When Does the Limitation Period in S 34(3) Start Running and Other Cases for the Fortnight

State of Maharashtra & Ors. v. Ark Builders Pvt. Ltd. (SCI: 28.02.11)

Aftab Alam & RM Lodha, JJ.
Civil Appeal No. 2152 of 2011 (Arising out of S.L.P. (Civil) No. 14308 of 2010)

Facts:
Disputes arose between the parties and was referred to arbitration. The award was in favour of Ark Builders Pvt. Ltd. (Ark Builders). The tribunal gave the award to Ark Builders on 20th March 2003. The tribunal did not give a copy of the award to the appellant apparently because the appellant did not bear costs of the arbitration.

Ark Builders submitted the award to the Executive Engineer (one of the appellants) on 29th March 2003 asking for payment. A proposal was filed by the Executive Engineer on 16th April 2003 to the Chief Engineer, the Financial Advisor and the Joint Secretary for challenging the award.

On 13th June 2003, Ark Builders sent a reminder to the Chief Engineer for payment on the basis of the arbitral award. Another reminder was sent to the Secretary and Special Commissioner on 8th January 2004.

On 15th January 2004, the Executive Engineer acknowledged the receipt of the letter dated 29th March 2003 and the subsequent reminders but informed Ark Builders that the award would be challenged before the appropriate forum.

On 17th January 2004, a messenger was sent to the arbitrator to ask for a certified copy of the award. On 19th January 2004, the appellant received a certified copy of the arbitral award. On 28th January 2004, a petition for challenging the arbitral award was made.

Now, the question before the court was whether the limitation period specified in Section 34(3) started running from 29th March 2003, when Ark Builders submitted the arbitral award to the Executive Engineer, or from 19th January 2004, when the appellants received a certified copy of the arbitral award.

Section 34(3) provides:

“An application for setting aside may not be made after three months have elapsed from the date on which die 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 bow 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.”

Section 31(5)

“(5) After the arbitral award is made, a signed copy shall be delivered to each party.”

The Supreme Court, after referring to the above provisions and to the Supreme Court decision in Union of India v. Tecco Trichy Engineers and Contractors, held that the limitation period prescribed in Section 34(3) would start running only from the date when the party receives from the arbitrator a signed copy of the arbitral award, that is, 19th January 2004. The court further held:

“If the law prescribes that a copy of the order/award is to be communicated, delivered, dispatched, forwarded, rendered or sent to the parties concerned in a particular way and in case the law also sets a period of limitation for challenging the order/award in question by the aggrieved party, then the period of limitation can only commence from the date on which the order/award was received by the party concerned in the manner prescribed by the law.”

Other Cases Decided in the Second Fortnight of February

Bihar State Housing Board v. Harendra Nath Kapoor & Ors. (Patna HC: 18.02.11)
And
Shivam Housing Pvt.Ltd & Anr v. Thakur Mithilesh Kumar Singh & Anr. (Patna HC: 25.02.11)
Key Aspect:
Whether a Court Below the District Court is Competent Court for Setting Aside Arbitral Award?

Ashok Kalra vs Akash Paper Board Pvt Ltd & Anr (Del HC: 18.02.11)
Key Aspects:
Filing of Application to Set Aside Arbitral Award beyond the Time Stipulated in Section 34(3) of the Arbitration and Conciliation Act, 1996.

Bhanu Construction Pvt. Ltd. v. NTPC (Del HC: 18.02.11)
Key Aspects:
Arbitrator Cannot Disregard Express Provisions of Contract, Inconsistent Findings Arrived at by the Arbitrator- Legal Misconduct, Technical Experts as Arbitrators, Arbitration Act, 1940.

Parle Products Ltd. v. Jaydev F. Bombaywala (Guj HC: 21.02.11)
Key Aspects:
Filing of Suit- Appropriate Court, Forum Selection Clause- Exclusivity of Selected Forum.

Green Delhi Bqs Ltd. v. Municipal Corporation Of Delhi & Anr. (Del HC: 23.02.11)
Key Aspect: Filing of Writ Petition When Arbitration Clause Exists

Dallah Real Estate, Best Xerox and Universal Metal

Some issues/ decisions on arbitration.

