COMMISSIONER, M.P. HOUSING BOARD AND OTHERSversusM/S. MOHANLAL AND COMPANY

                         [2016] 3 S.C.R. 357.



   COMMISSIONER, M.P. HOUSING BOARD AND OTHERS                             A
                                  v.
               M/S. MOHANLAL AND COMPANY
                   (Civil Appeal No. 6573of2016)
                            JULY 19,2016                                   B
  [DIPAK MISRA AND ROHINTON f'ALI NARIMAN, JJ.j
       Arbitration and Conciliation Act. 1996: s.34(2) - Delay in
filing objection 11/s.34(2) il'hether c1111donable in aid of s.14 of
Limitation Act - In the instant case. arbitral award passed on
11.11.2010 - Respondent filed s.11 application for seeking
                                                                           c
appointment of arbitrator on the ground that there was 110 ctrbitration
clause in the contract - High Court dismissed the application which
order remained unchallenged and a/fained finality - Thereqfte1;
respondent filed an o~jection u/s.34(2) on 26.9.2011 to challenge
the award - Respondent also filed application u/s.14 seeking               D
exclusion of time consumed in the proceedings u/s.11 asserting that
he was bonqfidely prosecuting the case in the court having no
jurisdictio11 - Whether s. ]./ would be applicable - Held: Not
applicable -- s.14{1) of the limitmion Act lays down that the
proceedings must relate to the same matter in issue - Filing of an
                                                                           E
application u/s.11 for un appointment of arbitrator is totalzy different
from an objection filed u/s.34 - It cannot be said that the
proceedings related to "same matter in issue·· - Respondent had
duly participated in the arbitral proceeding - There was thus
absence of diligence a11d good faith on part of respondent - Time
consumed for pursuing remedy u/s. JJ not excludible for filing             f.
objection - Limitation Act, 1963 - s.14.
      Allowing the a11peal, the Court
       HELD: The ob,iection was filed beyond the JICriod
prescribed under the 1996 Act. However, the a1>pellants sought
exclusion of the time spent in the proceedings in court as                 G
envisaged under Section 14 of the Act. It is settled in law that
Section 14 of' the Act applies to Section 34(3) of the 1996 Act.
Section 14 would be applicable in cases of mistaken remedy or
selection of a wrong forum. In the case at hand, the respondent
appeared before the arbitrator and after the award was passed,             H
                            357
                                                                                .,
358            SUPREME COURT REPORTS                        [2016] 3 S.C.R.


A     chose not to file any objection to the award immediately. On the
      contrary, the respondent filed an application under Section 11 of
      1996 Act before the High Court for appointment of an arbitrator.
      Section 14(1) of the Act lays down that the proceedings must
      relate to the same matter in issue. It emphasises on due diligence
      and good faith. Filing of an application under Section 11 of the
B
      1996 Act for an appointment of arbitrator is totally different from
      an objection to award filed under Section 34 of the 1996 Act. To
      put it differently, one is at the stage of initiation, and the other at
      the stage of culmination. By no stretch of imagination, it can be
      said that the proceedings relate to "same matter in issue".
c     Additionally, the respondent had participated in the arbitral
      proceeding and was aware of passing of the award. He, may be,
      by design, invoked the jurisdiction of the High Court for
      appointment of an arbitrator. Liberal interpretation should be
      placed on Section 14 of the Act, but if the fact situation exposits
      absence of good faith of great magnitude, law should not come to
D
      the rescue of such a litigant. This is so because the respondent
      instead of participating in the arbitration proceedings, could have
      immediately taken steps for appointment of arbitrator as he
      thought appropriate or he could have filed his ob.icctions under
      Section 34(2) of the Act within permissible parameters but he
 E    chose a way, :m innovative path, possibly harbouring the thought
      that he could contrive the way where he could alone rule. This is
      neither diligence nor good faith. On the contrary, it is absence of
      both. The High Court has fallen into grave error by concurring
      with the opinion expressed by the Additional District Judge and,
      therefore, both the orders deserve to be lancinated. [Paras 14,
 F
      17, 18, 19] [364-D-E; 365-G; 366-B, E-H; 367-A-C)
            State of Goa v. Western Builders (2006) 6 SCC 239:
            2006 (3) Suppl. SCR 288; Consolidated Engineering
            Enterprises v. Principal Secretary, Irrigation
            lJepar/ment and ot/Jcrii (2008) 7 sec 169: 2008 (5)
 G          SCR 1108; Ranwdhar Shril'as v. Bhagll'andas (2005)
            13 SCC 1: 2005 (4) Suppl. SCR 808; Union of India
            v. Popular Construction Co. (2001) 8 SCC 470:2001
            (3) Suppl. SCR 619 - relied on.
            MP. Housing Board and Another v. Sohanlal Chourasia
 H          and Another (2008) 2 M.P.L.J. 103 - referred to.
 COMMISSIONER, M.P. HOUSING BOARD AND OTHERS v.                               359
          MIS. MOHANLAL AND COMPANY

