Whether a settlement of disputes or differences through a two-tier arbitration procedure as provided for in Clause 14 of the contract between the parties is permissible under the laws of India? (2) Assuming that a two-tier arbitration procedure is permissible under the laws of India, whether the award rendered in the appellate arbitration being a “foreign award” is liable to be enforced under the provisions of Section 48 of the Arbitration and Conciliation Act, 1996 7 at the instance of Centrotrade? If so, what is the relief that Centrotrade is entitled to?

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2562 OF 2006
M/S. CENTROTRADE MINERALS AND
METALS INC. …APPELLANT
VERSUS
HINDUSTAN COPPER LTD. ...RESPONDENT
WITH
CIVIL APPEAL NO.2564 OF 2006
J U D G M E N T
R.F. Nariman, J.
1. This matter comes to this Bench after two previous forays to this Court.
2. The appellant before us, in Civil Appeal No.2562 of 2006, is a U.S.
Corporation who had entered into a contract for sale of 15,500 DMT of
copper concentrate to be delivered at the Kandla Port in the State of
Gujarat, the said goods to be used at the Khetri Plant of the respondent
Hindustan Copper Ltd. (hereinafter referred to as “HCL”/ “the
respondent”), who is the appellant in the other Civil Appeal No.2564 of
2006. After all consignments were delivered, payments had been made
in accordance with the contract. However, a dispute arose between the
2
parties as regards the quantity of dry weight of copper concentrate
delivered. Clause 14 of the agreement contained a two-tier arbitration
agreement by which the first tier was to be settled by arbitration in India.
If either party disagrees with the result, that party will have the right to
appeal to a second arbitration to be held by the ICC in London. The
appellant M/s Centrotrade Minerals and Metals Inc. (hereinafter referred
to as “Centrotrade”/ “the appellant”) invoked the arbitration clause. By
an award dated 15.06.1999 the arbitrator appointed by the Indian
Council of Arbitration made a Nil Award. Thereupon, Centrotrade
invoked the second part of the arbitration agreement, as a result of
which Jeremy Cook QC, appointed by the ICC, delivered an award in
London, dated 29.09.2001, in which the following amounts were
awarded:
“27. For the above reasons I THEREFORE AWARD
and ADJUDGE that
(1) HCL do pay Centrotrade the sum of $152,112.33,
inclusive of interest to the date of the Award in respect
of the purchase price for the first shipment.
(2) HCL do pay Centrotrade the sum of $15,815.59,
inclusive of interest to the date of this Award in respect
of demurrage due on the first shipment.
(3) HCL, do pay Centrotrade the sum of $284,653.53,
inclusive of interest to the date of this Award in respect
of the purchase price on the second shipment.
(4) HCL do pay Centrotrade their legal costs in this
arbitration in the sum of $82,733 and in addition the
3
costs of the International Court of Arbitration, the
Arbitrator's fees and expenses totalling $29,000.
(5) HCL do pay Centrotrade compound interest on the
above sums from the date of this Award at 6% p.a. with
quarterly rests until the date of actual payment.”
3. Even before Jeremy Cook QC could deliver his award, HCL, during the
pendency of the proceedings before the arbitrator in London, filed a suit
in the Court at Khetri, in the State of Rajasthan, challenging the
arbitration clause. By an Order dated 27.04.2000, in a revision petition
filed against the Order of the Khetri Court, the High Court at Rajasthan
restrained the appellant from taking further steps in the London
arbitration, pending hearing and disposal of the revision petition. This
ad interim ex parte stay granted by the High Court was ultimately
vacated by the Supreme Court only on 08.02.2001. Meanwhile, we are
reliably informed that Mr. Cook, the learned arbitrator, referred the
matter of stay of the parties from proceeding with the London arbitration
to the ICC Court, which then decided that the arbitrator could continue
with the arbitral proceedings.
4. When the said award dated 29.09.2001 was sought to be enforced by
Centrotrade in India, a learned Single Judge of the Calcutta High Court,
after considering the objections of HCL, dismissed the Section 48
petition filed by HCL, as a result of which the aforesaid foreign award
became executable in India. However, a Division Bench of the Calcutta
4
High Court, by its judgment dated 28.07.2004, held that an appeal would
be maintainable inasmuch as the London award could not be said to be
a foreign award, but that a two-tier arbitration clause would be valid.
