# MIS CONSOLIDATED ENGG. ENTERPRISES < v. PRINCIPAL SECY. IRRIGATION DEPTT. & ORS

- **Citation:** [2008] 5 S.C.R. 1108
- **Court:** Supreme Court of India
- **Decided:** 2008-04-03
- **Case number:** Civil Appeal No.2461 of 2008
- **Bench:** K.G. Balakrishnan, R.V. Raveendran, J.M. Panchal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-consolidated-engg-enterprises-v-principal-secy-irrigation-deptt-ors-24520
- **Pages:** 41

## Headnote

Arbitration & Conciliation Act, 1996 - S. 34 - Applicability
c of s. 14 of the Limitation Act - Held, s. 14 of the Limitation Act,
1963 is applicable to an application filed under s.34 of the
Arbitration & Conciliation Act, 1996 -Limitation Act, 1963, s. 14
- Code of Civil Procedure, 1908.
Words & Phrases:
D
"due diligence" - Meaning of
In these two appeals, the question for consideration
'
before the Court was whether the provision of Section 14
-.
of the Limitation Act would be applicable to an application
E submitted under Section 34 of the Arbitration and
Conciliation Act, 1996, for setting aside the award made
by the arbitrator.
Dismissing Civil Appeal No.2461 of 2008 and allowing
F
Civil Appeal No.2462 of 2008, the Court
HELD: Per Panchal, J. (for himself and CJI) .
.
1. A bare reading of sub-section (3) of Section 34 of
the Arbitration and Conciliation Act, 1966 read with the
proviso makes it abundantly clear that the application for
G setting aside the award on the grounds mentioned in subsection (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. Section 29(2) of the Limitation Act, inter alia
t ..
H
1108
1
l
M/S CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1109
IRRIGATION DEPTT. & ORS.
provides that where any special or local law prescribes A
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 8
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 c
limitation as well as provision for extension upto specifi~d
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 · D
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 E
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.
[Para 10] [1126-C, D, E, F, G, H; 1127-A, B]
2.1 However, merely because it is held that Section 5
F
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 G
application submitted under Section 34 of the Act of 1996.
[Para 11] [1127-C, D]
2.2 The policy of Section 14 of the Act of 1996 is to
afford protection to a litigant against the bar.of limitation
when he institutes a proceeding which by reason of some H
1110
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A technical defect c_annot 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 interpret~d so
as to advance the cause of justice rather than abort the
B 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
C b

## Text

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(2008] 5 S.C.R. 1108
A
MIS CONSOLIDATED ENGG. ENTERPRISES
.... <
v.
PRINCIPAL SECY. IRRIGATION DEPTT. & ORS.
(C.A.No. 2461 of 2008)
B
APRIL 3, 2008
(K.G. BALAKRISHNAN, CJ & R.V. RAVEENDRAN
AND J.M. PANCHAL, JJ.)
Arbitration & Conciliation Act, 1996 - S. 34 - Applicability
c of s. 14 of the Limitation Act - Held, s. 14 of the Limitation Act,
1963 is applicable to an application filed under s.34 of the
Arbitration & Conciliation Act, 1996 -Limitation Act, 1963, s. 14
- Code of Civil Procedure, 1908.
Words & Phrases:
D
"due diligence" - Meaning of
In these two appeals, the question for consideration
'
before the Court was whether the provision of Section 14
-.
of the Limitation Act would be applicable to an application
E submitted under Section 34 of the Arbitration and
Conciliation Act, 1996, for setting aside the award made
by the arbitrator.
Dismissing Civil Appeal No.2461 of 2008 and allowing
F
Civil Appeal No.2462 of 2008, the Court
HELD: Per Panchal, J. (for himself and CJI) .
.
1. A bare reading of sub-section (3) of Section 34 of
the Arbitration and Conciliation Act, 1966 read with the
proviso makes it abundantly clear that the application for
G setting aside the award on the grounds mentioned in subsection (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. Section 29(2) of the Limitation Act, inter alia
t ..
