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Judgment
S. Rajeswaran, J.—This application u/s 9 read with Section 43(3) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as
''the Act'') has been filed to extend the time for submission of the dispute to arbitration.
The applicant was trading in shares through the 1st respondent which is a share and stock broking company. The applicant found that the 1st
respondent indulged in various fraudulent and unfair trade practices for their personal gain by inter alia refusing to sell the applicant''s shares when
asked to do so at the time when the share market reached the highest level. This resulted in huge loss and, therefore, the applicant made a
complaint to the 2nd respondent on 09.04.2001 and the 1st respondent by reply dated 30.04.2001 denied the allegations. The applicant then
issued a rejoinder dated 18.05.2001 to the reply dated 30.04.2001 setting out the particulars of the transaction and rebutting the veracity of the
averments in the reply.
By letter dated 09.08.2001, the 2nd respondent informed the applicant that the complaint has been referred to the Investor Grievance Cell
(IGC) of NSE for resolution. However, the IGC by letter dated 09.08.2001 advised him to file arbitration case. The applicant accordingly initiated
arbitration proceedings by filing an application dated 24.09.2001 claiming a sum of Rs. 35,00,000 and also paying an arbitration fee of Rs.
12,000. A reply was given by the 1st respondent on 23.10.2001 and after taking on record the relevant documents and oral submissions, the
arbitrators by their award dated 25.02.2002 relying upon the Bye-Laws and Regulations of the 2nd respondent dismissed the claim on the ground
that it was barred by limitation. Thereafter, the applicant was advised by the Grievance Cell of the SEBI to apply to court for extension of limitation
period prescribed by the arbitration agreement. Hence, the applicant filed this application u/s 43(3) of the Act, 1996 to extend the time for the
submission of the dispute to the arbitration.
This Court by order dated 27.09.2004 extended four weeks time from that date for the submission of the dispute to the arbitration. The 1st
respondent appeared before this Court and filed Application No. 4908/2004 praying to set aside the ex parte order dated 27.09.2004 made in
Application No. 3693/2004.
Another learned Single Judge of this Court by order dated 17.06.2005 set aside the order dated 27.09.2004 by observing that in his opinion
the matter has to be decided only while hearing that Application No. 3693/2004.
Now, the main Application No. 3693/2004 is posted before me for final hearing.
Learned Counsel for the applicant submitted that while exercising power u/s 43(3) of the Act, 1996, no notice of hearing was contemplated to
the opposite side and, therefore, the earlier order dated 27.09.2004 is to be restored and time has to be extended for submitting the dispute to the
arbitration.
It is his specific case that the claim was dismissed on limitation by the arbitrators and, therefore, it is not an award at all and in such
circumstances this Court can very well extend the time and remit the matter back to the arbitrators for passing an award on merits. The learned
Counsel further submitted that the arbitrators erred in law by passing an award on 25.02.2002 by dismissing the claim on the ground of limitation.
The arbitrators should have returned the claim petition with an endorsement to the effect that the claim petition is barred by limitation instead of
passing an award dismissing the claim on the ground of limitation. Even otherwise, learned Counsel contended that the order passed on
25.02.2002 is in substance a return by the arbitrators to comply with the question of limitation. If this Court extends the time, then, the applicant
can very well represent the claim petition by rectifying the defect of limitation. Otherwise, he would be put to undue hardship and this Court has to
consider the same and extend the time. learned Counsel has relied on the judgment of the Hon''ble Supreme Court reported in N. Balaji Vs.
Virendra Singh and Others, , in support of his submissions.
Per contra, the learned senior counsel appearing for the 1st respondent has submitted that inasmuch as the dispute had already been referred to
the arbitrators and an award has already been passed, Section 43(3) of the Act, 1996 would not at all get attracted. The learned senior counsel
contended that the order of the arbitrators dated 25.02.2002 holding that the claim is barred, under a time-barred clause is final and binding on the
applicant and the same has to be challenged by filing a setting aside petition u/s 34 of the Act, 1996 and this application u/s 43(3) of the Act for
extension of time is not at all maintainable. The learned senior counsel further submitted that an award dated 25.02.2002 cannot be deemed to be
a return to be complied with as the award is the ""arbitral award"" within the meaning of Section 2(1)(c) of the Act, 1996.
