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Patel Purshottamdas Motilal v. Patel Chhotabhai Motibhai
Structured Summary of the Opinion
Factual and Procedural Background
The plaintiff and the defendant are brothers who effected a partition of their joint family estate on 15 September 1955. The plaintiff ran a bidi business but, because of a physical handicap, authorised the defendant by a power of attorney dated 19 September 1956 to run the business on his behalf. The defendant operated the business for about 17 years. In 1973 the plaintiff discovered alleged mismanagement by the defendant and cancelled the power of attorney on 23 March 1973. Disputes arose and, by agreement dated 6 April 1973, the parties referred the disputes to arbitration. The arbitrator initially failed to make an award; Suit No. 38 of 1974 under Section 20 of the Arbitration Act, 1940 was filed for direction that the arbitration agreement be filed in Court, and it was decreed. Thereafter the arbitrator made an award on 21 September 1977, gave notice on 23 September 1977 that he was filing the award in Court, and filed it on 26 September 1977.
Under Article 119(b) of the Limitation Act, objections to such an award were required within thirty days of service of notice of the filing of the award. The plaintiff filed multiple applications for time to file objections and ultimately filed his objections (what he styled an application to set aside the award) on 7 December 1977. The learned trial Judge dismissed those objections as barred by limitation and passed a decree in terms of the award. That dismissal was challenged in a first appeal and in a Civil Revision Application (the latter filed on the assumption that the first appeal might not be maintainable).
Legal Issues Presented
- Whether the plaintiff's application to set aside (or objections to) the arbitrator's award was barred by time under Article 119(b) of the Limitation Act, having regard to the filing date of the award and the dates of the plaintiff's applications for extension.
- Whether Section 5 of the Limitation Act (1963) is applicable to applications under the Arbitration Act, 1940 (specifically applications to set aside an award specified in Article 119), and therefore whether the trial Court had jurisdiction to extend the time for filing objections.
- What was the legal effect of the trial Judge's order of 1 December 1977 stating "Granted if law permits to file objections" and adjourning to 7 December 1977—i.e., whether that order effectively extended time until 7 December 1977.
- Whether an appeal from the trial Judge's order refusing to admit or entertaining objections to an arbitration award on the ground of limitation is maintainable under Section 39(1)(vi) of the Arbitration Act (i.e., whether dismissal on limitation grounds equates to a refusal to set aside the award and is therefore appealable).
Arguments of the Parties
Arguments advanced by Mr. Majmudar (for the respondent)
- It was argued that the plaintiff did not make any formal application for condoning the delay under Section 5 of the Limitation Act; this omission was advanced as fatal to the plaintiff's claim to extension/condonation.
- It was further argued that an appeal was not maintainable: Section 39 of the Arbitration Act provides that appeal lies from an order setting aside or refusing to set aside an award. In absence of any objections from the plaintiff, the order made by the learned Judge merely passed a decree in terms of the award under Section 17 of the Arbitration Act and therefore neither set aside nor refused to set aside the award.
Arguments advanced by Mr. R. N. Shah (for the appellant/plaintiff)
- Relying on the Andhra Pradesh High Court decision in Veeraswamy Chetty v. Varadish Chetty (AIR 1957 Andhra Pradesh 493), it was argued that rejection of objections to an award on the ground of limitation is effectively a refusal to set aside the award and thus is appealable under Section 39(1)(vi).
