Orissa Pisciculture Development Corporation (Opdc) Limited Vs. Indian Oil Corporation (ioc) Ltd. and ors. - Court Judgment

Excerpt:
arbitration - delayed filing - sections 34 and 37(1)(b) of arbitration and conciliation act, 1996 and section 5 limitation act, 1963 - appellant entered into agreement with respondents - certain disputes cropped up between appellant and respondent no. 2 in respect of sell of petroleum products - said dispute was referred to sole arbitrator - arbitrator passed award - appeal under section 34 of act before district judge to set aside award - district judge found that appeal filed beyond period of limitation prescribed under section 34(3) of act - district judge dismissed appeal - hence, present appeal under section 37(1)(b) - whether section 5 of limitation act is applicable to application made under section 34 of act - held, once it is held that benefit of section 5 of limitation act is not available to proceeding under section 34 of act and the application filed under section 34 of act is to be dismissed on that ground, it is unnecessary to go into merits of appeal and other issues - section 5 of act cannot be pressed into service in aid of belated application made under section 34 of act - order of district judge confirmed - appeal dismissed - state financial corporations act, 1951 [63/1951]. section 29; [p.k. tripathy, a.k. parichha & n.prusty, jj] discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. -- state financial corporations act, 1951. section 29; discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. - 6. section 34(3) of the act reads as follows :34. application for setting aside arbitral award :(1) *(2) *(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. under the proviso to sub-section (3) of section 34, the court may condone a delay of thirty days in the maximum if the court is satisfied that the applicant was prevented by sufficient cause from making the application, within the said period of three months.a.s. naidu, j.1. the order passed by the district judge, khurda in arbitration appeal no. 89 of 2003 rejecting a petition filed by the petitioner under section 34 of the arbitration and conciliation act, 1996 (hereinafter referred to as 'the act') is impugned in this appeal.2. the question that arises for consideration is whether section 5 of the limitation act is applicable to an application made under section 34 of the arbitration and conciliation act, 1996.3. admittedly the appellant-corporation entered into an agreement with the respondents on 26.3.1993. certain disputes cropped up between the appellant and respondent no. 2 (indian oil corporation) in respect of sell of petroleum products. in consonance with clause 18 of the agreement the said dispute was referred to a sole arbitrator. the said arbitrator gave his award on 27.2.2002. being aggrieved by the award, the appellant filed an appeal under section 34 of the act before the district judge, khurda on 25.2.2003 with a prayer to set aside the same. according to the appellant, it received a copy of the award on 6.3.2002, but due to certain inadvertent reasons could not file the application under section 34 till 25.2.2003. the learned district judge came to a categorical finding that the appeal was filed beyond the period of limitation prescribed under section 34(3) of the act. he further held that the period of limitation prescribed under sub-section (3) of section 34 period of limitation prescribed under sub-section (3) of section 34 is absolute and unextendable, and accordingly held that the petition under section 34 filed by the appellant being grossly barred by time, the appeal could not be entertained and dismissed the same. the said order of the district judge is challenged in this appeal invoking jurisdiction of this court under section 37(1)(b) of the act.4. mr. hota, learned counsel for the appellant, forcefully submitted that the appointment of the arbitrator was contrary to the terms of the agreement and that it was not expected that the said arbitrator should have acted independently and impartially; he further submitted that section 5 of the limitation act is applicable to arbitration proceedings and the finding of the district judge that the time prescribed under section 34 could not be extended under any circumstances js erroneous and it is a fit case where the impugned order should be set aside and so also the award.5. per contra, the learned counsel for the respondents submitted that this court should not traverse beyond the order passed by the district judge. it is further emphatically submitted that section 34(3) of the act is very specific and the district judge has rightly arrived at the conclusion that the appeal filed by the appellant under section 34 was grossly barred by time and could not be entertained.6. section 34(3) of the act reads as follows :'34. application for setting aside arbitral award : (1) *** *** ***(2) *** *** ***(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.' 