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CASE NO.: Appeal (civil)  2461 of 2008

PETITIONER: CONSOLIDATED ENGG.ENTERPRISES    

RESPONDENT: PRINCIPAL SECY. IRRIGATION DEPTT. & ORS.

DATE OF JUDGMENT: 03/04/2008

BENCH: CJI K.G. BALAKRISHNAN & J.M. PANCHAL

JUDGMENT: J U D G M E N T  (Arising out of SLP(C) No.10311 of 2005) With

CIVIL APPEAL NO. 2462 OF 2008 (Arising out of SLP(C) No.15619 of 2005)

HATTI GOLD MINES COMPANY LTD.   \005.. APPELLANTS

Versus

M/S VINAY HEAVY EQUIPMENTS              \005.. RESPONDENT

J.M. PANCHAL, J.                  Civil Appeal No.2461 of 2008 @ SLP(C) NO.10311/2005                 Leave granted. 2.              The instant appeal is directed against judgment  dated April 4, 2005 rendered by the Division Bench of the  High Court of Karnataka at Bangalore in Misc. First Appeal  No.4465 of 2003, by which, decision dated October 24, 2002  passed by the learned District Judge, Bangalore Rural District,  Bangalore in A.S. No.2 of 2000 dismissing the application  submitted by the appellant under Section 34 of the Arbitration  and Conciliation Act, 1996 (the Act\022 for short) as time barred  has been set aside and the matter is remanded to the District  Court with a direction to proceed further with the matter in  accordance with law.

3.              The appellant is an enterprise engaged in civil  engineering construction as well as development of  infrastructure.  It entered into an agreement dated January  20, 1989 with the respondent for construction of earthen  bund, head sluices and the draft channel of the Y.G. Gudda  tank.  During the subsistence of the contract, disputes arose  between the parties.  Therefore, the appellant invoked  Arbitration clause No.51 of the agreement pursuant to which  the disputes were referred to the sole arbitrator for  adjudication.  The sole arbitrator made his award on April 10,  1999 in favour of the appellant.  Feeling aggrieved by the said  award, the respondents preferred an application dated July 5,  1999 to set aside the award as contemplated by Section 34 of  the Act in the court of learned Civil Judge (Senior Division),  Ramanagram, Bangalore Rural District.  The said application  was registered as A.C. No.1 of 1999.   It was realized by the  respondents that an application for setting aside the award  should have been filed before the learned Principal District  Judge, Bangalore District (Rural).  Therefore, the respondents  submitted an application on July 26, 2000 in the Court of

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learned Civil Judge (Senior Division), Ramanagaram with a  request to transfer the application made for setting aside the  award to the court of learned Principal District Judge (Rural),  Bangalore.  The learned Civil Judge (Senior Division),  Ramanagaram passed an order directing return of the suit  records for presentation before the proper court.  The  respondents collected the papers from the court of learned  Civil Judge (Senior Division), Ramanagaram and presented the  same in the court of learned Principal District Judge,  Bangalore (Rural) on August 21, 2000.  The present  application for setting aside the award, filed by the  respondents, was numbered as A.S. No.2 of 2000.  The  District Court framed preliminary issue for determination  which was as under: \023Whether the defendant proves that the  present suit is barred by the limitation under  Section 34(3) of the Arbitration and  Conciliation Act, 1996\024.

The respondents examined one witness and produced certain  documents whereas on behalf of the appellants one witness  was examined.  After appreciating the evidence and hearing  the learned counsel for the parties, the learned District Judge  held that the suit /application for setting aside the award, was  time barred and dismissed the same by his judgment dated  October 24, 2002.