- Reliance was also placed on the Assam High Court decision in Mafizuddin Bhuyan v. Alimuddin Bhuyan (AIR 1950 Assam 191), where a Division Bench held that dismissal of objections either on merits or as barred by time effectively refused to set aside the award and was appealable.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ramlal and Ors. v. Rewa Coalfields Ltd (Supreme Court) | Sets out principles to be borne in mind when construing Section 5 of the Limitation Act. | The court observed that this decision does not lay down that Section 5 is applicable to applications for setting aside an award under the Arbitration Act; therefore Ramlal had no direct application to the instant case on that point. |
| Kawahing Akbar v. Raldeosingh Akbar, AIR 1957 Nagpur 57 | Whether Section 5 of the Limitation Act (1908) was applicable to applications for setting aside an arbitration award under the Arbitration Act. | The court noted the Nagpur Division Bench held Section 5 (1908) did not apply to such applications under the Arbitration Act. The opinion used that decision to demonstrate that the pre-1963 wording of Section 5 did not make it applicable to arbitration applications, prompting comparison with the 1963 enactment. |
| Veeraswamy Chetty v. Varadish Chetty and Ors, AIR 1957 Andhra Pradesh 493 | Whether rejection of objections on limitation grounds amounts to a refusal to set aside an award and is therefore appealable under Section 39. | The court relied on this decision to support the view that dismissal of objections as time-barred is in effect a refusal to set aside the award and is appealable under Section 39(1)(vi). |
| Mafizuddin Bhuyan and Anr. v. Alimuddin Bhuyan and Ors, AIR 1950 Assam 191 | Whether dismissal of objections to an award on merits or on limitation grounds amounts to refusal to set aside and is appealable. | The court relied on the Assam Division Bench's holding that refusal to set aside an award (whether on merits or limitation grounds) is appealable; this supported the court's conclusion that the present appeal was maintainable under Section 39(1)(vi). |
Court's Reasoning and Analysis
The Court proceeded through a sequence of factual and legal findings to reach its decision:
- Notice and limitation period: The arbitrator made the award on 21 September 1977 and obtained the plaintiff's signature that day, so the plaintiff had notice of the award on 21 September 1977. The award was filed in Court on 26 September 1977; Article 119(b) of the Limitation Act prescribed thirty days from the date of service of notice of the filing of the award to apply to set it aside—thus, the outer ordinary limit was 26 October 1977.
- Dates of applications and the trial Court's orders: Before the limitation period expired the plaintiff made an application on 10 October 1977 for time to file objections. The trial Judge granted extensions repeatedly: until 18 October 1977; then to 25 October 1977; then to 4 November 1977; then to 1 December 1977. On 1 December 1977 the trial Judge ordered: "Granted if law permits to file objections" and adjourned to 7 December 1977. The plaintiff filed his objections on 7 December 1977. The trial Judge dismissed them as barred by limitation.
- Applicability of Section 5 of the Limitation Act: The Court distinguished the pre-1963 law from the 1963 Act. It noted that under the Limitation Act, 1908 Section 5 applied only to appeals, reviews and such applications as were made applicable "by or under any enactment". A Division Bench decision (Kawahing Akbar) held that the 1908 Section 5 was not applicable to applications under the Arbitration Act. The Court then examined Section 5 of the Limitation Act, 1963 which is wider in scope: it applies by its own force to "any appeal or any application" (except applications under Order XXI CPC), and the expression "any application" would, in the Court's view, include an application under the Arbitration Act to set aside an award specified in Article 119. Reading Section 5 together with Article 119 made it clear to the Court that Section 5 (1963) applies to applications under the Arbitration Act (contrasting with the position under the 1908 Act).
- Effect of the trial Judge's ambiguous order of 1 December 1977: The Court analysed the wording "Granted if law permits to file objections" and concluded that the trial Judge granted time up to 7 December 1977 but made that grant subject to the condition that the law must permit such filing. Because Section 5 of the Limitation Act, 1963 did in fact give jurisdiction to extend time, the conditional grant meant that the plaintiff could avail himself of the extended time until 7 December 1977. Consequently, the objections filed on 7 December fell within the effective extended time.
- Whether an express application for condonation was mandatory: The Court acknowledged the ordinary practice that an applicant seeking condonation under Section 5 files an application stating sufficient cause, but held that such an express/formal application is not an absolute mandatory requirement. Where facts and circumstances (including prior orders by the Court granting time) constituted "sufficient cause", the Court had jurisdiction even on an oral application to condone delay. In this case the sequence of orders granting time constituted sufficient cause to permit the objections to be admitted.
- Maintainability of the appeal: The Court considered Section 39(1)(vi) of the Arbitration Act which provides for appeal from an order setting aside or refusing to set aside an award. The Court accepted the position in Veeraswamy Chetty and Mafizuddin that dismissal of objections on limitation grounds is, in effect, a refusal to set aside the award; thus such an order is appealable under Section 39(1)(vi). On that basis the Court rejected the contention that the appeal was not maintainable.
- Conclusion on trial Judge's error: Taken together, these points led the Court to conclude that the learned trial Judge was in error in dismissing the objections as time-barred and in passing decree in terms of the award without deciding the objections on merits.
