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                                                          REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4892-4893     OF 2017 (Arising out of SLP (Civil) Nos. 33363-33364 of 2016)

Union of India                      …. Appellant

Versus

M/S. Simplex Infrastructures Ltd.                .... Respondent

J U D G M E N T

A.M.KHANWILKAR, J.

1. The short question that arises for consideration in this appeal

is: whether an intra-Court Letters Patent Appeal under clause 15 of

the  Letters  Patent  of  High Court  at  Calcutta  can be  maintained

against an order passed by the Single Judge on an application for

condonation of delay  filed along with the petition (for setting aside

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an  Arbitration  Award)  under  Section  34  of  the  Arbitration  and

Conciliation Act, 1996 (hereinafter referred to as ‘the Act’)?

2. Briefly  stated,  the  Respondent  being  the  lowest  bidder  was

allotted a contract by the Appellant in respect of  work styled as

“Construction of Tsunami Reconstruction Project in A & N Islands.

SH: Construction of 821 units of permanent shelters (single stories)

including  internal  water  supply  sanitary  installation  &  internal

Electrification in the Island of Teressa.” The contract agreement was

entered into between the parties on 5th October, 2006.  According to

the Appellant, the Respondent failed to adhere to the time frame for

completion of the contract.  As a result, a show cause notice was

issued to the Respondent on 27th April, 2007 to show cause as to

why the contract should not be rescinded by invoking clause 3 of

the agreement.  The Respondent submitted its response thereto on

8th May, 2007.  Despite the dismal performance of the Respondent,

the  Appellant  gave  it  one  more  opportunity  to  improve  on  the

performance vide a letter dated 20th June, 2007.  The Respondent,

however,  submitted  its  12th revised  completion  plan  dated  10th

October,  2007.   Since  the  Respondent  failed  to  adhere  to  the

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extended time line and also miserably failed to maintain the quality

and progress of work, the Appellant served it with a second show

cause notice on 4th January, 2008.  The Respondent replied to the

said  show  cause  notice  on  1st February  2008.  However,  the

explanation  offered  by  the  Respondent,  in  the  perception  of  the

Appellant, was found to be unsatisfactory and baseless.  Hence, the

Appellant  rescinded  the  contract  vide  letter  No.

57(12)/RE/TRP/Kamorata/07-08/638 dated 25th February, 2008.   

3. The  Respondent  then  invoked  the  arbitration  clause  in  the

agreement, pursuant to which the competent authority appointed

an  Arbitrator  vide  letter  no.  23(6)/(1)ADG(SR)/TRP/08-09/469

dated 27th August, 2008.  The arbitration hearing concluded on 27th

March,  2014.   An  Award  was  published  vide  letter

No.ARB/RKM/TRP/Case  005/2014-20  dated  27th October,  2014.

The Appellant received a hard copy of the Award on 31st October,

2014,  wherein  the  Arbitrator  held  that  the  rescindment  order

passed by the Appellant was illegal as time was not the essence of

the contract and further directed the Appellant to pay the final bill

submitted  by  the  Respondent.  Aggrieved,  the  Appellant  filed  a

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petition for setting aside the arbitral award before the District Court

at Port Blair being Appeal No. 2 of 2015.  The Respondent, on the

other  hand,  filed  an execution proceeding  in  relation to  the  self

same  Award  before  the  High  Court  at  Calcutta  being  EC  Case

No.734 of  2015.  The Appellant  then preferred an application in

Appeal No.2 of 2015 before the District Court, for stay of the Award.

The  District  Judge  allowed  the  said  application.  That  fact  was

brought to the notice of the High Court at Calcutta in execution

proceedings initiated by the Respondent. The High Court vide order

dated 15th September, 2015, disposed of the Execution petition filed

by the Respondent and gave liberty to the Respondent to appear

before the District Court and to resist the proceedings pending in

that court.   

4. The Respondent then filed objections in the proceedings before

the District Court.  According to the Respondent, the appeal before

the District Court was not maintainable as the application under

Section 9 of the Arbitration Act with regard to the subject matter of

the  arbitration  proceedings  was  filed  before  the  High  Court  at

Calcutta.   It  was then contended that the District Court did not

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have territorial jurisdiction as per Section 42 of the Act and that the

petition under Section 34 against the subject award can proceed

only before the High Court.  The District Court vide order dated 12th

February,  2016 accepted that  objection.  It  held that  the petition

filed  by  the  Appellant  under  Section  34  of  the  Act  was  not

maintainable on account of territorial jurisdiction.

