Himachal Pradesh High Court
Reserved On: 17.12.2024 vs Bansal Generation Ltd on 7 January, 2025
Author: Vivek Singh Thakur
Bench: Vivek Singh Thakur
2025:HHC:1427
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Arb. Appeal No. 32 of 2023
Reserved on: 17.12.2024
Date of Decision: 07.01.2025
Ajmer Vidyut Vitran Nigam Ltd. …Appellant.
Versus
Bansal Generation Ltd. ...Respondent.
Coram
Hon’ble Mr Justice Vivek Singh Thakur, Judge.
Hon’ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes
For the Appellant : Ms Devyani Sharma, Senior
Advocate, with Mr Basant Pal
Thakur, Advocate.
For the Respondent : M/s Rajeev Kumar Gupta and
Kalaunta Devi, Advocate.
Rakesh Kainthla, Judge
The present appeal is directed against the judgment
dated 20.9.2023, passed by learned Single Judge of this Court, vide
which a petition filed by the appellant (original petitioner) under
Section 34 of the Arbitration and Conciliation Act, 1996 was held
to be barred by limitation and the benefit of Section 14 of
Limitation Act was not extended to it. (Parties shall hereinafter be
1
Whether reporters of Local Papers may be allowed to see the judgment? Yes.
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referred to in the same manner as they were arrayed before the
learned Single Judge for convenience).
2. Briefly stated, the facts giving rise to the present
appeal are that a dispute arose between the parties on the supply
of transformers and their payment. The respondent took recourse
to Chapter V of the Micro Small and Medium Enterprises
Development Act, 2006 (MSMED Act) and raised a dispute before
the Facilitation Council at Shimla. A notice was served upon the
petitioner, and it filed a detailed reply. The council passed an
order on 6.3.2017 and transferred the matter to the learned
Arbitrator. The proceedings were conducted before the learned
Arbitrator, who passed an award on 6.7.2018 for ₹2,11,871/- and a
sum of ₹22,82,060/- minus ₹8,90,676/- i.e. ₹13,91,384/- along
with interest at the rate of three times of the rate notified by
Reserve Bank of India from time to time. The respondent was also
held entitled to the cost of ₹70,000/-. The respondent filed an
application under Section 33 of the Arbitration and Conciliation
Act, 1996 and a corrected award was passed on 3.11.2008 for a sum
of ₹1,39,28,134/- and ₹1,16,39,307/- as on 30.6.2018 along with
interest at the rate of three times of the rates notified by Reserve
Bank of India from time to time. A cost of ₹70,000/- was also
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awarded. The petitioner sought the opinion of its counsel on
whether a writ petition could be filed for a waiver of the deposit of
75% of the disputed amount as required under Section 19 of the
MSMED Act. The learned Advocate advised that a chance could be
taken by filing a writ petition before the High Court for seeking a
waiver of deposit of 75% of the awarded amount. A writ petition
was filed before the High Court of Rajasthan at Jaipur on 15.1.2019,
which was registered as CWP No. 1756 of 2019, and an interim
order staying the execution of the award was passed on 22.1.2019.
The respondent contested the writ petition, and it was withdrawn
on 11.5.2022 because of the objection raised by the respondent
regarding lack of maintainability. The learned counsel for the
petitioner forwarded the copy of the judgment along with his
opinion and advised the petitioner to file a petition under Section
34 of the Arbitration and Conciliation Act, 1996, at Shimla within
33 days. The matter was processed, and the Authorized Officer
contacted the learned counsel on 3.6.2022, which was a holiday.
Authorized Officer was advised by the learned counsel that the
Courts were closing for summer vacation w.e.f. 4.6.2022 till
12.6.2022 and hence, the Authorized Officer should come on
13.6.2022 to file the objection. The officer visited the office of
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learned counsel on 13.6.2022 and signed the objection petition
under Section 34 of the Arbitration and Conciliation Act, 1996.
The petitioner also filed an application under Section 34(3) of the
Arbitration and Conciliation Act for condonation of delay in filing
the objections. This application was contested by the respondent
by filing a reply. Learned Single Judge also directed the learned
counsel to file the affidavit, which was filed and taken on record.
3. Learned Single Judge held that the provisions of
Section 14 of the Limitation Act applied to the proceedings under
Section 34 of the Arbitration and Conciliation Act, 1996; however,
the petitioner had to show that it was a bona fide proceeding
before the wrong Forum with due diligence to invoke the
provision of Section 14 of the Limitation Act. The affidavit of the
learned counsel showed that he had advised the petitioner to take
a chance by filing a writ petition in the High Court to waive the
pre-condition to deposit 75% of the disputed amount. He had not
advised the petitioner to assail the award by filing a writ petition
before the High Court; therefore, the requirements of invoking
Section 14 of the Limitation Act, namely that the proceedings
were prosecuted bona fide and with due diligence, were missing,
and the benefit of Section 14 of the Limitation Act could not be
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granted to the petitioner. Consequently, the petition was
dismissed, and the petition under Section 34 of the Arbitration
and Conciliation Act was held to be barred by limitation.