4.              Thereupon the respondents invoked appellate  jurisdiction of the High Court of Karnataka at Bangalore by  filing Misc. First Appeal No.4465 of 2003 under Section 37 of  the Act.  The issue, namely, whether the provisions of Sections  12 and 14 of the Limitation Act, 1963 are applicable to an  application filed under Section 34 of the Act was pending for  consideration in other matters also.  The appeal filed by the  respondents was, therefore, taken up for hearing with other  matters.  The Division Bench of the High Court of Karnataka  was of the view that the learned District Judge, Bangalore  Rural District, Bangalore committed an error in holding that  Section 14 of the Limitation Act was not applicable to an  application submitted under Section 34 of the Act and,  therefore, the time taken during which the respondents had  been prosecuting in the court of learned Civil Judge (Senior  Division), Ramanagaram was not excludable.  On facts, the  High Court held that there was no lack of bona fide on the  part of the respondents and that the respondents had  diligently prosecuted the matter before the other court.  In  view of these conclusions, the High Court by Judgment dated  April 4, 2005 set aside the decision dated October 24, 2002  rendered by the learned District Judge Bangalore (Rural) in  A.S. No.2 of 2000 and has directed the learned District Judge  to proceed further with the matter in accordance with law,  giving rise to the instant appeal.

Civil Appeal No.2462 of 2008 @ SLP(C) NO.15619/2005

5.              Leave granted.

6.              This appeal is directed against the judgment dated  April 4, 2005 rendered by the Division Bench of the High  Court of Karnataka in W.P. No.7089 of 2003 by which it is  held that Sections 12 and 14 of the Limitation Act are  applicable to and application submitted under Section 34 of  the Act, but the appellant is not entitled to exclusion of time  as contemplated by Section 14 of the Limitation Act, because  the appellant had not prosecuted application for setting aside

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the award made by the arbitrator, in other courts, with due  diligence and in good faith.

7.              The appellant is a public sector undertaking of the  Government of Karnataka.  It had invited tenders by way of  public notification for mining and transporting ore from  Ajjanahalli mine to Ingaldal.  The tender submitted by the  respondent was accepted on May 10, 1999 and an agreement  was entered into between the parties.  The respondent was  directed to commence the work from May 26, 1999 and to  deploy required number of vehicles etc.  The respondent did  not follow the instructions given by the appellants and,  therefore, disputes arose between the parties.  The appellant  and the respondent mutually agreed to terminate the contract  as per the clause mentioned in the contract.  The respondent  made claim with respect to the works done by it during the  subsistence of the contract.  The claim was not accepted by  the appellant.  Therefore the dispute was referred to the sole  arbitrator for adjudication as stipulated by the contract.  The  arbitrator made his award on March 15, 2002.  The appellant  filed an application on June 6, 2002 in the court of learned  Civil Judge (Senior Division), Chitradurga to set aside the  award made by the arbitrator on the footing that the court of  learned Civil Judge (Senior Division) was the Principal Civil  Court of original jurisdiction in the District and that two other  cases, namely, Arbitration Case No.1/97 and 1/2001 were  also pending in the court of learned Civil Judge (Senior  Division), Chitradurga.  After sometime, the appellant realized  that the appropriate court before which an application for  setting aside the award should have been made was the court  of learned District Judge, Chitradurga.  Therefore, the  appellant filed an application under order VII Rule 10A  seeking prayer to return the application to it for presentation  before the District Court, Chitradurga.  The learned Civil  Judge (Senior Division), Chitradurga after hearing the learned  counsel for the parties directed the appellant to present the  application made under Section 34 of the Act before the  District Court, Chitradurga by an order dated October 29,  2002 and directed the parties to appear before the learned  District Judge on November 21, 2002.  In view of the  directions given by the learned Civil Judge (Senior Division),  Chitradurga the appellant presented the application filed  under Section 34 of the Act before the District Court  Chitradurga on November 21, 2002.  The respondent raised a  preliminary objection regarding jurisdiction of the learned  District Judge, Chitradurga to entertain the application  submitted under Section 34 of the Act on the ground that the  agreement was entered into between the parties within the  jurisdiction of city of Bangalore and, therefore, the City Civil  Court, Bangalore had jurisdiction to entertain the application  filed by the appellant.  The learned District Judge,  Chitradurga by an order dated February 3, 2003 held that he  had no jurisdiction to entertain the application submitted by  the appellant and accordingly returned the application, for  presentation before the appropriate court.  The appellant  thereafter presented the application for setting aside the  award, before the VIth Additional City Civil Court, Bangalore  on February 10, 2003 which was registered as an appeal.   Along with the appeal, the appellant also filed an application  under Section 14 read with Section 5 of the Limitation Act and  prayed to exclude the time taken in prosecuting the  proceedings bona fide before the two courts which had no  jurisdiction.  The learned Judge of City Civil Court, Bangalore  dismissed the application, as time barred, by an order dated  July 17, 2003.  Thereupon the appellant invoked extra-

