Holding

Section 14 of the Limitation Act, 1963 applies to arbitration proceedings under Section 34 of the Arbitration and Conciliation Act, 1996; the question of exclusion of time spent before the wrong forum is to be decided by the Principal Civil Court.

Issues considered

Whether Section 14 of the Limitation Act, 1963 is applicable to proceedings under Section 34 of the Arbitration and Conciliation Act, 1996.
Whether the period spent by the appellant in prosecuting the arbitration proceedings before an incorrect forum is to be excluded for the purpose of calculating the limitation period.

Legislation cited

Arbitration and Conciliation Act, 1996s. 34, s. 43
Code of Civil Procedure, 1908s. 47
Limitation Act, 1963s. 14, s. 29, s. 3, s. 5

Subjects

ArbitrationLimitation ActSection 34Section 14Time-barWrong forumAppealPrincipal Civil CourtExclusion of limitation period

Judgment

[2008] 11 S.C.R. 703

GULBARGA UNIVERSITY A
II.
MALLIKARJUN S. KODAGALI AND ANR.
(Criminal Appeal No.4747 of 2008)
AUGUST 1, 2008
B
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]

Limitation Act, 1963: s. 14 - Applicability of, to arbitration
proceedings under s. 34 of 1996 Act - Held: Applicable - Arbi-
tration and Conciliation Act, 1996 - s. 34 c
Arbitration and Conciliation Act, 1996: &. 34 - Time spent
in filing application under s. 34 before wrong forum - Exclusion
of, for determining the period of limitation - Held: SuclJ issue to
be decided by Principal Civil Court - Matter remitted to princi-
D
pal Civil Court for fresh consideration - Limitation Act, 1963.
The questions which arose for consideration in the
present appeal were: (1) whether s.14 of Limitation Act,
1963 is applicable to proceeding under s.34 of Arbitration
and Conciliation Act, 1996 and (2) whether the period spent E
in moving application under s.34 of 1996 Act in wrong fo-
rum would stand excluded for determining the period of
limitation.
Allowing the appeal on first question and remitting
the matter on the second question to Principal Civil Court, F
the Court
""'
HELD: 1. There cannot be any doubt whatsoever that
in terms of sub-section (2) of s.34 of the Arbitration and
Conciliation Act, an arbitral award may be set aside only G
... if one of the conditions specified therein is satisfied. Sub-
section (3) of s.34 provides for the period of limitation
't- within which an application under s.34 of the Act is to be
filed. The proviso appended thereto empowers the court
703 H
704 SUPREME COURT REPORTS [2008] 11 S.C.R.

A to entertain an application despite expiry of the period of
limitation specified therein, namely, three months. No pro-
vision, however, exists as regards application of s.14 of
the Limitation Act. Sub-section (2) of s.29 would apply to
an arbitration proceedings and consequently s.14 of the
B Limitation Act would also. be applicable. [Para 7] [712-F-
H; 713-A-B]
State of Goa v. Western Builders (2006) 6 SCC 239; Na-
tional Aluminimum Co. Ltd. v. Pressteel & Fabrications
(P)Ltd. (2004) 1 sec 540 - relied on.
c
2~. The question, as to whether the period spent by
the appellant in prosecuting the arbitrat)on proceedings
should be·excluded or not is a matter which rnust fall for ~

dedsion. before ttJe Principal Civil Court. The necessary ''
corollary of the aforementioned finding is that as fo
D
whether the appellant had been prosecuting, with due di!i-
gence another proceeding or not would fan for consider- ~

ation before the Principal Civil Court. [Para 8] [713-C]
•'

Mallikprjun. v. Gulbarga University (2004) 1 SCC ~72; r-
E Bharat Bhushan Bansal v. U. P. Smal! lndµstries Corporation
Limited (19~9) 2 SCC 166; Union; of lndifJ v. Mis. ·popular Con-
structions Company AIR (2001) SC 4010; Union of India & Apr. J,
v. Bhavna Engineering Co. (2007) 5 RAJ 458 - referred to. ...

