# Moradabad Development Authority v. M/S V.R. Construction & Engineering Co., Moradabad

- **Citation:** (2022) 3 ILRA 849
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-03-02
- **Case number:** First Appeal From Order No.460 of 2021
- **Bench:** J.J. Munir
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/moradabad-development-authority-v-m-s-v-r-construction-engineering-co-moradabad-48248
- **Pages:** 16

## Headnote

Civil Law - Arbitration & Conciliation Act1996 - Section 34(2) - Limitation Act -
Section 5-Appeal against order refusing to
condone the delay-in making Application u/s
34(2)-Application u/s 5 of limitation Actincompetent-as limitation is governed by section
34(3) of Act,1996 and condonation by its
proviso-not by section 5 of Limitation Act.

Appeal dismissed. (E-9)

Held, the principle above indicated and the
terms of section 14 of the Limitation Act show
that Section 14 would not come to the
Appellant's rescue. The prescribed period of
limitation under section 34 (3) , together with
its proviso is three months & anr. 30 days of
time, that may be condoned by the Court. (para
30)

List of Cases cited:

## Text

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3 All. Moradabad Development Authority Vs. M/S V.R. Construction & Engineering Co.,
 Moradabad
849
(2022)03ILR A849
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 02.03.2022

BEFORE

THE HON'BLE J.J. MUNIR, J.

First Appeal From Order No.460 of 2021

Moradabad Development Authority
 ...Appellant
Versus
M/S V.R. Construction & Engineering Co.,
Moradabad ...Respondent

Counsel for the Appellant:
Sri Krishna Mohan Asthana

Counsel for the Respondent:
Sri Manu Khare

Civil Law - Arbitration & Conciliation Act1996 - Section 34(2) - Limitation Act -
Section 5-Appeal against order refusing to
condone the delay-in making Application u/s
34(2)-Application u/s 5 of limitation Actincompetent-as limitation is governed by section
34(3) of Act,1996 and condonation by its
proviso-not by section 5 of Limitation Act.

Appeal dismissed. (E-9)

Held, the principle above indicated and the
terms of section 14 of the Limitation Act show
that Section 14 would not come to the
Appellant's rescue. The prescribed period of
limitation under section 34 (3) , together with
its proviso is three months & anr. 30 days of
time, that may be condoned by the Court. (para
30)

List of Cases cited:

1. Gulbarga University Vs Mallikarjun S. Kodagali
& anr. (2008) 13 SCC 539

2. U.O.I. Vs Popular Construction Co. [(2001) 8
SCC 470 : AIR 2001 SC 4010]

3. St.of Goa Vs Western Builders [(2006) 6 SCC
239]

4. National Aluminium Co. Ltd. Vs Pressteel &
Fabrications (P) Ltd. [(2004) 1 SCC 540]

5. U.O.I. Vs Bhavna Engg. Co. [(2008) 13 SCC
546

6. U.O.I. Vs Popular Construction Co. (2001) 8
SCC 470

7. Consolidated Engineering Enterprises Vs
Principal Secretary, Irrigation Department & ors.
(2008) 7 SCC 169

8. P. Radha Bai & ors. Vs P. Ashok Kumar & anr.
(2019) 13 SCC 445

9. National Spot Exchange Limited Vs Anil Kohli
AIR 2021 SC 4339

10. M.P. Steel Corporation Vs Commissioner of
Central Excise (2015) 7 SCC 58
(Delivered by Hon'ble J.J. Munir, J.)

1. Heard Mr. K.M. Asthana, learned
Counsel for the appellant and Mr. Manu
Khare, learned Counsel appearing on
behalf of the respondent.

2. This is an appeal from an order of
the Presiding Officer, Commercial Court,
Moradabad dated 05.03.2020, refusing to
condone the delay in making an application
by the appellant under Section 34(2) of the
Arbitration and Conciliation Act, 19961.