4. Being aggrieved from the judgment passed by the
learned Single Judge, the applicant/petitioner has filed the
present appeal asserting that the judgment is the result of non-
consideration of the available material. The benefit of Section 14
of the Limitation Act was wrongly denied to the petitioner. Liberal
construction has to be given to Section 14 of the Limitation Act,
and the Court always lean in favour of advancing the cause of
justice. The petitioner was bona fidely pursuing the remedy in the
wrong Court with due diligence. It sought an opinion from the
Panel Advocate and proceeded to file the writ petition as the
amount awarded was huge and not payable. Chapter 5 of the
MSMED Act did not apply to the present case, and the claim was
time-barred. 75% of the awarded amount has to be deposited to
challenge the award, which was exorbitant. The writ petition was
filed in the High Court of Rajasthan in good faith in a bona fide
belief that all disputes were subject to the jurisdiction of the
Courts in Rajasthan. This writ petition was filed within 56 days of
the award. An interim order was also passed by the High Court.
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Ultimately, the writ was held to be not maintainable and had to be
withdrawn. The time spent by the petitioner in prosecuting the
remedy before the High Court was to be excluded. Learned Single
Judge has taken a technical view of the matter. M/s Bansal
Generation Limited was registered with MSEFC in the year 2007,
and the unit was transferred to M/s New Bansal Generation
Limited. M/s Bansal Generation Limited was not in existence in
the year 2015 when the claim petition was filed. Hence, the claim
petition was not maintainable. Learned Arbitrator wrongly relied
upon the printouts of the electronic record. He did not properly
appreciate the arguments and pleadings and passed the award
without considering that the principal amount was already paid to
the respondent for the supply of 2006 numbers of 25 KVA
transformers. Therefore, it was prayed that the present appeal be
allowed and the judgment passed by the learned Single Judge be
set aside.
5. We have heard Ms Devyani Sharma, learned Senior
Counsel, instructed by Mr Basant Pal Thakur, learned counsel for
the appellant/petitioner and Mr Rajiv Kumar Gupta and Ms
Kalaunta Devi, learned counsel for the respondent.
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6. Ms Devyani Sharma, learned Senior Counsel for the
appellant/petitioner, submitted that the learned Single Judge
erred in denying the benefits of Section 14 of the Limitation Act to
the petitioner. It was duly proved on record that the petitioner
had sought advice from the Panel Counsel, who had advised the
petitioner to take a chance by filing a writ petition for waiving the
requirement of a deposit of 75% of the amount required under
Section 19 of the MSMED Act. The proceedings were prosecuted
bona fide in Rajasthan because, as per the terms and conditions of
the agreement between the parties, all proceedings were to be
conducted before the Courts located in Rajasthan. The writ was
held to be not maintainable and was withdrawn by the petitioner.
The time spent in prosecuting the writ is to be excluded while
computing the limitation, and if the period is so excluded, the
petition under Section 34 of the Arbitration and Conciliation Act
was within limitation. The provision of Section 14 of the
Arbitration and Conciliation Act is to be liberally construed.
Learned Single Judge had taken a hyper-technical view while
dismissing the petition. Therefore, she prayed that the present
petition be allowed and the judgment passed by the learned Single
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Judge be set aside. She relied upon the following judgments in
support of her submissions:-
(i) State of Goa vs Western Builders (2006) 6SCC 239;
(ii) M/s Rajpura Gas House (Indane LPG Distributor),
Rajpura vs. Sh. B.S. Koli & Anr. AIR 2009 P&H 137;
(iii) Kalpraj Dharamshi and another Kotak Investment
Advisors Limited and another, (2021) 10 SCC 401;
(iv) Hyderabad Industries Ltd. vs. ESI Corporation (2007) 8
SCC 167;
(v) Consolidated Engineering Enterprises vs Principal
Secretary, Irrigation Department and others a/w
connected matter, (2008) 7 SCC 169;
(vi) Roshanlal Kuthalia and others Vs. R.B. Mohan Singh
Oberoi, (1975) 4 SCC 628;
(vii) Union of India and others Vs. West Coast Paper Mills Ltd.
and another (III) (2004) 3 SCC 458;
(viii) M.P. Steel Corporation vs Commissioner of Central Excise
(2015) 7 SCC 58;
(ix) Shakti Tubes Limited Vs. State of Bihar and others
(2009)1 SCC 786;
(x) Sesh Nath Singh and another vs Baidyabati Sheoraphuli
Co-operative Bank Limited and another, (2021) 7 SCC
313;
(xi) Kirpal Singh Vs. Government of India, Civil Appeal No.
12849-12856/2024, decided on 21.11.2024,
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(xii) NHPC Limited Vs. BGS-SGS-Soma JV, (2020) 270 DLT
539; and
(xiii) Biad Power Services Private Limited Vs. The Bihar
Medical Services and Infrastructure Corporation Ltd.
EC/5/2024 decided on 6.9.2024.
7. Mr. Rajiv Kumar Gupta, learned counsel for the
respondent, submitted that 75% of the amount was not deposited
before the Court, and the petition under Section 34 of the
Arbitration and Conciliation Act, 1996, was not maintainable.
Learned counsel for the petitioner had advised the petitioner to
take recourse to Section 34 of the Arbitration and Conciliation
Act, 1996, and a chance could be taken by filing a writ petition for
waiver to deposit 75% of the amount as required under MSMED
Act. Therefore, there was no advice to challenge the award by
filing a writ petition and prosecuting the proceedings before the
High Court of Rajasthan was not bona fide. The petitioner is not
entitled to the benefit of Section 14 of the Limitation Act.