Heard the learned Counsel for the applicant and the learned senior Counsel appearing for the 1st respondent. I have also perused the
documents filed in support of their submissions.
Already an ex parte order was passed by a learned judge of this Court on 27.09.2004 extending the time by four weeks from 27.09.2004 and
the application itself was disposed of on that date itself by passing that order. But another learned judge of this Court, at the instance of the 1st
respondent, set aside the order dated 27.09.2004 and restored the present application. Further, no appeal appears to have been filed against the
order dated 17.06.2005.
I am unable to accept the contentions of the learned Counsel for the applicant that while exercising power u/s 43(3) of the Act, no notice of
hearing is contemplated to the opposite side. I am of the opinion that notice should go to the other side in the application filed u/s 43(3) of the Act.
Courts have to order notice in all the cases where petitions are filed to condone the delay in instituting the proceedings.
I am also unable to accept the contentions of the learned Counsel for the applicant that the award dated 25.02.2002 is not an award at all and
in substance it is only a return to be complied with. The order of the arbitrators holding that the claim is barred under a limitation clause is also an
award u/s 2(1)(c) of the Act and, therefore, it is binding on the applicant, if no step is taken to set aside the award by the applicant.
A close reading of Section 43(3) of the Act makes it clear that courts can extend time on an application by the applicant before referring the
dispute to arbitrators or at least before an award is passed either on merits or otherwise by the arbitrators. As rightly pointed out by the learned
senior counsel appearing for the 1st respondent, in the present case, the dispute was referred to the arbitrators, claim statement and replies were
filed with the documents and final award was also passed on 25.02.2002 itself. Therefore, this application filed u/s 43(3) of the Act, 1996 on
19.04.2004 is not at all maintainable.
In N. Balaji, the Hon''ble Supreme Court held that an election dispute submitted after the limitation period was not barred by limitation. In that
case, a representation was submitted to the authorities to de-list the names of ineligible voters from the voters'' list. Without taking any action in
respect thereof, election was conducted and further representation raising the election dispute was made to the Minister. As the same was not
considered, a writ petition was filed and the High Court directed the Minister to consider the representation. The Minister directed the writ
petitioner to approach the appropriate authority under the provisions of Multi-State Co-operative Societies Act and challenging this order another
writ petition was filed. The High Court directed that all the representations containing the dispute be referred to Central Registrar for adjudication
leaving open the question of limitation to be considered by Central Registrar. Before the Central Registrar it was contended that the dispute was
barred by limitation as having been filed beyond one month of election. Only in such circumstances, the Hon''ble Supreme Court held that the
dispute petition is not a new petition and it has to be read in continuation of the earlier representations.
In the present case, the arbitrators on 25.02.2002 held that the last transaction done by the applicant with the 1st respondent was in July 2000
and the application to National Stock Exchange (NSE-2nd respondent) was made by the applicant on 24.09.2001 only and after referring to the
Bye-Laws and Regulations of the 2nd respondent, which stipulates that all disputes shall be submitted to 2nd respondent for arbitration within six
months, rejected the claim petition. Therefore, the facts here are different, that too, the issues arising under the Arbitration and Conciliation Act,
1996. Hence, the principle laid down by the Hon''ble Supreme Court in the above case will not be applicable to the instant case. Moreover, the
question before this Court is not whether the petition is barred by limitation or not. This Court has to decide only whether the applicant has made
out a case for granting extension of time to refer the dispute for arbitration or not.
Therefore, there is no merit in the above application and the same is liable to be dismissed. Accordingly, the above application is dismissed.
No costs.