IN THE HIGH COURT OF KARNATAKA AT BANGALORE

Dated this the 5^th day of August, 2009

PRESENT

THE HON'BLE MR. JUSTICE N KUMAR

AND

THE HON'BLE MR. JUSTICE B. SREENIVASE GOWDA

MISCELLANEOUS FIRST APPEAL No. 4402 of 2009 (AA/DB)

BETWEEN;

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Mr. Syed Rizwan Ahmed S/o late K S Nazir Ahmed Aged about 39 years Resding at "Hussaini Manzil" Salmara, Karkala Udupi District

... Appellant

(By Sri Padubidri Raghavendra Rao, Senior Counsel for M/s. Padubidri Raghavendra Rao Mohan Rao & Associates, Advocates)

AND:

1 Mr. Syed Ahmed S/o late Haji Syed Ummer Aged about 74 years Residing at No.303/22 39^th Cross, 8^th Block Jayanagar Bangalore

2 Mr. Syed Hussain S/o late Haji Syed Ummer Aged about 80 years Residing at Salmara Karkala Udupi District

Sri H Umesh Shetty Retired District & Sessions Judge Sole Arbitrator Ibros Apartments Jail Road Mangalore - 575 003 D.K. District

... Respondents

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(By Sri G S Kannur, Advocate for Sri Dhirendra N. Katti, Advocate for R1)

This MFA filed under Section 37(1)(b) of the Arbitration Conciliation Act, against the order dated 4-4-2009 passed in Arbitration Suit No.19/2007 on the file of the District Judge, Udupi District, Udupi, the suit filed by the plaintiff challenge the award passed by the 3^rd defendant is hereby dismissed.

This MFA coming on for admission this day, N. KUMAR J., delivered the following:

JUDGMENT

The appellant has preferred this appeal against the order passed by the District Judge, Udupi, dismissing the application filed under Section 34 of the Arbitration and Conciliation Act, 1996, for short, hereinafter referred to as the Act, on the

ground that the application is barred by limitation and Section 14 is not applicable to the facts of this case.

The appellant Syed Rizwan Ahamed, respondents-1 2. and 2, were partners in M/s Greenland Industries, a partnership firm. Dispute arose between the partners in the running of the business. The partnership provided for resolution of all disputes through arbitration by referring the dispute to a sole arbitrator Mr. C.R. Murali. «Respondents-1 and 2 called upon the appellant to agree for the arbitration. The appellant did not agree for the arbitration. Therefore, the first respondent filed CMP 126/01 before this Court seeking appointment of an arbitrator. This Court, by order dated 04.01.2002, appointed Justice N.R. Kudoor as the sole Subsequently, by order dated 05.04.2002, arbitrator. Sri. Umesh Shetty, Retired Distirct Judge was appointed was appointed as sole arbitrator in place of Justice N.R. Kudoor. Both the parties participated in the arbitration proceedings. Ultimately, an award came to be passed on 23.09.2005 by the third respondent-arbitrator. Aggrieved by the said award, the M

appellant herein filed an application under Section 34 of the Act before the Principal Civil Court of original jurisdiction, i.e., before the District Judge, Mangalore, challenging the award on various grounds. Respondents-1 and 2 entered appearance. They have filed detailed written statement. It was also contended that the said application filed by the appellant before the Mangalore Court is with malafide intention to harass the defendant, there are no bonafides, the Managlore Court has no jurisdiction to entertain the suit. Thereafter, the question of territorial jurisdiction was tried as a preliminary issue and the Court at Mangalore held that it had no jurisdiction to entertain the application under Section 34 of the Act and therefore ordered for return of the application. The said order was passed on 24.07.2007. The appellant took return of the application on 31.7.2007 in the morning and represented the same on the same day in the afternoon at the Principal Civil Court, which is the District Court at Udupi. The respondents-1 and 2 contended that Section 14 is not available to the appellant, the application filed on 31.07.2007 is clearly barred

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by time and therefore the application is liable to be dismissed on the ground that it is barred by time.

3. The Mangalore Court framed three issues. The third issue is regarding limitation. Both the parties adduced evidence on the said issues. Thereafter it recorded a finding that the appellant is not entitled to the benefit of Section 14 of the Limitation Act, as his conduct is not bonafide. Therefore it dismissed the application as barred by time, by its order dated 4^th April 2009. Aggrieved by the said order, the appellant is before this Court.

4. Sri. Padubidri Raghavendra Rao, learned Senior Counsel appearing for the appellant contended that the Apex Court in the case of CONSOLIDATED ENGINEERING ENTERPRISES Vs. PRINICPAL SECRETARY, IRRIGATION DEPARTMENT AND OTHERS, reported in (2008) 7 SCC 169, has held that Section 14 of the Limitation Act is attracted to an application filed under Section 34 of the Act, if the applicant is diligently pursuing the remedy in a wrong Court, the said

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period is to be excluded and benefit of Section 14 is available to such applicant. Though the said judgment was cited before the learned trial Judge, the learned Judge has not properly appreciated the same and thus committed serious error in dismissing the application on the sole ground of being barred by limitation.

