Orissa High Court · 2023
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.2754 of 2024 (In the matter of an application under Articles 226 and 227of the Constitution of India, 1950). Rabindra Nath Rath & Anr. …. Petitioner(s) -versus- M/s. Maruti Estate (India) Pvt. Ltd. …. Opposite Party (s) Advocates appeared in the case throughHybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr. S. S. Mohanty, Advocate Mr. SubirPalit, Senior Advocate along with Mr. A. Kejriwal, Advocate CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-02.04.2025 DATE OF JUDGMENT:-16.05.2025 Dr. S.K. Panigrahi, J. 1. The Petitioners, by way of the present Writ Petition, challenge the order dated 18th November 2023 passed by the learned Senior Civil Judge, Commercial Court, Bhubaneswar, in ARBP No. 40 of 2023. I. FACTUAL MATRIX OF THE CASE: 2. The brief facts of the caseare asfollows: Page 1 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 (i) Petitioner No. 1 was one of the Promoter Directors of M/s Maruti Estate (India) Private Limited, a private limited company registered at Bhubaneswar. Since its incorporation on 27thFebruary 1996, the company has been engaged in real estate development and construction, including the purchase and sale of land and the promotion of buildings. (ii) The Petitioners entered into an agreement dated 17.03.2012 with the Respondent for the transfer of certain properties and their shares to the Respondent company. In exchange, specific flats in the building known as “Centre Point Residential Complex,” Block-B, Chandrasekharpur, Bhubaneswar, were agreed to be sold and transferred to the Petitioners. (iii) The Respondent transferred flats Nos. 102, 105, 305, and 306 to the Petitioners. However, flats Nos. 104, 302, 303, and 308 remained untransferred. Aggrieved, the Petitioners invoked arbitration under Clause 13 of the agreement and sought an amicable settlement by their letter dated 17.11.2016. (iv) By letter dated 08.12.2016, the Respondent denied the Petitioners’ claims and raised new allegations. The Petitioners replied on 09.01.2017, refuting those allegations, requesting transfer of the remaining flats, and seeking agreement on the appointment of arbitrators. (v) On 31.03.2017, the Petitioners became aware that the Respondent was attempting to sell and transfer flats numbered 104, 302, 303, and 308 of Page 2 of 16 Signature Not Verified
Legal Reasoning
Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 the Centre Point Residential Complex to other parties, having initiated sale proceedings without their consent. (vi) Pursuant thereto, the Petitioners filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 bearing ARBP No. 19 of 2017 before the District Judge, Khurda, Bhubaneswar, seeking to restrain the Respondent from alienating the flats pending arbitration. (vii) The District Judge, after hearing both parties, granted the injunction by order dated 10.05.2018, temporarily restraining the Respondent from alienating flats Nos. 104, 302, 303, and 308 until further orders of the Arbitral Tribunal. (viii) Thereafter, the Petitioners filed an application under Section 11 of the Act bearing ARBP No. 31 of 2017 before this Court for appointment of
Legal Reasoning
an arbitrator. This Court appointed Sri Rajat Kumar Rath, Senior Advocate, as Sole Arbitrator by order dated 16.08.2019, and arbitration proceedings commenced under Arbitration Proceeding No. 61 of 2019 before the Orissa High Court Arbitration Centre. (ix) On 24.02.2020, the Respondent’s representative deposited Rs. 7,20,764 as Arbitrator Fee and Rs. 25,000 as Administration Fee. (x) During the pendency of the arbitration proceedings, the appointed Sole Arbitrator unfortunately passed away. In light of this, this Court appointed Sri Rama Kanta Mohanty, Senior Advocate, as the new Sole Arbitrator on 16.01.2021 to continue and conclude the arbitration proceedings. Page 3 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 (xi) On 18.04.2022, the Sole Arbitrator passed an award in favor of the Petitioners directing the Respondent to hand over unencumbered possession of flats Nos. 104, 302, 303, and 308 within 90 days. In the event of failure, the Respondent would be liable to pay Rs. 2,38,00,000 with 12% interest from the 91st day until payment. Additionally, the Respondent was directed to pay Rs. 10,00,000 as compensation. (xii) The Respondent’s non-compliance with the arbitral award led the Petitioners to file E.C. No. 1573 of 2022 on 05.08.2022 before the Civil Judge, Senior Division (Commercial Court), Bhubaneswar. (xiii) The court issued a show cause notice to the Respondent on 11.08.2022. On 16.09.2022, after reviewing court records and postal receipts, the Respondent was declared ex-parte for non-appearance. Subsequently, on 09.05.2023, the court issued a warrant of attachment in the execution case. (xiv) On 17.05.2023, the Respondent appeared before the executing court and on 05.07.2023 filed a petition to set aside the ex-parte order dated 16.09.2022, seeking an opportunity to file objections. (xv) Subsequently, on 09.08.2023, the Respondent filed Arbitration Petition No. 40 of 2023 under Section 34 of the Arbitration and Conciliation Act before the Civil Judge, Senior Division (Commercial Court), Bhubaneswar. (xvi) On 12.08.2023, the Respondent informed the Petitioners by letter that they had received a certified copy of the award from the executing court and intended to challenge it. On 04.09.2023, the Respondent filed Page 4 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 two miscellaneous applications in Arbitration Petition No. 40 of 2023, one for condoning delay in filing the appeal and another for a stay. (xvii) The Petitioners filed their reply to the Respondent’s petition seeking