                     Case Law Reference                                        A
     (2008) 2 M.P.L.J. 103        referred to Paras
     2001 (3) Suppl. SCR 619      relied on   Para 13
     2006 (3) Suppl. SCR 288      relied on   Para 14
     2008 (5) SCR 1108            relied on   Para 14
     2005 (4) Suppl. SCR 808      relied on   Para 17
     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6573
of2016.
      From the Judgment and Order dated 12.08.2013 of the High Court
of Madhya Pradesh, Principal Seat at Jabalpur in Civil Revision No. 332
                                                                               c
of2012.
      Sushi! Dutt Salwan, Pramod Dayal, Nikunj Dayal, Ms. Paya!
Dayal, Siddharth Vikram, Advs. for the Appellants.
       Shekhar Sharma, Ms. Rashmi Singh, Adarsh Upadhyay, Advs.
for the Respondent.                                                            D
      The Judgment of the Court was delivered by
      DIPAK MISRA, J. 1. Leave granted.
      2. The present appeal, by special leave, is directed against the
order dated 12th August, 2013, passed by the High Court of Madhya              E
Pradesh, Principal Seat at Jabalpur, in Civil Revision No.332 of2012,
whereby the High Court has affirmed the view expressed by the learned
Additional District Judge, Bhopal, that the objection preferred by the
respondent under Section 34(2) of the Arbitration & Conciliation Act,
1996 (for short, 'the 1996 Act') was condonable in aid of Section 14 of
the Limitation Act, 1963 (for brevity, 'the Act').                             F
        3. The present litigation has a history. The respondent had entered
into a contract for construction of a commercial complex at Bittan Market,
E-5, Arera Colony, Bhopal on 29th June, 2009. During the subsistence
of the contract, certain disputes arose between the p~rties and the matter
was arbitrated upon. Clause 29 of the contract, on the basis of which          G
the matter was referred to arbitration, reads as follows:
      "29 - Except as otherwise provided in this contract all
      questions and disputes relating to the meaning of the
      specifications, designs, drawings and instructions, herein
      before mentioned and as to thing whatsoever, in any way,                 H
360      SUPREME COURT REPORTS                              [2016] 3 S.C.R.


A     arising out of or relating to the contracts, designs. drawings,
      specifications, estimates, concerning the work, or the
      execution or failure to execute the same, whether arising
      during the progress of the work or after the completion or
      abandonment thereof, shall be referred to the Dy. Housing
      Commissioner in writing for his decision within a period of
B
      thirty days of such occurrence. Thereupon, the Dy.
      Housing shall give his written instructions and/or decision
      within a period of sixty days of such written request. This
      period can be extended by mutual consent of the parties.
      If decided amount is more than Rs.25,000/- the same shall
c     be. referred to the Housing Commissioner for his perusal.
      Upon receipt of written instructions, or decision, the parties
      shall promptly proceed without delay to comply such
      decision or instructions. If the Dy. Housing Commissioner
      fails to give his instructions or decision in writing within a
D     period of sixty days or mutually agreed time after being
      requested, ifthe parties are aggrieved against the decision
      of the Dy. Housing Commissioner the patties may within
      thirty days prefer such dispute/disputes for arbitration to
      the Addi. Housing Commissioner subject to the jurisdiction
      and limitations in accordance with the provisions of
 E    Madhyastham Adhikaran Adhiniyam, 1995. In case the
      dispute is within the jurisdiction of Addi. Housing
      Commissioner he shall then act as sole arbitrator, and he
      shall pass an award after hearing both the parties, strictly
      in accordance with the provisions of the Arbitration Act,
 F     1940 and the rules made thereunder for the time being in
      force.
      If the contractor does not make any demand for arbitration
      in respect of claim(s) in writing within ninety days on
      receiving information from the Executive Engineer that the
G     final bill is ready for payment, the claim of the contractor
      shall be deemed to have been waived and shall be absolutely
      barred and the Board shall be discharged or released of all
      the liabi Ii ties. under the contract in respect of such claim( s).
      A reference to the Arbitration shall be no ground for not
      continuing the work on the part of the contractor and
 H
    COMMISSIONER, M.P. HOUSING BOARD AND OTHERS v.                           361
     MIS. MOHANLAL AND COMPANY [DIPAK MISRA, J.]

