High Court
Case Details
Neutral Citation No. - 2023:AHC:117747-DB Reserved on 24.05.2023 Delivered on 26.05.2023 Court No. - 21 Case :- APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 DEFECTIVE No. - 346 of 2023 Appellant :- Reliance Industries Ltd. Respondent :- M/S Sachkhand Filling Station And 2 Others Counsel for Appellant :- Rahul Agarwal Hon'ble Manoj Kumar Gupta,J. Hon'ble Prashant Kumar,J. (Delivered by Hon’ble Prashant Kumar, J) 1. The appellant herein is a Public Limited Company engaged in the business of manufacturing, refining, marketing, selling and distributing petroleum and other allied products. After the Government of India allowed private companies to market and sell the petroleum product in India the appellant-company started looking out for people to grant dealership for selling the products. 2. In August, 2004, the appellant issued a letter of intent to respondent firm to grant dealership for selling the petroleum products, thereafter, parties entered into a dealership agreement, which was for a term of 20 years. In this dealership agreement there was a clause, that in case of any dispute the matter will be referred to the arbitration. Subsequently, there was a dispute between the parties and the appellant terminated the dealership of the
Legal Reasoning
respondent. This termination was challenged by the respondent in this Hon’ble Court by means of a writ petition (Writ Petition No. 4042 (M/B) of 2009, M/s Sachkhand Filling Station v. Union of India), which was dismissed on the ground of alternative remedy. 3. After the dismissal of the writ petition, an arbitral tribunal was constituted, where the parties herein filed the written statements and statements of defence with counter claim. After hearing the parties at length and perusing the documents and evidence on record, the arbitrator passed a final award on 27.12.2010 in favour of the respondent wherein the appellant was to pay an amount of Rs.1,69,38,600/- to the respondent, which was the decretal amount along with interest. 4. Aggrieved by the award the petitioner preferred an application under Section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) for setting aside the award. The learned District Judge, Shahjahanpur rejected the said application filed under Section 34 of the Act on 28.03.2019. Thereafter, the respondent herein filed an execution application before the District Judge, Shahjahanpur, which was numbered as Execution Case No.72 of 2019. 5. Against the order of rejection of Section 34 application the appellant herein filed an appeal under Section 37 of the Act before Allahabad High Court (F.A.F.O. No.3358 of 2019). This court stayed the execution of arbitral award but directed the respondent to deposit entire decretal amount with the District Judge, Shahjahanpur vide its order dated 27.09.2019. Accordingly, the respondent deposited entire decretal amount before the District Judge, Shahjahanpur. Later, this Hon’ble Court modified the order dated 27.09.2019 and allowed the respondent to withdraw 50% of decretal amount on furnishing security. 6. Vide order dated 03.02.2021, Allahabad High Court allowed the appeal filed by the appellant under Section 37 of the Act and held that the District Judge, Shahjahanpur would not have jurisdiction to hear the application under Section 34 of the Act as the seat of arbitration was in Bombay and it was only Bombay Court, who has jurisdiction to entertain and hear the Section 34 application. 7. Though the appeal filed by the appellant was allowed on 03.02.2021 but it took the appellant more than seven and half months to file a fresh application under Section 34 before the Bombay High Court (numbered as Commercial Arbitration Petition No.559 of 2021), which was time-barred as per Section 34 (3) of the Act. 8. In the meanwhile, the execution petition filed by the respondent, which was pending before the District Judge, Shahjahanpur was transferred to Commercial Court, Shahjahanpur as by then the Commercial Courts were established. 2 9. On 12.10.2021, Counsel for the appellant appeared before the Commercial Court, Shahjahanpur and filed his objection to the pending execution petition filed by the respondent, and next date fixed was 18.10.2021. On 18.10.2021, when the matter was called out though the objection was on record but nobody appeared on behalf of the appellant inspite of repeated calls, and the matter was again adjourned for 20.10.2021. 10. On 20.10.2021, counsel for the appellant appeared and argued the matter. After hearing both the sides, the objections were overruled and the decretal amount was ordered to be released in favour of the respondents. 11. The order sheet reveals that, the matter was again listed on 02.11.2021, 12.11.2021, 21.12.2021, 07.02.2022, 13.04.2022, 24.05.2022, 25.07.2022, 01.08.2022. Since nobody was appearing on behalf of the appellant so the court ordered to issue a fresh notice to them. The matter was again listed on 03.09.2022, then was listed on 12.09.2022 where the execution court held that since the notice was served and the service was complete but no one appeared so another opportunity was given to the appellant to appear on 01.10.2022. Thereafter, the case was again listed on 01.10.2022, 28.10.2022, 07.11.2022, 22.11.2022, 12.12.2022, 17.12.2022, 21.01.2023 but no one appeared on behalf of the appellant. 12. The counsel for the appellant submitted that for the first time they came to know about the order dated 20.10.2021 was in the month of January, 2023 when in the Section 34 application pending before the Bombay High Court it was informed that entire decretal amount had been released so there is no case pursuing the Section 34 Application. 13.