to set aside the ex-parte order dated 16.09.2022 passed by the Civil Judge, Senior Division (Commercial Court), Bhubaneswar. Subsequently, the learned Civil Judge, by order dated 18.11.2023, admitted the application under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the Respondent. (xviii) Aggrieved by this order, the Petitioners have approached this Court byway of the present writ petition. II. SUBMISSIONS ON BEHALF OF THE PETITIONERS: 3. (i) Learned counsel for the Petitioners earnestly made the following submissions in support of his contentions: The Petitioners submitted that the Civil Judge erred in failing to consider that the Respondent’s applications under Section 34 of the Arbitration and Conciliation Act, 1996, are defective, inconsistent, and non-compliant with statutory requirements. It is further contended that the Court erroneously condoned a delay of 120 days without sufficient cause, in violation of the mandatory limitation prescribed under Section 34. (ii) The Petitioners submitted that the Respondent was fully aware of the arbitral proceedings but wilfully chose to ignore them and disobey the award, thereby acting in bad faith. Page 5 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 (iii) The Petitionerssubmitted that all actions on behalf of the Respondent were carried out by its Managing Director. Accordingly, the plea of lack of knowledge is false and frivolous. The Respondent had full knowledge of the arbitral proceedings, having been represented by its Managing Director from the outset, as evidenced by the Vakalatnama and the Statement of Defence with counter claim. The later claim of ignorance, made after abandonment of arbitration, is baseless and an afterthought. (iv) The Petitioners further submitted that the Respondent, through its own representative and while being represented by its Managing Director, paid Rs. 7,45,764/- towards Arbitrator and Administrative fees, thereby negating the claim of ignorance. (v) The Petitioners asserted that, in an attempt to evade liability, the Respondent raised false pleas of fraud and lack of knowledge. An FIR was first filed on 14.06.2023 against its employee, Mr. Srikanta Patnaik, alleging theft. After appearing before the Executing Court on 05.07.2023 and seeking to set aside the execution order dated 16.09.2022, a second FIR was lodged on 13.07.2023 with broader allegations. This sequence reveals that the claim of unauthorized participation was a deliberate afterthought aimed at obstructing execution and misleading the Court. (vi) The Petitioners submitted that the second FIR, alleging collusion between the Petitioners and Mr. Patnaik, lacks evidentiary support and appears to be a diversionary tactic to cover the Respondent’s Page 6 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 internal mismanagement. Notably, neither FIR contains any allegation of forgery of the Vakalatnama, further affirming the Managing Director’s knowledge of the arbitration. The order sheet reflects erratic participation followed by abandonment. The belated objections, filed only after issuance of a warrant of attachment, are a dishonest attempt to stall execution and subvert due process. (vii) The Petitioners submitted that, as per established practice at the High Court Arbitration Centre, arbitral awards are delivered in the presence of the parties and their counsel. In the present case, the award was duly pronounced and served, as reflected in the daily orders. Since proceedings were conducted at the Centre, the Respondent cannot now claim non-receipt of the award. Entertaining such a plea would erode the credibility and integrity of the institutional arbitration process. (viii) The Petitioners contended that permitting the Respondent to maintain a Section 34 application after a delay defeats the objective of expeditious dispute resolution envisaged under the Arbitration and Conciliation Act, 1996, and its subsequent amendments. The impugned order, if allowed to stand, would result in undue delay and irreparable prejudice to the Petitioner, who has already obtained a valid arbitral award. (ix) The Petitioners submitted that service of the award on the advocate of a party constitutes sufficient compliance with Section 34 of the Arbitration and Conciliation Act, 1996. The Petitioner relied on the Page 7 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 decisions of the Supreme Court in NilakanthaSidramappaNingshetti v. KashinathSomanaNingshetti1,andEast India Hotels Ltd. v. Agra Development Authority2 to buttress this argument. (x) The Petitioners submitted that the Civil Judge failed to appreciate that the expression “signed by parties” under Order XXIII Rule 3, read with Order III Rule 1 of the Code of Civil Procedure, 1908, permits acts required by law to be performed by a party in person, by a recognized agent, or by a pleader appearing on their behalf. Accordingly, the explanation offered for the delay in filing the Section 34 application is untenable and unsupported by any credible material. (xi) The Petitioners further submitted that the District Judge, Khurda at Bhubaneswar, by order dated 10.05.2018 in a Section 9 application, had restrained the Respondent from alienating Flats Nos. 104, 302, 303, and 308. Despite this, the Respondent proceeded to sell Flat No. 303 on 28.01.2020 and Flat No. 104 on 01.01.2021, displaying blatant disregard for judicial orders and reflecting poorly on its conduct. (xii) The Petitioners submitted that the contention raised by the Respondent regarding the availability of an alternative remedy under Section 37 of the Arbitration and Conciliation Act, 1996, is wholly misconceived. The present writ petition challenges an order condoning delay and admitting a Section 34 application, which is an interlocutory order not appealable under Section 37. Since Section 37 provides for appeals only from specific enumerated orders, the 11962 (2) SCR 551. 