Therefore, he prayed that the present appeal be dismissed. He
relied upon the judgment of M/s India Glycols Limited and another
Vs. Micro and Small Enterprises Facilitation Council, Medhchal-
Malkajgiri and others, Civil Appeal No. 7491 of 2023, decided on
06.11.2023 and Haryana Pradesh Congress Committee Vs. First
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Newsmedia Private Ltd., Arb. Appeal No. 15 of 2019, decided on
10.1.2020 in support of his submission.
8. We have given considerable thought to the
submissions made at the bar and have gone through the records
carefully.
9. It was laid down by the Hon’ble Supreme Court in State
of Goa v. Western Builders, (2006) 6 SCC 239: 2006 SCC OnLine SC
672 that the provisions of Section 14 of the Limitation Act apply to
the petition filed under Section 34 of the Arbitration and
Conciliation Act. It was observed at page 248:
“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
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 Reasons that 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 14 of the
Limitation Act shall be excluded. But on the contrary, the
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 of the Limitation
Act that its operation is excluded to that extent of the area
which is covered under the Arbitration and Conciliation
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decisions of this Court interpreting sub-section (2) of
Section 29 of the Limitation Act with reference to other
Acts like the Representation of the People Act or the
provisions of the Criminal Procedure Code where a 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 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 the 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 and setting aside the
award 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 the operation of Section 14 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.
26. As a result of the above discussion, we are of the
opinion that the view taken by the court below, excluding
the applicability of Section 14 in this proceeding, is not
correct. We hold that Section 14 of the Limitation Act, 1963
is applicable in (sic to) the Arbitration and Conciliation Act,
1996.”
10. A similar view was taken in Consolidated Engg.
Enterprises v. Irrigation Deptt., (2008) 7 SCC 169: 2008 SCC OnLine
SC 618 wherein it was observed at page 181:
“21. Section 14 of the Limitation Act deals with the
exclusion of time of proceeding bona fide in a court
without jurisdiction. On analysis of the said section, it
becomes evident that the following conditions must be
satisfied before Section 14 can be pressed into service:
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(1) Both the prior and subsequent proceedings are
civil proceedings prosecuted by the same party;
(2) The prior proceeding had been prosecuted with
due diligence and in good faith;
(3) The failure of the prior proceeding was due to a
defect of jurisdiction or other cause of like nature;
(4) The earlier proceeding and the latter proceeding
must relate to the same matter in issue and;
(5) Both the proceedings are in a court.
22. The policy of the section is to afford protection to a
litigant against the bar of limitation when he institutes a
proceeding which, by reason of some technical defect,
cannot be decided on merits and is dismissed. While
considering the provisions of Section 14 of the Limitation
Act, a proper approach will have to be adopted, and the
provisions will have to be interpreted so as to advance the
cause of justice rather than abort the proceedings. It will
be well to bear in mind that an element of mistake is
inherent in the invocation of Section 14. In fact, the
section is intended to provide relief against the bar of
limitation in cases of mistaken remedy or selection of a
wrong forum. On reading Section 14 of the Act, it becomes
clear that the legislature has enacted the said section to
exempt a certain period covered by a bona fide litigious
activity. Upon the words used in the section, it is not
possible to sustain the interpretation that the principle
underlying the said section, namely, that the bar of
limitation should not affect a person honestly doing his
best to get his case tried on merits but failing because the
court is unable to give him such a trial, would not be
applicable to an application filed under Section 34 of the
Act of 1996. The principle is clearly applicable not only to
a case in which a litigant brings his application in the
court, that is, a court having no jurisdiction to entertain
it, but also where he brings the suit or the application in
the wrong court in consequence of bona fide mistake or
(sic of) law or defect of the procedure. Having regard to
the intention of the legislature, this Court is of the firm
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opinion that the equity underlying Section 14 should be
applied to its fullest extent, and time taken diligently
pursuing a remedy in a wrong court should be excluded.
23. At this stage, it would be relevant to ascertain
whether there is any express provision in the Act of 1996
which excludes the applicability of Section 14 of the
Limitation Act. On review of the provisions of the Act of
1996, this Court finds that there is no provision in the said
Act which excludes the applicability of the provisions of
Section 14 of the Limitation Act to an application
submitted under Section 34 of the said Act. On the
contrary, this Court finds that Section 43 makes the
provisions of the Limitation Act, 1963, applicable to
arbitration proceedings. The proceedings under Section
34 are for the purpose of challenging the award, whereas
the proceedings referred to under Section 43 are the
original proceedings which can be equated with a suit in a
court. Hence, Section 43 incorporating the Limitation Act
will apply to the proceedings in the arbitration as it
applies to the proceedings of a suit in the court. Sub-
section (4) of Section 43, inter alia, provides that where
the court orders that an arbitral award be set aside, the
period between the commencement of the arbitration and
the date of the order of the court shall be excluded in
computing the time prescribed by the Limitation Act,
1963, for the commencement of the proceedings with
respect to the dispute so submitted. If the period between
the commencement of the arbitration proceedings till the
award is set aside by the court has to be excluded in
computing the period of limitation provided for any
proceedings with respect to the dispute, there is no good
reason as to why it should not be held that the provisions
of Section 14 of the Limitation Act would be applicable to
an application submitted under Section 34 of the Act of
1996, more particularly where no provision is to be found
in the Act of 1996, which excludes the applicability of
Section 14 of the Limitation Act, to an application made
under Section 34 of the Act. It is to be noticed that the
powers under Section 34 of the Act can be exercised by the
court only if the aggrieved party makes an application.
