* HIGH COURT OF DELHI : NEW DELHI
+ I.A. No. 6465/2009 in CS (OS) No. 885/2007
Reserved on: November 12, 2009
% Decided on: December 3, 2009
M/s. Nathpa Jhakri Power Corporation Ltd. ...Plaintiff
Through : Mr.Neeraj Malhotra, Adv.
Versus
M/s. Nathpa Jhakri Venture & Ors. ...Defendants
Through : Mr. E.R. Kumar with Mr. D.P.
Mohanty, Mr. Shashank and
Ms. Pallavi Sharma, Advs.
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
1. Whether the Reporters of local papers may
be allowed to see the judgment? No
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
MANMOHAN SINGH, J.
1. By this order, I shall dispose of I.A. No. 6465/2009 filed by
the plaintiff under Section 14 of the Limitation Act, 1963.
2. Brief facts of the present case are as follows.
(a) The plaintiff is a joint venture of the Government of India and the
Government of Himachal Pradesh, set up to execute a hydro-electric
project with a capacity of 1500 MW.
(b) The defendants are a joint venture of two companies, one in Italy and
CS (OS) No. 885/2007 Page 1 of 13
one in Mumbai. Various works were to be carried out and the defendants
submitted their tender bids along with other contenders and were
awarded the execution of work under Contract # 2.2, i.e. for construction
of civil works for Head Race Tunnel from Stn. 16042 m to Stn. 27295 m
and surge shaft for the same by letter dated 26th May, 1993 in
accordance with which a contract was signed by the parties on 24th June,
1993.
(c) Clause 70 of the General Conditions of the Contract provided a price
adjustment mechanism which allowed for any increase/decrease of costs
corresponding to any change in the indexed costs of labour, materials,
fuel etc. Clause 70 (v) provides for recovery of additional costs borne
due to subsequent change in any legislation.
(d) Modified clause 67 provided for resolution of the disputes between
the parties by reference to arbitration. In case the claims of parties were
within Rs. 50 million, the decision of the DRB would be final. If the
claims of parties were beyond Rs. 50 million, the DRB‟s decision would
be only recommendatory and either party could resort to arbitration.
(e) As a result of the increase in the road tax on cement, explosives and
steel, the defendants paid Rs. 29,28,731.94/- and then claimed
reimbursement of the same from the plaintiff.
(f) The said bill for reimbursement was rejected by Engineer in Charge
of the plaintiff. The claims of the defendants were admittedly within the
ceiling of Rs. 50 million.
(g) The matter was referred to the Dispute Resolution Board (hereinafter
CS (OS) No. 885/2007 Page 2 of 13
referred to as „DRB‟) which passed an order dated 7th July, 1995 in
favour of the defendants.
(h)A review application against the same was filed but was rejected vide
order dated 12th February, 1997.
(i) No appeal/objection against the said order was filed by the plaintiff
except Suit No. 17/2002 at the High Court of Himachal Pradesh at
Shimla (referred to as „Shimla High Court‟ for brevity)
3. The plaintiff filed an application under Order 39 Rules 1 and
2 and obtained an ad-interim ex-parte order in its favour in the Shimla
High Court.
4. The plaintiff also filed an application under Section 9 of the
Arbitration and Conciliation Act, 1996 praying, inter-alia, that the
defendants be directed to refund the plaintiff with interest @ 24 % per
annum and that the operation of the DRB‟s orders dated 7 th July, 1995
and 12th February, 1997 be stayed.
5. The defendants filed an application under Order 39 Rule 4 of
the CPC for vacation of the ex-parte grant of injunction.
6. By order dated 3rd May, 2005 a Single Judge of the Shimla
High Court returned the plaint in accordance with the provisions of
Order 7 Rule 10 of the Code of Civil Procedure for presentation of the
plaint before a court of competent jurisdiction in view of the finding
dated 13th April, 2005 in another case being Arbitration Case No.
58/2003.
7. The plaintiff preferred an appeal being OSA No. 4/2005
CS (OS) No. 885/2007 Page 3 of 13
which was dismissed by the Division Bench of the Shimla High Court
by order dated 10th September, 2008, inter alia, with the following
finding :
“The law is well settled that when two or more competent
courts have jurisdiction to entertain the matter, the parties
by mutual consent can agree to fix jurisdiction in only one
of them.