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ordinary jurisdiction of the High Court of Karnataka under  Article 226 of the Constitution by filing Writ Petition No.7089  of 2003.  The questions posed for consideration of the High  Court was, whether the provisions of Sections 12 and 14 of the  Limitation Act were applicable to an application filed under  Section 34 of the Act and whether the appellant had  prosecuted the matter in other courts with due diligence and  in good faith.  After hearing the learned counsel for the  parties, the High Court by Judgment dated April 4, 2005 held  that the provisions of Sections 12 and 14 of the Limitation Act  are applicable to a proceeding under the Act.  However, on  appreciation of facts the High Court held that the appellant  had not prosecuted the matter in other courts, with due  diligence and in good faith.  In view of the above-mentioned  conclusion the High Court has dismissed the writ petition filed  by the appellant vide Judgment dated April 4, 2005, giving rise  to the instant appeal. 8.                This Court has heard the learned counsel for the  parties at length and in great detail as well as considered the  documents submitted by the parties.

9.              The question posed for consideration before the  Court is whether the provision of Section 14 of the Limitation  Act would be applicable to an application submitted under  Section 34 of the Act of 1996 for setting aside the award made  by the arbitrator.  In order to resolve the controversy it would  be advantageous to refer to certain provisions of the Limitation  Act and Section 34 of the Act of 1996.  Section 14 and relevant  part of 29(2) of the Limitation Act, necessary for the purpose of  deciding the issue, read as under: \02314.         Exclusion of time of proceeding  bona fide in court without jurisdiction \026  (1) 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 or of a 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. (2)     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. (3)     Notwithstanding 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 by  the court under rule 1 of that Order, where  such permission is granted on the ground that  the first suit must fail by reason of a defect in  the jurisdiction of the court or other cause of a  like nature.         Explanation\027For the purpose of this section,-- (a)     in excluding the time during which a former civil  proceeding was pending, the day on which that

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proceeding was instituted and the day on which  it ended shall both be counted. (b)      a plaintiff or an applicant resisting an appeal  shall be deemed to be prosecuting a proceeding. (c)      misjoining of parties or of cause of action shall  be deemed to be a cause of a like nature with  defect of jurisdiction.\024

\02329(2)       Where any special or local law prescribes  for any suit, appeal or application a period of  limitation different from the period prescribed by  the Schedule, the provision of section 3 shall  apply as if such period were the period prescribed  by the Schedule and for the purpose of  determining any period of limitation prescribed  for any suit, appeal or application by any special  or local law, the provisions contained in sections  4 to 24 (inclusive) shall apply only in so far as,  and to the extent to which, they are not expressly  excluded by such special or local law.\024 However, Section 34 of the Arbitration and Conciliation Act,  1996 reads as under: \02334.         Application for setting aside arbitral  award.-  (1) Recourse to a Court against an arbitral award  may be made only by an application for setting  aside such award in accordance with sub-section (2)  and sub-section (3). (2)     An arbitral award may be set aside by the  Court only if- (a)   the party making the application furnishes  proof that-         (i) a party was under some incapacity; or ii)     the arbitration agreement is not valid under  the law to which the parties have subjected it or,  failing any indication thereon, under the law for the  time being in force; or (iii)   the party making the application was not given  proper notice of the appointment of an  arbitrator or of the arbitral proceedings or was  otherwise unable to present his case; or