3. The facts leading to the present
appeal are these:

The
Moradabad
Development
Authority, Moradabad, hereinafter referred
to as 'the appellant', entered into an
agreement with M/s. V.R. Construction and
Engineering Company for a civil works
contract on 28.03.2009. The subject matter
850 INDIAN LAW REPORTS ALLAHABAD SERIES
of the contract was construction of a
'Sourcing Hub and Warehouse' in Sector 4,
Naya Moradabad Yojna, Delhi-Moradabad
Road. The project subject matter of the
contract
is
said
to
be
worth
Rs.26,03,84,722.93 only. The project was
to be completed within a period of two
years w.e.f. 03.03.2009. The said period
would end on 02.03.2011, but was
extended from time to time, as the
appellant say, on the request of M/s. V.R.
Construction and Engineering Company,
hereinafter referred to as 'the respondent'.

4. It is the appellant's claim that the
time for completion of the contracted
project was last extended up to 31.03.2016
subject to a penalty of Rs.7.20 lakhs. It is
the appellant's case that the respondent
submitted an affidavit, saying that they
were A-Category contractors and also
submitted a certificate of experience dated
10.02.2009 issued by a certain M/s. Arch
Add Consultants, New Delhi certifying
them as A-Class contractors. Besides, other
testimonials were also attached in response
to the tender notice for the works contract
in
question
that
was
published
on
27.02.2009. It appears that on 02.03.2009,
a letter was issued by the appellant to the
respondent that the respondent's tender has
been approved, with a specific condition
that if the experience certificate submitted
by the respondent is found to be false upon
verification, the earnest money deposited
shall
be
forfeited
and
appropriate
proceedings drawn in accordance with law.

5. It is the appellant's further case that
the contract, that was later on executed,
carried an arbitration clause, being Clause
No.32. Clause 32(b) provides that if the
respondent is dissatisfied with the final
decision of the Engineer-in-Charge taken
under Clause 32(a), the respondent may,
within twenty-eight days of receipt of the
decision, give notice in writing, requiring
the matter to be submitted to arbitration,
furnishing detailed particulars of the
dispute or differences. The notice would
clearly indicate the point(s) in issue. It was
further a term in the contract that if the
respondent failed to serve a notice of
arbitration within the time stipulated, the
decision of the Engineer-in-Charge of the
appellant, shall be conclusive and binding
on the respondent. The appellant say that
upon inquiries made from M/s. Arch Add
Consultants, New Delhi with regard to the
letter dated 27.01.2016 issued by the
Managing Director of a certain Kashi
Vishwanath Steel Private Limited, the
appellant were informed that the experience
certificate under reference was never issued
by M/s. Arch Add Consultants, New Delhi.

6. It is also said that the respondent
committed various irregularities of a
serious nature in the execution of the works
contract. The appellant issued a letter dated
09.02.2016 to the Secretary, Awas Evam
Sahari Niyojan, Anubhag-3 of the State
Government, requesting him to institute an
inquiry into the irregularities committed by
the respondent in the construction of
Sourcing Hub and Warehouse Complex in
Sector-4 of the Moradabad Residential
Scheme under the works contract.

7.

On
10.05.2016,
the
State
Government
constituted
an
Inquiry
Committee to go into the allegations of
irregularities committed by the respondent
vis-à-vis the execution of the contracted
work. The Inquiry Committee, after notice
to the respondent and the appellant, as the
appellant say, visited the site and held
inquiry. The Committee is said to have
submitted a report to the Secretary to the
Government in the appropriate Department.
The appellant say that the certificate of
3 All. Moradabad Development Authority Vs. M/S V.R. Construction & Engineering Co.,
 Moradabad
851
experience submitted by the respondent,
upon verification, was found to be false and
fabricated. This verification is said to have
been made from the company that had
issued the certificate of experience.

8. The Committee are also claimed to
have said that the respondent carried out
work according to their whims, bereft of
any
directions
by
the
Engineering
Department
of
the
appellant.
The
Committee are also said to have found that
though a sum of Rs.26,01,55,764/- has
been spent on the project, it was still
incomplete and not in a state where it could
be put to use for the public purpose that it
was meant for. The Committee are also
claimed to have made a report to debar the
respondent from doing any further work
from the appellant and also recommending
that final payment be made for the work
that the respondent had validly executed.

9. It was in this background that a
dispute arose between the appellant and
the respondent, stemming from execution
of the works contract entered into
between parties.