Lex Arbitri Blog had brought to our attention that the French Court of Appeal had decided in Dallah Real Estate v. Pakistan that the arbitral award was valid. This was in complete contradiction to the decision of the UK Supreme Court which refused to enforce the same arbitral award. The Conflict of Laws. Net Blog has a detailed post on the French Court of Appeal decision. Do check it out.

Best Xerox Centre v. Xerox Modi India Ltd.

Best Xerox Centre had filed a complaint under the Competition Act, 2002 against Xerox Modi India Ltd. alleging abuse of dominant position. The allegation is that the abuse of dominant position is for coercing Best Xerox Centre (BXC) to sign the Full Service Maintenance Agreement (FSMA) with an arbitration clause in which Xerox Modi (Xerox) had the exclusive right to appoint the arbitrators.

According to BXC, in order to lure customers for selling the products of Xerox, Xerox provided equitable terms of contract, including the arbitration clause wherein both BXC and Xerox had to contribute in appointing the arbitrators. However, once BXC purchased the machines of Xerox, in the service agreement (FSMA) entered for the purpose of servicing the machines of Xerox, the arbitration clause provided for the unilateral constitution of the tribunal by Xerox.

The Competition Commission of India held that there was no prima facie case of abuse of dominant position and also held:

“The Commission is not the forum for challenging the terms of any arbitration clause, unless there is any anti competitive element involved.”

We had, in a previous post, discussed about the unilateral right of a party to appoint the arbitral tribunal under the arbitration agreement. 

Universal Metal Company Ltd. v. GAIL (India) Ltd.

As per the Gas Sales Agreement (GSA) between the petitioner, Universal Metal Company Ltd. (Universal) and GAIL (India) Ltd. (GAIL), GAIL had the right to levy certain charges on Universal. When GAIL levied such charges, Universal petitioned to the PNGRB alleging that levy of such charges by GAIL was arbitry and unjust. The Petroleum and Natural Gas Regulatory Board (PNGRB) heard the matter and held that in view of Article 13 of the GSA which provided for reference of disputes to arbitration and in view of Section 24(1) of the Petroleum and Natural Gas Regulatory Board Act, the PNGRB is under an obligation to dismiss the matter and refer the same to arbitration. Section 24(1) reads:

“Save as otherwise provided for arbitration in the relevant agreements between entities or between an entity or any other person, as the case may be, if any dispute arises, in respect of matters referred to in sub-section(2) among entities or between an entity and any other person, such dispute shall be decided by a Bench consisting of the Member (Legal) and one or more members nominated by the Chairperson: Provided that if the members of the Bench differ on any point or points, they shall state the point or points on which they differ and refer the same to a member other than a member of the Bench for hearing on such point or points and such point or points shall be decided according to the opinion of that member.”(emphasis not in the original)

Some Very Interesting Reads on Contract Law and Arbitration

Recently, two interesting articles were published in SSRN on contract law

The first article titled “Contract Law, Party Sophistication and the New Formalism”, penned by Meredith Miller, criticizes the law as it exists on the impact of party sophistication in the interpretation of contracts. The author does not wholly discount the party sophistication concept. Rather, according to the author, the courts have not addressed the issue of party sophistication in a meaningful way. Do check this article out (44 pages).

In the case of Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] UKSC 44, the UK Supreme Court dealt with the law pertaining to whether “without prejudice” communications during negotiations would form a part of factual matrix that is relevant extrinsic aid to contract interpretation.

This article titled “Without Prejudice Interpretation – With Prejudice Negotiations” by Adrian A. S. Zuckerman critically analyses the decision. Do check it out. Extremely interesting and short (10 pages).

Also do check out this case comment in the UK SC Blog on the said case.
A few interesting articles on arbitration. (ideally these must be a part of the monthly roundup of arbitration articles but then these are very hot reads.

David Schwartz hates using the term “mandatory arbitration” to the situation where the party that solely drafted the contract enforces the arbitration clause contained in it against the other party which has weaker bargaining power and had no positive role to play in the drafting of the contract. He wants to call such arbitration as “claim-suppressing arbitration” in this article titled “Claim-Suppressing Arbitration: the New Rules”. Do check it out. He is in favour of the passing of the Arbitration Fairness Act (USA). Interesting read.

