act itself.
Section 2 (h) of the Limitation Act says that nothing shall be deemed
to be done in good faith which is not done with due care and
attention.
(10) In the instant case, the appellant/plaintiff was having full
knowledge that there was no arbitration clause in the agreement
and even after that proceeding for appointment of the arbitrator was
filed. Mr. Dubey has argued that SO(C) Gevra area, in a meeting,
had assured that the said matter may go in arbitration, therefore, the
plaintiff firstly gave an application to the C.M.D. for appointment of
an arbitrator and when the said application was not responded, then
the above proceeding was filed. This is the self same statement of
the appellant/plaintiff. There is not a single document of the
defendant which may show that either such discussion had taken
place between the appellant/plaintiff and SO(C) Gevra or that
SO(C) Gevra had assured the appellant/plaintiff that there may be
an arbitration on the orders passed by the C.M.D.. That apart SO(C)
Gevra was not a competent authority to give such advise or to take
such a decision in the matter on behalf of the respondent.
(11) We also note that as soon as the arbitration proceeding was
filed, the defendant had taken an objection about non-existence of
the arbitration agreement between the parties, but the same was not
accepted by the appellant, who continued the above proceeding and
took a chance till its final rejection on merits.
(12) In Jagdish Chander –Vs- Ramesh Chander and Others, (2007)
5 SCC 719, it was held that “The existence of an arbitration
agreement as defined under Section 7 of the Act 1996 is a condition
precedent for exercise of power to appoint an arbitrator/Arbitral
Tribunal, under Section 11 of the Act by the Chief Justice or his
designate. It is not permissible to appoint an arbitrator to adjudicate
the disputes between the parties in the absence of an arbitration
agreement or mutual consent.”
(13) In the instant case, neither there was an arbitration agreement
nor a mutual consent between the competent parties to the
agreement. Thus it cannot be said that in the above fact situation the
appellant/plaintiff was prosecuting the arbitration proceeding with
due diligence. On the contrary it would appear from the conduct of
the appellant/plaintiff, as per pleadings taken in the plaint vide
Para-45 and other paragraphs, that the appellant/plaintiff did not
do things with due care and attention and the arbitration
proceeding was not prosecuted in good faith.
(14) For the foregoing reasons, we do not find any infirmity in the
impugned order dated 4-3-2003 passed by the trial Court. The
appeal is liable to be dismissed and is hereby dismissed.
(15) There shall be no order as to cost.
JUDGE
Vatti
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