MUNICIPAL CORPORATION OF DELHI AND ORS. v. INTNL. SECURITY & INTELLIGENCE AGENCY LTD

Citation: [2003] 1 S.C.R. 951

Court: Supreme Court of India

Bench: R.C. LAHOTI, BRIJESH KUMAR, ARIJIT PASAYAT

Judgment text

MUNICIPAL CORPORATION OF DELHI AND ORS. v. . , )· INTNL. SECURITY & INTELLIGENCE AGENCY LTD. I FEBRUARY 6, 2003 .. (R. C. LAHOTI. BRIJESH KUMAR AND ARIJIT PASAYAT, JJ. ) ~~ Arbitration Act, 1940-Sections 39 and 41-Code of Civil Procedure, 1908-0rder 41 Rule 22-Cross objections in appeal under Section 39- Rights to file and maintainability of-Held, right to take cross-objection is exercise ofsubstantive right ofappeal conferred by the statute-Thus, cross objection maintainable-The subject matter and relief sought therein must . )- conform to the requirement ofSection 39{1)-However, ifappeal by reference to which cross objection has been filed is not maintainable, then the cross objection cannot be heard and decided on merits. Appellant and respondent entered into a contract and disputes arose therefrom. In terms of the arbitration clause in the agreement disputes were referred to the arbitrator. Arbitrator passed a non-speaking award.

• Respondent filed applicaHon for making award rule of the Court. .. ,4 Appell•nt filed objection to the same. Court dismissed the objeciion and made award rule of the court and decree was passed in terms of the award. 1 Respondent filed review petition praying for award of future interest on the decretal amount which was dismissed by Single Judge. Respondent then filed appeal before the Division Bench seeking condonation of delay in filing appeal by excluding time lost in prosecuting review petition. Appeal was dismissed as not maintainable on the ground that order put in issue and relief sought for in the appeal did not fall within Section 39(1) of the Act. Appellant also filed appeal against the order rejecting o~jection petition filed by it. Division Bench dismissed the appeal as time'barred. Meanwhile respondent had filed petition for execution of the decree, to which appellant filed objections which were overruled.

Appellant then filed an appeal before High Court which too was dismissed. Hence the present appeals. The appellant contended that its appeal in Hi11h Court, thou11h barred by time, could he treated and heard as cross objection. Dismissing the appeals, the Court HELD: I. I. In all the appeals filed under Section 39 of the Arbitration Act, 1940, the provisions of the Code of Civil Procedure, 1908 would be applicable. This would include the applicability of Order 41 including the right to take any cross objection under Rule 22 thereof to appeals under Section 39 of the Act. 1960-E, Fl 1. 2. Right to prefer cross objection partakes of the right to prefer an appeal. When the impugned decree or order is partly in favour of one party and partly in favour of the other, one party may rest contended by his partial success with a view to giving a quietus to the litigation.

However, he may like to exercise his right of appeal if he finds that the other party was not interested in burying the hatchet and proposed to keep the lis alive by pursuing the same before the appellate forum. He too may in such circumstances exercise his right to file appeal by taking cross objection. Thus taking any cross objection to the decree or order impugned is the exercise of right of appeal though such right is exercised in the form of • taking cross objection. The substantive right is the right of appeal; the form of cross objection is a matter of procedure. [960-G, H; 961-AI . 1. 3. Right to take a cross objection is the exercise of substantive right . of appeal conferred by a statute. Available grounds of challenge against the judgment, decree or order impugned remain the same whether it is an appeal or a cross-objection. The difference lies in the form and manner of exercising tht right; the terminus a quo-the starting point of limitation also differs. 1962-FI 1. 4.

Once it is held that by taking cross objection what is being exercised is the right of appeal itself, it follows that the subject-matter of cross objection and the relief sought therein must conform to the requirement of Section 39(1). In other words, a cross objection can be preferred if the applicant could have sought for the same relief by filing an appeal in conformity with the provisions of Section 39(1) of the Act. If the subject-matter of the cross objection is to impugn such an order which does not fall within the purview of any of the categories contemplated by clauses (i) to (vi) of sub-section (1) of Section 39 of the Act, the cross objection shall not be maintainable. 1963-E, Fl Bhadurma/ v. Bizaatunnisa Begum and Ors. , AIR (1964) AP 365; ! nayatu//ah Khan v. Diwanchand Mahajan and Ors.. AIR (1959) M. P. 58; M. C. D. ,. _ INTNL. SECURITY & INTELLIGENCE AGENCY LTD. 953 Ramasray Singh and Ors. v. Bibhisan Sinha and Ors.. AIR (1950), Calcutta 372; A. l. A.