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The jurisdiction under Section 34 of the Act cannot be
exercised suo motu. The total period of four months
within which an application for setting aside an arbitral
award has to be made is not unusually long. Section 34 of
the Act of 1996 would be unduly oppressive if it is held
that the provisions of Section 14 of the Limitation Act are
not applicable to it because cases are no doubt conceivable
where an aggrieved party, despite the exercise of due
diligence and good faith, is unable to make an application
within a period of four months. From the scheme and
language of Section 34 of the Act of 1996, the intention of
the legislature to exclude the applicability of Section 14 of
the Limitation Act is not manifest. It is well to remember
that Section 14 of the Limitation Act does not provide for a
fresh period of limitation but only provides for the
exclusion of a certain period. Having regard to the
legislative intent, it will have to be held that the
provisions of Section 14 of the Limitation Act, 1963, would
be applicable to an application submitted under Section 34
of the Act of 1996 for setting aside an arbitral award.
24. We may notice that in similar circumstances, the
Division Bench of this Court in State of Goa v. Western
Builders [(2006) 6 SCC 239] has taken a similar view. As
observed earlier, the intention of the legislature in
enacting Section 14 of the Act is to give relief to a litigant
who had approached the wrong forum. No canon of
construction of a statute is more firmly established than
this that the purpose of interpretation is to give effect to
the intention underlying the statute. The interpretation of
Section 14 has to be liberal. The language of the beneficial
provision contained in Section 14 of the Limitation Act
must be construed liberally so as to suppress the mischief
and advance its object. Therefore, it is held that the
provisions of Section 14 of the Limitation Act are
applicable to an application submitted under Section 34 of
the Act of 1996 for setting aside an arbitral award.
xxxxxx
29. As this Court holds that Section 14 of the Limitation
Act, 1963 is applicable to an application filed under
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Section 34 of the 1996 Act for setting aside an award made
by an arbitrator, the appeal arising from Special Leave
Petition (C) No. 10311 of 2005 will have to be dismissed
because the Division Bench of the High Court of Karnataka
has in terms held that there was no lack of bona fides on
the part of the respondents and that the respondents had
diligently prosecuted the matter before the other court
and had also immediately after coming to know the lack of
jurisdiction of the court had filed the memo seeking
withdrawal of the appeal and presented the same before
the lower court which had the jurisdiction.
31. To attract the provisions of Section 14 of the
Limitation Act, five conditions enumerated in the earlier
part of this judgment have to co-exist [Ed.: See para 21,
above.]. There is no manner of doubt that the section
deserves to be construed liberally. Due diligence and
caution are essential prerequisites for attracting Section
14. Due diligence cannot be measured by any absolute
standards. Due diligence is a measure of prudence or
activity expected from and ordinarily exercised by a
reasonable and prudent person under particular
circumstances. The time during which a court holds up a
case while it is discovering that it ought to have been
presented in another court must be excluded, as the delay
of the court cannot affect the due diligence of the party.
Section 14 requires that the prior proceeding should have
been prosecuted in good faith and with due diligence. The
definition of good faith as found in Section 2(h) of the
Limitation Act would indicate that nothing shall be
deemed to be in good faith which is not done with due care
and attention. It is true that Section 14 will not help a
party who is guilty of negligence, lapse or inaction.
However, there can be no hard-and-fast rule as to what
amounts to good faith. It is a matter to be decided on the
facts of each case. It will, in almost every case, be more or
less a question of degree. The mere filing of an application
in the wrong court would not prima facie show want of
good faith. There must be no pretended mistake
intentionally made with a view to delaying the
proceedings or harassing the opposite party. In the light
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of these principles, the question will have to be considered
whether the appellant had prosecuted the matter in other
courts with due diligence and in good faith.”
11. A similar view was taken by Punjab and Haryana High
Court in Rajpura Gas House (Indane LPG Distributor) v. B.S. Koli,
2009 SCC OnLine P&H 3660: (2009) 3 RCR (Civil) 317: AIR 2009 P&H
137
12. It was held in Kalpraj Dharamshi v. Kotak Investment
Advisors Ltd., (2021) 10 SCC 401: 2021 SCC OnLine SC 204 that where
the party had filed the petition under section 34 of the Arbitration
and Conciliation Act before the wrong court, the time spent in the
proceedings before the wrong forum could be excluded under
section 14 of Limitation Act. It was observed at page 446:
81. It must be noticed that the judgment in Popular
Construction Co. [Union of India v. Popular Construction Co.,
(2001) 8 SCC 470] was considered by this Court by a Bench
consisting of three Judges in Consolidated Engg.