Case Law Referen~e
F
(2006) 6 sec 239 relied on Para 4 >-
: 2004) 1 sec 540 relied on Para 5
(2004) 1 sec 372 referred to, Para 3
· ("1999) 2 sec 166 referred to Para 3
,
G
..,.Al~ .(2001).SC 4010
· .;
referred to Para 4 t

(2007) 5 RAJ 458 referred to Para,6 ~·

CIVILAPPELLATE JURISDICTION :·CivilAppeal No. 4747
of 2008
H
~
GULBARGA UNIVERSITY v. MALLIKARJUN S. 705
KODAGALI & ANR [S.B. SINHA, J.]

From the final Judgment and Order dated 31.1.2005 of A
the High Court of Karnataka at Bangalore in Misc. First Appeal
No. 717 of 2004
Or. M.P. Raju, Mary Scaria and Ashwani Bhardwaj for the
Appellant.
B
G.V. Chandrashekhar, N.K. Verma and P.P. Singh for the
Respondents.
The Judgment of the Court wad delivered by
S.B. SINHA, J. 1. Leave granted. c
2. Application of Section 14 of the Limitation Act, 1963 in
a proceeding under Section 34 of the Arbitration and Concilia-
tion Act, 1996 (for short, 'the Act') is in question in this appeal
which arises out of a judgment and order dated 31.1.2005
passed by the High Court of Karnataka at Bangalore in Miscel- D
laneous First Appeal No. 717 of 2004 whereby and whereunder
the objection filed by the appellant herein under Section 34 of
the Act was held to be barred by limitation.
3. Bereft of all unnecessary details, the fact of the matter E
is as under:
The parties hereto entered into a contract of construction
of an indoor stadium on or about 21.5.1993. The said contract
contained a clause pertaining to resolution of dispute between
the parties by the Superintending Engineer, PWD, Gulbarga F
contained in clause 30 of the contract, which reads as under :
'The decision of the Superintending Engineer of the Gulbarga
Circle for the time being shall be final, conclusive, and binding
on all parties to the contract upon all questions relating to the
meaning of the specifications, designs, drawings and G
instructions herein before mentioned and as to the quality of
workmanship or material used on the work, or as to any other
question, claim, right, matter, or thing whatsoever, in any way
arising out of, or relating to the contract, designs, drawings,
specifications, estimates, instructions, orders or those H
706 SUPREME COURT REPORTS [2008] 11 S.C.R.
-~

A conditions or otherwise concerning the works or the execution,
or, failure to execute the same, whether arising during the
progress of the work, or after the completion or abandonment
thereof in case of dispute arising between the contractor and
Gulbarga University."
B The parties filed their claims and counter claims before ,)!I:

the said authority. A purported award was passed in terms
thereof on or about 30.7.1999. However, a copy thereof was
not supplied to the respondent. Respondent filed a writ petition .,
before the High Court of Karnataka for issuance of a writ of or I
c in the nature of mandamus directing the said authority to supply
it a copy of the said award. The writ petition was filed on
17.2.2000. It was allowed by an order dated 13.6.2000whereby
and whereunder the Superintending Engineer was directed to
furnish a copy of his decision to the respondent. Pursuant
D thereto, the same was furnished on 19.8.2000.
~-
Treating the said award to be one made under the Act as
also on the premise that no opjection thereto was filed by the
appellants in the court of Principal Civil Judge within the period
prescribed for questioning the validity thereof and, thus, became
E an executable decree, an execution application was filed on or
about 18.9.2000. An objection thereto was filed by the appel-
lant herein purported to be under Section 47 of the Code of
Civil Procedure. The said objection was dismissed. A Revision
Application was filed thereagainst and by a judgment and or-
F der dated 30.11.2001, it was held by the High Court that the
said clause does not constitute an arbitration agreement.
A special leave petition was filed thereagainst by the re-
spondent and in a decision of Three Judge Bench of this Court,
since reported in Mallikarjun v. Gulbarga University [(2004) 1
G
SCC 372], the decision of the High Court was reversed holding
that 'clause 30' constituted an arbitration agreement. This Court,
'
_,..
in support of the said decision, noticed an earlier decision of
this Court in Bharat Bhushan Bansal v. UP Small Industries
Corporation Limited [(1999) 2 SCC 166], stating :
H

I
GULBARGA UNIVERSITY v. MALLIKARJUN S. 707
KODAGALI & ANR. [S.B. SINHA, J.]