Alagappa Chettiar v. Chockalingam Chetty and Ors. , AIR (1919) Madras 784 and Shri Baru Ram v. Smt. f'rasanni and Ors. , 119591 SCR 1403, referred to. Superintending Engineer and Ors. v. B. Subba Reddy, 11999) 4 SCC 423, overruled. 2. 1. Under Order 22 Rule 4 of the CPC the cross objection may be ·~; heard in spite of the original appeal having not been heard on merits when the original appeal being dismissed as withdrawn and the original appeal being dismissed for default in appearance or any other default. Just as the enabling provisions of cross objection contained in Sub-Rule (I) of Order 22 of the CPC are applicable to appeals under Section 39 of the Act the disabling provision contained in sub-Rule (4) too would apply to ' '> appeals under Section 39 of the Act in view of the generality of the pro,·isions contained in Section 41 of the Act.

To put it brieOy, if the Appellate Court forms an opinion that that original appeal itself was incompetent or not maintainable as it was filed against an order not falling within one of the clauses (i) to (vi) of sub-section (I) of Section 39 then the cross objection shall also fall to the ground and cannot be adjudicated upon on merits. It has to be remembered that law of limitation operates with all its rigour and equitable considerations are out of place in applying the law of limitation. The cross-objector ought to have filed appeal within the prescribed period of limitation calculated from the date of the order if he wished to do so. Having allowed the opportunity to lapse he gets another extended period of limitation commencing from the date of service of the notice of the appeal enabling him P. utting in issue for consideration of the Appellate Court the same grounds which he could have otherwise done by way of filing an appeal.

This extended period of limitation commences from the date of service of the notice of appeal and such notice ought to be in a valid or competent appeal. 1963-G, H; 964-A-DI 2. 2. If the appeal cannot be heard on merits for the reason that it • was no appeal in the eye of law, service of notice in such appeal would not furnish cause for commencement of a new period of limitation for filing appeal in the form of cross objection. The only exception in which the cross objection can still be heard is one where the memo of cross objection can be said to have been filed within the period prescribed for filing an original appeal against the impugned order and the memo also independently satisfies all the requirements of a memo of appeal.

Just as a belated or time-barred memo of cross-appeal can be treated-and taken up for consideration-as cross objection subject to its satisfying the requirements of cross-objection memo so also a cross-objection can be treated as crossappeal and heard as such subject to its satisfying the requirements as to maintainability of an appeal with regard to limitation and otherwise. 1964-D, E, Fl 2. 3. The original appeal filed by the respondents was found to be not maintainable as not covered by any of the clauses (i) to (vi) of subsection (1) of Section 39 of the Act. It was dismissed as incompetent. The question of the memo of appeal filed in the High Court by the appellants being treated as cross objection and being taken up for hearing on merits does not arise. Independently treated as an original appeal the same was held to be hopelessly barred by time as the delay was not explained -{ satisfactorily.

Thus, the High Court rightly dismissed the appeal filed by the appellants as time-barred and is not available to be heard and decided as cross objection in view of the original appeal filed in the High Court by the respondents having failed as incompetent. f965·F, G, H; 966-AJ Mis. Malhati Tea Syndicate Limited v. Revenue Officer, Ja/paiguri and Ors. , AIR (1973) Calcutta 78; Dhani Ram v. Smt. Sushi/a Devi, AIR (1977) HP 83; Chancha/gauri Raman/al and Ors. v. Narendrakumar Chandulal and Ors. , AIR (1986) Gujarat 55; Charity Commissioner v. Padmavati and Ors. , AIR (1956) Bombay 86; A. LA. Alagappa Chettiar v. Chockalingam Chetty and Ors. , AIR (1919) Madras 784, approved. Shankar Lal and Anr. v. Sarup Lal and Anr. , (1912) 34 ILR Allahabad 140 and Nanak Bakhsh and Ors. v. Wazir Singh and Ors. , (1909) 4 IC 625, disapproved. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1062 of2003. From the Judgment and Order dated 12. 07. 2002 of the High Court of Delhi in FAO (OS) 471/01.

WITH Civil Appeal No. 1063/2003. Dr. K. S. Sidhu, Ms.. Maldeep Sidu, Mayank Goel and·S. K. Sinha, for M. C. D. ,. , INTNL. SECURITY & INTELLIGENCE AGENCY LTD. [LAHOTI. J. ] 955 the Appellants. Mr. R. F. Nariman. Mrs. Kamlesh Mahajan and Ashok K. Mahajan. for the Respondent. The Judgment of the Cou11 was deli\ered by R. C. LAHOTI, J. Leave granted in both the SLPs. The respondent-International Security and Intelligence Agency Ltd. entered into a contract with the Municipal Corporation of Delhi whereby the former undertook to provide security services etc. to the latter. The agreement contained an arbitration clause obligating the parties to have the disputes arising between them and referable to the contract determined by reference to arbitration under the provisions of the Arbitration Act, 1940, hereinafter 'the Act', for short. It appears that originally \Vhen the agreement was entered into between the parties the respondents were a sole proprietory concern and the appellant no.