…
In the present case, as noted above, at three places in the
contract, namely, Clause XII, modified clause 67 as well as
clause 5 the parties have clearly indicated that the
arbitration proceedings shall be held at New Delhi and have
also clearly agreed that the Courts at Delhi would have
jurisdiction to decide their disputes. The parties were aware
that the other courts which could have jurisdiction were the
courts in Shimla & Kinnaur Districts. When they
specifically limited the jurisdiction to the Delhi courts, a
presumption can reasonably be raised that their intention
was to oust the jurisdiction of the courts at Shimla &
Kinnaur Districts. The parties by such an agreement have
not conferred jurisdiction upon a Court not having
jurisdiction but have elected that the disputes between them
should be decided by the Courts at Delhi.”
The complete record of the said suit was received by the plaintiff on 8th
December, 2008 from the court for the purpose of presentation of plaint
in the appropriate court. Thereafter the present suit was filed on 27th
February, 2009.
8. The present application has been filed by the plaintiff
seeking exclusion of time spent in pursuing a prior proceeding as
regards the same matter before the Shimla High Court. The
plaintiff has submitted that as the contract in question was executed
in the state of Himachal Pradesh and the General Conditions of the
Contract did not confer sole and exclusive jurisdiction on the courts
of Delhi, the plaintiff instituted a suit on 10th April, 2002 against the
CS (OS) No. 885/2007 Page 4 of 13
recommendation of the DRB dated 10th May, 1995 passed almost five
years earlier, in the Shimla High Court being CS (OS) No. 17/2002
praying that the DRB‟s orders be declared null and void; that the DRB
be restrained from passing any binding orders based on Clause 67 of the
contract and that the DRB‟s interpretation of the said clause be declared
bad.
9. It is the plaintiff‟s submission that the civil proceedings in the
Shimla High Court were being pursued by the plaintiff with due
diligence and in good faith.
10. It is argued by the plaintiff that the prior proceedings were
terminated due to defect of jurisdiction and hence, as per Section 14 of
the Limitation Act, the period spent by the plaintiff in pursuing the
matter against the defendant in good faith in another High Court should
be excluded while counting the period of limitation for filing the present
suit and should be condoned.
11. As per the plaintiff, the period from filing of the suit to
handing over the records by the Shimla High Court to the plaintiff i.e.
from 10th April, 2002 to 8th December, 2008, which is a period of 6
years, 7 months and 28 days should be excluded.
12. In their reply to the plaintiff‟s application for condonation of
delay, defendants no. 1 to 3 have contended that the dispute between the
parties was decided by the DRB on merits and after due consideration.
The review filed by the plaintiff was dismissed and for five years
thereafter, the plaintiff did nothing.
CS (OS) No. 885/2007 Page 5 of 13
13. Further, the defendants have contended that in CS (OS) No.
56/2004 filed by the plaintiff against the present defendant no. 1, the
Shimla High Court held on 7th June, 2006 that the decision of the DRB
for individual claims not exceeding Rs. 50 million is nothing but an
arbitral award which cannot be challenged/ set aside by filing of a suit.
14. In this regard, counsel for the defendants has referred to
Punjab State v. Dina Nath, (2007) 5 SCC 28 wherein it was observed
that if the intention of the parties is to refer the dispute to an arbitrator,
then there is an arbitration agreement. Merely because the word
„arbitration‟ is not included in the clause would not preclude the relevant
agreement from being an arbitration agreement.
15. It is argued by the defendant that the plaintiff‟s contention
that the contract did not vest sole and exclusive jurisdiction on the Delhi
courts is false as the language of the jurisdiction clause is absolutely
clear in vesting jurisdiction on Delhi courts.
16. The plaintiff was pursuing the matter in the Shimla High
Court without due diligence as the jurisdiction clause clearly vests
jurisdiction with the courts at Delhi and the plaintiff was aware of the
same, the plaintiff‟s prayer ought not to be condoned. Further, the
application under Section 14 has been verified on 17 th April, 2009 and
there is no application for condonation from the period from 19th
December, 2008 till the date of filing of the present plaint on 27th
February, 2009.
CS (OS) No. 885/2007 Page 6 of 13
17. The defendants have also contended that the order dated 7th
July, 1995 and 12th February, 1997 passed by the DRB were in the
nature of arbitral awards and were not challenged, nor was any
application filed under Section 33 of the Arbitration Act, 1940. On the
other hand, the said orders were acted upon and the amount due was paid
to defendant no. 1. The present suit is therefore barred under Section 32
of the Arbitration Act, 1940.
18. The provision of Section 14 of the Limitation Act, 1963 is
reproduced hereunder :
“14. Exclusion of time of proceeding bona fide in court
without jurisdiction(1) In computing the period of limitation for any suit the
time during which the plaintiff has been prosecuting
with due diligence another civil proceeding, whether in
a court of first instance or of appeal or revision, against
the defendant shall be excluded, where the proceeding
relates to the same matter in issue and is prosecuted in
good faith in a court which, from defect of jurisdiction
or other cause of a like nature, is unable to entertain it.