10. In consequence, the respondent
served a notice of arbitration under
Section 11(5) of the Act of 1996.
Thereafter, the Vice-Chairman of the
appellant appointed a sole Arbitrator on
22.04.2017. It is the appellant's case that
on 10.07.2017, the Commissioner of the
Moradabad Division, taking cognizance
of the irregularities committed by the
respondent, directed the appellant to
initiate
proceedings
against
the
respondent by lodging a First Information
Report. The direction was issued in view
of
the
fact
that
the
respondent's
testimonials,
entitling
them
to
the
contract, were found by the appellant and
the Inquiry Committee appointed by the
State Government to be forged.

11. On 19.07.2017, the appellant say
they issued a show cause notice, calling
upon the respondent to submit a reply
why they may not be blacklisted from
obtaining
future
contracts
by
the
appellant. An FIR was lodged on
21.07.2017 by the appellant against the
respondent, giving rise to Case Crime
No.769, under Sections 420, 467, 471
IPC, Police Station Civil Lines, District
Moradabad. It is not in dispute that the
FIR aforesaid was challenged before this
Court vide Criminal Misc. Writ Petition
No.1470 of 2017 and was quashed vide a
judgment and order dated 02.02.2018.

12. On the 21st July, 2017, an order
was passed by the Vice-Chairman of the
appellant, cancelling the appointment of the
sole Arbitrator with a further stipulation
that since the contract was obtained on the
basis of a forged and fabricated document,
the same is null and void, and that the
respondent is not entitled to invoke
proceedings for arbitration. It is the
appellant's case that the order cancelling
the appointment of the sole Arbitrator dated
21.07.2017 was served upon the Arbitrator,
Mr. Bal Kishan Gupta on 22.07.2017 and
upon his refusal to receive it, the order was
affixed on the Arbitrator's residential
premises on 22.07.2017. It is also the
appellant's case that the sole Arbitrator was
also delivered the order cancelling his
appointment through registered post on
22.07.2017. Further, the cancellation of
appointment was published in the Daily
Newspaper Hindustan, published from
Moradabad on 22.07.2017. The appellant
say that the order dated 21.07.2017 passed
by the Vice-Chairman of the appellant
cancelling the appointment of the sole
852 INDIAN LAW REPORTS ALLAHABAD SERIES
Arbitrator was not challenged before any
Court or competent Authority and the same
has attained finality.

13. On 31.07.2017, the sole Arbitrator
addressed a letter to the appellant's
Secretary, which says that the letter sent by
the appellant cancelling the Arbitrator's
appointment was received by him on
24.07.2017.
The
arbitral
proceedings,
according to the Arbitrator, were concluded
on 22.07.2017 and opinion was reserved. It
transpires from the record that the award
was made on 23.07.2017, which carries a
complete record of the proceedings. The
award shows in paragraph no.9 that in all,
six hearings were held between 05.05.2017
and 22.07.2017. It appears that in these
proceedings,
the
appellant
did
not
participate and the proceedings went exparte. The award too was pronounced ex
parte. It is the appellant's case that the letter
dated 31.07.2017 does not mention the fact
that the award was pronounced on
23.07.2017, though, later on, it purports to
have been pronounced on 23.07.2017. It is
the appellant's contention that the award is
ante-timed
and
one
made
after
communication of the letter cancelling the
Arbitrator's appointment by the appellant.
Admittedly, the award was served upon the
appellant on 03.08.2017. It appears that on
05.08.2017 and 14.08.2017, upon receipt of
the Arbitrator's award, the Vice-Chairman
of the appellant addressed orders to the
respondent and the sole Arbitrator, saying
that the award pronounced on 23.07.2017
was
without
jurisdiction
and
void,
inasmuch as the Arbitrator's appointment
had been cancelled on 22.07.2017.

14. It is the appellant's case that they
were bona fide under the impression that
since the award has been delivered by the
sole Arbitrator after cancellation of his
appointment, the award pronounced is
without jurisdiction and a nullity. It is
inexucatble. The respondent filed an
execution case under Section 36 of the Act
of 1996, that was registered as Arbitration
Case No.41 of 2019 before the Court of the
District Judge, Moradabad. The application
sought execution of the sole Arbitrator's
award
dated
23.07.2017
against
the
appellant for a sum of Rs.4,73,93,012/-.
The appellant say that upon knowledge of
the institution of execution proceedings,
they filed objection supported by affidavit
under Section 47 CPC before the District
Judge, that were registered as Misc. Case
No.2 of 2019. It was prayed that the award
was inexecutable, as the sole Arbitrator had
acted without jurisdiction and made the
award on 23.07.2017, after his appointment
as Arbitrator had been cancelled by the
appellant on 21.07.2017. The award was
assailed as ante-timed.