5. The Appellant then challenged the Award by filing Arbitration

Petition No. 224 of 2016 before the High Court at Calcutta under

Section  34  of  the  Act  and  prayed  for  setting  aside  the  Arbitral

Award.  The Appellant also filed an application being G.A. No: 958

of  2016  for  condoning  delay,  mentioning  the  circumstances  in

which the Appellant had to approach the High Court under Section

34 of the Act.  The learned Single Judge after hearing the parties

allowed the said application for condonation of delay, being satisfied

that sufficient cause was made out by the Appellant for condoning

the delay of 131 days.  The said order reads thus:

“The Court: After considering the submissions made by the learned advocate for the applicant/petitioner and upon perusing the application for condonation of delay,  it  appears  that  sufficient  cause  has  been shown to explain the delay in filing the application, being AP No.224 of 2016 and as such the delay is

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condoned.  The application for condonation of delay, being GA No.958 of 2016, is accordingly allowed.”   

6. Aggrieved by the aforementioned order dated 27th April, 2016,

the Respondent preferred an intra court letters patent appeal being

G.A: No.1650 of 2016.  This appeal was contested by the Appellant

inter alia on the ground that such letters patent appeal was not

maintainable.   The  Division  Bench  adverted  to  the  relevant

decisions  pressed  into  service  by  both  the  sides  including  the

decision of  this Court in  Fuerst Day Lawson Limited v.  Jindal

Exports Limited.1  It has also noted that the order under appeal is

not appealable under Section 37 of the Act.  The Division Bench,

however, relied on the judgment of the Division Bench of the High

Court at Calcutta in the case of  Modi Korea Telecommunication

Ltd. V. Appcon Consultants Pvt. Ltd.2   and of the special Bench

of three-Judges in M/s. Tanusree Art Printers & Anr. V. Rabindra

Nath Pal,3   to hold that the three-Judge Bench decision of the High

Court  was  directly  on  the  point  and  was  binding  on  it.  It  then

proceeded to conclude that the order passed by the learned Single

1 (2011) 8 SCC 333 2 (1999) 2 CHN 107 3 (2000) 2 CHN 213

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Judge, sensu stricto was not falling within the provisions of the Act

and was without  jurisdiction.   On that  logic  the  Division Bench

reversed  the  order  of  the  learned  Single  Judge  by  invoking  its

jurisdiction under Letters Patent Appeal.

7. The  Appellant  contends  that  the  Division  Bench committed

manifest error in entertaining the appeal disregarding the settled

legal position restated by this Court in Fuerst Day Lawson Limited

(supra).  It is submitted that the Act is a self contained code.  It

provides  for  a  remedy  against  the  arbitral  award,  including  for

condonation of delay in filing of the petition under Section 34 of the

Act.  The order passed by the learned Single Judge on the subject

application for condonation of delay in filing petition under Section

34 was, therefore, in relation to the arbitration proceedings.  Even if

the discretion or for that matter jurisdiction is misapplied and is

not in accordance with law, that can be no reason to hold that the

order in such proceedings was not under the provisions of the Act

as such.  It would nevertheless come within the ambit of the Act.

Further, such order has not been made appealable under Section

37 of the Act as applicable at the relevant time. The correctness

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whereof could be assailed before the appropriate forum, but not by

way of a Letters Patent Appeal under clause 15.  The Appellant has

stoutly relied on the dictum of this Court in the case of Fuerst Day

Lawson Limited (supra) to buttress this contention.

8. The Respondent, on the other hand, has supported the view

taken by the Division Bench in the impugned judgment being in

conformity with the dictum of the special bench of the High Court of

three-Judges in the case of  M/s. Tanusree Art Printers & Anr.