"15. A bare comparison of clause 30 of the contract A
agreement involved in the present matter and clauses 23
and 24 involved in Bharat Bhushan Bansal case would
show that they are not identical. Whereas clause 30 of the
agreement in question provides for resolution of the
dispute arising out of the contract by persons named B
therein; in terms of clause 24, there was no question of
decision by a named person in the dispute raised by the
parties to the agreement. The matters which are specified
under clauses 23 and 24 in Bharat Bhushan Bansal case
were necessarily not required to arise out of the contract, c
but merely claims arising during performance of the
contract. Clause 30 of the agreement in the present case
did provide for resolution of the dispute arising out of the
contract by the Superintending Engineer, Gulbarga Circle,
Gulbarga. For that reason, the case relied upon by the
0
learned counsel for the respondent is distinguishable.
16. Once clause 30 is constituted to be a valid arbitration
agreement, it would necessarily follow that the decision of
the arbitrator named therein would be rendered only upon
allowing the parties to adduce evidence in support of their E
respective claims and counter-claims as also upon hearing
the parties to the dispute. For the purpose of constituting
the valid arbitration agreement, it is not necessary that the
conditions as regards adduction of evidence by the parties
or giving an opportunity of hearing to them must specifically F
be mentioned therein. Such conditions, it is trite, are
implicit in the decision-making process in the arbitration
proceedings. Compliance with the principles of natural
justice inheres in an arbitration process. They, irrespective
of the fact as to whether recorded specifically in the G
arbitration agreement or not are required to be followed.
Once the principles of natural justice are not complied
with, the award made by the arbitrator would be rendered
invalid. We, therefore, are of the opinion that the arbitration
clause does not necessitate spelling out of a duty on the
H
'r
708 SUPREME COURT REPORTS [2008) 11 S.C.R. •
i
A part of the arbitrator to hear both parties before deciding
the question before him. The expression "decision"
subsumes adjudication of the dispute. Here in the instant
case, it will bear repetition to state, that the disputes between
the parties arose out of a contract and in relation to matters
B specified therein and, thus, were required to be decided
and such decisions are not only final an.d bindirig on the !tf

parties, but they are conclusive which clearly spells out the
finality of such decisions as also their binding nature.
~-

17. A clause which is inserted in a contract agreement for
c the purpose of prevention of dispute will not be an arbitration
agreement. Such a provision has been made in the
agreement itself by conferring power upon the Engineer-
in-Charge to take a decision thereupon in relation to the
matters envisaged under clauses 31 and 32 of the said
D agreement. Clauses 31 and 32 of the said ·agreement
provide for a decision of the Engineer-in-Charge in relation
to the matters specified therein. The jurisdiction of the
Engineer-in-Charge in relation to such matters are limited
and they cannot be equated with an arbitration agreement.
E Despite such clauses meant for prevention of dispute
arising out of a contract, significantly, clause 30 has been
inserted in the contract agreement by the parties.
18. The very fact that clause 30 has been inserted by the
parties despite the clauses for prevention of dispute is
F itself a pointer to the fact that the parties to the contract
were ad idem that the dispute and differences arising out
of or under the contract should be determined by a
domestic tribunal chosen by them."
Appellant thereafter filed an application in terms of Sec-
G
tion 34 of the Act before the Principal Civil Court on 8.12.2003.
The same was held to be barred by limitation. An appeal pre-
ferred thereagainst by the appellant before the High Court has '1"
been dismissed by reason of the impugned judgment, stating :

H "The learned counsel for the respondent has drawn our
GULBARGA UNIVERSITY v. MALLIKARJUN S. 709
KODAGALI & ANR. [S.S. SINHA, J.]

