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TMI Blog2018 (8) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... derlying it being the advancement of justice by giving the Government the opportunity to scrutinize and take immediate action to settle a just claim without driving the person who has issued a notice having to institute a suit involving considerable expenditure and delay - This is to be contrasted with Section 34(5), also a procedural provision, the infraction of which leads to no consequence. To construe such a provision as being mandatory would defeat the advancement of justice as it would provide the consequence of dismissing an application filed without adhering to the requirements of Section 34(5), thereby scuttling the process of justice by burying the element of fairness. It shall be the endeavour of every Court in which a Section 34 application is filed, to stick to the time limit of one year from the date of service of notice to the opposite party by the applicant, or by the Court, as the case may be. In case the Court issues notice after the period mentioned in Section 34(3) has elapsed, every Court shall endeavour to dispose of the Section 34 application within a period of one year from the date of filing of the said application, similar to what has been provided in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion Report which led to the 2015 amendment, that the mandatory language of Section 34(5), together with its object, made it clear that the sub-section was a condition precedent to the filing of a proper application under Section 34, and, on the analogy of a notice issued under Section 80 of the Code of Civil Procedure, 1908, being a condition precedent to the filing of a suit against the Government, the Division Bench held that since this mandatory requirement had not been complied with, and as the period of 120 days had run out, the Section 34 application itself would have to be dismissed. In the end, it allowed the appeal and set aside the judgment of the learned Single Judge. 5. Shri Nagendra Rai, learned Senior Advocate appearing on behalf of the Appellants, has argued that the Letters Patent Appeal itself was not maintainable. He further went on to argue that in any event, Section 34(5) and (6) form part of a composite scheme, the object of which is that an application under Section 34 be disposed of expeditiously within one year. He points out that as no consequence is provided if such application is not disposed of within the said period of one year, the aforesaid provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced the aforesaid provision, also makes interesting reading, which is set out hereinbelow: 3. The Arbitration and Conciliation Act, 1996 (hereinafter the Act ) is based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 and the UNCITRAL Conciliation Rules, 1980. The Act has now been in force for almost two decades, and in this period of time, although arbitration has fast emerged as a frequently chosen alternative to litigation, it has come to be afflicted with various problems including those of high costs and delays, making it no better than either the earlier regime which it was intended to replace; or to litigation, to which it intends to provide an alternative. Delays are inherent in the arbitration process, and costs of arbitration can be tremendous. Even though courts play a pivotal role in giving finality to certain issues which arise before, after and even during an arbitration, there exists a serious threat of arbitration related litigation getting caught up in the huge list of pending cases before the courts. After the award, a challenge under section 34 makes the award inexecutable and such petitions remain pending for several years. The ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the District Forum . This Court referred to the Statement of Objects and Reasons of the Consumer Protection Act, 1986, which is similar to the object sought to be achieved by the amendment made in Section 34(5) and (6) of the Arbitration and Conciliation Act, 1996, as follows: 8. The Statement of Objects and Reasons of the Consumer Protection Act, 1986 indicates that it has been enacted to promote and protect the rights and interests of consumers and to provide them speedy and simple redressal of their grievances. Hence, quasi-judicial machinery has been set up for the purpose, at different levels. These quasi-judicial bodies have to observe the principles of natural justice as per clause 4 of the Statement of Objects and Reasons, which reads as under: 4. To provide speedy and simple redressal to consumer disputes, a quasi-judicial machinery is sought to be set up at the District, State and Central levels. These quasi-judicial bodies will observe the principles of natural justice and have been empowered to give reliefs of a specific nature and to award, wherever appropriate, compensation to consumers. Penalties for non-compliance of the orders given by the quas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided in case extension of time exceeds 15 days. Therefore, it could not be said that any substantive right accrued in favour of the appellant or there was any kind of bar of limitation in filing of the reply within extended time though beyond 45 days in all. The reply is not necessarily to be rejected. All facts and circumstances of the case must be taken into account. The Statement of Objects and Reasons of the Act also provides that the principles of natural justice have also to be kept in mind. 12. In Kailash (supra), this Court was faced with the question whether, after the amendment of Order VIII Rule 1 of the CPC by the Amendment Act of 2002, the said provision must be construed as being mandatory. The provision is set out in paragraph 26 of the judgment as follows: 26. The text of Order 8 Rule 1, as it stands now, reads as under: 1. Written statement .