H
1108
1
l
M/S CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1109
IRRIGATION DEPTT. & ORS.
provides that where any special or local law prescribes A
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 8
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 c
limitation as well as provision for extension upto specifi~d
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 · D
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 E
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.
[Para 10] [1126-C, D, E, F, G, H; 1127-A, B]
2.1 However, merely because it is held that Section 5
F
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 G
application submitted under Section 34 of the Act of 1996.
[Para 11] [1127-C, D]
2.2 The policy of Section 14 of the Act of 1996 is to
afford protection to a litigant against the bar.of limitation
when he institutes a proceeding which by reason of some H
1110
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A technical defect c_annot 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 interpret~d so
as to advance the cause of justice rather than abort the
B 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
C 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
D 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
E 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
F 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. [Para 12] [1127-G;
1128-A, B, C, D, E]
2.3 On review of the provisions of the Act of 1996 this
G 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,
H. 1963 applicable to arbitration proceedings. The
MIS CONSOLIDATED ENGG. ENT v. PRINCIPAL SECY.
1111
~
IRRIGATION DEPTT. & ORS.
.., +
proceedings under Section 34 are for the purpose of A
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 ~o the
proceedings in the arbitr_ation as !t applies _to the 8
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 c
prescribed by the Limitation Act, 1963, for the
commencement of the proceedings with respect to the
dispute so submitted. If the period betwe~n the
commencement of the arbitration proceedings till the
award is set aside by the court, has to be excluded in 0
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 E
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.
F
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 G
thatthe 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 H
1.112
SUPREME COURT REPORTS
[2008] 5 S.C.R
A 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. Section 14 of the
Limitation Act does not provide for a fresh period of
limitation but only provides for the exclusion of a certain
B period. Having regard to the legislative intent, it will have
to be held that the provisions of Section 14 of the
t
Limitation Act, 1963 would be applicable to an application
submitted under Section 34 of the Act of 1996 for setting
aside an arbitral award. [Para 13] [1128-F, G, H; 1129-A-H; .
C 1130-A]
State of Goa vs. Western Builders (2006) 6 SCC 239 -
relied on.
Commissioner of Sa/es Tax, Uttar Pradesh vs. Parson
Tools and Plants, Kanpur 1975 (3) SCR 743 and Union of
D India vs. Popular Constructions Co. (2001) 8 SCC 470 -
distinguished.
3. Since it is held 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
E arbitrator, Civil Appeal No.2461 of 2008 fails 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
F had also immediately after coming to know the lack of
jurisdiction of the court had filed the menio seeking
withdrawal of the appeal and presented the same before
the lower court which had the jurisdiction. [Para 17]
[1133-C, D, E]
G
4.1 As far as the Civil Appeal No.2462 of 2008 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,
H 1996 is eminently just and is hereby upheld. However, this
f
-
M/S CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1113
IRRIGATION DEPTI. & ORS.
'
,)
Court finds it difficult to uphold the finding recorded by A
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 courts. [Para 18] [1133-F, G, H]
B
4.2 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 c
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 D
the courts which had no jurisdiction to entertain the same,
·(
the 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 E
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. [Para 19] [1135-C, D, E, F, G]
Per Raveendran, J. (Supplementing):
F
-!
1. It is now well settled that the words 'appeals under
the Code of Civil Procedure, 1908' occurring in Article 116
of the Limitation Act refer not only to appeals preferred
under Code of Civil Procedure, 1908, but also to appeals, G
where the procedure for filing of such appeals and powers
of the court for dealing with such appeals are governed
by Code of Civil Procedure. [Para 4.4] [1139-D, E]
"
Vidyacharan Shukla v. Khubchand Baghel - AIR 1964
SC 1099 - relied on.
H
1114
SUPREME COURT REPORTS
[2008) 5 S.C.R.
