UNITED INDIA INSURANCE CO. LTD.versusJ.A. INFRASTRUCTURE PVT. LTD.

A                      UNITED INDIA INSURANCE CO. LTD.
                                          \'.
                         J.A. INFRASTRUCTURE PVT.LTD.

                                 AUGUST 30, 2006

B           [DR. AR. LAKSHMANAN AND TARUN CHATTERJEE, JJ.]


         Arbitration and Conciliation Act, 1996; Ss. 34 and 43/limitalion Act,
    1963; S.14:

c         Arbitration Clause in the Insurance Agreement-Dispute between
    Insurer and lns11red-Appointment of Arbitrators by the parties and Presiding
    Officer/Umpire by Arbitrators-Insurer filing Arbitration Petition-Dismissed
    by High Court on ground ofjurisdiction-Filing ofpetition before the District
    Court with application for exclusion of time spent before the wrong for11m
D   in terms of Section 14 of the limitalion Act-Dismissed by trial Co11rt-
    Challenge to-Dismissed b)' High Court-On appeal, Held: limitation Act
    could be applied to arbitration as it applies LO the proceedings in the
    Court-1996 Act does not expressly exclude the applicabili1y of Section 14
    of the limitation Act-Time spent in prosecuting the remedy before wrong
    Forum could be excluded in lerms of Section 14 of the Limitation Act-
E   Hence, matter remitted back to trial Court to decide the case on merits.

           llespondent-Assured invoked arbitration clause as per Condition No. 7
    of the Insurance Policy and appointed an Arbitrator. The appellant-Insurance
    Company also appointed .another Arbitrator. Both the Arbitrators appointed
F   Presiding Arbitrator. The Majority Award was passed by the Presiding
    Arbitrator and Co-Arbitrator as appointed by the insured awarding a sum of
    Rs. 2, 12,49,336 with future interest in favour of the assured. The Minority
    Award was passed by the other Co-Arbitrator, as appointed by the Insurance
    Company who awarded a sum of Rs. 1,23,08,104/- with interest. Aggrieved by
    both the Awards, the appellant filed an Arbitration Petition, which was
G   dismissed by the Single Judge of the High Court for want of jurisdiction.
    Later, the Insurer filed a fresh petition before the District Court along with   .....
    application under Section 14 of the Limitation Act, which was dismissed by
    the District Court. Aggrieved against the order passed by the District Court,
    the appellant filed a Writ Petition before the High Court which was also

H                                       638
       UNITED INDIA INSURANCE CO.LTD. r. J.A. INFRASTRUCTURE PVT. LTD. [LAKSHMANAN. J.] 639


      dismissed. Hence the present appeal.                                                    A
            Disposing of the appeal, the Court

              HELD:t.1. Arbitration and Conciliation Act, 1996 does not expressly
     · exclude the applicability of Section 14 of the Limitation Act and that the
       prohibitory provision has to be construed strictly. Besides, the respondent            B
       has not seriously opposed the applicability of Section 14 of the Limitation
       Act which deals with exclusion of time spent in prosecuting the remedy before
       the wrong forum bona fide. Therefore, the order passed by the High Court is
       set aside and the matter is remitted back to the District Court to decide the
       case on merit after affording opportunity to the respondent Pending disposal           C
       of the matter by the District Court, the appellant-Insurance Company is
       directed to deposit the amount awarded by the Co-Arbitrator appointed by the
       Insurance Company to the credit of Arbitration Petition on the file of the
       District Court. On such deposit, the District Court shall invest the same in
       a nationalized bank in a short term deposit.1641-G; 642-B-C; E-FI
                                                                                              D
            State of Goa v. Mis. Western Builders, JT (2006) 6 SC 125, relied on.

           1.2. It is clarified that the objections and other issues raised have not
      been decided on merits.

            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3870 of2006.                      E
            From the Judgment and Order dated 21.12.2005 of the High Court of
      Judicature at Bombay, Nagpur Bench, Nagpur in Writ Petition No. 5454/2005.
,.
            A.K. De and Ashok K. Mahajan for the Appellant.