-The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence: Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the same on such other day, as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Corpn. Bank [(2002) 6 SCC 33] a pari materia provision contained in Section 13 of the Consumer Protection Act, 1986 came up for the consideration of the Court. The provision requires the opposite party to a complaint to give his version of the case within a period of 30 days or such extended period not exceeding 15 days as may be granted by the District Forum. The Court took into consideration the Statement of Objects and Reasons and the legislative intent behind providing a time-frame to file reply and held: (i) that the provision as framed was not mandatory in nature as no penal consequences are prescribed if the extended time exceeds 15 days, and; (ii) that the provision was directory in nature and could not be interpreted to mean that in no event whatsoever the reply of the respondent could be taken on record beyond the period of 45 days. xxx xxx xxx 46. We sum up and briefly state our conclusions as under: xxx xxx xxx (iv) The purpose of providing the time schedule for filing the written statement under Order 8 Rule 1 CPC is to expedite and not to scuttle the hearing. The provision spells out a disability on the defendant. It does not impose an embar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment shows that the provisions of Order 8 Rule 1 CPC did not directly arise for consideration before the Court and to that extent the observations made by the Court are obiter. Also, the attention of the Court was not invited to the earlier decision of this Court in Topline Shoes Ltd. case [(2002) 6 SCC 33]. Despite this observation, New India Assurance Co. Ltd. (supra) went on to follow the judgment in J.J. Merchant (supra), and stated: 25. We are, therefore, of the view that the judgment delivered in J.J. Merchant [J.J. Merchant v. Shrinath Chaturvedi, (2002) 6 SCC 635] holds the field and therefore, we reiterate the view that the District Forum can grant a further period of 15 days to the opposite party for filing his version or reply and not beyond that. 26. There is one more reason to follow the law laid down in J.J. Merchant (supra). J.J. Merchant (supra) was decided in 2002, whereas Kailash [Kailash v. Nanhku, (2005) 4 SCC 480] was decided in 2005. As per law laid down by this Court, while deciding Kailash (supra), this Court ought to have respected the view expressed in J.J. Merchant (supra) as the judgment delivered in J.J. Merchant (supra) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It would have also administrative control in overseeing that the functions of the State Commissions or District Forums are discharged in furtherance of the objects and purposes of the Act in the best manner. The Court then referred to the Consumer Protection (Amendment) Bill, 2002, which envisaged insertion of sub-section (3-A) in Section 13 of the Act, which reads as under: 30. 13. (3-A) Every complaint shall be heard as expeditiously as possible and endeavour shall be made to decide the complaint within a period of three months from the date of receipt of notice by opposite party where the complaint does not require analysis or testing of commodities and within five months if it requires analysis or testing of commodities: Provided that no adjournment shall be ordinarily granted by the District Forum unless sufficient cause is shown and the reasons for grant of adjournment have been recorded in writing by the Forum: Provided further that the District Forum shall make such orders as to the costs occasioned by the adjournment as may be provided in the regulations made under this Act. (emphasis in original) 31. From the wording of the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Co. Ltd. (supra) did not refer to paragraph 38 of Kailash (supra) or appreciate that J.J. Merchant (supra) was distinguished correctly on the ground that Order VIII Rule 1, CPC did not directly arise for consideration in J.J. Merchant (supra). The observations on Order VIII Rule 1, CPC in paragraphs 14 and 15 of J.J. Merchant (supra) were correctly held to be in the nature of obiter dicta , and therefore, not binding on the three-Judge Bench of Kailash (supra). Insofar as Kailash (supra) is concerned, it is a binding judgment on the effect of Order VIII Rule 1, CPC, whose reasoning has been confirmed by a three-Judge Bench in Salem Bar Association (supra). 