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CASE NO.: Appeal (civil)  3870 of 2006

PETITIONER: UNITED INDIA INSURANCE CO. LTD.

RESPONDENT: J.A.INFRA STRUCTURE PVT.LTD.

DATE OF JUDGMENT: 30/08/2006

BENCH: Dr. AR. LAKSHMANAN & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T (Arising out of SLP(C) No.6470 of 2006)  

Dr. AR. LAKSHMANAN, J.  

       Leave granted.         Heard learned counsel appearing on behalf of both sides.         This 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 insured.  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.   On 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.         Aggrieved 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.  The 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.   Aggrieved by the said Judgment dt.21.12.2005, the appellant preferred  the above appeal.         The 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.

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       This 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 :- "14.Exclusion of time of proceeding bona fide in court without  jurisdiction - (1) 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. 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 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."

       This 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.             In the 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.           Since 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.           We make it clear that we have not decided the objections and other  issues raised on merits.           The Civil Appeal stands disposed of accordingly with the above  observation.  However, pending disposal of the matter by the District

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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.         We 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 with law.