Empirical Legal Studies Blog has come up with links to a couple of empirical studies on arbitration. I have not read the articles but the description in the ELS blog post projects the articles to be very interesting. The links to the said articles are provided below (subscription required):

An Empirical Study of Employment Arbitration: Case Outcomes and Processes, 8 Journal of Empirical Legal Studies 1 (2011) by Alexander Colvin

Punitive Damages in Securities Arbitration: An Empirical Study, 39 Journal of Legal Studies 497, 518 (tbl. 4) (2010) by Stephen J. Choi & et al.

Bhoomi Pooja is a secular activity when done by the HC judges in official capacity

The HC of Gujarat has delivered a judgment on 10/2/11 on the secular character of the Bhoomi Pooja participated by the HC judges of Gujarat. The court found the act of Bhoomi Pooja as an acceptable proposition within secularism and found that offering prayers with the aid of brahmin priests chanting Sanskrit slokas well within the secular tenet of the constitution.

The discourse on secularism in India seems to point towards the Indian brand of secularism which is a fluid concept- vague as much as it could get. Secularism has been a point of debate in Indian judiciary specifically and bastions are cases like S.R Bommai, Ramesh Yaswant Probhoo, to cite a few.

In the present case, by setting another standard of secularism, the court have said that the Bhoomi Pooja is essentially for the betterment of the institution of the HC and therefore for the betterment of everyone directly or indirectly connected irrespective of their caste or religion.

“17. If such incident is further considered, one needs to excavate the earth to some extent for laying down any foundation. If the earth even if treated in its materialistic sense, the existence of the earth and well being of the earth touches to all mankind on the earth. At the time of excavation of such earth or at the time when a building is to be constructed by adding physical burden, offering of the prayer to the earth to pardon or to graciously bear the burden or the damage, if any, to make the construction successful, which is to be used for betterment of the institution of the High Court, such an action can be termed as for the betterment of all persons connected thereby directly or indirectly, irrespective of their caste or religion or community. Therefore, such offering of the prayer to the earth at the time of foundation laying ceremony cannot be termed as non-secular action if "manav dharma" is to be understood in its real sense in furtherance to the principles of secularism to be observed by our nation.
18. At the time when the prayers are to be offered to the earth by the dignitaries who had laid down the foundation for the building, simultaneously if sanskrit slokas are spoken by brahmins, it can be said as in furtherance to the prayer offered to the earth. Such slokas could also be termed as supplementing prayers offered by the person/s laying foundation for a noble desire to achieve successful construction of new building. If the ultimate aim for successful construction of the building is holy and with the larger interest of those persons who are to be directly or indirectly benefited by successful construction of the building, irrespective of their caste or community or religion, it would fall within the principles of "Vasudeva Kutumbakam", welfare to all and hurt to none. Such in no manner can be termed as non-secular activity.


After discussing this, the court enquired whether the person who has filed the PIL has locus as per the recent guidelines given in Uttranchal v. Balvantsinh and found him to be lacking locus.


“26. In our view, in view of the aforesaid consideration, it appears that the petition has been filed with extraneous considerations which are not disclosed by the petitioner since he has tried to expose the cause of the organization behind him or the other persons. Such would lead to serious doubt about the credentials of the petitioner. Further, the correctness of the statement made at para 3 is falsified by the above referred subsequent paragraphs and the annexures produced with the petition. Therefore, it can be said that the petition is either filed with some extraneous consideration or there is no genuineness or bonafide public interest as sought to be canvassed. The petition can be termed as by a busy body for extraneous consideration.”


Therefore the court rejected the petition and slated exemplary cost.

Issues to muse
1. If the court had to find that person had no locus and therefore the petition was to be dismissed why the verbose on secularism? Were they driven by the need of self justification!
2. Secularism unequivocally prohibits preference by state of one religion over the other. When the HC conducts Bhoomi Pooja with brahmin priests what else other than preferring one religion over the other was done, however the court may try to justify it as part of dharma and not part of religion. Court’s rationale if nothing is poor and unsubstantiated.
3. One could appreciate Bhoomi Pooja as a matter of culture and in India, like elsewhere, culture and religion are mostly interlinked. Even when culture is the driving force, its association with a particular religion should make the state wary in adopting it in public sphere of a secular nation.
4. The exemplary cost that has been levelled shows the courts tolerance in bad light, ‘here you go if you dare to raise fingers against us’ sorts.