A
2. Arbitration & Conciliation Act (AC Act) is no doubt,
a special law, consolidating and amending the law relating
to arbitration and matters connected therewith or
incidental thereto. AC Act does not prescribe the period
of limitation, for various proceedings under that Act,
B except where it intends to prescribe a period different
from what is prescribed in the Limitation Act. On the
other hand, Section 43 makes the provisions of
Limitation Act, 1963 applicable to proceedings - both in
court and in arbitration - under the AC Act. There is also
C no express exclusion of application of any provision of
the Limitation Act to proceedings under AC Act, but there .
are some specific departures from the general provisions
of Limitation Act, as for example, the proviso to section
34(3) and sub-sections (2) to (4) of section 43 of the AC
Act. [Para 5] [1139-F, G; 1140-A]
D
3. Where the Schedule to the Limitation Act
prescribes a period of limitation for appeals or
"
applications to any court, and the special or local law
provides for filing of appeals and applications to the court,
E but does not prescribe any period of limitation in regard
to such appeals or applications, the period of limitation
prescribed in the Schedule to the Limitation Act will apply
to such appeals or applications and consequently the
provisions of sections 4 to 24 will also apply. Where the
special or local law prescribes for any appeal or
F application, a period of limitation different from the period
prescribed by the Schedule to the Limitation Act, then the
provisions of section 29(2) will be attracted. In that event,
the provisions of section 3 of Limitation Act will apply, as
\if the period of limitation prescribed under the special law
G was .the period prescribed by the Schedule to Limitation
Act, and for the purpose of determining any period of
limitation prescribed for the appeal or application by the
special law, the provisions contained in sections 4 to 24
~
wi-11 apply to the extent to which they are not expressly
H excluded by such special law. The object of section 29(2)
MIS CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1115
IRRIGATION DEPTT. & ORS.
•
_A
is to ensure that the principles contained in sections 4 to. A
24 of Limitation Act apply to suits, appeals and.
applications filed in a court under special or local laws
also, even if it prescribes a period of limitation different
from what is prescribed in the Limitation Act, except to
the extent of express exclusion of the application of any B
-~
or all of those provisions. So also the Limitation Act will
not apply to appeals or applications before Tribunals,
unless expressly provided. [Para 6 & 7] [1140-B, C, D, E,
F, G; 1141-A]
4. The contention of the appellant that section 43 of c
the AC Act makes applicable the provisions of Limitation
Act only to arbitrations, thereby expressing an intent to
exclude the application to any proceedings relating to
arbitration in a court, ignores and overlooks section 29(2)
of the Limitation Act and section 43(1) of the AC Act. SubD
section (1) of section 43 of the Act provides that the
~ r
Limitation Act shall apply to Arbitrations as it applies to
proceedings in court. The purpose of section 43 of AC Act
is not to make Limitation Act inapplicable to proceedings
before court, but on the other hand, make Limitation Act E
applicable to arbitrations. As already noticed, the
Limitation Act applies only to proceedings in court, and
but for the express provision in section 43, the Limitation
Act would not have applied to arbitration, as Arbitrators
are Private Tribunals and not courts. Section 43 of the AC
F
Act, apart from making the provisions of Limitation Act,
f
1963 applicable to arbitrations, reiterates that Limitation
Act applies to proceedings in court. Therefore, the
provisions of Limitation Act, 1963 apply to all proceedings
under the AC Act, both in court and in arbitration, except G
to the extent expressly excluded by the provisions of the
AC Act. [Para 8] [1141-B, C, D, E]
5.1 Sub-section (3) of section 34 of the AC Act
prescribes the period of limitation for filing an application
for setting aside an award as three months from the date
H
1116
. SUPREME COURT REPORTS
[200815 S.C.R.
A on which the applicant has received the arbitral award.
" .
The proviso thereto vests in the court, discretion to extend
the period of limitation by a further period not exceeding
thirty days if the court is satisfied that the applicant was
prevented by sufficient cause for not making the
B application within three months. The use of the words "but
not thereafter" in the proviso makes it clear that even if a
sufficient cause is made out for a longer extension, the
extension cannot be beyond thirty days. The purpose of
proviso to section 34(3) of AC Act is similar to that of
c Section 5 of the Limitation Act which also relates to
extension of the period of limitation prescribed for any
application or appeal. It vests a discretion in a court to
extend the prescribed period of limitation if the applicant
satisfies the court that he had sufficient cause for not
D
making the application within the prescribed period.