          payment as per terms and conditions of the agreement shall         A
          be continued by the Board."
      4. Relying on the said clause, the matter was referred to the
Additional Housing Commissioner, the sole arbitrator, who passed an
award on 11th November, 2010. Be it stated, both the parties appeared
before the learned arbitrator and on the basis of the materials brought on    B
record, the learned arbitrator passed the award. As is manifest from
record, the arbitrator did not find any justification to allow any of the
claims of the respondent-contractor.
       5. When the matter stood thus. as it appears. wisdom dawned
upon the respondent and he thought that he could take a somersault.           c
And that propelled him to file an application under Section 11 of the 1996
Act before the High Court of Madhya Pradesh, which formed the subject
matter of Arbitration Case No.135of2010, for seeking appointment of
an arbitrator to adjudicate the disputes. It was contended before the
High Court that clause 29 of the contract could not be treated as an
arbitration clause and, therefore, the court should appoint an arbitrator.    D
To bolster the said stand, reliance was placed on M.P. Housing Board
mu/ Another vs. Solw11/al C/1011,.asia anti A11other1•
      6. The learned Single Judge reproduced the relevant passages
from the said judgment and came to hold as follows:
                                                                              E
          "From the aforesaid clause, it is seen that if any dispute
          arises between the parties, the matter has to be resolved
          by reference to the Dy. Housing Commissioner and,
          thereafter, to the Addi. Housing Commissioner. The
          provisions of Arbitration Clause clearly indicates that the
          Arbitrator appointed under the agreement is a named_                F
          arbitration namely the Addi. Housing Commissioner and he
          has to exercise, powers available under the Arbitration Act
          of 1940. Available on record is an award passed by the
          Arbitrator i.e. the Addi. Housing Commissioner vide
          Annexure PS and once in terms of clause 29 of the                   G
          Agreement, the arbitrator i.e. the Addi. Housing
          Commissioner has adjudicated the dispute and has passed
          an award, no further action is to be taken in these
          proceedings against u/s 11, as the sole arbitrator in
I   (2008) 2 M.l'.L.J. 103
                                                                              H
362            SUPREME COURT REPORTS                           [2016] 3 S.C.R.



A           accordance with Arbitration Agreement has already
            adjudicated the dispute between the parties. If the petitioner
            is aggrieved by the adjudication of the dispute, he can now
            challenge the award of the Arbitration in accordance with
            law.
B           In the light of the resolution of the dispute by the sole
            Arbitator in accordance with clause 29 of the agreement,
            this court does not find any ground to interfere into the
            matter. The judgment relied upon by Sh. Shashank Shekhar
            is clearly distinguishable. In that case the question and the
            power is exercised by the Addi. Housing Commissioner u/
c           s 29 of the agreement in question. In the said case, it is
            only held that a Dy. Housing Commissioner deciding the
            claim under clause 29 is not an Arbitrator."
            7. We must immediately state that the said order was not assailed
      and, has been allowed to attain finality.
D
             8. After facing non-success before the High Court in his effort to
      get an arbitrator appointed, the respondent thought it appropriate to file
      an objection under Section 34(2) of the 1996 Act to challenge the award.
      The said application was filed on 26th September, 2011. It is apt to note
      here that the award was passed on 11th November, 20 I 0.
 E           9. The respondent, along with his objection, filed an application
      under Section 14 of the Act seeking exclusion of the time consumed in
      the proceedings asse11ing that he was bonafidely prosecuting the case in
      the court having no jurisdiction. The learned Additional District Judge,
      upon hearing the learned counsel for tlie parties, a II owed the application
 F    on the foundation that the respondent was entitled to exclusion of time
      under Section I 4 of the Act.
               I 0. Being grieved by the aforesaid order, the appellant preferred
      civi I revision before the High Court and, as has been stated earlier, the
      High Cou11 did not find any infirmity in the order passed by the learned
G     Additional District Judge and, accordingly, gave the stamp of approval
      to the same.
            I I. We have heard Mr. Sushi I Dutt Salwan, learned counsel for
      the appellants and Mr. Shekhar Sharma, learned counsel for the
      respondent.
 H           12. The singular issue that emerges for consideration is whether
  COMMISSIONER, M.P. HOUSING BOARD AND OTHERS v.                         363
    MIS. MOHANLAL AND COMPANY [DIPAK MISRA, J.)

