2021 (5) TMI 1088 - HC - Indian Laws

Dismissal of arbitration petition filed by the appellant under section 34 of the Arbitration and Conciliation Act 1996 - return of shares - applicability of period of limitation was applicable to the transactions in question prior to 29th August 1998 - effect of the amendment to Bye-law 252(2) amended by the Stock Exchange Mumbai providing that the provisions of Limitation Act 1963 - vested rights had accrued in favour of the appellant by virtue of Section 2(4) of the Act or not. Effect of the amendment to Bye-law 252(2) amended by the Stock Exchange Mumbai providing that the provisions of Limitation Act 1963 - HELD THAT - In view of the fact that it is not the case of the respondent that the said Bye-law 252(2) of the Bye-laws framed by the Stock Exchange Mumbai applied with retrospective effect the judgment of Madras High Court in case of THE PROJECT DIRECTOR PROJECT IMPLEMENTATION UNIT NATIONAL HIGHWAYS AUTHORITY OF INDIA VERSUS K. PERIYASAMY AND ORS. 2018 (4) TMI 2000 - MADRAS HIGH COURT would not assist the case of the appellant. The question now arises for consideration of this Court is as to what is the effect of amendment of Bye-law 252(2) amended by the Stock Exchange Mumbai providing that the provision of Limitation Act 1963 would be applicable. Allahabad High Court in case of Mt. Begam Sultan 1925 (7) TMI 4 - ALLAHABAD HIGH COURT relied upon by the learned counsel for the respondent held that the law of limitation applicable to a suit or the proceeding is the law in force at the date of the institution of the suit or the proceeding unless there is a distinct provision to the contrary. It is held that there was no vested right in the decree holder to wait for an indefinite period of time in order to apply for execution. Supreme Court in case of Ramprasad Dagaduram 1966 (4) TMI 82 - SUPREME COURT has held that the respondent had no vested right in the law of procedure for enforcement of mortgage though the period of limitation was abridged for the enforcement of the mortgage by Article 132 of the Indian Limitation Act 1908. Such abridgment did not take away any vested right. In view of Section 2(4) of the Arbitration and Conciliation Act 1996 period of limitation was not applicable to the transactions entered into between the appellant and the respondent prior to 29th August 1998 when the provisions of Limitation Act 1963 were extended to the arbitral proceedings under the Stock Exchange Bye-laws. However there would be no merit in the contention of the appellant that even after applicability of the provisions of the Limitation Act appellant would be continued to be governed by no period of limitation in view of Section 2(4) - The alleged rights if any in favour of the appellant in view of Section 2(4) of the Arbitration Act to file claim without period of limitation stood abrogated in view of the amendment to Bye-law 252(2). The appellant would be thereafter governed by the amended Bye-law 252(2) for filing any claim in respect of cause of action having arisen prior to the date of amendment. If the provisions of Limitation Act 1963 apply to the transactions in question whether the proceedings were filed by the appellant within a period of three years from 29th August 1998 or not? - HELD THAT - Under the proviso to sub-Section 3 of Section 166 of the Motor Vehicles Act 1988 maximum period of delay which could be condoned was six months which expired on 22nd January 1990. The Supreme Court held that it is true that the appellant earlier could have filed an application for condonation of even more than six months after the expiry of limitation but can this be treated to be a right which the appellant had acquired. It is held that it would be treated to be a right. So far as the period of limitation for commencing a legal proceeding is concerned it is adjudicable in nature and has to be governed by the Motor Vehicles Act 1988 subject to two conditions. The Supreme Court adverted to the earlier judgment in case of New India Insurance Co. Ltd. v/s. Smt. Shanti Misra 1975 (10) TMI 101 - SUPREME COURT . It is held in that matter that a period of two years was available to the respondent for instituting a suit for recovery of damages when the husband of the respondent had expired. In March 1967 the claims tribunal under Section 110 of the Motor Vehicles Act 1939 was constituted barring the jurisdiction of Civil Court and prescribed 60 days as the period of limitation - The Supreme Court held that the period of limitation for lodging the claim under the old as well as the new Act was same six months which expired three weeks after coming in force of the new Act. It would be open to the appellant to file his claim within this period or even later by 22nd July 1989 with a prayer to condone the delay. His rights to claim for compensation was not affected at all with substitution of one Act with another. Since the period of limitation remained the same there was no question of the appellant being taken by surprise. In this background the appellant s further default has to be considered. It is held that having actually initiated the proceedings when the old Act covered the field the claimant could say that his right which had accrued on the date of filing of the petition could not be taken away. A perusal of Section 30 of the Limitation Act 1963 makes it clear that any suit for which the period of limitation is shorter than the period of limitation prescribed by the Indian Limitation Act 1908 may be instituted within a period of seven years next after the commencement of the said Act 1963 or within the period prescribed for such suit by the Indian Limitation Act 1908 whichever period expires earlier - by virtue of Section 2(4) read with Section 43 of the Arbitration and Conciliation Act 1996 there would be no period of limitation even after amendment to Bye-Law 252(2) framed by the Stock Exchange Mumbai. Since this Court is of the view that limitation period of three years in this case would commence w.e.f. 29th August 1998 a question that arise for consideration is whether within the period of three years from 29th August 1998 the appellant had filed the claim before the Stock Exchange Mumbai or not. It is not in dispute that the statement of claim was filed by the appellant on 1st July 2002. It is not in dispute that complaint filed by the appellant before the Investor s Grievances Redressal Cell was pending during the period between 29th April 1999 and 29th September 2000 - Cause of action would not commence only from the date of rejection of complaint by the Investor s Grievances Redressal Cell for the purpose of filing statement of claim for the first time. The arbitral Tribunal has rendered various findings of facts after considering the pleadings documents and the Bye-laws Rules and Regulations framed by the Stock Exchange Mumbai. Learned Single Judge while deciding the petition under Section 34 of the Arbitration and Conciliation Act 1996 rightly did not interfere with the findings of facts and did not re-appreciate the evidence. The appellant did not make out any case for interference with the award rendered by the learned Single Judge. Scope of Section 37 of the Arbitration and Conciliation Act 1996 is very limited. The appellant cannot expand the scope of Section 37 of the Arbitration and Conciliation Act 1996 by advancing various arguments which are not advanced before the learned Single Judge while arguing the application under Section 34 of the Arbitration and Conciliation Act 1996. There are no infirmity in the impugned award rendered by the arbitral Tribunal and also in the impugned judgment rendered by the learned Single Judge - Appeal is devoid of merit and is dismissed.