Section 5 of Limitation Act does not place any outer limit
in regard to the period of extension, whereas the proviso
"
to sub-section 3 of section 34 of the AC Act places a limit
,,
on the period of extension of the period of limitation. Thus
the proviso to sub-section 34(3) of the AC Act is also a.
E provision relating to extension of period of limitation, but
differs from section 5 of the Limitation Act, in regard to
period of extension, and has the effect of excluding
sectiOn 5 alone of the Limitation Act. [Para 12] (1144-C, D,
E, F, G, H]
F
5.2 Neither sub-section (3) of section 34 of the AC
Act nor any other provision of the AC Act exclude the
applicability of section 14 of the Limitation Act to
applications under section 34(1) of the AC Act. Nor will
the proviso to section 34(3) exclude the application of
G section 14, as section 14 is not a provision for extension
of period of limitation, but for exclusion of certain period
while computing the period of limitation. Having regard
to section 29(2) of Limitation Act, section 14 of that Act
will be applicable to an application under section 34(1) of
H the AC Act. Even when there is cause to apply section 14,
M/S CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1117
IRRIGATION DEPTT. & ORS. [J.M. PANCHAL, J.]
, )
the limitation period continues to be three months and A
not more, but in computing the limitation period of three
months for the application under section 34(1) of the AC
Act, the time during which the applicant was prosecuting ·
such application before the wrong court is excluded,
provided the proceeding in the wrong court was B
prosecuted bona fide, with due diligence. [Para 14)
,;
[1145-A, B, C, DJ
-t
State of Goa vs. Western Builders (2006) 6 SCC 239 -
relied on.
Commissioner of Sales Tax, UP v. Parson Tools and c
Plants, Kanpur (1975) 3 SCR 743, Union of India vs. Popular
Construction Co. (2001) 8 SCC 470 and Fairgrowth
Investments Ltd vs_ Custodian (2004) 11 SCC 472 -
distinguished.
D
5.3 In view of the above, it has to be held that section
14(2) of the Limitation Act, 1963 is applicable to
proceedings under section 34(1) of the AC Act. [Para 15]
[1148.F]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. E
2461 of 2008.
From the final Judgment and Order dated 04.04.2005 of
the High Court of Karnataka at Bangalore in MFA. No. 4465 of
2003
WITH
F
C.A. No. 2462 of 2008.
y
R.F. Nariman, Joseph Poockatt. Nikhil Majithia, Prasahant
Kumar AS. Bhasme, Varun Thakur, Hage Lampu and Sanjay
R. Hegde for the appearing parties.
G
The Judgment of the Court was delivered by
J.M. PANCHAL, J.
~
Civil Appeal No.2461of 2008 @ SLP(C) N0.103111
2005.
H
1118
SUPREME COURT REPORTS
[2008] 5 S.C.R. ·
A
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
B
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' for short) as time .barred has been set aside
and the matter is remanded to the District Court with a direction
c 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,
D 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.
f
Therefore, the appellant invoked Arbitration clause No.51 of the
'
agreement pursuant to which the disputes were referred to the
E
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
F
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,
G 2000 in the Court of 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
H
M/S CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1119
IRRIGATION DEPTT. & ORS. [J.M. PANCHAL, J.]
... )
return of the suit records for presentation before the proper court.
A
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
B
t
numbered as A.S. No.2 of 2000. The District Court framed
preliminary issue for determination which was as under:
"Whether the defendant proves that the present suit is
barred by the limitation under Section 34(3) of the
Arbitration and Conciliation Act, 1996".
c
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 D
Judge held that the suit /application for setting aside the award,
... 1
was time barred and dismissed the same by his judgment dated
October 24, 2002.