(iv)    the arbitral award deals with a dispute not  contemplated by or not falling within the terms  of the submission to arbitration, or it contains  decisions on matters beyond the scope of the  submission to arbitration:      Provided that, if the decisions on matters submitted  to arbitration can be separated from those not so  submitted, only that part of the arbitral award which  contains decisions on matters not submitted to  arbitration may be set aside; or (v)     the composition of the arbitral tribunal or the  arbitral procedure was not in accordance with  the agreement of the parties, unless such  agreement was in conflict with a provision of  this Part from which the parties cannot  derogate, or, failing such agreement, was not  in accordance with this Part; or

(b)     the Court finds that\027 (i)     the subject-matter of the dispute is  not capable of settlement by  arbitration under the law for the  time being in force, or

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(ii)    the arbitral award is in conflict  with the public policy of India. Explanation\027 Without prejudice to the generality of  sub-clause (ii) of clause (b), it is hereby declared, for  the avoidance of any doubt, that an award is in  conflict with the public policy of India if the making  of the award was induced or affected by fraud or  corruption or was in violation of section 75 of  section 81.

(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, from the date on which that  request had been disposed of by the arbitral  tribunal:      Provided that if the Court is satisfied that the  applicant was prevented by sufficient cause from  making the application within the said period of  three months it may entertain the application  within a further period of thirty days, but not  thereafter. (4)     On receipt of an  application under sub-section  (1), the Court may, where it is appropriate and it is  so requested by a party, adjourn the proceedings for  a period of time determined by it in order to give the  arbitral tribunal an opportunity to resume the  arbitral proceedings or to take such other action as  in the opinion of arbitral tribunal will eliminate the  grounds for setting aside the arbitral award.\024 10.             A bare reading of sub-section (3) of Section 34 read  with the proviso makes it abundantly clear that the  application for setting aside the award on the grounds  mentioned in sub-section (2) of Section 34 will have to be  made within three months.  The period can further be  extended, on sufficient cause being shown, by another period  of 30 days but not thereafter.  It means that as far as  application for setting aside the award is concerned, the period  of limitation prescribed is three months which can be  extended by another period of 30 days, on sufficient cause  being shown to the satisfaction of the Court.  Section 29(2) of  the Limitation Act, inter alia provides that where any special  or local law prescribes for any suit, appeal or application a  period of limitation different from the period of limitation  prescribed by the schedule, the provisions of Section 3 shall  apply as if such period was the period prescribed by the  schedule and for the purpose of determining any period of  limitation prescribed for any suit, appeal or application by any  special or local law, the provisions contained in Sections 4 to  24 shall apply only insofar as, and to the extent, they are not  expressly excluded by such special or local law.  When any  special statute prescribes certain period of limitation as well as  provision for extension upto specified time limit, on sufficient  cause being shown, then the period of limitation prescribed  under the special law shall prevail and to that extent the  provisions of the Limitation Act shall stand excluded.  As the  intention of the legislature in enacting sub-section (3) of  Section 34 of the Act is that the application for setting aside  the award should be made within three months and the period  can be further extended on sufficient cause being shown by  another period of 30 days but not thereafter, this Court is of  the opinion that the provisions of Section 5 of the Limitation  Act would not be applicable because the applicability of

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Section 5 of the Limitation Act stands excluded because of the  provisions of Section 29(2) of the Limitation Act.   11.             However, merely because it is held that Section 5 of  the Limitation Act is not applicable to an application filed  under Section 34 of the Act for setting aside an award, one  need not conclude that provisions of Section 14 of the  Limitation Act would also not be applicable to an application  submitted under Section 34 of the Act of 1996.