18. In State v. N.S. Gnaneswaran , (2013) 3 SCC 594, this Court was concerned with whether Section 154(2) of the Code of Criminal Procedure, 1973 was mandatory or directory. The said Section reads as follows: 154. Information in cognizable cases .- xxx xxx xxx (2) A copy of the information as recorded under sub-section (1) shall be given forthwith, free of cost, to the informant. Despite the mandatory nature of the language used in the provision, no consequence was provided if the Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eof. It is imperative to note that the provision is procedural, the object behind which is to dispose of applications under Section 34 expeditiously. One must remember the wise observation contained in Kailash (supra), where the object of such a provision is only to expedite the hearing and not to scuttle the same. All rules of procedure are the handmaids of justice and if, in advancing the cause of justice, it is made clear that such provision should be construed as directory, then so be it. 21. Take the case of Section 80 of the CPC. Under the said provision, the Privy Council and then our Court have consistently taken the view that a suit against the Government cannot be validly instituted until after the expiration of two months after the notice in writing has been delivered to the parties concerned in the manner prescribed by the said Section. If such suit is filed either without such notice or before the said two months period is over, such suit has to be dismissed as not maintainable. The reason for this is felicitously set out in Bihari Chowdhary and Anr. v. State of Bihar and Ors. , (1984) 2 SCC 627, as follows: 3. When we examine the scheme of the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Shri Tripathi, an application filed under Section 34 is a condition precedent, and if no prior notice is issued to the other party, without being accompanied by an affidavit by the applicant endorsing compliance with the said requirement, such application, being a non-starter, would have to be dismissed at the end of the 120 days period mentioned in Section 34(3). Apart from what has been stated by us hereinabove, even otherwise, on a plain reading of Section 34, this does not follow. Section 34(1) reads as under: 34. Application for setting aside arbitral award.- (1) 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). What is conspicuous by its absence is any reference to sub-section (5). The only requirement in Section 34(1) is that an application for setting aside an award be in accordance with sub-sections (2) and (3). This, again, is an important pointer to the fact that even legislatively, sub-section (5) is not a condition precedent, but a procedural provision which seeks to reduce the delay in deciding applications under Section 34. One ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (5) is served upon the other party. This is for the reason that an anterior date to that of filing the application is to be the starting point of the period of one year referred to in Section 34(6). The express language of Section 34(6), therefore, militates against this submission of Shri Tripathi. Secondly, even if sub-section (5) be construed to be a provision independent of sub-section (6), the same consequence in law is the result namely, that there is no consequence provided if such prior notice is not issued. This submission must therefore fail. 26. We come now to some of the High Court judgments. The High Courts of Patna, Bihar Rajya Bhumi Vikas Bank Samiti v. State of Bihar and Ors., L.P.A. No. 1841 of 2016 in C.W.J.C. No. 746 of 2016 [decided on 28.10.2016]. Kerala, Shamsudeen v. Shreeram Transport Finance Co. Ltd., Arb. A. No. 49 of 2016 [decided on 16.02.2017]. Himachal Pradesh, Madhava Hytech Engineers Pvt. Ltd. v. The Executive Engineers and Ors., O.M.P. (M) No. 48 of 2016 [decided on 24.08.2017]. Delhi, Machine Tool (India) Ltd. v. Splendor Buildwell Pvt. Ltd. and Ors., O.M.P. (COMM.) 199- 200 of 2018 [decided on 29.05.2018]. and Gauhati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12.07.2018]. 27. We are of the opinion that the view propounded by the High Courts of Bombay and Calcutta represents the correct state of the law. However, we may add that it shall be the endeavour of every Court in which a Section 34 application is filed, to stick to the time limit of one year from the date of service of notice to the opposite party by the applicant, or by the Court, as the case may be. In case the Court issues notice after the period mentioned in Section 34(3) has elapsed, every Court shall endeavour to dispose of the Section 34 application within a period of one year from the date of filing of the said application, similar to what has been provided in Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. This will give effect to the object sought to be achieved by adding Section 13(6) by the 2015 Amendment Act. 28. We may also add that in cases covered by Section 10 read with Section 14 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, the Commercial Appellate Division shall endeavour to dispose of appeals filed before it within si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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