           Rameshwar Prasad Goyal, Jay Savla and Reena Bagga for the                          F
      Respondent.

            The Judgment of the Court was delivered by

            DR. AR. LAKSHMANAN, J. Leave granted.
                                                                                              G
            Heard learned counsel appearing on behalf of both sides.

             This appeal is directed against the final judgment and order dt. 21.12.2005
      passed by the High Court of Judicature at Bombay, Nagpur Bench in Wrir
i-    Petition No.5454 of 2005. The respondent is the insured. The respondent H
     640                   SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.
                                                                                   6

A invoked arbitration as per Condition No. 7 of the Policy. The respondent
  appointed one Shri V.P .Shah as Arbitrator. The appellant-Insurance Company
  appointed Shri A.Sankaran as Arbitrator. Both the Arbitrators appointed Shri
   B.R.Mehta as Presiding Arbitrator. On 10.10.2003, the Majority Award was
  passed by the Presiding Arbitrator. Shri B.R.Mehta and Co-Arbitrator Shri
  V.P.Shah awarding Rs.2, 12,49,336.00 (Rupees two crore twelve lakh forty nine
B thousand three hundred thirty six only) with future interest @ 18%. The
  Minority Award was passed by Co-Arbitrator Shri A.Sankaran who awarded
  a sum ofRs.1,23,08,104/- and interest ofRs.43,57,066/- upto 10.10.2003 and
  cost of arbitration of Rs.4 lacs and further interest on the aggregate of all
  these amounts @ 15% from the date of Award till the date of payment of
c decree whichever is earlier.

        \Aggrieved by both the Awards, the appellant filed Arbitration Petition
  under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the
  Act') in the High Court of Judicature at Bombay. The petition was listed
  before a 'learned Single Judge of the High Court who after hearing the parties
D dismissed the petition for want of jurisdiction. The appellant-Insurance
  Company thereafter filed a fresh petition under Section 34 of the Act before
  the District Court, Nagpur along with application under Section 14 of the
  Limitation Act on 17.01.2005. The District Court, Nagpur dismissed the
  application filed by the appellant-Insurance Company under Section 14 of the
  Limitation Act and consequently, the application filed under Section 34 of the
E
  Act also stood dismissed. Aggrieved against the order passed by the District
  Court, the appellant filed again a Writ Petition before the High Court of
  Bombay at Nagpur Bench which was also dismissed on 21.12.2005. Aggrieved
  by the said Judgment dt.21.12.2005, the appellant preferred the above appeal.

F       The High Court by the impugned judgment dismissed the Writ Petition
  No.5454 of2005 following the earlier judgment of the Bombay High Court in
  H.MP. Engineers Ltd and Ors. v. Ralies India Ltd and Ors., reported in
  2003(4) MH.L.J.93 I. Learned counsel for the appellant submitted that in view
  of the recent judgment of this Court in State of Goa v. Mis. Western Builders,
  reported in JT (2006) 6 SC 125, the view taken by the Bombay High Court in
G H.M.P.Engineers Ltd. and Ors. v. Ralies India Ltd. and Ors. (supra) and
  followed by the High Court in the impugned judgment is not correct.                  --
          This Court in the Judgment in State of Goa v. Mis. Western Builders,
    (supra) was considering the question as to what extent Section 14 of the
    Limitation Act, 1963 which deals with exclusion of time spent in prosecuting       .r
H
 UNITEDINDIA INSURANCE CO. I.TD. r. J.A. INFRASTRUCTUREPVT. LTD. [LAKSHMANAN,J.] 64]


the remedy before wrong forum is applicable to the Arbitration and Conciliation        A ..
Act, 1996 or not. Section 14 of the Limitation Act reads thus :-

        "14 Exclusion of time of proceeding bona fide in court without
        jurisdiction - (I) In computing the period of limitation for any suit the
        time during which the plaintiff has been prosecuting with due diligences
        another civil proceeding, whether in a court of first insiance or of           B
        appeal or revision, against the defendant shall be excluded, ,where the
        proceeding relates to the same matter in issue and is pro!ecuted in
        good faith in a court which, from defect of jurisdiction or other cause
       ·of a Iike nature, is unable to entertain it.