12.             Section 14 of the Limitation Act deals with exclusion  of time of proceeding bona fide in a court without jurisdiction.  On analysis of the said Section, it becomes evident that the  following conditions must be satisfied before Section 14 can be  pressed into service: (1)     Both the prior and subsequent proceedings are civil  proceedings prosecuted by the same party; (2)     The prior proceeding had been prosecuted with due  diligence and in good faith; (3)     The failure of the prior proceeding was due to defect  of jurisdiction or other cause of like nature; (4)     The earlier proceeding and the latter proceeding  must relate to the same matter in issue and; (5)      Both the proceedings are in a court.

               The policy of the Section is to afford protection to a  litigant against the bar of limitation when he institutes a  proceeding which by reason of some technical defect cannot be  decided on merits and is dismissed.  While considering the  provisions of Section 14 of the Limitation Act, proper approach  will have to be adopted and the provisions will have 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  activity.  Upon the words used in the section, it is not possible  to sustain the interpretation that the principle underlying the  said section, namely, that the bar of limitation should not  affect a person honestly doing his best to get his case tried on  merits but failing because the court is unable to give him such  a trial, would not be applicable to an application filed under  Section 34 of the Act of 1996.  The principle is clearly  applicable not only to a case in which a litigant brings his  application in the court, that is, a court having no jurisdiction  to entertain it but also where he brings the suit or the  application in the wrong court in consequence of bona fide  mistake or law or defect of procedure.  Having regard to the  intention of the legislature this Court is of the firm opinion  that the equity underlying Section 14 should be applied to its  fullest extent and time taken diligently pursuing a remedy, in  a wrong court, should be excluded.

13.             At this stage it would be relevant to ascertain  whether there is any express provision in the Act of 1996,  which excludes the applicability of Section 14 of the Limitation  Act.  On review of the provisions of the Act of 1996 this Court  finds that there is no provision in the said Act which excludes  the applicability of the provisions of Section 14 of the  Limitation Act to an application submitted under Section 34 of  the said Act.  On the contrary, this Court finds that Section 43  makes the provisions of the Limitation Act, 1963 applicable to

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arbitration proceedings.  The proceedings under Section 34  are for the purpose of challenging the award whereas the  proceeding referred to under Section 43 are the original  proceedings which can be equated with a suit in a court.   Hence, Section 43 incorporating the Limitation Act will apply  to the proceedings in the arbitration as it applies to the  proceedings of a suit in the court.  Sub-section (4) of Section  43, inter alia, provides that where the court orders that an  arbitral award be set aside, the period between the  commencement of the arbitration and the date of the order of  the court shall be excluded in computing the time prescribed  by the Limitation Act, 1963, for the commencement of the  proceedings with respect to the dispute so submitted.  If the  period between the commencement of the arbitration  proceedings till the award is set aside by the court, has to be  excluded in computing the period of limitation provided for  any proceedings with respect to the dispute, there is no good  reason as to why it should not be held that the provisions of  Section 14 of the Limitation Act would be applicable to an  application submitted under Section 34 of the Act of 1996  more particularly where  no provision is to be found in the Act  of 1996, which excludes the applicability of Section 14 of the  Limitation Act, to an application made under Section 34 of the  Act.  It is to be noticed that the powers under Section 34 of the  Act can be exercised by the court only if the aggrieved party  makes an application.  The jurisdiction under Section 34 of  the Act, cannot be exercised, suo motu.  The total period of  four months within which an application, for setting aside an  arbitral award, has to be made is not unusually long.  Section  34 of the Act of 1996 would be unduly oppressive, if it is held  that the provisions of Section 14 of the Limitation Act are not  applicable to it, because cases are no doubt conceivable where  an aggrieved party, despite exercise of due diligence and good  faith, is unable to make an application within a period of 4  months.  From the scheme and language of Section 34 of the  Act of 1996, the intention of the Legislature to exclude, the  applicability of Section 14 of the Limitation Act, is not  manifest.  It is well to remember that Section 14 of the  Limitation Act does not provide for a fresh period of limitation  but only provides for the exclusion of a certain period.  Having  regard to the legislative intent, it will have to be held that the  provisions of Section 14 of the Limitation Act, 1963 would be  applicable to an application submitted under Section 34 of the  Act of 1996 for setting aside an arbitral award.

