ASHALATA S LAHOTI Vs. HIRALAL LILLADHAR

JUDGEMENT

(1.) PARTIES in each of the petitions are different. The facts and cause of action is also different. All these petitions are however, being disposed off by a common judgment as one of the questions involved is a question common to all the three petitions and arguments had been advanced by various Counsel on that proposition of law. Arbitration Petition No. 82 of 1997 and 83 of 1997 are filed under the Arbitration Act, 1940. (Hereinafter referred to as the 1940 Act ). Arbitration Petition No. 318 of 1998 is filed under the Arbitration and Conciliation Act, 1996 (Hereinafter referred to as the 1996 Act ).

(2.) BEFORE coming to the common issue, it will be necessary to broadly set out the facts and the grounds raised in each of the petitions. Award 997 is dated 22-12-1995. The Award pertains to certain transactions, transacted on the Bombay Stock Exchange. The transactions are between a member and a non member. By an Award dated 22-12-1995 the Arbitrator held that the Law of limitation, namely, Indian Limitation Act, 1963 is attracted and consequently the claims were time barred and cannot be entertained. The grounds to challenge the Award are as under :-

(3.) DR. Chandrachud for the respondent in Arbitration Petition No. 82 and 83 of 1997 and V. V. Tulzapurkar learned Counsel for the petitioner in Arbitration Petition No. 318 of 1998 arguing on behalf of the petitioners contend that the transactions between a member and non member is not a transaction under the Act. They contend that the Arbitration is pursuant to the contract signed between a member and a non member. It is contended that at the highest, the Agreement for Arbitration can be said to be by way of incorporation where by the procedure as laid down under the bye-laws of the Bombay Stock Exchange has been adopted. Adopting such procedure, it is contended does not mean that the Arbitration is pursuant to a provision in a statute. It is therefore, contended that such a transaction between a member and non member is not controlled by the bye-laws framed by the Act and as such the provisions of the Indian Limitation Act, 1963 will apply. In support, it is contended that such an issue arose though not exactly on the same point in the case of (Collector of Aurangabad and another v. Central Bank of India and another), A. I. R. 1967 Supreme Court 1831. In that case, tax dues were sought to be recovered as arrears of land revenue as the Act itself so provided. If the arrears were arrears of land revenue, it had first priority over other dues. The Apex Court had to consider the question as to whether the tax dues which could be recovered as arrears of land revenue could be said to be "land revenue". The Apex Court negating the contention held that merely because the procedure for recovering the tax was as if it was an arrears of land revenue, by itself would not convert "tax" into land revenue to get priority for payment. Reliance was also placed on a Judgment of the Division Bench of this Court in the case of (Savitra Khandu Berad v. The Nagar Agricultural Sale and Purchase Co-operative Society Limited, Ahmednagar), reported in 49 Bom. L. R. 425. Reference to Arbitration thereunder was made under section 54 of the Bombay Co-operative Societies Act, 1925. The question which arose was whether the Indian Limitation Act, 1908 applies to claim for adjudication as also the procedure prescribed in section 54 of the Bombay Co-operative Society Act, 1925. A Division Bench of this Court held that Arbitration under section 54 was a statutory arbitration and as such, section 37 of the Arbitration Act, 1940 is not applicable. The Division Bench observed that in a arbitration proceeding where the source of the authority of the Arbitrator is a statute, and not an Agreement between the contending parties, a condition that the Arbitrator must decide the dispute according to the law of limitation cannot in the absence of a statutory provision be implied. The Division Bench observed that the legislature has by section 46 of the Arbitration Act expressly excluded the application of section 37 to statutory arbitrations, and if notwithstanding that express exclusion the provisions of the Indian Limitation Act are applied, the Court would in effect be rendering the exclusion Clause ineffective. To similar facts, reliance has also been placed on another Division Bench judgment of this Court in the case of (The Textile Labour Association, Ahmedabad v. The Labour Appellate Tribunal of India and others), A. I. R. 1956 Bombay 746. The Division Bench speaking through Chagla, C. J. , observed that the provisions of the Arbitration Act which the Court was concerned are made applicable to a statutory arbitration and what section 46 provides is that the provisions of Arbitration Act shall apply except in so far as Arbitration Act is inconsistent with any other enactment or rules made thereunder which provide for a statutory arbitration. Thereafter the Division Bench observed that section 46 deals with those statutory arbitrations where the statute itself is looked upon as an Arbitration Agreement and in so far as the case which the Division Bench was considering was not a statutory arbitration in the sense in which section 46 intends to be. The Arbitration was under section 66 by a written submission to Arbitration of a private party. Therefore, a distinction was sought to be made between a statutory arbitration and a private arbitration. In (Hemendra Shah petitioner v. Stock Exchange, Bombay and others, respondents), reported in 1995 (2) Mh. L. J. 770, a learned Single Judge of this Court was considering the bye-laws framed under the Securities Contracts (Regulation) Act, 1956 and the provisions of the Arbitration Act. In para 14, the learned Single Judge observed that section 37 does not apply to an Arbitration under the Rules, Bye-laws and Regulations of the Bombay Stock Exchange. In para 19, the learned Single Judge observed that bye-laws 226 (a) and 226 (c) make it very clear that all such contracts or dealings irrespective of the fact that there may be no contract notes are deemed to be subject to these Rules, Bye-laws and Regulations. It is therefore, clear that these Rules, Bye-laws and Regulations will govern such contracts and dealings. This judgment is sought to be distinguished on the ground that it was not a judgment between a member and non member. On a perusal of the facts, it will be observed that it was a dispute between a member and a non-member. Hence, the ratio of that judgment would be applicable to the case in question. However, I proceed on the footing that the said judgment does not cover a dispute between a member and a non member. At this stage, I may also refer to the reference made to the case of (M/s. Trilokchand Motichand and others v. V. H. B. Munshi, Commissioner of Sales Tax, Bombay and another), A. I. R. 1970 Supreme Court 898 to contend that the law of limitation and/or latches is a matter of public policy. The need for a law of Limitation as stated in the Halsbury Laws of England (Third Edition volume 24) are for three different reasons:-