        2 In computing the period of limitation for any application, the time C
        during which the applicant has been prosecuting with due diligence
        another civil proceeding, whether in a court of first instance or of
        appeal or revision, against the same party for the same relief shall be
        excluded, where such proceeding is prosecuted in good faith in a
        court which, from defect of jurisdiction or other cause of a like nature, D
        is unable to entertain it.

        3. Notwithstanding anything contained in rule 2 of Order XXIII of
        the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-
        section (I) shall apply in relation to a fresh suit instituted on permission
        granted on the ground that the first suit must fail by reasons of a E
      . defect in the jurisdiction of the court of other cause of a like nature."

       This Court also in para 13 of the said Judgment has observed that
Section 14 of the Limitation Act has been excluded by this special enactment
i.e. Arbitration and Conciliation Act, 1996 andthat Section 43 of the Arbitration
and Conciliation Act, 1996 clearly says that the Limitation Act, 1963 shall            F
apply to arbitration as it applies to the proceedings in court. This Court has
also followed few other Judgments of this Court in support of the view taken
by them. In the concluding portion this Court has observed that in the
present context, there is no two opinion in the matter that the Arbitration and
Conciliation Act, 1996 does not expressly excluded the applicability of Section
14 of the Limitation Act and that the prohibitory provision has to be construed        G
strictly.

      In the result, this Court was of the opinion that the view taken by the
court below excluding the applicability of Section 14 in the said proceeding
was not correct. This Court held that Section 14 of the Limitation Act, 1963 H
    642                     SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.

A was applicable in the Arbitration and Conciliation Act, I996 and accordingly
  this Court set aside the judgments and order and remanded the matters back
  to the District Court for deciding the application under Section 14 of the
  Limitation Act on merit. In view of the Judgment in State of Goa v.
  Mis. Western Builders (supra). the counsel for the respondent has not seriously
B opposed to the applicability of Section I 4 of the Limitation Act which deals
  with exclusion of time spent in prosecuting the remedy before the wrong
  forum bona fide. Therefore, we set aside the order passed by the High Court
  and remit the matter back to the District Court, Nagpur to decide the objections
  raised by the appellant-Insurance Company under Section 34(3) of the
  Arbitration and Conciliation Act, I 996 and decide the same on merit after
C affording opportunity to the respondent herein.
          Since the matter is pending for very long time before one forum or the
    other, we direct t!ie District Court, Nagpur to dispose of the matter within six
    months from today.

D         We make it clear that we have not decided the objections and other
    issues raised on merits.

           The Civil Appeal stands disposed of accordingly with the above
    observation. However, pending disposal of the matter by the District Court,
    we direct the appellant-Insurance Company to deposit the amount awarded
E   by the Arbitrator Shri A.Sankaran to the credit of Arbitration Petition No.164/
    2005 on the file of the District Court, Nagpur. The Appellant-Insurance
    Company shall now deposit Rs. I, 70,65, 170/- (Rupees one crore seventy lakhs
    sixty five thousands, one hundred seventy only) to the credit of Arbitration
    Petition No.164/2005 within one month from today. On such deposit, the
F   District Court shall invest the same in a nationalised bank in a short term
    deposit.

         We also reserve liberty to the respondent to move an application for
  withdrawal of the said amount before the said court and if such an application
  is filed, the District Court is directed to dispose of the same on merits and
G in accordance with law.
    S.K.S.                                                    Appeal disposed of.