(2) In computing the period of limitation for any
application, the time during which the applicant has
been prosecuting with due diligence another civil
proceeding, whether in a court of first instance or of
appeal or revision, against the same party for the same
relief shall be excluded, where such proceeding is
prosecuted in good faith in a court which, from defect of
jurisdiction or other cause of a like nature, is unable to
entertain it.
(3) Notwithstanding anything contained in Rule 2 of Order
XXIII of the Code of Civil Procedure, 1908 (5 of 1908),
the provisions of sub-section (1) shall apply in relation
to a fresh suit instituted on permission granted by the
court under Rule 1 of that Order, where such permission
is granted on the ground that the first suit must fail by
reason of a defect in the jurisdiction of the court or other
cause of a like nature.
CS (OS) No. 885/2007 Page 7 of 13
Explanation : For the purposes of this section,
(a) in excluding the time during which a former civil
proceeding was pending, the day on which that
proceeding was instituted and the day on which it
ended shall both be counted;
(b) a plaintiff or an applicant resisting an appeal shall
be deemed to be prosecuting a proceeding;
(c) misjoinder of parties or of causes of action shall be
deemed to be a cause of a like nature with defect
of jurisdiction.”
19. As per well settled law, the five conditions to be satisfied for
application of Section 14 are as follows :
(i) Both the prior and subsequent proceedings are civil
proceedings prosecuted by the same party;
(ii) The prior proceeding had been prosecuted with due
diligence and in good faith;
(iii) The failure of the prior proceeding was due to defect of
jurisdiction or other cause of like nature;
(iv) The earlier proceeding and the latter proceeding must
relate to the same matter in issue and;
(v) Both the proceedings are in a court.
20. The question posed before this court, after perusal of the facts
is simply whether the plaintiff can take benefit of Section 14 of the
Limitation Act and get the period of 6 years, 7 months and 28 days spent
pursuing civil suit no. 17/2002 in the Shimla High Court excluded.
21. From the pleadings of the parties, it appears that the admitted
facts are that on 19th May, 1995 the claims of the defendants were
accepted by the DRB and a recommendation was made accordingly. The
application against the recommendation was rejected vide order dated 7th
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July, 1995 and the appeal against this order was rejected vide order dated
12th February, 1997.
22. The plaintiff filed a civil suit being no. 17/2002 in the Shimla
High Court on 10th April, 2002, i.e. after 5 years and 58 days after the
cause of action arose.
23. On 3rd May, 2005 a learned Single Judge of the Shimla High
Court returned the plaint, the appeal against which was rejected vide a
division bench order dated 10th September, 2008.
24. The present suit was filed on 27th February, 2009 and the
application under consideration was verified on 17th April, 2009.
25. An intriguing fact is that the suit filed at the Shimla High
Court appears to be time barred as it was filed 5 years and 58 days after
the cause of action arose, therefore, there is no question of taking benefit
of the time spent in pursuing a litigation which was time barred to begin
with. In this respect, counsel for the defendants has referred to Amar
Chand Inani v. Union of India, (1973) 1 SCC 115, wherein it was held
as under :
“9. …Section 14 of the Act only provided for the exclusion
of the time during which the plaintiff has been prosecuting
with due diligence another civil proceeding against the
defendant, where the proceeding is founded upon the same
cause of action and is prosecuted in good faith in a Court
which, from defect of jurisdiction, or other cause of a like
nature, is unable to entertain it. Even if the plaintiff was
entitled to get an exclusion of the time during which he was
prosecuting the suit in the Karnal and Panipat Courts, the
suit would not be within time as the filing of the suit in the
Karnal Court was beyond the period of Limitation.”
26. The present suit has not been filed in compliance with the
CS (OS) No. 885/2007 Page 9 of 13
procedure prescribed in Order VII Rules 10 (2) and 10A (2) of the CPC.
A bare examination of the plaint in civil suit no. 17/2002 filed in the
Shimla High Court which shows that, (a) in the earlier suit filed by the
plaintiff in the Shimla High Court, the suit for the purpose of jurisdiction
was valued at Rs. 10,05,000/- whereas the present suit has been valued at
Rs. 1,45,15,481/- for the purposes of declaration and at Rs. 500/- for the
purposes of perpetual injunction; (b) counsel for the plaintiff has
admitted that substantial changes have been made in the plaint which has
been filed in this court and that the said changes are not minor but exist
from para 1 to the prayer clause. New facts, admittedly, have been
added, the prayer has been changed and so has the pecuniary
jurisdiction. Under the compliance of Order 7 Rule 10 CPC, after the
return of the plaint it should have been filed before the District Court as
the plaint was valued in the suit at Rs. 10,05,000/-.