15. The appellant's objection stood
transferred along with the execution case
from the court of the District Judge,
Moradabad to the Commercial Court,
before whom it came up for determination
on 31.08.2019. The Commercial Court
rejected the objection vide order dated
31.08.2019, holding that the question about
the Arbitrator passing an award without
jurisdiction was something that could be
gone into on an application by the appellant
under Section 34(2) of the Act of 1996, but
not
under
Section
47
CPC.
The
Commercial Court has remarked that the
objection under Section 47 CPC had been
brought two years after the award was
passed and the remedy of the appellant was
under Section 34(2) of the Act of 1996.

16. Aggrieved by the order passed by
the Commercial Court, Moradabad dated
31.08.2019
rejecting
the
appellant's
3 All. Moradabad Development Authority Vs. M/S V.R. Construction & Engineering Co.,
 Moradabad
853
objection under Section 47 CPC, the
appellant preferred Misc. Petition (Civil)
No.67 of 2020 before this Court under
Article 227 of the Constitution. The
aforesaid
petition
was
dismissed
on
19.02.2020 on ground that the appellant
had an alternative remedy of moving this
Court in Revision under Section 115 CPC.
The appellant then moved Civil Revision
No.18 of 2020 challenging the order of the
Commercial
Court
dated
31.08.2019,
rejecting the appellant's objection under
Section 47 CPC. In the said revision, the
delay condonation application made has
been allowed vide order dated 28.09.2020
and a regular number has been assigned to
the revision, which is now pending before
this Court, questioning the order dated
31.08.2019. The appellant, notwithstanding
the challenge laid to the order dated
31.08.2019 passed by the Commercial
Court last mentioned, on legal advice
received, also filed an application under
Section 34(2) of the Act of 1996 on
05.02.2020, along with an application
under Section 5 of the Indian Limitation
Act, 1963 seeking to set aside the award.

17. This application was registered as
Arbitration Petition No.1 of 2020 on the
file of
the Commercial Court. The
Commercial Court, by the order impugned,
has held that it has no jurisdiction to
condone
the
delay
in
making
the
application under Section 34(2) of the Act
of 1996, inasmuch as it was moved on
05.02.2022, whereas the impugned award
was
served
upon
the
appellant
on
03.08.2017. The Commercial Court was of
opinion that the limitation to challenge an
award of the Arbitrator under Section 34(2)
of the Act of 1996 was governed by subSection (3) of Section 34, where the
limitation to make such an application was
three months from the date on which the
party making the application had received
the award, and further that by the proviso to
sub-Section (3) of Section 34, the Court
had jurisdiction to condone the delay in
making such an application within a further
period of 30 days, but no more. It was on
the
aforesaid
reasoning
that
the
Commercial Court declined to condone the
delay holding that it had no jurisdiction to
do so.

18. Mr. K.M. Asthana, learned
Counsel for the appellant submits that the
Commercial
Court
has
committed
a
manifest error of law, inasmuch as the
appellant's application, though worded as
one purely for condonation of delay
invoking Section 5 of the Indian Limitation
Act, was, in substance, an application
seeking to exclude the period of time that
the appellant spent in pursuing remedies
bona fide. Mr. Asthana submits that the
application ought to have been considered
bereft of its label as one under Section 14
of the Limitation Act that squarely applies
to proceedings under the Act of 1996. He
submits that Section 14 of the Limitation
Act is applicable to the rights of parties,
who move the Court under Section 34, in
the event they have pursued in good faith
another remedy, which the other Court on
account of lack of jurisdiction or other
cause of a like nature was unable to
entertain.