7. article 119(b) of the limitation act, 1963 prescribed a period of limitation of thirty days for an application under the arbitration act, 1940 for setting aside an award from the date of service of the notice of the filing of the award. the present act prescribes in its own provision, i.e. sub-section (3) of section 34, the period of limitation for such an application. the limitation prescribed is three months from the date on which the party making the application 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. under the proviso to sub-section (3) of section 34, the court may condone a delay of thirty days in the maximum if the court is satisfied that the applicant was prevented by sufficient cause from making the application, within the said period of three months.8. the supreme court in the case of union of india v. popular construction co., air 2001 sc 4010, categorically held that the provisions of the limitation act are not applicable to an application challenging an award under section 34 and as such there was no scope for assessing sufficiency of the cause for the delay beyond the period prescribed under the proviso to sub-section (3) of section 34. in the said decision it was held :'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 'in accordance with' sub-section (2) and sub-section (3). sub-section (2) 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. consequently by virtue of section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed...'thus by virtue of section 34(1), recourse to court against an arbitral award cannot be made beyond the period prescribed. the importance of the period so fixed is emphasized by the provisions of section 36 which stipulates the time for enforcement of an award. the section specifies that where the time for making an application to set aside the arbitral award under section 34 has expired, or such application has been made which has been refused, the award shall be enforced.9. the rules of limitation are founded on consideration of public policy and have to be interpreted with the approach which advances the cause of public policy and not otherwise. the intention of the legislature stipulating a period of limitation is not to give a right where there is none, but to impose a bar after a specific period authorizing a litigant to enforce his existing right within the period of limitation. the object of limitation laws is to compel a litigant to be diligent in seeking remedies in a court of law and to put a bar on stale claims. the law assists the vigilant and not those who sleep over their rights. this being the position, according to me, the period of limitation has to be strictly adhered to.10. section 34 of the act prescribes a definite period of limitation for filing an application for setting aside the award. it obviously and necessarily follows that the legislature consciously excluded application of section 5 of the limitation act. considering the scheme of the arbitration and conciliation act, 1996 which is a self-contained one dealing with matters arising out of arbitration proceedings, it should be construed that there has been exclusion of application of section 5 of the limitation act.thus the principle that emerges is that if the legislature in a special statute prescribes a certain period of limitation for filing a particular application thereunder, and provides in clear terms that such period on sufficient causes being shown may be extended, in the maximum, only up to a specified time limit and not further, then the court concerned has no jurisdiction to entertain the application filed beyond such maximum time limit prescribed in the statute (see air 1975 sc 1039 : commissioner of s.t., u.p. v. parson tools and plants, kanpur),11. admittedly the award in the present case was passed on 27.2.2002; whereas the petition under section 34 was filed only on 25th of february, 2003, much after the time stipulated under sub-section (3) of section 34, considering the facts and circumstances of the present case in the touch-stone of the decision of the supreme court (supra), i find that the petition filed by the appellant under section 34 to set aside the award was grossly barred by time.12. once it is held that the benefit of section 5 of the limitation act is not available to the proceeding under section 34 of the act and the application filed under section 34 of the act is to be dismissed on that ground, it is unnecessary to go into the merits of the appeal and other issues.i, therefore, conclude that the limitation act cannot be pressed into service in the aid of belated application made under section 34 of the act seeking condonation of delay. the rights to set aside an award under section 34 of the act is a statutory right which has to be exercised strictly in terms of the said statute and expanding the principles of equity has no place. in the facts found in this appeal, the application under section 34 of the act was not filed within the time limit, but it was filed at a much later date and was hopelessly barred by time. the benefit of section 5 of the limitation act not being available to the application made under section 34 of the act, the application entails rejection. the learned district judge has therefore not committed any error in not entertaining the said petition. the impugned order does not suffer from any infirmity or illegality and, accordingly, i am not inclined to interfere with the same.13. the appeal is dismissed. parties to bear their own costs.