However, since the Indian award and the London Award, being
arbitration awards by arbitrators who had concurrent jurisdiction, were
mutually destructive of each other, neither could be enforced, as a result
of which the appeal was allowed and the judgment of the learned single
Judge was set aside.
5. At this juncture, the matter came to a Division Bench of this Court. Two
separate judgments were delivered by S.B. Sinha, J. and Tarun
Chatterjee, J. reported in Centrotrade Minerals & Metals Inc. v.
Hindustan Copper Ltd. (2006) 11 SCC 245. After setting out the facts
of the case, S.B. Sinha,J. held that a two tier clause of the kind
contained in clause 14 of this agreement is non est in the eye of law and
would be invalid under Section 23 of the Indian Contract Act. In this view
of the matter, the foreign award could not enforced in India and
Centrotrade’s appeal was therefore dismissed, the appeal filed by HCL
being allowed. Tarun Chatterjee, J. set out four questions in paragraph
134 as follows:
“134. We have heard Mr Sarkar, learned Senior
Counsel appearing for Centrotrade and Mr Debabrata
Ray Choudhury, learned Senior Counsel for HCL. I
have also examined the entire material on record
including the arbitration agreement, the awards and
5
judgments of the Division Bench as well as the learned
Single Judge. Before us, the following issues were
raised by the learned counsel for the parties for decision
in the appeals:
(1) Whether the second part of clause 14 of the
agreement providing for a two-tier arbitration was valid
and permissible in India under the Act?
(2) If it is valid, on the interpretation of clause 14 of the
agreement, can it be said that the ICC arbitrator sat in
appeal against the award of the Indian arbitrator?
(3) Whether the ICC award is a foreign award or not?
(4) Whether HCL was given proper opportunity to
present its case before the ICC arbitrator?”
6. These questions were answered by stating that the two-tier arbitration
process was valid and permissible in Indian law; that the ICC arbitrator
sat in appeal against the award of the Indian arbitrator; that the ICC
award was a foreign award; but that since HCL was not given a proper
opportunity to present its case before the ICC arbitrator, Centrotrade’s
appeal would have to be dismissed and HCL’s appeal allowed.
7. The matter then came on a reference before a 3-Judge bench of this
Court and is reported in Centrotrade Minerals & Metal Inc. v.
Hindustan Copper Ltd. (2017) 2 SCC 228. The reference order was
referred to in paragraph 1 of the judgment of Lokur,J., as follows:
“These appeals have been referred [Centrotrade
Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006)
11 SCC 245] to a Bench of three Judges in view of a
difference of opinion between the two learned Judges
of this Court. The controversy is best understood by
referring to the proceedings recorded on 9-5-2006:
6
Hon'ble Mr Justice S.B. Sinha pronounced his
Lordship's judgment of the Bench comprising his
Lordship and Hon'ble Mr Justice Tarun Chatterjee.
Leave granted. For the reasons mentioned in the signed
judgment, civil appeal arising out of SLP (C) No. 18611
of 2004 filed by M/s Centrotrade Minerals and Metal
Inc., is dismissed and civil appeal arising out of SLP (C)
No. 21340 of 2005 (actually 2004) preferred by
Hindustan Copper Ltd. is allowed. In the peculiar facts
and circumstances of the case, the parties shall pay and
bear their own costs. Hon'ble Mr Justice Tarun
Chatterjee pronounced his Lordship's judgment
disposing of the appeals in terms of the signed
judgment. In view of difference of opinion, the matter is
referred to a larger Bench for consideration. The
Registry of this Court shall place the matter before the
Hon'ble the Chief Justice for constitution of a larger
Bench.
The decisions rendered by Sinha and Chatterjee, JJ.
are reported as Centrotrade Minerals & Metals
Inc. v. Hindustan Copper Ltd. [Centrotrade Minerals &
Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SCC
245]”
Paragraph 5 of the aforesaid judgment set out the two questions that
arose in this case as follows:
“5. The issues that have arisen for our consideration, as
a result of the difference of opinion between the learned
Judges, are as under:
(1) Whether a settlement of disputes or differences
through a two-tier arbitration procedure as provided for
in Clause 14 of the contract between the parties is
permissible under the laws of India?
(2) Assuming that a two-tier arbitration procedure is
permissible under the laws of India, whether the award
rendered in the appellate arbitration being a “foreign
award” is liable to be enforced under the provisions of
Section 48 of the Arbitration and Conciliation Act, 1996
7
at the instance of Centrotrade? If so, what is the relief
that Centrotrade is entitled to?