Legal Reasoning
The counsel for the appellant submits that after coming to know about the order dated 20.10.2021 on 13th January, 2023, the appellant asked its counsel, who applied for the certified copy on 30.01.2023 and the copy was made available to him on 09.02.2023. This delay from 13.01.2023 to 30.01.2023 has also not been satisfactorily explained. After obtaining certified copy, the appellant submits that it took three weeks time to arrange file from the commercial court and send it to its counsel at Allahabad. This period of three weeks is also not explained properly. 3 14. The instant appeal has been filed on 02.05.2023 and there is no plausible explanation of delay from 09.02.2023 till the date of filing. 15. The delay in filing the instant appeal challenging the order dated 20.10.2021 has not been properly explained, hence, the instant appeal suffers from delay and laches. 16. Earlier, two Judges Bench of Hon’ble Supreme Court in the case of Union of India Vs. M/s Varindera Constructions1 decided on 17.09.2018 has held as under:- “since a Section 34 application has to be filed within a maximum period of 120 days including the grace period of 30 days, an appeal filed from the self-same proceeding under Section 37 should be covered by the same drill. Given the fact that an appellate proceeding is a continuation of the original proceeding, as has been held in Lachmeshwar Prasad Shukul and Others vs. Keshwar Lal Chaudhuri and Others, AIR 1941 Federal Court 5, and repeatedly followed by our judgments, we feel that any delay beyond 120 days in the filing of an appeal under Section 37 from an application being either dismissed or allowed under Section 34 the Arbitration and Conciliation Act, 1996 should not be allowed as it will defeat the overall statutory purpose of arbitration proceedings being decided with utmost despatch.” 17. Two Judges Bench of Hon’ble Supreme Court in the case of M/s N.V. International vs. The State of Assam2 decided on 06.12.2019 has held that :- “…….since a Section 34 has to be filed within a maximum period of 120 days including the grace period of 30 days, an appeal filed from the self- same proceeding under Section 37 be covered by the same drill.” “………..any delay beyond 120 days in the filing of an appeal under Section 37 an application being either dismissed or allowed under Section 34 of the Arbitration and Conciliation Act, 1996 should not be allowed as it will 1(2020) 2 SCC 111 2(2020) 2 SCC 109 4 defeat the overall statutory purpose of arbitration proceedings being decided with utmost despatch.” 18. Thereafter, a three Judges bench of Hon’ble Supreme Court in the matter of Government of Maharashtra (Water Resources Department) represented by Executive Engineer vs. M/S Borse Brothers Engineerr & Contractors Pvt. Ltd.3 has held that:- “ Given the aforesaid and the object of speedy disposal sought to be achieved both under the Arbitration Act the Commercial Courts Act, for appeals filed under section 37 of the Arbitration Act that are governed by Articles 116 and 117 of the Limitation Act section 13(1A) of the Commercial Courts Act, a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by way of exception and not by way of rule. In a fit case in which a party has otherwise acted bona fide and not in a negligent manner, a short delay beyond such period can, in the discretion of the court, be condoned, always bearing in mind that the other side of the picture is that the opposite party may have acquired both in equity and justice, what may now be lost by the first party’s inaction, negligence or laches.” 19. That in view of the ratio laid down by the Hon’ble Supreme Court and the latest three judges bench decision, in which it was held that the Court has power to condone the delay but that will be an exception. The delay can only be condoned if the parties have acted bonafide and not in the negligent manner and if the delay is short then the same can be condoned. But in this case the delay in filing the present appeal is hopelessly barred by limitation. The order sheet shows that after the objections were heard in the presence of his counsel and were decided, the appellant made no efforts to challenge the same. 20. The order sheet further reveals that since the counsel for the respondent was not appearing, a fresh notice was issued on 01.08.2022. The 3(2021) 6 SCC 460, Civil Appeal No.995 of 2021 decided by Hon’ble Supreme Court on 19.03.2021. 5 execution court further called for the delivery report of the notice vide its order dated 13.09.2022. 21. On 12.09.2022 the execution court after being satisfied that the notice has been delivered to the appellant but since they have not appeared a fresh opportunity was given to them and notice was issued on 12.09.2022 informing the appellant that the matter will be listed again on 01.10.2022. Since the record shows that the appellant was well aware of the pending proceedings and it purposely chose not to appear, hence, it cannot be said that the appellant was not aware of the order dated 20.10.2021 passed by the execution court, which is under challenge in the present appeal. 22. As noted above, by the impugned order dated 20.10.2021, the executing court after overruling the objections of the appellant had directed for release of the decretal amount in deposit with it. It is admitted by the appellant that in pursuance of the said order, the amount which was in deposit had been released in favour of the respondents. The objection of the appellant under Section 34 is still pending disposal before the High Court of Bombay. The restitution of the sum released in favour of the respondent would arise only in case objection under Section 34 is allowed. Consequently, the dismissal of the instant appeal would not result in any serious prejudice to the appellant. 23. The instant appeal is highly time-barred and the explanation given in the delay condonation application cannot be accepted as it does not show sufficient cause for the delay, nor day to day has been explained properly. Further, as per the law laid down by Hon’ble Supreme Court in the matter of Government of Maharashtra (supra) this case does not fall under the exceptional case, which call for interference by this Court and, hence, the instant appeal is accordingly dismissed on the ground of delay. Order Date :- 26.5.2023 S.P. (Prashant Kumar, J.) (Manoj Kumar Gupta, J.) Digitally signed by :- SANJAY PURI High Court of Judicature at Allahabad 6