(supra).  It is submitted that as the order passed by the learned

Single Judge is not in terms of the provisions of the Act and thus

without jurisdiction, the exercise of   powers  under  clause 15 of

the letters patent appeal was just and proper.  It was submitted

that  Section  34  of  the  Act  gives  no  jurisdiction  to  the  court  to

condone delay in filing of the petition for setting aside the award,

beyond  the  period  prescribed  in  sub-Section  (3)  thereof.   After

expiry of the prescribed period, it is submitted that even though it

may be a case of gross hardship caused to the Appellant because of

the  ill  advised  remedy  pursued  before  the  District  Court  and

virtually  being  rendered  remediless,  that  is  the  inevitable

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consequence of the mandate of Section 34 of the Act.  Further, the

explanation  offered  by  the  Appellant  in  the  application  for

condonation of delay cannot be reckoned as a sufficient cause in

law. Thus, the learned Single Judge committed manifest error in

entertaining  the  same  to  show  indulgence  to  the  Appellant  by

condoning  the  delay  of  131  days  in  filing  of  the  petition  under

Section 34 of the Act.

9. After hearing the counsel for the parties and going through the

decisions  relied  upon  by  both  sides,  we  have  no  hesitation  in

allowing this appeal.  The efficacy of the provisions of the Act has

been expounded by this Court in the case of  Fuerst Day Lawson

Limited  (supra).  After  analyzing  the  relevant  provisions  and the

decisions  on  the  subject  and  in  particular  the  decision  in  P.S.

Sathappan v. Andhra Bank Ltd.4,   it has been held that the Act is

a self contained Code relating to arbitration. In paragraphs 88 and

89 of the reported judgment, this Court opined:

“88. Mohindra  Supply  Co.3 was  last  referred  in  a Constitution  Bench  decision  of  this  Court  in  P.S. Sathappan16,  and  the  way  the  Constitution  Bench understood and interpreted  Mohindra Supply Co.3 would

4 (2004) 11 SCC 672

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be clear from the following para 10 of the judgment: (P.S. Sathappan case16, SCC pp. 689-90) “10. … The provisions in the Letters Patent providing for appeal,  insofar  as  they  related  to  orders  passed  in arbitration  proceedings,  were  held  to  be  subject  to  the provisions of Sections 39(1) and (2) of the Arbitration Act, as  the  same  is  a  self-contained  code  relating  to arbitration.”

89. It is, thus, to be seen that Arbitration Act, 1940, from its inception and right through to 2004 (in P.S. Sathappan) was  held  to  be  a  self-contained  code.  Now,  if  the Arbitration Act, 1940 was held to be a self-contained code, on matters pertaining to  arbitration,  the Arbitration and Conciliation Act,  1996,  which consolidates,  amends and designs the law relating to arbitration bring it, as much as possible, in harmony with the UNCITRAL Model must be held only to be more so. Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapurkar, J., that it carries with it “a negative import that only such acts as are mentioned in the Act  are permissible to be done and  acts  or  things  not  mentioned  therein  are  not permissible to be done”. In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special  Act  sets out a self-contained  code  the  applicability  of  the  general  law procedure would be impliedly excluded.”   

10. After  this  decision,  there  is  no  scope  to  contend  that  the

remedy  of  Letters  Patent  Appeal  was  available  in  relation  to

judgment  of  the  learned  Single  Judge  in  question.  This  legal

position has been restated in the recent decision of this Court (to

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which one of  us was party,  Justice Dipak Misra),  in the case of

Arun Dev Upadhyaya V/s. Integrated Sales Service Ltd & Anr.5  

11. The Division Bench of the High Court, however, made a fine

distinction by holding that the judgment of the learned Single Judge

of condoning delay in filing of the petition under Section 34 of the

Act was without jurisdiction and not in terms of the provisions of

the  Act.   It  is  not  possible  to  countenance  this  approach.   The

Division Bench, in our opinion, was not right in observing that the

decision in M/s. Tanusree Art Printers & Anr.  (supra) being of a

special bench of three-Judges of the same Court, was binding,  in

spite of  having noticed the decision of  this Court in  Fuerst Day

Lawson Limited  (supra) – which is directly on the point and was

pressed into service by the Appellant.  Neither the Division Bench of

the High Court at Calcutta which dealt with the case of Modi Korea

Telecommunication  Ltd.  (supra)  nor  the  three-Judges  Bench

which  decided  the  case  of  M/s.  Tanusree  Art  Printers  &  Anr.

(supra), had the benefit of the judgment of this Court in Fuerst Day

Lawson Limited (supra), which is later in time.  