Enterprises [Consolidated Engg. Enterprises v. Irrigation
Deptt., (2008) 7 SCC 169] wherein the question with regard
to the applicability of Section 14 of the Limitation Act to an
application under Section 34(3) of the Arbitration Act fell
for consideration. In Consolidated Engg. Enterprises
[Consolidated Engg. Enterprises v. Irrigation Deptt., (2008) 7
SCC 169], the appellant before this Court was an enterprise
engaged in civil engineering construction as well as
development of infrastructure. It entered into an
agreement with the respondent for the construction of an
earthen bund, head sluices and the draft channel of the Y.G.
Gudda tank. A dispute arose between the parties, and
therefore, the appellant invoked arbitration Clause 51 of the
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agreement. The dispute was referred to the sole arbitrator,
who passed his award in favour of the appellant. Feeling
aggrieved by the said award, the respondents preferred an
application to set aside the said award as provided by
Section 34 of the Arbitration Act in the Court of the Civil
Judge (Senior Division), Ramanagaram, Bangalore Rural
District, Bangalore. However, it was realised by the
respondents that an application for setting aside the award
should have been filed before the Principal District Judge,
Bangalore District (Rural). As such, an application was
preferred by the respondents in the Court of the Civil Judge
(Senior Division), Ramanagaram, with a request to transfer
the application made for setting aside the award to the
Court of the Principal District Judge (Rural), Bangalore.
13. This position was reiterated in Kirpal Singh v. Union of
India, 2024 SCC OnLine SC 3814, wherein it was observed:
9. Having considered the matter in detail, we are of the
opinion that the issue is covered by the decision of this
court in Consolidated Engg. Enterprises v. Principal Secretary,
Irrigation Dept. (2008) 7 SCC 169.
10. We may hasten to add that when the substantive
remedies under Sections 34 and/or 37 of the Arbitration Act
are by their very nature limited in their scope due to
statutory prescription, it is necessary to interpret the
limitation provisions liberally, or else, even that limited
window to challenge an arbitral award will be lost. The
remedies under Sections 34 and 37 are precious. Courts of
law will keep in mind the need to secure and protect such a
remedy while calculating the period of limitation for
invoking these jurisdictions.
14. Thus, there is no dispute that the provisions of section
14 of the Limitation Act apply to an application under section 34
of the Arbitration and Conciliation Act.
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15. It was held in Roshanlal Kuthalia v. R.B. Mohan Singh
Oberoi, (1975) 4 SCC 628: 1974 SCC OnLine SC 326 that any
circumstance legal or factual which prevents the Court from
entertaining the matter attracts the provision of section 14 of
Limitation Act. It was observed at page 639:
“27. Certainly, Section 14 is wide enough to cover periods
covered by execution proceedings (See 1959 SCR 811 at 818
[Raghunath Das v. Gokul Chand, AIR 1958 SC 827, 831: 1959
SCR 811, 818]). After all, Section 47 itself contemplates the
transmigration of souls as it were of execution petitions
and suits. The substantial identity of the subject matter of
the lis is a pragmatic test. Moreover, the defects that will
attract the provision are not merely jurisdictional strictly
so called but others more or less neighbours to such
deficiencies. Any circumstance, legal or factual, which
inhibits entertainment or consideration by the Court of the
dispute on the merits comes within the scope of the
section, and a liberal touch must inform the interpretation
of the Limitation Act which deprives the remedy of one who
has a right [See (1971) 2 SCR 397 at 401 [India Electric Works
Ltd. v. James Mantosh, AIR 1971 SC 2313, 2316: (1971) 2 SCR
397, 401]]. In the Associated Hotels case (i. e., the very lisin its
earlier round on the execution side), this Court pointed out
[(1961) 1 SCR 259 at 272 [Associated Hotels of India Ltd. v. R.B.
Jodhu Mal Kuthalia, AIR 1961 SC 156, 163] ] that the question
was one of initial jurisdiction of the Court to entertain the
proceedings. Thus, in this very matter, the obstacle was
jurisdictional, and the exclusionary operation of Section 14
of the Limitation Act was attracted.”