5. the learned Counsel for the Per contra, respondents submitted that the learned trial Judge has noticed the said judgment. In fact he has followed the said judgment. The said judgment applies to a case where a person is bonafidely prosecuting the proceedings. It does not apply to a case where bonafide is lacking. Therefore, he submits that the appellant is a MBA Graduate, he had the assistance of two senior Advocates, a partnership business was being carried on in Karkala, all the properties are situated in Karkala and Karkala falls within Udupi District. Under these circumstances, the very fact that instead of filing the petition in Udupi District, they have filed in Mangalore District Court, shows the intention was to harass the respondent, as under

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the award, he was called upon to pay more than Rs.1,50,00,000-00. Therefore, he submits that the order passed by the trial Court is legal and valid and do not call for interference.

6. In the light of the aforesaid submissions, the question that arise for consideration is:

" Whether the trial Court was justified in holding that Section 14 of the Act is not attracted to the facts of this case?"

7. The facts are not in dispute. Challenging the award passed by the learned trial Judge, the appellant filed petition under Section 34 of the Act on 15.12.2005 before the Mangalore Court well within time. The respondent filed detailed objections and also contended that the Mangalore Court has no jurisdiction. Issues came to be framed. Thereafter, the Mangalore Court held that it has no jurisdiction and passed an order on 24.07.2007 directing return of the application to the appellant for presentation before the proper Court. In pursuance of the said order, the appellant took back

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the application on 31.07.2007 in the morning and represented the application in the evening before the District Court at Udupi on the very same day. It is that application which is now dismissed on the ground of want of bonafides on part of the appellant.

8. No doubt, Section 14 on which reliance is placed is attracted to a case where a party is prosecuting with due diligence the proceedings in a wrong forum, in good faith. Then only the said provision is attracted. In order to show any malafides or want of good faith, no material is placed on record. In order to find out whether it was prosecuted in good faith, bonafide, what is relied upon is the three factors namely:

• Respondents-1 and 2 filed caveat petition in the Mangalore Court anticipating application under Section 34 by the appellant;
• (2) The entire arbitration proceedings went on in Mangalore City;

(3) Two Senior Lawyers whom the appellant engaged and consulted advised him to file the application in Mangalore.

The appellant is a MBA graduate. He may be 9. specialist in his own field. He is not expected to know the territorial jurisdiction of a Court under the Arbitration Act. It is reasonable to believe that when a caveat petition is filed by the respondent in Mangalore Court, anticipating that the appellant is going to file an application under Section 34 of the Act, if the appellant believed that the said Court had jurisdiction, he cannot be found fault with. Similarly, when the entire arbitration proceedings went on in Mangalore, if he is under the impression that Mangalore District Court has jurisdiction over the said proceedings, again he cannot be found fault with. In the end of the day, he has engaged the best counsel available in the city and if they choose to file it in a Court which has no jurisdiction, certainly the party cannot be blamed. More over, it will take some more time for the people, the Advocates and everyone concerned to fully

appreciate the fact that Udupi District is a different district, and it is no more part of Dakshina Kannada District.

10. Anyone of the above reasons would constitute a bonafide reason for prosecuting the matter in a wrong forum. Unfortunately, the learned trial Judge has taken pains to review the entire case law on the point but missed the real point in issue and held that application is barred by time. In the facts of this case, we are satisfied that the appellant was bonafidely prosecuting in a wrong Court, in good faith and therefore, he is entitled to the benefit of Section 14 of the Act. In that view of the matter, the impugned order requires to be quashed. Hence, we pass the following order:

Appeal is allowed. The impugned order is hereby quashed. Entire matter is remitted back to Principal District Judge, Udupi, with a direction to restore the application filed under Section 34 of the Arbitration Act to its original file and decide the application on merits in accordance with law after affording sufficient opportunity to the parties. In fact, the award is dated 23.09.2005. Four years is wasted in finding out in which Court the matter is to be agitated, which runs counter to the object with which the Act is made. Everyone has contributed to the delay in disposal of the matter. As the appellant has also contributed, he has to compensate the respondent for no fault of theirs. In that view of the matter, he is liable to pay cost of Rs.5,000-00 to the respondents. That apart, the District Court is directed to take up this matter out of turn and dispose of the same within three months from the date of appearance of the parties.

Both the parties shall appear before the District Court Udupi on 17^th August, 2009 without waiting for any further notice from the District Court.

Sd/-JUDGE

Sd/-JUDGE

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