2(2001) 4 SCC 175. Page 8 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 impugned order falls outside its ambit, and the writ petition is therefore maintainable. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTY: 4. (i) (ii) The Learned Counsel for the Opposite Party earnestly made the following submissions in support of his contentions: The instant writ petition is not maintainable as there exists a substantive and efficacious statutory remedy available under Section 37 of the Arbitration and Conciliation Act, 1996. It is a well-settled principle that writ jurisdiction under Articles 226 and 227 of the Constitution is barred where an adequate alternative remedy is available.Reliance was placed on the decision of the Supreme Court in Bhaven Construction v. Executive Engineer, SardarSarobar3, where it was held that interference under Articles 226 and 227 of the Constitution cannot be exercised to override the procedure established under the Arbitration Act, 1996.Such jurisdiction is to be exercised only in rare and exceptional circumstances where the statute fails to provide an effective remedy. Accordingly, the present writ petition is not maintainable in view of the statutory mechanism for redressal. (iii) The Opposite Party had no knowledge of the arbitration proceedings or the execution case. The counsel who appeared before the Sole Arbitrator on behalf of the Opposite Party had expressly stated that he had no instructions in the matter. Despite this, on the same date, the 3(2022) 1 SCC 75. Page 9 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 evidence of Claimant Witness No. 1 was recorded by the Sole Arbitrator. (iv) One Mr. SrikantaPattnaik, a former employee of the Opposite Party, appeared before the Sole Arbitrator and paid the arbitration fees and expenses. However, he deliberately withheld information regarding the arbitration from the Managing Director and failed to inform the conducting counsel. As a result, the arbitral award dated 18.04.2022 came to be passed against the Opposite Party without its knowledge. (v) Mr. Pattnaik has also committed acts of fraud against the company, including misappropriation of funds. He was caught stealing money from the Managing Director’s office, following which criminal proceedings have been initiated against him in I.C.C. Case No. 2940 of 2023 and InfocityP.S. Case Nos. 0208 and 0241 of 2023. The investigations in these cases are currently ongoing. (vi) The Opposite Party first became aware of the arbitration and execution proceedings when its banker, Axis Bank, informed it via email dated 12.05.2023 that a lien had been marked on its bank account. Upon making inquiries, the Opposite Party obtained certified copies of the relevant documents through its counsel on 23.05.2023. It was only after perusing these documents that the Opposite Party came to know about the award dated 18.04.2022. The application under Section 34 of the Act was then filed promptly. Page 10 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 (vii) The application under Section 34 was filed within the prescribed limitation period. Accordingly, the Court below rightly admitted the application and did not pass any order condoning delay. IV. COURT’S REASONING AND ANALYSIS: 5. 6. 7. 8. Heard the learned counsel for the Parties and perused the materials placed on record. At the outset, it is imperative to emphasize that Section 37 of the Arbitration and Conciliation Act, 1996 exhaustively delineates the categories of orders that are appealable under it. The language and scope of this provision do not contemplate an appeal against an order admitting an application under Section 34. Consequently, the Petitioner has invoked the extraordinary writ jurisdiction of this Court under Articles 226 and 227 of the Constitution of India. The principal issue for determination in the instant matter is whether the impugned order dated 18th November 2023, admitting the respondent’s Section 34 application, was within the prescribed limitation period and is legally tenable. Section 34(3) of the Arbitration and Conciliation Act, 1996, mandates that an application to set aside an arbitral award must be filed within three months from the date the party making the application receives the award, or if a request under Section 33 has been made, from the
Decision
date on which that request is disposed of by the arbitral tribunal. The Court may grant an extension of thirty days only upon sufficient cause being shown. Beyond this period, no application is maintainable. This Page 11 of 16 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-May-2025 12:07:07 provision balances the need for finality with limited relief for genuine delays. The provision is reproduced hereinbelow: “(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.” 9. 10. 11. In this regard, the Supreme Court in Union of India v. Popular Construction Co.4and Simplex Infrastructure Ltd. v. Union of India5 has held that the limitation period prescribed under Section 34(3) is mandatory and must be strictly adhered to. Further,it is settled law that the limitation period under Section 34(3) commences from the date the party actually receives a signed copy of the arbitral award. The Supreme Court, while interpreting Section 34(3) of the Arbitration and Conciliation Act, 1996, highlighted the critical importance of the delivery of the arbitral award in Union of India v. Tecco Trichy Engineers and Contractors6, observing as follows: “8. The delivery of an arbitral award under sub-section (5) of Section 31 is not a matter of mere formality. It is a matter