16. A similar view was taken in Shakti Tubes Ltd. v. State of
Bihar, (2009) 1 SCC 786: (2009) 1 SCC (Civ) 370: 2008 SCC OnLine SC
1878 wherein it was observed at page 793:
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“20. Section 14 of the Limitation Act speaks of prosecution
of the proceedings in a court which, from defect of
jurisdiction or other cause of a like nature, is unable to
entertain it. What would be the true purport of the words
“other cause of a like nature”? The same must relate to the
subject matter of the issue. A three-judge Bench of this
Court had an occasion to consider the same
in Rameshwarlal v. Municipal Council, Tonk [(1996) 6 SCC
100] wherein it was held: (SCC p. 101, para 3)
“3. Normally, for application of Section 14, the court dealing
with the matter in the first instance, which is the subject of
the issue in the later case, must be found to have a lack of
jurisdiction or other cause of like nature to entertain the
matter. However, since the High Court expressly
declined to grant relief, relegating the petitioner to a
suit in the civil court, the petitioner cannot be left
remediless. Accordingly, the time taken in prosecuting
the proceedings before the High Court and this Court
obviously pursued diligently and bona fide needs to be
excluded. (emphasis in original)
21. The question again came up for consideration before
this Court in Union of India v. West Coast Paper Mills
Ltd. [(2004) 3 SCC 458] wherein Lahoti, J. (as the learned
Chief Justice then was), held as under: (SCC p. 464, para 14)
“14. … In the submission of the learned Senior Counsel,
filing of civil writ petition claiming money relief cannot
be said to be a proceeding instituted in good faith and
secondly, dismissal of writ petition on the ground that it
was not an appropriate remedy for seeking money relief
cannot be said to be ‘defect of jurisdiction or other cause
of a like nature’ within the meaning of Section 14 of the
Limitation Act. It is true that the writ petition was not
dismissed by the High Court on the grounds of defect of
jurisdiction. However, Section 14 of the Limitation Act is
wide in its application, inasmuch as it is not confined in
its applicability only to cases of defect of jurisdiction,
but it is applicable also to cases where the prior
proceedings have failed on account of other causes of
like nature. The expression ‘other cause of like nature’
20
2025:HHC:1427came up for the consideration of this Court in Roshanlal
Kuthalia v. R.B. Mohan Singh Oberoi [(1975) 4 SCC 628],
and it was held that Section 14 of the Limitation Act is
wide enough to cover such cases where the defects are
not merely jurisdictional strictly so called but others
more or less neighbours to such deficiencies. Any
circumstance, legal or factual, which inhibits
entertainment or consideration by the court of the
dispute on the merits comes within the scope of the
section, and a liberal touch must inform the
interpretation of the Limitation Act, which deprives the
remedy of one who has a right.”
22. We may also notice that in India Electric Works
Ltd. v. James Mantosh [(1971) 1 SCC 24: (1971) 2 SCR 397], this
Court held: (SCC pp. 28-29, para 7)
“7. It is well settled that although all questions of
limitation must be decided by the provisions of the Act
and the courts cannot travel beyond them, the words ‘or
other cause of a like nature’ must be construed liberally.
Some clue is furnished with regard to the intention of
the legislature by Explanation III in Section 14(2).
Before the enactment of the Act in 1908, there was a
conflict amongst the High Courts on the question
whether misjoinder and non-joinder were defects which
were covered by the words ‘or other cause of a like
nature’. It was to set at rest this conflict that
Explanation III was added. An extended meaning was
thus given to these words. Strictly speaking, misjoinder
or non-joinder of parties could hardly be regarded as a
defect of jurisdiction or something similar or analogous
to it.”
23. The provisions of Section 14 of the Limitation Act have
been held to be applicable even in a proceeding arising
under Section 34 of the Arbitration and Conciliation Act,
1996. (See Gulbarga University v. Mallikarjun S. Kodagali
[(2008) 13 SCC 539: (2008) 11 Scale 79].)
17. It was held in M.P. Steel Corpn. v. CCE, (2015) 7 SCC 58:
(2015) 3 SCC (Civ) 510: (2015) 32 GSTR 260: (2015) 80 VST 402: 2015
21
2025:HHC:1427SCC OnLine SC 378 that the provisions of Section 14 of the
Limitation Act are to be liberally construed. It was observed at
page 86:
35. This judgment is in line with a large number of
authorities which have held that Section 14 should be
liberally construed to advance the cause of justice–
see Shakti Tubes Ltd. v. State of Bihar [(2009) 1 SCC 786 :
(2009) 1 SCC (Civ) 370] and the judgments cited therein.
Obviously, the context of Section 14 would require that the
term “court” be liberally construed to include within it
quasi-judicial tribunals as well. This is for the very good
reason that the principle of Section 14 is that whenever a
person bona fide prosecutes with due diligence another
proceeding which proves to be abortive because it is
without jurisdiction, or otherwise no decision could be
rendered on merits, the time taken in such proceeding
ought to be excluded as otherwise the person who has
approached the court in such proceeding would be
penalised for no fault of his own. This judgment does not
further the case of Shri Viswanathan in any way. The
question that has to be answered in this case is whether
suits, appeals or applications referred to by the Limitation
Act are to be filed in courts. This has nothing to do with
“civil proceedings” referred to in Section 14, which may be
filed before other courts or authorities which ultimately do
not answer the case before them on merits but throw the
case out on some technical ground. Obviously, the word
“court” in Section 14 takes its colour from the preceding
words “civil proceedings”. Civil proceedings are of many
kinds and need not be confined to suits, appeals or
applications, which are made only in courts stricto sensu.
This is made even more clear by the explicit language of
Section 14, by which a civil proceeding can even be a
revision, which may be to a quasi-judicial tribunal under a
particular statute.
22
2025:HHC:1427
18. A similar view was taken in Sesh Nath Singh v.
Baidyabati Sheoraphuli Coop. Bank Ltd., (2021) 7 SCC 313 : (2021) 4
SCC (Civ) 113: 2021 SCC OnLine SC 244 wherein it was observed at
page 342:
“75. Section 14 of the Limitation Act is to be read as a
whole. A conjoint and careful reading of sub-sections (1),
(2) and (3) of Section 14 makes it clear that an applicant
who has prosecuted another civil proceeding with due
diligence before a forum which is unable to entertain the
same on account of defect of jurisdiction or any other cause
of like nature is entitled to exclusion of the time during
which the applicant had been prosecuting such proceeding,
in computing the period of limitation. The substantive
provisions of sub-sections (1), (2) and (3) of Section 14 do
not say that Section 14 can only be invoked on termination
of the earlier proceedings, prosecuted in good faith.