in the obtaining factual scenario, Section 14 of the Act would be        A
applicable. To appreciate the controversy, it is necessary to refer to
Section 34(3) of the 1996 Act. It reads as follows:
       "34(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       .B
       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 ifthe Court is satisfied that the applicant was
        prevented by sufficient cause from making the application         c
        within the said period of three months it may ente11ain the
        application within a further period of thirty days, but not
        thereafter."
      13. This Court iii Union of India vs. Popular Construction
   1
Co. interpreting the said provision has held that:-                       -D
        " As far as the language of Section 34 of the 1996 Act is
        concerned, the crucial words are "but not thereafter" used
        in the proviso to sub-section (3). In ouropinion, this phrase
        would amount to an express exclusion within the meaning
        of Section 29(2) of the Limitation Act, and would therefore
                                                                          E
        bar the application of Section 5 of that Act. Par! iament did
        not need to go further. To hold that the cout1 could entertain
        an application to set aside the award beyond the extended
        period under the proviso, would render the phrase "but not
        thereafter" wholly otiose. No principle of interpretation
        would justify such a result".                                     F
        Andagain:-
         "Furthermore, Section 34(1) itself provides that recourse
       · to a court against an arbitral award may be made only by
         an application for setting aside such award "iii accordance
         with" sub-section (2) and sub-section (3). Sub-section (2)       G
         relates to grounds for setting aside an award and is not
         relevant for our purposes. But an application filed beyond
         the period mentioned in Section 34, sub-section (3) would
         not be an application"in accordance with" that sub-section.
'(200I) s sec 470                                                         H
364             SUPREME COURT REPORTS                          [2016] 3 S.C.R.


A            Consequently by virtue of Section 34( I), recourse to the
             court against an arbitral award cannot be made beyond the
             period prescribed. The importance of the period fixed under
             Section 34 is emphasised by the provisions of Section 36
             which provide that
B            "where the time for making an application to set aside the
             arbitral award under Section 34 has expired ... the award
             shall be enforced under the Code of Civil Procedure, 1908
             in the ·same manner as if it were a decree of the court".
             This is a significant depaiture from the provisions of the
c            Arbitration Act, 1940".

              14. The aforesaid authority makes it absolutely clear that that the
      scheme oflimitation provided under the 1996 Act is different than 1940
      Act; and, therefore, an application filed beyond the period of limitation
      under Section 34(3) of 1996 Act would not be an application in
D     accordance   with the said provision. As.is evident from factual narration,
      the.application was filed beyond the period prescribed in the said
      provision. Therefore, it could not have been entertained under the 1996
  · · Act.· However, the appellants sought exclusion of the time spent in the
   ··.·proceedings . in court as envisaged under Section 14 of the Act. It is
      settled in law that Section 14 of the Act applies to Section 34(3) of the
E 1996 Act. It has been so held in State of Goa vs. Western Builders ..
      and Consolidated Engineering Enterprises vs. Principal Secretary,
      lrrigatio11 Departme11t a11d others4•
              l5. Having stated thus, we are obliged to scrutinise under what
       situations Section 14 of the Act gets attracted. Section 14( I) of the
 F     Act, which is relevant for the present purpose, reads as follows:
             "14. Exclusion of time of proceeding bona fide in court
             without jurisdiction.-( I) In computing the period oflimitation
             for any suit the time during which the plaintiff has been
             prosecuting with due diligence another civil proceeding,
 G           whether in a court of first instance or of 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 .

       , (2006) 6 sec 239
 1-1   • (2008) 1 sec 169
  COMMISSIONER, M.P. HOUSING BOARD AND OTHERS v.                            365
    MIS. MOHANLAL AND COMPANY [DIPAK MISRA, J.]

