The Plea of Limitation VII: Section 14 of The Limitation Act, 1963

The Respondent entered into a contract for construction of a commercial complex. Certain disputes arose. The matter was referred to Arbitration on the basis of Clause 29 of the contract. The Sole Arbitrator passed an award on 11th November, 2010. Both the parties appeared before the Arbitrator. The Arbitrator did not find any justification to allow any of the claims of the Respondent-Contractor.

When the matter stood thus, as it appears, wisdom dawned upon the Respondent and he thought he could take a somersault. That propelled him to file an application under Section 11 of The Arbitration and Conciliation Act, 1996 (‘1996 Act’). It was contended that Clause 29 of the contract could not be treated as an Arbitration Clause and, therefore, the Court should appoint an Arbitrator. To bolster the said stand, reliance was placed on M.P. Housing Board, (2008) 2 MPLJ 103. After facing non-success before the High Court, in his effort to get an Arbitrator appointed, the Respondent thought it appropriate to file an objection under Section 34(2) of the 1996 Act to challenge the Award. The said application was filed on 26th September, 2011. The Respondent, along with his objection, filed an application under Section 14 of The Limitation Act, 1963.

My Lord, Is Section 14 of The Limitation Act, 1963 (‘Act’) applicable in the obtaining factual scenario?

No.

To appreciate the controversy, it is necessary to refer to Section 34(3) of the 1996 Act. An application filed beyond the period of limitation under Section 34(3) would not be an application in accordance with the said provision. As is evident from the factual narration, the application was filed beyond the period prescribed in the said provision. Therefore, it could not have been entertained under the 1996 Act. However, the Appellant-Respondent sought exclusion of the time spent in the proceedings in Court as envisaged under Section 14 of the Act. It is settled law that Section 14 of the Act applies to Section 34(3) of the 1996 Act [See, Western Builders, (2006) 6 SCC 239 & Consolidated Engineering Enterprises, (2008) 7 SCC 169]. Section 14(1) lays down that the proceedings must relate to the ‘same matter in issue’. Its emphasizes on due diligence and good faith. Filing an application under Section 11 of the 1996 Act for an appointment of an Arbitrator is totally different than an objection to an Award filed under Section 34 of the 1996 Act. To put it differently, one is at the stage of initiation, and the other at the stage of culmination. By no stretch of imagination, it can be said that the proceedings related to the ‘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 litigant. We say so because the Respondent instead of participating in the Arbitration Proceedings, could have immediately taken steps for appointment of Arbitrator as he thought appropriate or he could have filed his objections under Section 34(2) of the 1996 Act within permissible parameters, but he chose a way, which we are disposed to think, an innovative path, possibly harboring the thought that he could contrive the way where he could alone rule. Frankly speaking, this is neither diligence nor good faith. On the contrary, it is absence of both.”

Hon’ble Justice Dipak Misra, Commissioner, MP Housing Board v. Mohanlal, [Civil Appeal No. 6573 of 2016].

 

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