82. To sum up, Section 14 excludes the time spent in
proceeding in the wrong forum, which is unable to
entertain the proceedings for want of jurisdiction or other
such cause. Where such proceedings have ended, the outer
limit to claim exclusion under Section 14 would be the date
on which the proceedings ended.”
19. A similar view was taken by the Delhi High Court in
NHPC Ltd. v. BGS-SGS-Soma JV, 2020 SCC OnLine Del 2368.
20. It was submitted that the respondent was not
registered under the MSMED Act and could not have taken
recourse to the provisions of the MSMED Act. This submission is
not acceptable. It is apparent from the grounds (H) and (I), taken
in the writ petition before the High Court of Rajasthan, that it was
23
2025:HHC:1427
specifically stated that M/s Bansal Generation Limited was
registered with registration No. 02/09/12/50044, dated 27.4.2007
in the year 2007. It was also asserted that since its liabilities and
assets were taken over by New Bansal Generation Limited, it was
contractually liable for all the liabilities. Once it had taken a plea
before the High Court that M/s Bansal General Limited was
registered and M/s New Bansal General Limited was contractually
liable, the plea that Bansal Generation Limited was not registered
under MSMED Act is not available to the petitioner. Therefore, the
judgment in Biad Power Services Private Limited (supra) relied
upon by the petitioner that a writ petition can be filed when the
company was not registered under the MSMED Act will not apply
to the present case.
21. The petitioner has relied upon the legal advice taken
by him from the learned counsel (Annexure A-14). This advice
was sought on the specific issue, namely whether a writ petition
could be filed for the waiver of deposition of 75% of the disputed
amount as is apparent from the opening part of the opinion,
which reads as under:-
“That my opinion has been sought on the specific issue as
to whether a writ petition can be filed for the waiver of
deposition of 75% of disputed amount as provided under
Section 19 of Micro, Small and Medium Enterprises
24
2025:HHC:1427Development Act, 2006 (hereinafter for the sake of brevity
will be referred as Act of 2006) in order to avail the remedy
available under Section 34 of Arbitration and Conciliation
Act, 1996 (hereinafter for the sake of brevity will be
referred as the Act of 1996).”
22. After adverting to the factual matrix, learned counsel
gave his advice regarding the remedies as under:-
“The remedy available to the Nigam against the award
dated 06.07.2018, passed by the learned Arbitration
Tribunal, is of challenging this award before the District &
Sessions Court under Section 34 of the Act of 1996.
However, for challenging the same, the Nigam is required
to deposit 75% of the amount so awarded by the learned
Tribunal as per Section 19 of the Act of 2006. The limitation
available to challenge the said award is of 90 days under
Section 34 of the Act of 1996. But presently, the application
moved by the firm under Section 33 of the Act of 1996 is
pending before the learned Arbitration Tribunal at Shimla
(HP) thus, the challenge to the award dated 06.07.2018
shall be made before the District & Sessions Court after the
disposal of the application of the firm moved under Section
34(3) of the Act of 1996, which provides that the limitation
of challenging the award will commence from the date of
decision on the application moved under Section 33 of the
Act of 1996, before the learned Arbitration Tribunal. In this
regard, one latest judgment dated 08.08.2018 has also been
passed by the Hon’ble Supreme Court, in the SLP No.
20195/2017 (M/s Ved Prakash Mithal and Sons Vs Union of
India), wherein the judgment passed by the Bombay High
Court has been upheld holding that the limitation of
challenging the award under Section 34(3) starts from the
date of which the application under Section 33 of the Act of
1996 is dispo0sed of by the Arbitral Tribunal.”
23. It is clear that learned counsel had advised the
petitioner that the available remedy against the award is
challenging it before the District & Sessions Court under Section
25
2025:HHC:1427
34 of the Arbitration and Conciliation Act, 1996, and for that
purpose, 75% of the amount, so awarded by the Tribunal had to
be deposited. He also opined that the challenge to the award
should be made before the District & Sessions Court after the
disposal of the application under Section 33 of the Arbitration and
Conciliation Act, 1996.
24. He opined regarding the maintainability of the writ
petition as under:-
“Now, the question on which the specific opinion has been
sought is whether a writ petition is maintainable against
the Arbitral Award passed by the learned Arbitration
Tribunal for the waiver of the pre-condition of depositing
the 75% of the amount which has been awarded by the
learned Tribunal, in terms of Section 19 of the Act of 2006.
In this regard, it is opined that the remedy which has been
prescribed under the Act of 1996 is to approach the District
& Sessions Judge, under Section 34 of the said Act, in order
to challenge the award dated 06.07.2018, passed by learned
Arbitration Tribunal. For that, the Nigam has to deposit
75% of the amount awarded in favour of the claimant, as
per Section 19(3) of the Act of 2006. However, a chance can
be taken by filing a writ petition before the Hon’ble High Court,
with the prayer for waiver of deposition of 75% of the awarded
amount, on the count that the Nigam is a company controlled
by the State Government and also on the count that the entire
amount related to the agreement for supply of transformers
has been paid to the M/s Bansal Generation Limited, however
with bit delay, that too for the reason that entire agreed
number of transformers were not supplied by the firm. It
can also be pointed out that the present awarded amount is
only towards the interest and not the actual payment under
the agreement.”