Summary

Issues Involved:

1. Applicability of the Limitation Act, 1963 to the transactions prior to 29th August 1998.
2. Effect of the amendment to Bye-law 252(2) of the Bombay Stock Exchange.
3. Vested rights under Section 2(4) of the Arbitration and Conciliation Act, 1996.
4. Timeliness of the arbitral proceedings filed by the appellant.

Issue-Wise Detailed Analysis:

1. Applicability of the Limitation Act, 1963:

The primary issue was whether the Limitation Act, 1963 applied to transactions that occurred before the amendment of Bye-law 252(2) on 29th August 1998. Section 2(4) of the Arbitration and Conciliation Act, 1996, initially excluded the applicability of the Limitation Act to statutory arbitrations. The court held that prior to the amendment, there was no prescribed limitation period for arbitration under the Bombay Stock Exchange bye-laws. However, with the amendment, the provisions of the Limitation Act became applicable, thereby introducing a three-year limitation period for filing claims.

2. Effect of the Amendment to Bye-law 252(2):

The amendment to Bye-law 252(2) was significant as it introduced the applicability of the Limitation Act to arbitrations under the Stock Exchange's rules. The court concluded that the amendment did not have retrospective effect. The appellant argued that since the transactions occurred before the amendment, the limitation should not apply. However, the court rejected this argument, stating that the amendment applied to all transactions from the date of its enactment, thus affecting claims filed after the amendment.

3. Vested Rights Under Section 2(4) of the Arbitration Act:

The appellant contended that vested rights under Section 2(4) allowed for filing claims without a limitation period. The court disagreed, noting that no arbitral proceedings were initiated before the amendment. Therefore, no vested rights were accrued. The court emphasized that the amendment curtailed the unlimited period of limitation, aligning with procedural law changes, and did not confiscate any existing cause of action.

4. Timeliness of the Arbitral Proceedings:

The court examined whether the appellant filed the arbitral proceedings within the prescribed limitation period post-amendment. The appellant filed the statement of claim on 1st July 2002, which was beyond the three-year limitation period starting from 29th August 1998. The court noted that the time taken before the Investor's Grievances Redressal Cell should be excluded from the limitation period calculation. Despite this exclusion, the claim was still time-barred. The court held that the cause of action commenced on 29th August 1998, and the appellant failed to file within the stipulated time frame.

Conclusion:

The court upheld the arbitral tribunal's decision and the learned Single Judge's judgment, dismissing the appeal. It concluded that the appellant's claims were time-barred under the amended bye-laws, and no vested rights allowed for bypassing the limitation period. The appeal was dismissed with no order as to costs, emphasizing the importance of adhering to procedural timelines in arbitration proceedings.