      jurisdiction or other cause of a like nature, is unable to             A
      entertain it."
       16. In Consolidated Enl(ineerinK Enterprises (supra), the Court,
while dealing with the conditions in which Section 14 will be applicable,
enumerated five conditions which are as follows:-
      ;'(1) Both the prior and subsequent proceedings are civil              B
      proceedings prosecuted by the same party;
      (2) The prior proceeding had been prosecuted with due
      diligence and in good faith;
      (3) The failure of the prior proceeding was due to defect
      of jurisdiction or other cause ofl ike nature;                         c
      (4) The earlier proceeding and the latter proceeding must
      relate to the same matter in issue and;
      (5) Doth the proceedings are in a court."
      In the said case, it has also been stated that:-                       D
      '' ... 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 interpreted so as to advance
      the cause of justice rather than nbort the 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         E
      is intended to provide reliefagainst the bar of Iimitation in
      cases of mis taken remedy or selection of a wrong forum.
      On reading Section 14 of the Act it becomes c!ear that the
      legislature has enacted the said section to exempt a certain
      period covered by a bona fide litigious activity.... "                  F
         17. From the aforesaid passage, it is clear ?S noon day that
there has to be a liberal interpretation to advance the cause of justice.
However, it has also been laid down that it woulcfbe applicable in cases
of mistaken remedy or selection ofa wrong forum. As per the conditions
enumerated, the earlier proceeding and the latter proceeding must relate     G
to the same matter in issue. It is worthy to mention here that the words
"matter in issue" are used under Section 11 of.the Code of Civil
Procedure, 1908.' As has been held in Rammllwr Shrivas vs.
Blwgwandas·' the said expression connotes the matter which is directly
'(200SJ 13 sec 1                                                            .._.H
366            SUPREME COURT REPORTS                            [2016] 3 S.C.R.



A     and substantially in issue. We have only referred to the said authority to
      highlight that despite liberal interpretation placed under Section 14 of the
      Act, the matter in issue in the earlier proceeding and the latter proceeding
      has to be conferred requisite importance. That apart, the prosecution of
      the prior proceeding should also show due diligence and good faith.
B              18. In the case at hand, the respondent appeared before the
      learned arbitrator and after the award was passed, chose not to file any
      objection to the award immediately. On the contrary, the respondent
      filed an application under Section 11 of 1996 Act before the High Court
      for appointment of an arbitrator. As has been stated earlier, the learned
c     Single Judge of the High Court distinguished the decision in the case of
      Solzanlal Clzourasia and Another (supra) and came to hold that the
      application was not maintainable. However, he granted liberty to the
      respondent to file an objection in accordance with law. The words "in
      accordance with law" gain significance. It allows an argument to be
      canvassed by the respondent that the time spent in earlier proceeding
D     deserved exclusion while computing the period of limitation. But, an
      ominous one for the respondent, whether Section 14 is at al I attracted?
      Had the learned Single Judge stated that the period consumed for pursuing
      the remedy under Section 11 of the 1996 Act, would be excluded for
      filing objection, possibly the matter would have been different. In any
      case, we do not intend to dilate further on that aspect. It is quite clear
 E
      that the quoted portion herein-above does not so indicate. It only grants
      liberty to the respondent to file an objection in accordance with law.
       Sectioo 14( I) of the Act which we have reproduced, lays down that the
       proceedings must relate to the same matter in issue. It emphasises on
      due diligence and good faith. Filing of an application under Section 11 of
 F    the 1996 Act for an appointment of arbitrator is totally different than an
      objection to award filed under Section 34 of the 1996 Act. To put it
      differently, one is at the stage of initiation, and the other at the stage of
      culmination. By no stretch of imagination, it can be said that the
       proceedings relate to "same matter in issue". Additionally, the respondent
      had participated in the arbitral proceeding and was aware of passing of
 G
      the award. He, may be, by design, invoked the jurisdiction of the High
       Court for appointment of an arbitrator. We are absolutely conscious
      that liberal interpretation should be placed on Section 14 of the Act, but
       ifthe fact situation exposits absence of good faith of great magnitude,
       law should not come to the rescue of such a litigant. We say so because
 H     the respondent instead of participating in the arbitration proceedings,
  COMMISSIONER, M.P. HOUSING BOARD AND OTHERS v.                               367
    MIS. MOHANLAL AND COMPANY [DIPAK MISRA, J.]

could have immediately taken steps for appointment of arbitrator as he          A
thought appropriate or he could have filed his objections under
Section34(2) of the Act within permissible parameters but he chose a
way, which we are disposed to think, an innovative path, possibly
harbouring the thought that he could contrive the way where he could
alone rule. Frankly speaking, this is neither diligence nor good faith. On
                                                                                B
the contrary, it is absence of both.

         19. In view of the aforesaid analysis, we find that the High
Court has fallen into grave error by concurring with the opinion expressed
by the learned Additional District Judge and, therefore, both the orders
deserve to be lancinatcd and, accordingly, we so direct.                        c
        20. The appeal is, accordingly, allowed. There shall be no order
as to costs.


D~vika Gujral                                                Appeal allowed.