Holding and Implications
Core Ruling: The Court allowed the appeal, set aside the order and the decree passed by the learned trial Judge, and remanded the case to the trial Court with a direction that the trial Judge shall decide the objections filed by the plaintiff to the award on their merits and proceed further according to law.
Direct implications and consequential orders:
- The learned trial Judge's dismissal of the plaintiff's objections on the ground of limitation and the resulting decree in terms of the award have been set aside.
- The matter is remitted to the trial Court for determination of the plaintiff's objections on merits.
- The Civil Revision Application (filed on assumption the appeal might be non-maintainable) is not decided on merits because the appeal was allowed; the rule in the revision application stands discharged.
- The Civil Application for stay does not survive and the rule in that application is discharged.
- There shall be no order as to costs in all three proceedings in the circumstances of the case.
Broader precedent or legal innovation:
The opinion applies and interprets existing law (in particular Section 5 of the Limitation Act, 1963 read with Article 119) and relies upon prior High Court authorities on appealability under Section 39. The Court did not purport to lay down a novel rule beyond interpreting the scope of Section 5 (1963) as applicable to applications under the Arbitration Act and treating a trial Court's conditional grant of time (coupled with existing judicial discretion under Section 5) as effective where the condition is satisfied by the law; no broader distinct precedent-creating pronouncement beyond its reasoning was asserted in the text.
1. The plaintiff and the defendant are brothers. On 15th September 1955, partition of the joint family estate between them was effected. Plaintiff thereafter was running Bidi business. On account of some physical handicap, he was unable to run it. Therefore, he authorized the defendant to run it on his behalf and executed in that behalf a power of attorney dated 19th September 1956. For 17 years the defendant carried on the plaintiff's business. The plaintiff in 1973 found that the defendant had been mismanaging the business. He, therefore, cancelled his power of attorney on 23rd March 1973. Disputes arose between the par-ties in the matter of the plaintiff's business which was run by the defendant for 17 years. They, therefore, agreed on 6th April 1973 to refer the disputes to an arbitrator. The disputes were referred to the arbitrator. The arbitrator did not make award and, therefore, that arbitration failed. Thereafter Suit No. 38 of 1974 was filed under Section 20 of the Arbitration Act, 1940, for direction that arbitration agreement be filed in Court. It was decreed. Thereafter disputes were referred to the arbitrator. On 21st September 1977 the arbitrator made his award. On 23rd September 1977 the arbitrator gave the parties notice that he was filing the award in Court. On 26th September 1977 it was filed in Court. Within 30 days thereafter the parties were required to file objections. The plaintiff, however, made several applications for time to file his objections. Ultimately he filed them on 7th December 1977. The learned trial Judge dismissed them on the ground that they were barred by limitation.
2. It is that order which is challenged in the first appeal as well as in the Civil Revision Application. The Civil Revision Application has been filed on the assumption that the first appeal may not be maintainable.
3. Now the undisputed factual position is as follows. The arbitrator made his award on 21st September 1977. On that very day he took the signature of the plaintiff on the award in token of his having pronounced it. Therefore, the plaintiff had on 21st September 1977 notice of the arbitrator having made the award. Article 119(b) of the Limitation Act provides that an application for setting aside an award made under Arbitration Act, 1940 can be made within thirty days from the date of service of the notice of the filing of the award. The award was filed on 26th September 1977. The plaintiff knew of it on that day. Therefore, the plaintiff was required to make an application to set aside the award on or before 26th October 1977. He, however, made an application for setting aside the award or what he calls lodged objections to the award on 7th December 1977. Before the expiry of the period of limitation, he made an application on 10th October 1977 to the learned trial Judge for granting him time to file objections to the award. The learned trial Judge granted time to file objections to the award until 18th October 1977. On that day, a fresh application for time was made to the learned trial Judge who granted it and extended time until 25th October 1977. On 25th October 1977 the learned trial Judge granted a similar application extending time until the 4th November 1977. On 4th November 1977 on a similar application made the learned trial Judge, the learned trial Judge granted time until 1st December 1977. On 1st December 1977 the learned trial Judge made the following order on such application: "Granted if law permits to file objections"; and adjourned the case to 7th December 1977. On that day, the plaintiff filed objections to the award or, in other words, he made an application to set aside the award. Under these circumstances, the question which we are required to consider is whether the plaintiff's application to set aside the award was barred by time. The first aspect of this contention is whether Section 5 of the Limitation Act is applicable to an application for setting aside an award made under Arbitration Act, 1940. A reference has been made to the decision of the Supreme Court in Ramlal and Ors. v. Rewa Coalfields Ltd. This decision has no application to the instant case because though it sets out the principles which should be borne in mind while construing Section 5 of the Limitation Act, it does not lay down that Section 5 is applicable to an application for setting aside an award made under Arbitration Act, 1940.