For the present, we propose to address only the first
question and depending upon the answer, the appeals
would be set down for hearing on the remaining issue.
We have adopted this somewhat unusual course since
the roster of business allowed us to hear the appeals
only sporadically and therefore the proceedings before
us dragged on for about three months.”
Since the first question was answered in the affirmative, the Court
concluded:
“Conclusion
48. In view of the above, the first question before us is
answered in the affirmative. The appeals should be
listed again for consideration of the second question
which relates to the enforcement of the appellate
award.”
8. This is how the appeals have been listed again for consideration of the
second question, which relates to enforcement of the London award.
9. Shri Gourab Banerjee, learned senior counsel appearing on behalf of
Centrotrade, has taken us through the record and has relied strongly on
this Court’s recent judgment in Vijay Karia v. Prsymian Cavi E Sistemi
SRL 2020 (3) SCALE 494. He then referred in detail to the portions of
the award which dealt with the natural justice aspect of the case, as well
as the judgment of the Single Judge of the Calcutta High Court which
dealt with the same. He then read out to us Chatterjee J’s views
contained in Centrotrade [2006] (supra) and contended that ample
opportunity had been given by the arbitrator to HCL to present its case,
8
but that HCL, having an Indian award in its pocket, wanted somehow to
abort the London arbitration proceedings. It first filed the suit that has
been referred to, and obtained ex parte ad interim stay against parties
from proceeding in the arbitration on 27.04.2000, which was vacated by
the Supreme Court only on 08.02.2001. Jeremy Cook QC afforded as
many as six opportunities to HCL to present its case and bent over
backwards by extending time for filing of submissions and documents
several times, and even considered documents that were filed by HCL
after the last deadline had been extended, and then passed the award.
He, therefore, attacked Chatterjee J’s judgment, stating that it was
factually incorrect when it stated that a fair opportunity had not been
given to HCL to present its case. Several other judgments both Indian
and foreign were cited by Shri Banerjee in support of his submission.
Apart from relying heavily on the judgment in Vijay Karia (supra), he
relied upon the approach to a Section 48 proceeding by quoting from
Redfern and Hunter on International Arbitration 6
th Edn. and Merkin and
Flannery on the Arbitration Act, 1996.
10.Shri Harin P. Raval, learned senior counsel appearing on behalf of HCL,
has taken a preliminary submission that the only point of difference
between S.B. Sinha,J. and Tarun Chatterjee,J. was on whether the twotier arbitration clause was valid in law. Once that point had been
answered, the question of being unable to present one’s case, not
9
having been decided by S.B. Sinha, J., was not referred to the larger
bench as there was no difference of opinion between the learned
Judges on this aspect and therefore this aspect cannot now be
adjudicated upon. Even otherwise, he argued, basing his submissions
on a list of dates and a paper book of documents filed before this Court
for the first time, to show that as a matter of fact once the arbitrator had
extended time, the last extension being till 12.09.2001, he ought to have
allowed further time in which, apart from legal submissions furnished,
documents could have been furnished in support of HCL’s case. This is
particularly in view of the fact that on 11.09.2001, a terrorist attack had
taken place in New York as a result of which globally, there was
disruption of transport and communication, and therefore it was very
difficult for HCL to send documents within the requisite time. He argued
that had such documents been seen, there can be no doubt that this
one-sided award might well have been in his client’s favour, as a result
of which serious prejudice had been caused to his clients. Even
otherwise, he argued that the issue of jurisdiction was to be taken as a
preliminary question before the learned arbitrator, after which further
proceedings were to take place. This was never done by the learned
arbitrator. Also, the learned arbitrator in proceeding with the arbitration
despite the ex parte ad interim stay being granted by an Indian court
10
resulted in his client being unable to present his case before the
arbitrator.