14.             We may notice that in similar circumstances the  Division Bench of this Court in State of Goa vs. Western  Builders  2006 (6) SCC 239  has taken a similar view.  As  observed earlier the intention of the legislature in enacting  Section 14 of the Act is to give relief to a litigant who had  approached the wrong forum.  No canon of construction of a  statute is more firmly established than this that the purpose of  interpretation is to give effect to the intention underlying the  statute.  The interpretation of Section 14 has to be liberal.   The language of beneficial provision contained in Section 14 of  the Limitation Act must be construed liberally so as to  suppress the mischief and advance its object.  Therefore, it is  held that the provisions of Section 14 of the Limitation Act are  applicable to an application submitted under Section 34 of the  Act of 1996 for setting aside an arbitral award.

15.                The plea that in view of the decision rendered by  three Judge Bench of this Court in Commissioner of Sales  Tax, Uttar Pradesh vs. Parson Tools and Plants, Kanpur  1975 (3) SCR 743  the provisions of Section 14 of the

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Limitation Act should not be held to be applicable to an  application filed under Section 34 of the Act, has no  substance.   The question determined in the Commissioner of  Sales Tax, Uttar Pradesh (supra) was \023whether under the  circumstances of the case, Section 14 of the Limitation Act  extended the period for filing of the revisions by the time  during which the restoration application remained pending as  being prosecuted bona fide.\024     In the said case, Sales-Tax  Officer had made two assessment orders.  The assessee had  filed appeals before the Appellate Authority.  The appeals were  dismissed in default as the assessee did not remain present on  the specified date.  The assessee filed two applications for  setting aside such dismissal, under Rule 68(6) of the U.P.  Sales Tax Rules.  During the pendency of the application a  Single Judge of Allahabad High Court declared Rule 68(5) of  the Rules ultra vires under which the appeals were dismissed  for default.  In view of the ruling of High Court, the Appellate  Authority dismissed the appeals.  The assessee, therefore, filed  two revision petitions.  They were filed more than 18 months  after the dismissal of the appeals.  The revisions were  accompanied by two applications in which the assessee had  prayed for exclusion of time spent by him in presenting the  aborting proceedings under Rule 68(6) for setting aside the  dismissal of his appeals.  The revisional authority excluded the  time spent in those proceedings from computation of limitation  by applying Section 14 of the Limitation Act.  The High Court  dismissed the Reference made on the motion of the  Commissioner of Sales-Tax.  In appeal, this Court held that (1)  if the legislature in a special statute prescribes a certain  period of limitation, then the Tribunal concerned has no  jurisdiction to treat within limitation, an application, by  excluding the time spent in prosecuting in good faith, on the  analogy of Section 14(2) of the Limitation Act and (2) the  Appellate Authority and Revisional Authority were not \021courts\022  but were merely administrative Tribunals and, therefore,  Section 14 of the Limitation Act did not, in terms, apply to the  proceedings before such Tribunals.  From the judgment of the  Supreme Court in Commissioner of Sales Tax, U.P. (supra),  it is evident that essentially what weighed with the Court in  holding that Section 14 of the Limitation Act was not  applicable, was that the Appellate Authority and Revisional  Authority were not \021courts\022.  The stark features of the  revisional powers pointed out by the court, showed that the  legislature had deliberately excluded the application of the  principles underlying Sections 5 and 14 of the Limitation Act.   Here in this case, the Court is not called upon to exmine scope  of revisional powers.  The Court in this case is dealing with  Section 34 of the Act which confers powers on the Court of the  first instance to set aside an award rendered by an arbitrator,  on specified grounds.  It is not the case of the contractor that  the forums before which the Government of India undertaking  had initiated proceedings for setting aside the arbitral award  are not \021courts\022. In view of these glaring distinguishing  features, this Court is of the opinion that the decision  rendered in the case of Commission of Sales Tax, Uttar  Pradesh, Lucknow (supra) did not decide the issue which falls  for consideration of this Court and, therefore, the said decision    cannot be construed to mean that the provisions of Section 14  of the Limitation Act are not applicable, to an application  submitted under Section 34 of the Act of 1996.