I was an institution known as Delhi Development Authority (Slum Wing). Subsequently, the respondents, the sole proprietory concern, was taken over , by a private limited company as the respondents presently are while the DDA (Slum Wing) was taken over by the Municipal Corporation of Delhi. Whether or not the arbitration clause incorporated in the contract entered into between the parties as they were then, would be binding on and available to be invoked by the present parties, was the subject matter of controversy raised by the appellants but we need not enter into the details thereof inasmuch as that is irrelevant for adjudicating upon the neat questions of law arising for decision in these appeals. Disputes arose between the parties and on a petition under Section 8 of the Act filed by the respondents, the Court directed the same to be determined through arbitration by a retired Judge of the High Court.

The order of the Court appointing the arbitrator and referring the disputes for determination by him achieved a finality as the appellants did not file any appeal there against and both the parties submitted to the jurisdiction of the arbitrator. On 14. 3. 1997, the arbitratpr gave an award. The award is a non speaking one. The arbitration agreement between the parties does not require the arbitratqr to make a reasoned award. The respondents filed an application under Section 14 of the Act for making the award a rule of the Court. On 26. 5. 1997, objections were filed by the appellants seeking setting aside of the award. Though the objection petition is styled as one under Sections 30 and 33 (both) of the Act. a perusal of the contents of the objection petition shows . -( that all the objections raised therein fall within the scope'of Section 30 of. the Act. During the pendency of the hearing on the said objection petition. on 20. 1.

2000 the appellants filed another objection petition styled as one under Section 33 of the Act wherein for the first time a plea was raised that so far as the respondents compauy is concerned it was not a party to the contract and therefore appointment of arbitrator at its instance and all the subsequent proceedings upto the date of making of the award were without jurisdiction and nullity and were liable to be adjudged so. By judgment dated 17. 1. 2001, the Court directed the objection raised on behalf of the appellants to be dismissed and the award to be made a rule. of the Court. A decree in terms of the award as upheld by the judgment was later drawn up and dated as 17. 1. 2001. On 20. 2. 7001, the respondents moved an application seeking review of the judgment.

The judgment and the decree drawn up did not award future interest on the decretal amount to the respondents and the only relief sought for in the review petition was to suitably modify the operative part of the judgment and the decree so as to include therein a direction for payment of interest from the date of decree till realization of the decretal amount. On 25. 9. 2001, the learned single Judge directed the review petition to be dismissed. · On 8. 10. 200I, the respondents filed an appeal before the Division Bench of the High Court feeling aggrieved by the judgment and decree dated 17. 1. 2001. Condonation of delay in filing the appeal by excluding the time lost in prosecuting the review petition was sought for. A perusal of the memo ofappeal shows that the only relief sought for in the appeal was for a suitable modification in the decree so as to include therein direction to pay future interest from the date of decree till realization. On 27. 10.

2001, the appellants too filed an appeal against the judgment and decree dated 17. 1. 200 I laying challenge to the order of the original court rejecting the objection petition filed by it and directing the award to be made a rule of the Court. The appeal .. was filed with a delay of 230 days. The appellants sought for condonation of delay in filing the appeal on the ground that it was awaiting the resu1t of revie"'·~ petition and was persuaded to file an appeal because ofthe respondents .. having filed an appeal. The cause assigned by the appellants for seeking condonation uf delay did not apparently amount to sufficient cause within the meaning of Section 5 of the Limitation Act. When the matter came up for hearing, the appellants submitted that the memo ofappeal filed on 27. 10. 2001, M. C. D. ,. INTNL SECURITY & INTELLIGENCE AGENCY LTD. [LAHOTl. J.

] 957 if barred by time and hence not maintainable as an appeal, could still be treated as a cross objection under Order 41 Rule 22 of the CPC which having been filed within the prescribed period of limitation for filing cross objection the same deserved to be heard and decided on merits along with the first appeal filed by the respondents herein. On 12th July, 2002. the first appeal filed by the appellants has been directed to be dismissed by the Division Bench as barred by time consequent upon the dismissal of its application under Section 5 of the Limitation Act. Feeling aggrieved by the judgment dated 12. 7. 2002, SLP(C) 20508/2002 has been filed by Municipal Corporation of Delhi. Subsequently by an order dated 20th September, 2002, the first appeal filed by the respondents has been directed to be dismissed by the Division Bench as not maintainable on the Division Bench forming an opinion that the • > are dismissed. Costs easy. N. J. Appeals dismissed. -~