11.Having heard learned senior advocates for both parties, it is first
necessary to set out the portions of the award dated 29.09.2001 which
deal with the aspect of HCL being unable to present its case before the
learned arbitrator. The learned arbitrator, after referring to the Rajasthan
High Court proceedings and the Supreme Court’s vacation of the stay,
then found:
“7. As set out in paragraph 6 above, HCL, by a series of
letters to the International Court of Arbitration and to
me, in my capacity as arbitrator, maintained that any
arbitration commenced under the second paragraph of
Clause 14 of the contract is null and void and until
August 2001, refused to participate in it, even though
they were invited by me to do so without prejudice to
their jurisdictional objections. Despite this stance, Fox
& Mandal were at all times consulted about the
procedural aspects of this arbitration, were asked for
their submissions in relation to the procedure, progress
and substance of the dispute, received copies of all
correspondence passing between Centrotrade and
myself and of all submissions made and have been
given every opportunity to take any point which they
wished to take in their defence. By Orders made on 20th
December 2000, 19th January 2001 and 3rd May 2001,
I directed that Centrotrade serve submissions and
supporting evidence, followed by HCL's Response and
evidence in support, with a right in Centrotrade to put in
a reply in accordance with a clear timetable. When no
Defence Submissions or supporting evidence was
served by HCL within the time prescribed, I sent them a
fax on 30th July 2001,giving them one last opportunity
to inform me by return of any intention on their part to
put in a Defence and to seek an extension of time for
doing so.
11
8. Following a further fax on 9th August 2001, in which I
informed the parties that I was proceeding with the
Award, on 11th August I received a fax from Fox &
Mandal requesting an extension of time of one month to
put in a defence. On 16th August I ordered that any
submissions in support of an application for an
extension of time for a defence and any submissions on
the substantive merits of the dispute, together with any
evidence relied on in relation to the application and any
submissions should be received by me by 31st August
2001, in the absence of which I would not give them any
consideration. On 27th August Fox & Mandal sought a
further 3 weeks’ extension of time for making their
submissions and serving supporting evidence. I allowed
a final extension for these submissions and evidence
until 12th September 2001. Seventy - five pages of
submissions were received by me on 13th September
2001, without any supporting evidence or any
justification for not complying with my earlier orders. No
grounds were put forward for any application for an
extension of time for putting in Defence submissions.
Indeed no formal application was made for an extension
of time to do so. HCL have therefore not attempted to
justify their earlier stance nor to give me any reason for
considering their submissions on the merits which are
made out of time. Centrotrade have objected to these
submissions contending that they are inadmissible
because of HCL’s persistent breaches of my orders.
Nonetheless, though not bound to do so because of
their belated nature, I have considered those
submissions and taken them fully into account in
making this Award. I made plain in my orders that no
further material provided thereafter would be taken into
account, and I have not done so.
9. In their submissions HCL maintained their arguments
as to lack of jurisdiction and the invalidity of this London
Arbitration but without prejudice to that, put forward
submissions both on the jurisdictional arguments, the
nullity of the second paragraph of the Arbitration clause
in the contract and on the merits of the dispute. It is clear
that this dispute can be determined on the documents
12
turning, as it does essentially on points of construction
of the contract and matters of Indian law.”
 (emphasis supplied)
Ultimately, the arbitrator awarded costs for the London proceeding,
declining to award costs for the arbitration that had taken place in India.
12.The learned Single Judge of the Calcutta High Court, while dealing with
the objections as to breach of natural justice, dismissed the aforesaid
objections as follows:
“Mr. Roy Choudhury then submits that in view of
Section 48(1)(b) of the Act, the award is not
enforceable, as neither notice of appointment of
arbitrator was given to the respondent, nor was it given
opportunity to present its case. The arbitrator followed
the ICC Arbitration and Conciliation Rules, though they
were not mentioned by the parties in the arbitration
agreement, hence in view of Section 48(1)(b) of the Act
the award was not enforceable.
Mr. Sarkar replies that the respondent was given all
opportunities to present its case, but it showed total
non-cooperation with the arbitrator. The arbitral
procedure followed by the arbitrator does not militate
against the arbitration agreement.
I find that the petitioner approached the ICC
International Court of Arbitration on February 22nd
,
2000. The respondent filed a suit in the Court of Civil
Judge, Junior Division, Khetry on March 28th
2000; it wanted to stop the second arbitration in terms
of the arbitration agreement. The arbitrator was
appointed on June 7
th, 2000. Till August 2001 the
respondent maintained that the second part of the
arbitration agreement being against the public policy of
India, the arbitration through the ICC International Court
of Arbitration was not permissible. On this ground the
respondent refused to participate in the arbitral
proceeding. It took the matter upto the Apex Court.