4. Th.ereupon the respondents invoked appellate
jurisdiction of the High Court of Karnataka at Bangalore by filing
E
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
F
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 G
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 H
1120
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A
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
B 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) N0.15619/
2005.
c
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
D 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 the award made by
the arbitrator, in other courts, with due diligence and in good
E 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 lngaldal. The tender submitted by the respondent was
F
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
G 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
H . referred to the sole arbitrator for adjudication as stipulated by
..... -
t
.....
M/S CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1121
~
:.)
IRRIGATION DEPTT. & ORS. [J.M. PANCHAL, J.)
the contract. The arbitrator made his award on March 15, 2002.
A
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 B
,.+
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 c
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 D
'
t
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
E
(Senior Division), Chitradurga the appellant presented the
application filed under Section 34 of the Act before the Di~trict
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
F
·¥
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 G
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 Vlth Additional
City Civil Court, Bangalore on February 10, 2003 which was
H
1122
SUPREME COURT REPORTS
[2008] 5 S.C.R.
\.. -
A 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,
B Bangalore dismissed the application, as time barred, by an
order dated July 17, 2003. Thereupon the appellant invoked
..
+
extra-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
c 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
D 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
-r
r
the High Court held that the appellant had not prosecuted the
matter in other courts, with due diligence and in good faith. In
E
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
F 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.
G 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:
H
M/S CONSOLIDATED ENGG. ENT. v PRINCIPAL SECY.
1123
J
IRRIGATION DEPTT. & ORS. [J.M. PANCHAL, J.]
-
"14. Exclusion of time of proceeding bona fide in A
court without jurisdiction ..:.
(1) In computing the period of limitation for any suit the
time during which the plaintiff has been prosecuting with
ciue diligence another civil proceeding, whether in a court B
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.
c
(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 offirst instance or of appeal or revision,
against the same party for the same relief shall be D
excluded, where such proceeding is prosecuted in good
' t
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
XX.Ill of the Code of Civil Procedure, 1908 (5of1908), the
E
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 F
a like nature.
Explanation-For the purpose of this section,-·
(a)
in excluding the time during which a former civil
proceeding was pending, the day on which that G
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.
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SUPREME COURT REPORTS
[2008] 5 S.C.R.
\.
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A
(c)
misjoining of parties or of cause of action shall be
deemed to be a cause of a like nature with defect of
jurisdiction."
"29(2) Where any special or local law prescribes for any
B
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
f
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
c
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."
However, Section 34 of the Arbitration and Conciliation
D Act, 1996 reads as under:
"34. Application for setting aside arbitral award.-
t
'
(1) Recourse to a Court against an arbitral award may be
made only by an application for setting aside such award
E
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 thatF
(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
G
(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
t
present his case; or
H
(iv) the arbitral award deals with a dispute not
-j
.. -'!
i
·>
MIS CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1125
IRRIGATION DEPTT. & ORS. [J.M. PANCHAL, J.]
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-
(i)
the subject-matter of the dispute is not
capable of settlement by arbitration under
the law for the time being in force, or
(ii)
the arbitral award is in conflict with the
· public policy of India.
Explanation- Without prejudice to the generality of subclause (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
~ward 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:
A
B
c
D
E
F
G
H
1126
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A
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.
B
(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
c
such other action as in the opinion of arbitral tribunal will
eliminate the grounds for setting aside the arbitral award."
10. A bare reading of sub-section (3) of Section 34 read
with the proviso makes it abundantly clear that the application
D for setting aside the award on the grounds mentioned in subsection (2) of Section 34 will have to be made within three
months. The period can further be extended, on sufficient cause
t
'
being shown, by another period of 30 days but not thereafter. It
means that as far as application for setting aside the award is
E 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
F 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
G 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
H under the special law shall prevail and to that extent the
M/S CONSOLIDATED ENGG. ENT. v. PRINCIPAL SECY.
1127
IRRIGATION DEPTT. & ORS. [J.M. PANCHAL, J.)
-
J
provisions· of the Limitation Act shall stand excluded. As the A
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
B
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.
11. However, merely because it is held that Section 5 of C
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.
D
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
E
be pressed into service:
(1) Both the prior and subsequent proceedings are civil
proceedings prosecuted by the same party;
(2).