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CASE NO.: Appeal (civil)  4516 of 2006

PETITIONER: Union of India

RESPONDENT: M/s. Shring Construction Company Private Limited

DATE OF JUDGMENT: 17/10/2006

BENCH: G.P.MATHUR & A.K. MATHUR

JUDGMENT: JUDGMENT O R D E R  [ ARISING OUT OF S.L.P.(C) NO.26627 OF 2005]

A.K.MATHUR,J.                          Leave granted.

                       The short question involved in this appeal is  whether Section 14 of the Limitation is applicable to the  Arbitration and Conciliation Act, 1996 ( hereinafter to be  referred to as the "Act ") or not ?                                                                                       This appeal is directed against the judgment and  order passed  by the Division Bench of  High Court  of  Uttaranchal  at Nainital in First Appeal No.67 of 2005 on  17.8.2005  whereby the Division Bench has affirmed the  order dated 6.8.2005 passed by the District Judge, Dehradun  in Arbitration Case No.170 of 2005 dismissing the application  filed by the appellant under Section 34 of the Act  for setting  aside the arbitral award  on account of being barred by time.

               Brief facts which are necessary for disposal of the  present appeal are that the appellant \026 Union of India  entered into a contract  i.e. No. CEB/DDN/14 of 1993-94 (  for a value of Rs.82,34,789/-) with the respondent herein   through  the Chief Engineer, Bareilly Zone for construction of  residential accommodation  for Officers and staff  of Defence  Accounts Department at Lansdowne.  The work was to be  completed by the respondent in three phases  by the dates  specified in the contract. However, the respondent failed to  complete the contract work within the stipulated period  despite grant of extension of time by the appellant- Union of  India. However, the final bill of the respondent was duly  settled.  Subsequently, the respondent raised a dispute and  filed an application before the High Court of Uttaranchal  at  Nainital for appointment of an arbitrator.  The High Court by  its order dated 21.7.2003,  appointed Justice K.D.Shahi (  former Judge of Allahabad High Court) as the arbitrator. The  award was published on 30.11.2004 and a copy thereof was  received by the appellant on 3.12.2004.  As per the award, a  sum of Rs.28,94,720/- was awarded in favour of the  respondent to be paid by the appellant- Union of India with  interest at the rate of 18% per annum. The appellant being  aggrieved with the aforesaid award filed a writ petition i.e.  Writ Peition No.283 of 2005 challenging the award  before  the High Court of Uttaranchal, at Nainital under a bona fide  belief that since the arbitrator had been appointed by the  High Court, the award could be challenged in the High Court

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by filing writ petition. However, the writ petition was  dismissed on 4.4.2005 in limine being not maintainable on  the ground that the award ought to have been challenged  under Section 34 of the Act by filing objections in the court  of District Judge, Dehradun.  Hence, an objection under  Section 34 of the Act was filed before the District Judge,  Dehradun along with an application for condonation of delay  and the same came to be registered as Arbitration Case  No.170 of 2005. According to sub-section (3) of Section 34 of  the Act for setting aside an arbitral award, an application  may be made  within three months from the date on which  the party making 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. There is further proviso to sub-section (3)  of Section 34 that  the period for filing the application can be  extended  if the applicant could show that he was prevented  by sufficient cause from making the application within the  said period of three months by further 30 days but not  thereafter.  In the present case, admittedly the application  was filed beyond  even the extended period of 30 days.   Hence, the District Judge dismissed the application for  condonation of delay as well application for setting aside the  award being barred by time. The first appeal preferred  against that order before the High Court by the appellant  was also dismissed. Aggrieved against that order, the  present appeal has been filed.

               Mr.B.Dutta, learned Additional Solicitor General   for the appellant submitted that it is true that Section 5 of  the Limitation Act will have no application in these  proceedings because period of limitation has already been  prescribed under section 34(3)  of the Act but Section 14 of  the Limitation Act has not been excluded from its ambit.  It  is pointed out that the impugned award was challenged by  filing a writ petition  before the High Court but later on  it  was found that the writ petition was not maintainable and  accordingly, after dismissal of the writ petition the present  application was filed under section 34 of the Act  along with  application under section 5 of the Limitation Act. It appears  that  the question with regard to applicability of Section 14  of the Limitation Act  was not examined by the High Court as  well as  the District Judge. In fact,  it was bona fide error on  the part of the Union of India to have approached the High  Court. It was a misplaced impression that since the High  Court has appointed  the arbitrator , therefore,  its award can  be challenged before the High Court only. This Court recently  in the case of State of Goa v. Western Builders  reported in   (2006) 6 SCC 239  has taken a view that applicability of  Section 14 of the Limitation Act is not excluded from the Act  of 1996.  This Court in  Western Builders (supra)  has  observed as follows :

               " By virtue of Section 43 of the Act of  1996, the Limitation Act applies to the  proceedings under the Act of 1996 and the  provisions of the Limitation Act can only stand  excluded to the extent wherever different  period has been prescribed under the Act of  1996. Since there is no prohibition provided  under Section 34, there is no reason why  Section 14 of the Limitation Act should not be  read in the Act of 1996, which will advance the  cause of justice."

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Therefore,  Mr.Dutta, learned ASG  submitted that the  application filed by the appellant for condonation of delay  contending that the appellant was prosecuting remedy  before the High Court by filing writ  petition should have  been considered and delay should have been condoned.  This  question seems not to have been  examined by the trial court  as well as by the High Court.  In view of the decision in the  Western Builders (supra)  we think it just and proper to  remit this matter back to the trial court to decide whether  the application for setting aside the award under section 34  of the Act  filed by the appellant could be considered to be  within the period of limitation i.e. after deducting the period  spent by the appellant in prosecuting the remedy before the  High Court.     

               As a  result of our above discussion, we allow this  appeal and set aside  the impugned order  of the High Court  and that of the District Judge and remit the matter before  the District Judge.  The  learned District Judge is directed to  examine the matter in the light of the decision in Western  Builders (supra) and dispose of the application filed by the  appellant as expeditiously as possible on its merit, without  prejudice to any observation made in this order. There would  be no order as to costs.