13
Ultimately when it failed to obtain any order to stop the
arbitration, it filed its submissions running into seventyfive pages. Though the papers reached the arbitrator
beyond the stipulated date, he has considered such
submissions. He, however, did not find any merit in the
case made out by the respondent. The arbitrator has
recorded that at every stage he consulted the
procedural aspects with the solicitors representing the
respondent. There is no proof that the respondent ever
objected to the rules and procedure followed by the
arbitrator or that the arbitrator followed a procedure not
contemplated in the agreement. It is apparent from the
award that all opportunities were given to the
respondent to present its case. I find no merit in the
contentions that notice regarding appointment of the
arbitrator was not given to the respondent or that the
terms of reference were settled behind its back. The
respondent had full knowledge of everything; it was
informed about everything. Hence I find no substance
in the grievance that the respondent was unable to
present its case or that procedure not contemplated by
the agreement of the parties was followed by the
arbitrator.”
13.In appeal, the Division Bench, in view of its finding that the award is not
a foreign award, declined to apply Section 50 of the Arbitration Act, 1996
(hereinafter referred to as “Arbitration Act”), and then stated that the
London award is declared to be inexecutable so long as the Indian Nil
Award stands. In view of this finding, it did not go into the natural justice
point argued by HCL.
14.In the first round in this court, S.B. Sinha,J. did not go into the natural
justice point, in view of his finding that the arbitration clause itself was
null and void. Chatterjee,J., after agreeing with Centrotrade’s case on
the arbitration clause, then went into issue no. 4 and held as follows:
14
“Issue 4
Whether HCL was given proper opportunity to present
its case before the ICC arbitrator?
164. Under Section 48(1)(b) enforcement of a foreign
award can be refused if:
“48. (1)(b) the party against whom the award is invoked
was not given proper notice of the appointment of the
arbitrator or of the arbitral proceedings or was
otherwise unable to present his case;” (emphasis
supplied)
165. In the case at hand, HCL had the knowledge of
appointment of the arbitrator. In fact, it had approached
the Indian courts to stall the ICC arbitral proceedings.
On a special leave petition filed by Centrotrade against
the order of the Rajasthan High Court staying the ICC
arbitral proceedings, an order was passed by this Court
by which the stay order of the Rajasthan High Court was
vacated on 8-2-2001 and directions were given for the
ICC proceedings to continue in accordance with law.
166. It is true, in his award, Mr Jeremy Lionel Cooke,
the ICC arbitrator has noted that he was appointed by
ICC on 7-6-2000 and that HCL refused to participate in
the arbitral proceedings on the ground that the second
arbitration clause in the contract was null and void. He
directed Centrotrade and HCL to file submissions and
supporting evidence through orders dated 20-12-2000,
19-1-2001 and 3-5-2001. However, HCL did not comply
with these orders. On 30-7-2001, he sent a fax to HCL
to find out whether they intended to file their defence.
He sent a further fax on 9-8-2001 informing them that
he was proceeding with the award. (emphasis supplied)
Then on 11-8-2001, the ICC arbitrator received a reply
seeking extension of time. He granted time till 31-8-
2001. He received another request from HCL's
representatives on 27-8-2001 for further extension of
time. He granted extension till 12-9-2001. He received
the first set of submissions filed by HCL, without
supporting evidence, on 13-9-2001. He considered
those submissions and took them into account while
15
making the award. He has further recorded in his award
that:
“I made plain in my orders that no further material
provided thereafter would be taken into account, and I
have not done so.”
(emphasis supplied)
This last statement indicates that he received further
material from HCL, which he did not consider while
making the award. On the face of it, it seems that HCL
was given sufficient opportunity to present its case by
the arbitrator. However, this question must be looked
into from the then existing situation.
167. It must be noted that this Court vacated the stay
on the proceedings on 8-2-2001. The first direction of
the ICC arbitrator to the parties, after the order of this
Court on 8-2-2001, to serve submissions to him was
made on 3-5-2001 i.e. after a time gap of nearly 3
months. Cooperation of HCL was next requested only
on 30-7-2001 i.e. after a time gap of nearly 2 months.
Then the communication on 9-8-2001 stated that the
arbitrator was proceeding with the award. This time
there was a response from HCL. Upon these requests,
a time-limit of nearly one month ending on 12-9-2001
was given to HCL. The arbitrator received the first set
of submissions filed by HCL on 13-9-2001. Then he
made the award 16 days later on 29-9-2001. It seems
that between 13-9-2001 and 29-9-2001, he did receive
further material from HCL which he did not consider
while making the award on the ground that they were
received after the time-limit granted by him to HCL had
lapsed.