attention to the decision reported in AIR 2001 SC 4010 in A
the case of UNION OF INDIA v. M/S POPULAR
CONSTRUCTIONS COMPANY. In the said decision, the
Apex Court has clearly laid down that the provisions of
Section 5 of Limitation Act are not applicable to an
application filed challenging the award under Section 34 B
-...;.. and as such there was no scope for assessing sufficiency
of the cause for the delay beyond and period prescribed
in the proviso to Section 34.
In the light of this judgment and in the facts and
circumstances of the case as adverted to above, we are c
of the clear view that the petition filed before the Court
below under Section 34 was clearly barred by time and
the findings arrived at and conclusions reached by the
Court below while dismissing the petition on the ground,
does not call for any interference as it does not suffer from D
any infirmity in law."
4. Dr. M:P. Raju, learned counsel appearing on behalf of
the appellant, would contend that the earlier decision of this Court
in Union of India v. Mis. Popular Constructions Company [AIR
2001 SC 401 O], whereupon reliance has been placed by the E
High Court has since been revisited by this Court in State of
Goa v. Western Builders [(2006) 6 SCC 239), holding :
"14. The question is whether Section 14 of the Limitation
Act has been excluded by this special enactment i.e. the F
Arbitration and Conciliation Act, 1996. Section 43 of the
Arbitration and Conciliation Act, 1996 clearly says that the
Limitation Act, 1963 shall apply to arbitration as it applies
to the proceedings in the court.
15. Therefore, general proposition is by virtue of Section G
43 of the Act of 1996 the Limitation Act, 1963 applies to
_,_ the Act of 1996 but by virtue of sub-section (2) of Section
29 of the Limitation Act, if any other period has been
prescribed under the special enactment for moving the
application or otherwise then that period of limitation will H
710 SUPREME COURT REPORTS [2008] 11 S.C.R.

A govern the proceedings under that Act, and not the
provisions of the Limitation Act. In the present case under
the Act of 1996 for setting aside the award on any of the
grounds mentioned in sub-section (2) of Section 34 the
period of limitation has been prescribed and that will
B govern. Likewise, the period of condonation of delay i.e.
30 days in the proviso. ~

16. But there is no provision made in the Arbitration and
Conciliation Act, 1996 that if any party has bona fidely
prosecuted its remedy before the other forum which had
c no jurisdiction then in that case whether the period spent
in prosecuting the remedy bona fidely in that court can be
excluded or not. As per the provision, sub-section (3) of
Section 34 which prescribes the period of limitation (3
months) for moving the application for setting aside the
D award before the court then that period of limitation will be
applicable and not the period of limitation prescribed in
>
the Schedule under Section 3 of the Limitation Act, 1963.
Thus, the provision of moving the application prescribed
in the Limitation Act, shall stand excluded by virtue of sub-
E section (2) of Section 29 as under this special enactment
the period of limitation has already been prescribed.
Likewise the period of condonation of delay i.e. 30 days
....
by virtue of the proviso.
17. Therefore, by virtue of sub-section (2) of Section 29 of the
F Limitation Act what is excluded is the applicability of Section
5 of the Limitation Act and under Section 3 read with the
Schedule which prescribes the period for moving application.
18. Whenever two enactments are overlapping each other
on the same area then the courts should be cautious in
G
interpreting those provisions. It should not exceed the limit
provided by the statute. The extent of exclusion is, however,
really a questionof construction of each particular statute ·;-

and general principles applicable are subordinate to the
actual words used by legislature."
H
GULBARGA UNIVERSITY v. MALLIKARJUN S. . 711
KODAGALI & ANR. [S.S. SINHA, J.]
-+-
5. Referring to Popular Construction (supra) and National A
Aluminimum Co. Ltd. v. Pressteel & Fabrications (P) Ltd.
[(2004 (1) sec 540], it.was held:
"25. Therefore, in the present context also it is very clear
to us that there are no two opinions in the matter that the
Arbitration and Conciliation Act, 1996 does not expressly 8
exclude the applicability of Section 14 of the Limitation
Act. The prohibitory provision has to be construed strictly.
It is true that the Arbitration and Conciliation Act, 1996
intended to expedite commercial issues expeditiously.' It
is also clear in the Statement of Objects and Reason·s that c
in order to recognise economic reforms the settlement of
both domestic and international commercial' disputes
should be disposed of quickly so that the country's
economic progress be expedited. The Statement of
Objects and Reasons also nowhere indicates that Section D
14 of the Limitation Act shall be. excluded. But on the
contrary, intendment of the legislature is apparent in the
present case as Section 43 of the Arbitration and
Conciliation Act, 1996 applies the Limitation Act, 1963 as
a whole. It is only by virtue of sub-section (2) of Section 29 E
of the Limitation Act that its operation is excluded to that
I
extent of the area which is covered under the Arbitration
i