19. The submission before this Court
on behalf of the appellant, therefore,
proceeds on the basis that the application
seeking to condone the delay must be
construed as an application excluding the
period of limitation spent in the bona fide
pursuit of other remedies/ remedy against
the Arbitrator's award. The remedies, Mr.
Asthana points out, that the appellant
pursued against the impugned award, on
854 INDIAN LAW REPORTS ALLAHABAD SERIES
the foot of which he wants a substantial
period of limitation to be excluded, are an
FIR that was ultimately quashed by this
Court on 02.02.2018 by an order made in
Criminal Misc. Writ Petition No.1470 of
2017 and the objection that was filed under
Section 47 CPC in the execution brought
by the respondent in the year 2019. The
objection under Section 47 CPC being
rejected, this Court was approached in the
first instance under Article 227 of the
Constitution and that remedy being held to
be barred in view of the remedy of a civil
revision, a revision was preferred, which is
pending. It is, thus, pointed out that the
appellant have pursued remedies in good
faith before the competent fora, which
ultimately, on account of holding want of
jurisdiction in themselves, declined relief.
Mr. Asthana has placed reliance upon the
decision of the Supreme Court in Gulbarga
University v. Mallikarjun S. Kodagali and
another2 to submit that the provisions of
Section 14 of the Limitation Act would
apply to arbitral proceedings under Section
34 of the Act of 1996. It is his case that
unlike Section 5 of the Limitation Act, that
may be held excluded in view of the
provisions of sub-Section (3) of Section 34,
Section 14 of the Limitation Act applies to
proceedings under Section 34 of the Act of
1996 in the same manner as it does to suits.
He has drawn the attention of the Court to
the following holding of their Lordships in
Gulbarga University (supra):

"8.
Dr. M.P.
Raju,
learned
counsel appearing on behalf of the
appellant, would contend that the earlier
decision of this Court in Union of India v.
Popular Construction Co. [(2001) 8 SCC
470 : AIR 2001 SC 4010] whereupon
reliance has been placed by the High Court
has since been revisited by this Court in
State of Goa v. Western Builders [(2006) 6
SCC 239] holding : (SCC p. 246, paras 1418)

"14. The question is whether
Section 14 of the Limitation Act has been
excluded by this special enactment i.e. the
Arbitration and Conciliation Act, 1996.
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 the court.

15.
Therefore,
general
proposition is by virtue of Section 43 of the
Act of 1996 the Limitation Act, 1963
applies to the Act of 1996 but by virtue of
sub-section (2) of Section 29 of the
Limitation Act, if any other period has been
prescribed under the special enactment for
moving the application or otherwise then
that period of limitation will govern the
proceedings under that Act, and not the
provisions of the Limitation Act. In the
present case under the Act of 1996 for
setting aside the award on any of the
grounds mentioned in sub-section (2) of
Section 34 the period of limitation has been
prescribed and that will govern. Likewise,
the period of condonation of delay i.e. 30
days in the proviso.

16. But there is no provision
made in the Arbitration and Conciliation
Act, 1996 that if any party has bona fide
prosecuted its remedy before the other
forum which had no jurisdiction then in
that case whether the period spent in
prosecuting the remedy bona fidely in that
court can be excluded or not. As per the
provision, sub-section (3) of Section 34
which prescribes the period of limitation (3
months) for moving the application for
setting aside the award before the court
then that period of limitation will be
3 All. Moradabad Development Authority Vs. M/S V.R. Construction & Engineering Co.,
 Moradabad
855
applicable and not the period of limitation
prescribed in the Schedule under Section 3
of the Limitation Act, 1963. Thus, the
provision
of
moving
the
application
prescribed in the Limitation Act, shall stand
excluded by virtue of sub-section (2) of
Section 29 as under this special enactment
the period of limitation has already been
prescribed.
Likewise
the
period
of
condonation of delay i.e. 30 days by virtue
of the proviso.

17. Therefore, by virtue of subsection (2) of Section 29 of the Limitation
Act what is excluded is the applicability of
Section 5 of the Limitation Act and under
Section 3 read with the Schedule which
prescribes
the
period
for
moving
application.

18. Whenever two enactments are
overlapping each other on the same area
then the courts should be cautious in
interpreting those provisions. It should not
exceed the limit provided by the statute.
The extent of exclusion is, however, really
a
question
of
construction
of
each
particular statute and general principles
applicable are subordinate to the actual
words used by legislature."