168. It is clear from the above layout of facts that there
have been delays in the arbitral proceedings right from
the beginning when Centrotrade approached ICC on
22-2-2000. Most of the delays were due to HCL's
refusal to participate in the proceedings. However,
there were some delays which cannot be related to
HCL's conduct. For instance, the period from 8-2-2001
when the order of this Court was made to 3-5-2001
when the first direction of the arbitrator was made. The
16
whole arbitral proceeding was conducted in a manner
indicative of lack of urgency. Further, I find merit in the
submission of HCL that due to the total dislocation of air
traffic caused by the terrorist attack of 11-9-2001, the
materials sent by HCL to the ICC arbitrator reached
late. Under these circumstances, a delay of few days in
serving their submissions with supporting evidence,
after having accepted to participate in the arbitral
proceedings, seems excusable and should have been
excused. Considering the overall picture of the
circumstances and the delays, refusal of the arbitrator
to consider the material received by him after 13-9-2001
and before 29-9-2001, seems to be based on a frivolous
technicality. The arbitrator ought to have considered all
the material received by him before he made the award
on 29-9-2001. Considering the decisions in Hari Om
Maheshwari v. Vinitkumar Parikh [(2005) 1 SCC 379]
and Minmetal Germany GmbH v. Ferco Steel Ltd. [
(1999) 1 All ER (Comm) 315] it is true that where a party
is refused an adjournment and where it is not prevented
from presenting its case, it cannot, normally, claim
violation of natural justice and denial of a fair hearing.
However, in the light of the delays, some of which were
not attributable to HCL's conduct, it was only fair to
excuse HCL's lapse in filing the relevant material on
time. Therefore, it can be said that HCL did not get a
fair hearing and could not effectively present its case.
169. For the reasons aforesaid, I am of the view that
HCL could not effectively present its case before the
ICC arbitrator and therefore enforcement of the ICC
award should be refused in view of Section 48(1)(b) of
the Act. Accordingly, the judgment of the Division Bench
and also the judgment of the learned Single Judge of
the Calcutta High Court must be set aside and the
matter be remitted back to the ICC arbitrator for fresh
disposal of the arbitral proceedings in accordance with
law after giving fair and reasonable opportunity to both
the parties to present their cases before him. In view of
the fact that I have set aside the award of the ICC
arbitrator on the ground that HCL was unable to
effectively present its case before the ICC arbitrator, in
compliance with Section 48(1)(b) of the Act, I direct the
17
ICC arbitrator to pass a fresh award within three months
from the date of commencement of the fresh arbitral
proceedings.”
15.The law on the subject matter of Section 48(1)(b) of the Arbitration Act
has been laid down in a recent judgment of this Court in Vijay Karia
(supra). In paragraph 21 of the aforesaid judgment, this Court stated
that it was important to note that no challenge was made to the aforesaid
award under the English arbitration law, though available, just as in the
facts of the present case. This Court then set out the parameters of a
Section 48 challenge which reaches this Court as follows:
“24. Before referring to the wide ranging arguments on
both sides, it is important to emphasise that, unlike
Section 37 of the Arbitration Act, which is contained in
Part I of the said Act, and which provides an appeal
against either setting aside or refusing to set aside a
‘domestic’ arbitration award, the legislative policy so far
as recognition and enforcement of foreign awards is
that an appeal is provided against a judgment refusing
to recognise and enforce a foreign award but not the
other way around (i.e. an order recognising and
enforcing an award). This is because the policy of the
legislature is that there ought to be only one bite at the
cherry in a case where objections are made to the
foreign award on the extremely narrow grounds
contained in Section 48 of the Act and which have been
rejected. This is in consonance with the fact that India
is a signatory to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 1958
(hereinafter referred to as “New York Convention”) and
intends - through this legislation - to ensure that a
person who belongs to a Convention country, and who,
in most cases, has gone through a challenge procedure
to the said award in the country of its origin, must then
be able to get such award recognised and enforced in
India as soon as possible. This is so that such person
18
may enjoy the fruits of an award which has been
challenged and which challenge has been turned down
in the country of its origin, subject to grounds to resist
enforcement being made out under Section 48 of the
Arbitration Act. Bearing this in mind, it is important to
remember that the Supreme Court’s jurisdiction under
Article 136 should not be used to circumvent the
legislative policy so contained. We are saying this
because this matter has been argued for several days
before us as if it was a first appeal from a judgment
recognising and enforcing a foreign award. Given the
restricted parameters of Article 136, it is important to
note that in cases like the present - where no appeal is
granted against a judgment which recognises and
enforces a foreign award - this Court should be very
slow in interfering with such judgments, and should
entertain an appeal only with a view to settle the law if
some new or unique point is raised which has not been
answered by the Supreme Court before, so that the
Supreme Court judgment may then be used to guide
the course of future litigation in this regard. Also, it
would only be in a very exceptional case of a blatant
disregard of Section 48 of the Arbitration Act that the
Supreme Court would interfere with a judgment which
recognises and enforces a foreign award however
inelegantly drafted the judgment may be. With these
prefatory remarks we may now go on to the
submissions of counsel.”