and Conciliation Act, 1996. Our attention was also invited
to the various decisions of this Court interpreting sub-
section (2) of Section 29 of the Limitation Act with F
reference to other Acts like the Representation of the
People Act or the provisions of the Criminal Procedure
Code where separate period of limitation has been
prescribed. We need not overburden the judgment with
reference to those cases because it is very clear to us by
G
virtue of sub-section (2) of Section 29 of the Limitation Act
that the provisions of the Limitation Act shall stand excluded
+ in the Act of 1996 to the extent of area which is covered
by the Act of 1996. In the present case under Section 34
by virtue of sub-section (3) only the application for filing
H
712 SUPREME COURT REPORTS (2008] 11 S.C.R.

--..
A and setting aside the award a period has been prescribed
as 3 months and delay can be condoned to the extent of
30 days. To this extent the applicability of Section 5 of the
Limitation Act will stand excluded but there is no provision
· in the Act of 1996 which excludes operation of Section 14
B · .of the Limitation Act. If two Acts can be read harmoniously ~.

without doing violation to the words used therein, then ~

. there is no prohibition· in doing so.".
6. The ratio laid down in the said decision has since been "t
reiterated in Union of India & Anr. v. Bhavna Engineering Co.
c [2007 (5) RAJ 458], stating : .
"This Court in a recent judgment rendered in State of Goa
Vs. Western Builders, (2006) 6 SCC 239, held that Section
· 14 of the Lir:nitation Act, 1963 is applicable in .the Arbitration .
and Conciliation proceedings. Having gone through the
D
various facts, we are of the view that the mistake committed
by the appellant in approaching the Madhya Pradesh High ~·
Court and the Bombay High Court is bona fide. We,
therefore, condone the delay. In the facts of this case and
in the interest of jusUce, we, however, think it proper that
E the Section 34 Application pending before the Additional
District Judge, Gwalior be transferred to the Bombay High
Court. The application will be decided on merits
expeditiously. Parties are at liberty to urge all the
contentions before that Court."
F
7. There cannot be any doubt whatsoever that in terms of
sub-section (2) of Section 34 of the Act, an arbitral award may
be set aside only if one of the conditions specified therein is
satisfied. Sub-section (3) of Section 34 provides for the period
of limitation within which an application under Section 34 of the
G
Act is to be filed. The proviso appended thereto empowers the
court to entertain an application despite expiry of the period of
limitation specified therein, namely, three months. No provision,
however, exists as regards application of Section 14 of the Limi-
tation Act. This Court, as noticed hereinbefore in Western Build-
H
GULBARGA UNIVERSITY v. MALLIKARJUN S. 713
KODAGALI & ANR. [S.S. SINHA, J.]

ers opined that sub-section (2) of Section 29 thereof would ap- A
ply to an arbitration proceedings and consequently Section 14
of the Limitation Act would also be applicable. We are bound
by the said decision. Once it is held that the provisions of Sec-
tion 14 of the Limitation Act, 1963 would apply, it must be held
that the learned Trial Judge as also the High Court has commit- B
· ~ ted an error in not applying the said provisions.
8. The question, however,. as to whether the period spent
by the appellant in prosecuting the aforementioned proceed-
ings· should be excluded or not is a matter which must fall for
decision before the Principal Civil Court. The necessary corol- C
lary of the aforementioned finding is that as to whether the ap-
pellant had been prosecuting, with due diligence another pro-
ceeding or not would fal~ for consideration before the Principal
Civil Court. · ·
D
The impugned judgment of the High Court, therefore, can:
--"i not ,be sustained. It is set aside accordingly. The matter is re-
mitted to the Principal Civil Court for consideration of the mat-
ter afresh in the light of observations made hereinbefore. The
appeal is allowed accordingly. However, in the facts and cir-
cumstances of this case, there shall be no order as to costs. E
D.G. . Appeal disposed of