Referring to Popular Construction
[(2001) 8 SCC 470 : AIR 2001 SC 4010]
and National Aluminium Co. Ltd. v.
Pressteel & Fabrications (P) Ltd. [(2004) 1
SCC 540] it was held : (Western Builders
case [(2006) 6 SCC 239] , SCC pp. 248-49,
para 25)

"25. Therefore, in the present
context also it is very clear to us that there
are no two opinions in the matter that the
Arbitration and Conciliation Act, 1996
does not expressly exclude the applicability
of Section 14 of the Limitation Act. The
prohibitory provision has to be construed
strictly. It is true that the Arbitration and
Conciliation Act, 1996 intended to expedite
commercial issues expeditiously. It is also
clear in the Statement of Objects and
Reasons
that
in
order
to
recognise
economic reforms the settlement of both
domestic and international commercial
disputes should be disposed of quickly so
that the country's economic progress be
expedited. The Statement of Objects and
Reasons also nowhere indicates that
Section 14 of the Limitation Act shall be
excluded. But on the contrary, intendment
of the legislature is apparent in the present
case as Section 43 of the Arbitration and
Conciliation
Act,
1996
applies
the
Limitation Act, 1963 as a whole. It is only
by virtue of sub-section (2) of Section 29 of
the Limitation Act that its operation is
excluded to that extent of the area which is
covered
under
the
Arbitration
and
Conciliation Act, 1996. Our attention was
also invited to the various decisions of this
Court interpreting sub-section (2) of
Section 29 of the Limitation Act with
reference
to
other
Acts
like
the
Representation of the People Act or the
provisions of the Criminal Procedure Code
where separate period of limitation has
been prescribed. We need not overburden
the judgment with reference to those cases
because it is very clear to us by virtue of
sub-section (2) of Section 29 of the
Limitation Act that the provisions of the
Limitation Act shall stand excluded in the
Act of 1996 to the extent of area which is
covered by the Act of 1996. In the present
case under Section 34 by virtue of subsection (3) only (sic for) the application for
filing and setting aside the award a period
has been prescribed as 3 months and delay
can be condoned to the extent of 30 days.
To this extent the applicability of Section 5
of the Limitation Act will stand excluded
but there is no provision in the Act of 1996
856 INDIAN LAW REPORTS ALLAHABAD SERIES
which excludes operation of Section 14 of
the Limitation Act. If two Acts can be read
harmoniously without doing violation to
the words used therein, then there is no
prohibition in doing so."

The ratio laid down in the said
decision has since been reiterated in Union
of India v. Bhavna Engg. Co. [(2008) 13
SCC 546 : (2007) 5 Raj 458] stating : (SCC
pp. 546-47, para 2)

"2. This Court in a recent
judgment rendered in State of Goa v.
Western Builders [(2006) 6 SCC 239] held
that Section 14 of the Limitation Act, 1963
is
applicable
in
the
arbitration
and
conciliation proceedings. Having gone
through the various facts, we are of the
view that the mistake committed by the
appellant in approaching the Madhya
Pradesh High Court and the Bombay High
Court is bona fide. We, therefore, condone
the delay. In the facts of this case and in the
interest of justice, we, however, think it
proper that the Section 34 application
pending before the Additional District
Judge, Gwalior be transferred to the
Bombay High Court. The application will
be decided on merits expeditiously. Parties
are at liberty to urge all the contentions
before that Court."

9. There cannot be any doubt
whatsoever that in terms of sub-section (2)
of Section 34 of the Act, an arbitral award
may be set aside only if one of the
conditions specified therein is satisfied.
Sub-section (3) of Section 34 provides for
the period of limitation within which an
application under Section 34 of the Act is
to be filed. The proviso appended thereto
empowers the court to entertain an
application despite expiry of the period of
limitation specified therein, namely, three
months. No provision, however, exists as
regards application of Section 14 of the
Limitation Act. This Court, as noticed
hereinbefore in Western Builders [(2006) 6
SCC 239] opined that sub-section (2) of
Section 29 thereof would apply to an
arbitration proceedings and consequently
Section 14 of the Limitation Act would also
be applicable. We are bound by the said
decision. Once it is held that the provisions
of Section 14 of the Limitation Act, 1963
would apply, it must be held that the
learned trial Judge as also the High Court
had committed an error in not applying the
said provisions."