The Court then went on to refer to Minmetals Germany GmbH v. Ferco
Steel Ltd. (1999) C.L.C. 647 in paragraph 59, and Jorf Lasfar Energy
Co. v. AMCI Export Corp. 2008 WL 1228930 in paragraph 61 as
follows:
“59. The English judgments advocate applying the test
of a person being prevented from presenting its case by
matters outside his control. This was done in Minmetals
Germany GmbH v. Ferco Steel Ltd. (1999) C.L.C. 647
as follows:
19
“In my judgment, the inability to present a case to
arbitrators within s.103(2)(c) contemplates at least
that the enforcee has been prevented from
presenting his case by matters outside his control.
This will normally cover the case where the
procedure adopted has been operated in a manner
contrary to the rules of natural justice. Where,
however, the enforcee has, due to matters within his
control, not provided himself with the means of
taking advantage of an opportunity given to him to
present his case, he does not in my judgment, bring
himself within that exception to enforcement under
the convention. In the present case that is what has
happened”
xxx xxx xxx
61. An application of this test is found in Jorf Lasfar
Energy Co. v. AMCI Export Corp. 2008 WL 1228930,
where the U.S District Court, W.D. Pennsylvania decided
that if a party fails to obey procedural orders given by the
arbitrator, it must suffer the consequences. If evidence is
excluded because it is not submitted in accordance with
a procedural order, a party cannot purposefully ignore
the procedural directives of the decision-making body
and then successfully claim that the procedures were
unfair or violative of due process. Likewise, in Dongwoo
Mann+Hummel Co. Ltd. v. Mann+Hummel GmbH
(2008) SGHC 275, the Singapore High Court held:
“145. A deliberate refusal to comply with a discovery
order is not per se a contravention of public policy
because the adversarial procedure in arbitration
admits of the possible sanction of an adverse
inference being drawn against the party that does
not produce the document in question in compliance
with an order. The tribunal will of course consider all
the relevant facts and circumstances, and the
submissions by the parties before the tribunal
decides whether or not to draw an adverse inference
for the non-production. Dongwoo also had the liberty
to apply to the High Court to compel production of
the documents under s 13 and 14 of the IAA, if it was
not content with merely arguing on the question of
20
adverse inference and if it desperately needed the
production by M+H of those documents for its
inspection so that it could properly argue the point
on drawing an adverse inference. However,
Dongwoo chose not to do so.
146. Further, the present case was not one where a
party hides even the existence of the damning
document and then dishonestly denies its very
existence so that the opposing party does not even
have the chance to submit that an adverse inference
ought to be drawn for non-production. M+H in fact
disclosed the existence of the documents but gave
reasons why it could not disclose them. Here,
Dongwoo had the full opportunity to submit that an
adverse inference ought to be drawn, but it failed to
persuade the tribunal to draw the adverse inference.
The tribunal examined the other evidence before it,
considered the submissions of the parties and
rightfully exercised its fact finding and decision
making powers not to draw the adverse inference as
it was entitled to do so. It would appear to me that
the tribunal was doing nothing more than exercising
its normal fact finding powers to determine whether
or not an adverse inference ought to be drawn.””