5 (2016) 9 SCC 524

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12. The  Act  as  applicable  to  the  present  case,  provides  for  a

remedy of appeal in terms of Section 37 of the Act.  The same reads

thus:-

“37. Appealable orders. – (1) An appeal shall lie from the following  orders  (and  from  no  others)  to  the  Court authorized by law to hear appeals from original decrees of the Court passing the order, namely:- [(a)  Refusing  to  refer  the  parties  to  arbitration  under section 8; (b)  granting  or  refusing  to  grant  any  measure  under section 9; (c) setting aside or refusing to set aside an arbitral award under section 34.] (2) An appeal shall also lie to a Court from an order of the arbitral tribunal- (a)  accepting  the  plea  referred  to  in  sub-section  (2)  or sub-section (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17. (3)  No second appeal shall  lie  from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.”

13. On a bare reading of this provision, it is noticed that remedy of

appeal has been provided only against an order of setting aside or

refusing to set aside an arbitral award under Section 34(1) (c).  No

appeal  is  provided  against  an  order  passed  by  the  Court  of

competent  jurisdiction  condoning  the  delay  in  filing  the  petition

under Section 34 of the Act as such.   The Division Bench in the

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impugned Judgment, therefore, rightly noted that remedy of appeal

against the impugned order of  the learned Single Judge was not

otherwise available under Section 37 of the Act.  

14. In  our  opinion,  the  issue  is  squarely  answered  against  the

Respondent by the decision of this Court in  Fuerst Day Lawson

Limited (supra).  In that, the Judgment of the learned Single Judge

dated 27th April, 2016, was passed on an application purported to

be under Section 34(3) of the Act, for condoning delay in filing of the

petition for setting aside the arbitral award. Hence, the remedy of

Letters  Patent  Appeal  against  that  decision  is  unavailable.   The

question  as  to  whether  the  learned  Single  Judge  had  rightly

exercised  the  discretion  or  otherwise,  could  be  assailed  by  the

Respondent before this Court by way of special leave petition. But,

certainly not by way of a Letters Patent Appeal under clause 15.

For, even if the learned Single Judge may have committed manifest

error or wrongly decided the application for condonation of delay,

that judgment is ascribable to exercise of jurisdiction under Section

34(3) of the Act. In other words, whether the prayer for condonation

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of delay can be accepted or whether the application deserves to be

rejected, is a matter well within the jurisdiction of that court.  

15. The  learned  counsel  for  the  Respondent  was  at  pains  to

persuade  us  that  the  decision  of  the  learned  Single  Judge  is

palpably  wrong  and  cannot  be  sustained  in  law.   However,  we

cannot permit the Respondent to agitate that plea in the present

appeal  preferred  by  the  Appellant  challenging  the  impugned

decision of the Division Bench.  Instead, we deem it appropriate to

leave all contentions available to both sides open and give liberty to

the  Respondent  to  challenge  the  judgment  of  the  learned  Single

Judge dated 27th April, 2016 in G.A.No.958 of 2016, if so advised.

16. Accordingly, the impugned judgment of the Division Bench of

the  High  Court  at  Calcutta  dated  20th June,  2016  passed  in

G.A.No.1650 of 2016 in APOT No. 183/2016 in A.P. No. 224/2016

is  set  aside  with  liberty  to  the  Respondent  to  challenge  the

judgment of the learned Single Judge dated 27th April, 2016 in G.A.

No. 958 of 2016 in AP No.: 224 of 2016.  All contentions available to

both sides with regard to the correctness of the Judgment of the

Learned Single Judge dated 27th April, 2016, are kept open.

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17. While  parting,  we  may  take  note  of  the  order  dated  7th

November,  2016 passed by this  Court  directing the  Appellant  to

deposit Rs. 5,00,00,000/- (Rupees Five Crores) in the Registry of

this  Court  and further  to invest  the same in a short  term fixed

deposit.  We are informed that the Appellant has complied with the

said order and deposited the amount in the Registry. That has been

invested  by  the  Registry.   The  said  amount  along  with  interest

accrued thereon be transferred to an escrow account linked to the

proceedings pending before the High Court at Calcutta being A.P.

No.224 of 2016.  The High Court will be free to pass appropriate

directions  regarding  disbursement  or  investment  of  the  said

amount.

18. The appeals are allowed in the above terms with no order as to

costs.

                                      …..……………………………..J.         (Dipak Misra)

                                       .…..…………………………..J. (A.M.Khanwilkar)

New Delhi, Dated: April 13,  2017