20. Mr. Manu Khare, learned Counsel
for the respondent, on the other hand,
refuting the submissions of the learned
Counsel for the appellant, has submitted
that the application made in aid of the
substantive application under Section 34 of
the Act of 1996 is, in substance, one that is
under Section 5 of the Limitation Act,
seeking condonation of delay and not
merely one that goes by that label. Mr.
Khare submits that there is nothing said in
the application to indicate that the appellant
ever urged a case based on exclusion of the
period spent in bona fide prosecution of a
remedy before another Court or forum that
was ultimately found to be incompetent. He
urges that so far as an application under
Section 5 of the Limitation Act is
concerned, the said provision does not
apply at all to proceedings under Section 34
of the Act of 1996, in view of the proviso
to sub-Section (3) of Section 34 of the Act
of
1996.
Learned
Counsel
for
the
respondent has placed reliance upon the
guidance of the Supreme Court in Union of
India v. Popular Construction Co.3,
Consolidated Engineering Enterprises v.
Principal
Secretary,
Irrigation
Department and others4, P. Radha Bai
3 All. Moradabad Development Authority Vs. M/S V.R. Construction & Engineering Co.,
 Moradabad
857
and others v. P. Ashok Kumar and
another5 and National Spot Exchange
Limited v. Anil Kohli6.

21. In Union of India v. Popular
Construction Co. (supra), it has been held:

"16. Furthermore, Section 34(1)
itself provides that 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). Sub-section (2) relates
to grounds for setting aside an award and is
not relevant for our purposes. But an
application
filed
beyond
the
period
mentioned in Section 34, sub-section (3)
would not be an application "in accordance
with" that sub-section. Consequently by
virtue of Section 34(1), recourse to the
court against an arbitral award cannot be
made beyond the period prescribed. The
importance of the period fixed under
Section 34 is emphasised by the provisions
of Section 36 which provide that

"where the time for making an
application to set aside the arbitral award
under Section 34 has expired ... the award
shall be enforced under the Code of Civil
Procedure, 1908 in the same manner as if it
were a decree of the court".

This is a significant departure
from the provisions of the Arbitration Act,
1940. Under the 1940 Act, after the time to
set aside the award expired, the court was
required
to
"proceed
to
pronounce
judgment according to the award, and upon
the judgment so pronounced a decree shall
follow" (Section 17). Now the consequence
of the time expiring under Section 34 of the
1996 Act is that the award becomes
immediately
enforceable
without
any
further act of the court. If there were any
residual doubt on the interpretation of the
language used in Section 34, the scheme of
the 1996 Act would resolve the issue in
favour of curtailment of the court's powers
by the exclusion of the operation of Section
5 of the Limitation Act."

22. So far as the decision in
Consolidated
Engg.
Enterprises
v.
Irrigation Deptt. (supra) is concerned, it
brings out the distinction that while Section
5 of the Limitation Act would not apply to
an application under Section 34(2) of the
Act of 1996, Section 14 of the Limitation
Act would still apply. In Consolidated
Engg. Enterprises v. Irrigation Deptt., it
has been held:

"19. A bare reading of subsection (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.

20. 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
858 INDIAN LAW REPORTS ALLAHABAD SERIES
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 up to 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 subsection (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 Section 5 of the Limitation Act
stands excluded because of the provisions of
Section 29(2) of the Limitation Act. 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.

21. 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.

22. 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
3 All. Moradabad Development Authority Vs. M/S V.R. Construction & Engineering Co.,
 Moradabad
859
entertain it but also where he brings the suit
or the application in the wrong court in
consequence of bona fide mistake or (sic
of) 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.

27. The contention that in view of
the decision of the Division Bench of this
Court in Union of India v. Popular
Construction Co. [(2001) 8 SCC 470] the
Court should hold that the provisions of
Section 14 of the Limitation Act would 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
Limitation 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 insofar 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.

28. 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 Sections 5 and 14
are different. The effect of Section 14 is
that in order to ascertain what is the date of
expiration of the "prescribed period", 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.
[(2001) 8 SCC 470] 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.

31. 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 [Ed.: See
para 21, above.] . There is no manner of
doubt that the section deserves to be
construed liberally. Due diligence and
caution are essential prerequisites 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.
860 INDIAN LAW REPORTS ALLAHABAD SERIES
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."

23. There is little doubt, in view of
consistent authority, that Section 34(3)
provides for a special rule of limitation and
Sections 4 to 24 of the Limitation Act,
though
applicable
generally
to
an
application under Section 34 of the Act of
1996, is governed by a special law, that is
to say, the Act, where the period of
limitation for making such an application is
differently prescribed.