16.             The contention that in view of the decision of  Division Bench of this Court in Union of India vs. Popular  Constructions Co.  2001 (8) SCC 470  the Court should hold  that the provisions of Section 14 of the Limitation Act would

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not apply to an application filed under Section 34 of the Act, is  devoid of substance.  In the said decision what is held is that  Section 5 of the Limitation Act is not applicable to an  application challenging an award under Section 34 of the Act.   Section 29(2) of the Limiation Act inter-alia provides that  where any special or local law prescribes, for any application,  a period of limitation different from the period prescribed by  the schedule, the provisions contained in Sections 4 to 24  shall apply only in so far as, and to the extent to which, they  are not expressly excluded by such special or local law.  On  introspection, the Division Bench of this Court held that the  provisions of Section 5 of the Limitation Act are not applicable  to an application challenging an award.  This decision cannot  be construed to mean as ruling that the provisions of Section  14 of the Limitation Act are also not applicable to an  application challenging an award under Section 34 of the Act.   As noticed earlier, in the Act of 1996, there is no express  provision excluding application of the provisions of Section 14  of the Limitation Act to an application filed under Section 34 of  the Act for challenging an award.  Further, there is  fundamental distinction between the discretion to be exercised  under Section 5 of the Limitation Act and exclusion of the time  provided in Section 14 of the said Act.  The power to excuse  delay and grant an extension of time under Section 5 is  discretionary whereas under Section 14, exclusion of time is  mandatory, if the requisite conditions are satisfied.  Section 5  is broader in its sweep, than Section 14 in the sense that a  number of widely different reasons can be advanced and  established to show that there was sufficient cause in not  filing the appeal or the application within time.  The  ingredients in respect of Section 5 and 14 are different.  The  effect of Section 14 is that in order to ascertain what is the  date of expiration of the \021prescribed period\022, the days excluded  from operating by way of limitation, have to be added to what  is primarily the period of limitation prescribed.  Having regard  to all these principles, it is difficult to hold that the decision in  Popular Construction Co. (supra) rules that the provisions of  Section 14 of the Limitation Act would not apply to an  application challenging an award under Section 34 of the Act.

17.             As this Court holds that Section 14 of the Limitation  Act, 1963 is applicable to an application filed under Section 34  of the Act, 1996 for setting aside an award made by an  arbitrator, the appeal arising from Special Leave Petition (C)  No.10311 of 2005 will have to be dismissed because the  Division Bench of the High Court of Karnataka has in terms  held that there was no lack of bona fide on the part of the  respondents and that the respondents had diligently  prosecuted the matter before the other court and had also  immediately after coming to know the lack of jurisdiction of  the court had filed the memo seeking withdrawal of the appeal  and presented the same before the lower court which had the   jurisdiction.

18.             As far as the appeal arising from Special leave  Petition (C) No.15619 of 2005 is concerned, this Court finds  that the view taken by the High Court of Karnataka that the  provisions of Sections 12 and 14 of the Limitation Act, 1963  are applicable to the proceedings under the Arbitration and  Conciliation Act, 1996 is eminently just and is hereby upheld.   However, this Court finds it difficult to uphold the finding  recorded by the Division Bench of the High Court that the  appellant had not prosecuted the matter in other courts with  due diligence and in good faith and was, therefore, not entitled  to exclusion of time taken in prosecuting the matter in wrong