26
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25. Thus, it is apparent from the legal opinion given by
learned counsel for the petitioner that its remedy was to
challenge the award under Section 34 of the Arbitration and
Conciliation Act, 1996. Learned counsel further opined that a
chance could be taken by filing a writ petition for waiving the
deposition of 75% of the awarded amount. Learned Single Judge
had rightly pointed out that this opinion nowhere mentions that
the petitioner was advised to challenge the award by filing a writ
petition. At best, it advised the petitioner to take a chance to file a
writ petition for waiver on deposition of 75% of the awarded
amount. Therefore, the action of the petitioner in filing the writ
petition for challenging the award before the High Court was
contrary to the legal advice given to it, namely to file a petition
before the District & Sessions Court, Shimla, for challenging the
award.
26. In the present case, the action of the petitioner cannot
be said to be bona fide. As noticed above, petitioner’s counsel
never advised it to challenge the award by filing a writ petition
and had specifically advised to challenge the award by filing a
petition under Section 34 of the Arbitration and Conciliation Act,
1996, before the District & Sessions Judge at Shimla. It was held
27
2025:HHC:1427
by the Bombay High Court in Bharat Electronics Ltd. v. IBEX
Integrated Business Express (P) Ltd., 2023 SCC OnLine Bom 2776 that
proceeding to challenge the award by filing a writ petition are not
covered within the meaning of defect of jurisdiction because the
Writ Court has the jurisdiction to set aside the award but it may
decline to do so because of alternative remedy available under
Section 34 of Arbitration and Conciliation Act. It was observed:
“32. In my view, the Applicant in the present case has failed
to exercise due diligence and good faith. Further, the
proceedings adopted by the Applicant viz. the Writ
proceedings, cannot be said to be proceeding suffering
from “defect of Jurisdiction” or “any other causes of like
nature”. It is not the submission of the
Applicant/Petitioner that the Writ Court cannot interfere
with the Arbitral Award. In the present case, the Writ Court
chose not to interfere on account of an alternate remedy. In
the decision of the Supreme Court in Zafar Khan v. Board of
Revenue UP 1984 Supp SCC 505, “Defect of Jurisdiction” has
been construed as well as “other cause of like nature”, and
explanation (c) to Section 14 has also been referred to
which provides misjoinder of parties or causes of action
shall be deemed to be a cause of like nature with defect of
jurisdiction. This expression must take its colour and
content from the just preceding expression, “defect of
jurisdiction”. In the present case, the Writ Petition
challenging the Award cannot be termed a “defect of
jurisdiction”. In fact, this Court in JSW Steel Ltd. v. Kamlakar
v. Salvi (Judgment/Order dated 4th October 2021) has held
that the Writ Petition challenging an Award cannot be
termed as a “Defect of Jurisdiction”.
27. The counsel for the petitioner advised that a chance
could be taken by filing a writ petition for the waiver of 75% of the
28
2025:HHC:1427
amount required to be deposited as per Section 19 of the MSMED
Act. It was held in Neeraj Jhanji v. Commr. of Customs & Central
Excise, (2015) 12 SCC 695: 2013 SCC OnLine SC 1229 that taking a
chance by filing a writ petition before the wrong court does not
amount to bona fide. It was observed at page 697:
“3. The very filing of a writ petition by the petitioner in the
Delhi High Court against the order-in-original passed by
the Commissioner of Customs, Kanpur, indicates that the
petitioner took a chance in approaching the High Court at
Delhi, which had no territorial jurisdiction in the matter.
We are satisfied that filing of the writ petition or, for that
matter, appeal before the Delhi High Court was not at all
bona fide. We are in agreement with the observations made
by the Allahabad High Court in the impugned order [Neeraj
Jhanji v. CCE & Customs, Custom Appeal Defective 16 of
2012, order dated 6-8-2012 (All)]. The Allahabad High
Court has rightly dismissed the petitioner’s application of
condonation of delay and, consequently, the appeal as
time-barred.”
28. In the present case, taking a chance by filing a writ
petition for challenging the award that too, at Rajasthan, contrary
to the legal advice, cannot be said to be a bona fide act.
Prosecuting the same will also not be bona fide because the
judgment of Rajasthan High Court (Annexure A-17) shows that a
Division Bench of Rajasthan High Court had already held in
Sanghi Industries Ltd. & Anr. Vs. Micro Small Enterprises & Anr. D.B.
Special Appeal (Writ) No. 591/2018, dated 26.4.2018, that writ
petition against the award is not maintainable, and the proper
29
2025:HHC:1427
remedy was to approach the competent Court. Once the decision
of the Division Bench was delivered in the matter, the prosecution
of the petition before the learned Single Judge, who was bound by
the decision of the Division Bench, cannot be said to be bona fide.
29. Therefore, there is no infirmity in the judgment
passed by a learned Single Judge, and no interference is required
with it.
30. Consequently, the present appeal fails, and the same is
dismissed.
31. Records be sent back forthwith. Pending applications,
if any, also stand disposed of.
(Vivek Singh Thakur)
Judge
(Rakesh Kainthla)
Judge
7th January, 2025
(Chander)