27. Thus, even as per the admitted position by the plaintiff, i.e.
changing the contents, prayer, allegations and valuation of the suit and
then filing the same before this court amounts to filing a new suit which
is without any doubt time barred, therefore, in these circumstances, no
benefit under Section 14 of the Limitation Act can be given to the
plaintiff as for the purposes of Section 14, one of the requirements is that
the earlier and latter proceeding must relate to the same matter in hand.
Introducing differences as the plaintiff has, it cannot seek to state or
imply that civil suit no. 17/2002 and the present suit are the same.
28. Further, Clause XII of the contract between the parties i.e. the
CS (OS) No. 885/2007 Page 10 of 13
jurisdiction conferring clause is reproduced hereinbelow :
“In the event that any party deems it necessary to initiate
legal action or proceedings to enforce any rights or
obligations under this Agreement, the parties hereto agree
that any such action shall be initiated as per law for the time
being in force in India and within the jurisdiction of the
Courts at New Delhi. The Board Members, hereby, consent
to be bound by the personal jurisdiction of the Courts at
New Delhi.”
29. The above-mentioned clause has been referred to by the
plaintiff itself. In view of the explicit language of the said Clause, the
plaintiff‟s argument that the courts at Delhi did not have „exclusive‟ and
„sole‟ jurisdiction by virtue of the contract between the parties is, by no
stretch of imagination, a valid contention.
30. In light of this observation, the plaintiff has failed to satisfy
yet another requirement of Section 14, perhaps the most important
requirement, that the prior proceeding was not prosecuted with due
diligence and in good faith.
31. Further, the appeal order passed by the Division Bench of the
Shimla High Court clearly states that not only Clause XII of the contract
but also modified clause 67 as well as clause 5 clearly indicate that
arbitration proceedings shall be held at Delhi and also that Courts at
Delhi would have jurisdiction to decide the disputes.
32. In this regard, counsel for the defendants has referred to
Larsen & Toubro Ltd. v. Mr. K.S. Baidwan & Ors., FAFO No.
438/2008 passed on 31st March, 2009 by a learned Division Bench of the
Allahabad High Court and upheld by the Supreme Court in order dated
22nd July, 2009. The Hon‟ble Division Bench in that case referred to
CS (OS) No. 885/2007 Page 11 of 13
various cases and discussed the meaning of „good faith‟ within the
purview of Section 14. For convenience, these are stated numerically
below :
I. In Consolidated Engineering Enterprises v. Principal
Secretary, Irrigation Department & Ors., (2008) 7 SCC
169 it was held that due diligence cannot be measured by
any absolute standards and that it is the measure of
prudence or activity expected from an ordinary, reasonable
and prudent person. To take benefit of Section 14, there
must be an honest doubt as regards the competent court etc.
If an order has been passed and execution is stalled because
a party has been pursuing the appeal in the wrong forum for
some time, the intention of the party may be questioned.
II. In Rabindra Nath v. Sivakami, AIR 1972 SC 730 it
was stated that if a party insists on pursuing suit in the
wrong forum even after being made aware that the same is a
non-competent forum as regards the relevant issue, the said
party cannot take advantage of Section 14.
III. In Ghasi Ram & Ors. v. Chait Ram Sainti & Ors.,
AIR 1998 SC 2476 it was observed that the appellant was
an illiterate person who made an honest mistake while
acting on his counsel‟s advice.
33. In the present case, (i) civil suit no. 17/2002 filed at the
Shimla High Court was barred by limitation itself, having been filed
CS (OS) No. 885/2007 Page 12 of 13
more than 5 years after the dispute; (ii) there are three clauses in the
contract stating that the courts at Delhi are to have jurisdiction in case of
any dispute, and even if the plaintiff was unaware of these, it cannot
feign ignorance after the same was pointed out in the orders of the
Shimla High Court; and (iii) the plaint submitted now and the plaint
submitted in the prior proceeding differ greatly and cannot be said to be
as regards the same matter.
34. With these observations, no benefit under Section 14 of the
Limitation Act can be provided to the plaintiff as the plaintiff is not
entitled to any, therefore, the present application is dismissed and
consequently, the plaintiff‟s suit is also dismissed as being barred by
limitation.
All pending applications also stand disposed of. No costs.
MANMOHAN SINGH, J.
DECEMBER 3, 2009
nn
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