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courts. 19.             To attract the provisions of Section 14 of the  Limitation Act, five conditions enumerated in the earlier part  of this Judgment have to co-exist.  There is no manner of  doubt that the section deserves to be construed liberally.  Due  diligence and caution are essentially pre-requisites for  attracting Section 14.  Due diligence cannot be measured by  any absolute standards.  Due diligence is a measure of  prudence or activity expected from and ordinarily exercised by  a reasonable and prudent person under the particular  circumstances.  The time during which a court holds up a  case while it is discovering that it ought to have been  presented in another court, must be excluded, as the delay of  the court cannot affect the due diligence of the party.  Section  14 requires that the prior proceeding should have been  prosecuted in good faith and with due diligence.  The  definition of good faith as found in Section 2(h) of the  Limitation Act would indicate that nothing shall be deemed to  be in good faith which is not done with due care and attention.   It is true that Section 14 will not help a party who is guilty of  negligence, lapse or inaction.   However, there can be no hard  and fast rule as to what amounts to good faith.  It is a matter  to be decided on the facts of each case.  It will, in almost every  case be more or less a question of degree.  The mere filing of  an application in wrong court would not prima facie show  want of good faith.  There must be no pretended mistake  intentionally made with a view to delaying the proceedings or  harassing the opposite party.  In the light of these principles,  the question will have to be considered whether the appellant  had prosecuted the matter in other courts with due diligence  and in good faith.  As is evident from the facts of the case,  initially the appellant had approached the court of learned  Civil Judge, Senior Division, Chitradurga for setting aside the  award made by the arbitrator.  On direction dated October 29,  2002 issued by the learned Civil Judge (Senior Division),  Chitradurga, the appellant had presented the application for  setting aside the award before the learned District Judge,  Chitradurga.  Before the learned District Judge, Chitradurga  an objection was raised by the respondent that the application  was not maintainable before the said court and that the  application was maintainable before the learned Judge, City  Civil Court, Bangalore.  The District Judge, Chitradurga by an  order dated February 3, 2003 held that it had no jurisdiction  to entertain the application submitted by the applicant and  accordingly returned the application for presentation before  the appropriate court.  The question of jurisdiction was  seriously contested between the parties not only before the  court of learned Civil Judge (Senior Division), Chitradurga but  also before the learned District Judge, Chitradurga.  The  question of jurisdiction had to be considered by the courts  below because of establishment of City Civil Court, Bangalore  under a special enactment and in view of the definition of the  word \023court\024 as given in Section 2(e) of the Arbitration and  Conciliation Act, 1996 which means the principal civil court of  original jurisdiction in a district.   The record does not indicate  that there was pretended mistake intentionally made by the  appellant with a view to delaying the proceeding or harassing  the respondent.  There was an honest doubt about the court  competent to entertain the application for setting aside the  award made by the arbitrator.  The mere fact that                  the  question  of  jurisdiction   is   an   arguable   one     would  not negative good faith because the appellant believed bona  fide that the court in which it had instituted the proceeding  had jurisdiction in the matter.  By filing the application in the  courts which had no jurisdiction to entertain the same, the

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appellant did not achieve anything more particularly when the  lis was never given up.  Under the circumstances this Court is  of the opinion that the Division Bench of the High Court of  Karnataka was not justified in concluding that the appellant  had not prosecuted the matter in other courts with due  diligence and in good faith.  The said finding being against the  weight of evidence on record, is liable to be set aside and is  hereby set aside.  We, therefore, hold that the appellant had  prosecuted the matter in other courts with due diligence and  in good faith and, therefore, is entitled to claim exclusion of  time in prosecuting the matter in wrong courts.  Therefore, the  appeal arising from SLP(C) No.15619 of 2005 will have to be  allowed.

20.             For the foregoing reasons civil appeal arising from  SLP(C) No.10311 of 2005 fails and is dismissed.  The judgment  rendered by the Division Bench of the High Court of  Karnataka on April 4, 2005, in W.P. No. 7089 of 2003  dismissing the application filed by the appellant under Section  34 of the Arbitration and Conciliation Act, 1996 for setting  aside the award of the arbitrator, is set aside, and civil appeal  arising from SLP(C) No.15619 of 2005, is allowed.  The  Division Bench of the High Court of Karnataka is directed to  proceed further with the matter in accordance with law.  There  shall be no order as to costs in both the appeals.