4. The next decision to which reference has been made is more apposite. In Kawahing Akbar v. Raldeosingh Akbar AIR 1957 Nagpur 57, the question whether sec. 5 was applicable to an application for setting aside an award directly arose. A Division Bench of the Nagpur High Court laid down that Section 5 of the Limitation Act, 1908 did not apply to such applications under the Arbitration Act, 1940 and that, therefore, Section 5 could not be invoked for extending time for making an application to set aside the award. A perusal of that decision shows that Section 5 of the Limitation Act 1908 could not be invoked because it was not made applicable to such applications under the Arbitration Act. It is, therefore, necessary to turn to Section 5 of the Limitation Act, 1908. It provided as follows:
Any appeal or application for a review of judgment of for leave to appeal or any other application to which this section may be made applicable by or under any enactment for the time being in force may be admitted after the period of limitation prescribed therefore, when the appellant or applicant satisfies the Court that he had a sufficient cause for not preferring the appeal or making the application within such period.
It is clear, therefore, that Section 5, by virtue of its own force, was made applicable to appeals, applications for review of judgments and applications for leave to appeal. It applied to other applications only if it was made applicable by or under any other enactment. It appears from the decision of the Nagpur High Court that the Arbitration Act did not make Section 5 applicable to such applications made thereunder. Therefore, Section 5 of the Limitation Act, 1908 was not applicable to such applications made under the Arbitration Act. Section 5 of the Limitation Act, 1963 is materially different from its repealed counterpart. It provides as follows:
Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the Court that he had sufficient cause for not preferring the appeal or making the application within such period.
It is clear, therefore, that Section 5 by virtue of its own force now applies to all appeals and applications except application made under the provisions of Order XXI of the Code of Civil Procedure. The expression "any application", in our opinion, will include an application made under the Arbitration Act to set aside an award. When Section 5 is read in light of Article 119 in the Schedule to the Limitation Act, 1963 it becomes clear beyond all doubts that sec. 5 applies to applications made under the Arbitration Act, 1940 and specified in Article 119 of the Limitation Act, 1963. If Section 5, by virtue of its own force, was not applicable to such applications made under the Arbitration Act, 1940, the Legislature would not have used the expression "any application" and prescribed the period of limitation for making applications under the Arbitration Act, 1940 for the purposes specified in Article 119. It is, therefore, clear that Section 5 of the Limitation Act, 1963 has been widely worded and, in our opinion, its effect is wide enough to make it applicable to applications under the Arbitration Act, 1940 specified in Article 119.
5. The next question which has been raised is whether, in the instant case, the learned trial Judge was in error in rejecting the application after having granted time to the plaintiff to lodge objections to the award. All the applications for time which the plaintiff made expressly stated that time be granted to him for filing objections to the award. He did not leave it to the learned trial Judge to infer the purpose for which he made those applications., Therefore, when the learned trial Judge granted him time to file objections he did so for the purpose which the plaintiff specified in his applications. The plaintiff relied upon those orders and waited to file his objections to the award. On 1st of December 1977 the learned trial Judge made a very curious order which we have reproduced in the earlier part of this judgment. He granted time to the plaintiff if the law permitted the plaintiff to file his objections to the award. Such an order was made because the learned trial Judge was not sure of the position in law nor did he take trouble to ascertain what the position in law was. If he had looked at the Arbitration Act, he would have easily realised that the plaintiff had the right to file objections to the award. Secondly, if he had a look at the provisions of the Limitation Act, he would have realised that the plaintiff would be required to do so within thirty days and that he had the discretion to extend time if he so thought fit to enable the plaintiff to file his objections. He did not take care to do so and made a very curious or ambiguous order. Therefore, the question which arises is what is the effect of the order which the learned trial Judge made on 1st December 1977. We have no doubt in our minds that he extended time until 7th December 1977. He only conditioned that order by the rider that the extended time could be availed of by the plaintiff if law conferred upon him jurisdiction to extend time. Section 5 certainly conferred upon him jurisdiction to do so and, therefore, the net effect of the order which the learned trial Judge made on 1st December 1977 was to extend time until 7th December 1977 for enabling the plaintiff to file objections to the award.
6. It has been argued by Mr. Majmudar that no application for condoning delay was made by the plaintiff. Ordinarily, a party who wants to avail himself of the benefit of Section 5 of the Limitation Act makes an application setting out grounds which, in his opinion, constitute 'sufficient cause' and praying for condonation of delay and for admitting to hearing an appeal or application which is otherwise time barred. In the instant case, the plaintiff did not make such an application. Was that omission on the part of the plaintiff fatal to his case? In our opinion, though an application for condoning delay is ordinarily necessary, it is not a mandatory requirement of law. In a given case, even on an oral application, the Court has got the jurisdiction to condone delay if the facts and circumstances of the case so warrant. In the instant case, several orders which the -learned trial Judge made granting time to the plaintiff to file his objections themselves constituted a 'sufficient cause' and, therefore, it could not be said that the oral application made by the plaintiff to take his objections on record which otherwise appeared to be time-barred was not maintainable or suffered from a fatal omission to state the 'sufficient cause'. The learned trial Judge was, therefore, in error in dismissing the plaintiff's application in limine on the ground that it was barred by time. He ought to have admitted it to file and heard it on merits and decided it.
7. It has been argued by Mr. Majmudar that appeal against the impugned order is not maintainable. He has invited our attention to Section 39 of the Arbitration Act which, inter alia, provides that appeal shall lie from an order setting aside or refusing to set aside an award. He has argued that in absence of any objections to the award from the plaintiff, the order which the learned Judge made neither set aside the award nor refused to set aside. All that the learned trial Judge did was to pass decree in terms of the award under Section 17 of the Arbitration Act. Mr. R.N. Shah has invited our attention to the decision of the Andhra Pradesh High Court in Veeraswamy Chetty v. Varadish Chetty and Ors. AIR 1957 Andhra Pradesh 493. On the basis of this decision, it has been argued by Mr. Shah that rejection of objections on the ground of limitation amount to refusing to set aside the award. In this behalf he has further relied upon the decision of the Assam High Court in Mafizuddin Bhuyan and Anr. v. Alimuddin Bhuyan and Ors. AIR 1950 Assam 191. A Division Bench of that High Court has laid down that whether objections to an award are dismissed on merits or they are dismissed on the ground that they are filed beyond time, the Court by dismissing them in effect refuses to set aside the award and such an order is clearly appealable under Section 39. Clause (vi) in Sub-section (1) of Section 39 uses the expression "setting aside or refusing to set aside an award". The language of Clause (vi) is not circumscribed by the words "on merits". Therefore, when an order has set aside an award or refused to set aside an award on any ground whatsoever, the order becomes appealable under Section 39(1). If the Court has refused to set aside the award on merits, indeed the order is appealable; but if the Court has refused to set it aside on the ground of limitation, even then, it is a refusal to set aside the award. In our opinion, therefore, since in the instant case the learned trial Judge refused to set aside the award on the ground that objections to it filed by the plaintiff were barred by time, the order made by him was appealable under Section 39(l)(vi). The contention raised by Mr. Majmudar that the appeal is not maintainable cannot, therefore, succeed. Indeed in the instant case, the plaintiff has out of abundant caution instituted the appeal as well as the Revision Application.
8. For the reasons which we have stated the learned trial Judge was in error in dismissing the objections on the ground that they were barred by limitation and in passing the decree in terms of the award. We therefore, allow the appeal, set aside the order made and the decree passed by the learned trial Judge and remand the case to him with a direction that he shall decide on merits the objections filed by the plaintiff to the award and proceed further according to law. Since we have allowed the appeal, there shall be no order on the Civil Revision Application. Rule therefore stands discharged. Civil Application for stay now does not survive. Therefore, rule is discharged. There shall be no order as to costs in all the three proceedings in the circumstances of the case.
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