The Court finally summed up its conclusion on this aspect of the case,
as follows:
“76. Given the fact that the object of Section 48 is to
enforce foreign awards subject to certain well-defined
narrow exceptions, the expression “was otherwise
unable to present his case” occurring in Section
48(1)(b) cannot be given an expansive meaning and
would have to be read in the context and colour of the
words preceding the said phrase. In short, this
expression would be a facet of natural justice, which
would be breached only if a fair hearing was not given
by the arbitrator to the parties. Read along with the first
part of Section 48(1)(b), it is clear that this expression
would apply at the hearing stage and not after the award
has been delivered, as has been held in Ssangyong
21
(supra). A good working test for determining whether a
party has been unable to present his case is to see
whether factors outside the party’s control have
combined to deny the party a fair hearing. Thus, where
no opportunity was given to deal with an argument
which goes to the root of the case or findings based on
evidence which go behind the back of the party and
which results in a denial of justice to the prejudice of the
party; or additional or new evidence is taken which
forms the basis of the award on which a party has been
given no opportunity of rebuttal, would, on the facts of a
given case, render a foreign award liable to be set aside
on the ground that a party has been unable to present
his case. This must, of course, be with the caveat that
such breach be clearly made out on the facts of a given
case, and that awards must always be read supportively
with an inclination to uphold rather than destroy, given
the minimal interference possible with foreign awards
under Section 48.”
16.Shri Raval took exception to the interpretation of the word “otherwise”
occurring in Section 48(1)(b) and cited a Constitution Bench judgment
of this Court in Kavalappara Kottarathil Kochuni v. States of Madras
and Kerala (1960) 3 SCR 887, for the proposition that the expression
“otherwise” cannot be read ejusdem generis with words that precede it.
17.Kochuni’s case (supra) was concerned with the constitutional validity
of the Madras Marumakkathayam (Removal of Doubts) Act, 1955.
Section 2(b) of the aforesaid Act reads as follows:
“2. Notwithstanding any decision of Court, any sthanam
in respect of which:
(b) the members of the tarwad have been receiving
maintenance from the properties purporting to be
sthanam properties as of right, or in pursuance of a
custom or otherwise”
22
The Constitution Bench then held:
“The word “otherwise” in the context, it is contended,
must be construed by applying the rule of ejusdem
generis. The rule is that when general words follow
particular and specific words of the same nature, the
general words must be confined to the things of the
same kind as those specified. But it is clearly laid down
by decided case that the specific words must form a
distinct genus or category. It is not an inviolable rule of
law, but is only permissible inference in the absence of
an indication to the contrary. On the basis of this rule, is
contended, that the right or the custom mentioned in the
clause is a distinct genus and the words “or otherwise”
must be confined to things analogous to right or contract
such as lost grant, immemorial user etc. It appears to
us that the word “otherwise” in the context only means
“whatever may be the origin of the receipt of
maintenance”. One of the objects of the legislation is to
by-pass the decrees of courts and the Privy Council
observed that the receipt of maintenance might even be
out of bounty. It is most likely that a word of the widest
amplitude was used to cover even acts of charity and
bounty. If that be so, under the impugned Act even a
payment of maintenance out of charity would destroy
the character of an admitted sthanam which ex facie is
expropriatory and unreasonable.”
Given the object of the 1955 Act, the Constitution Bench was careful to
state that the word “otherwise” in the context only means “whatever may
be the origin of the receipt of maintenance”.
18.P. Ramanatha Aiyar’s Advanced Law Lexicon defines the expression
“otherwise” as follows:
“Otherwise. By other like means; contrarily; different
from that to which it relates; in a different manner; in
another way; in any other way; differently in other
respects in different respects; in some other like
capacity.”
23
The Law Lexicon then refers to an early judgment of Cleasby B. in
Monck v. Hilton 46 LJNC 167, in which it is stated as follows:
“As a general rule “otherwise” when following an
enumeration, should receive an ejusdem generis
interpretation (per CLEASBY, B. Monck v. Hilton, 46
LJMC 167, The words ‘or otherwise,’ in law, when used
as a general phrase following an enumeration of
particulars, are commonly interpreted in a restricted
sense, as referring to such other matters as are kindred
to the classes before mentioned.”
As has been held in paragraph 76 of Vijay Karia (supra), the context of
Section 48 is recognition and enforcement of foreign awards under the
New York Convention of 1958. Given the context of the New York
Convention, and the fact that the expression “otherwise” is susceptible
to two meanings, it is clear that the narrower meaning has been
preferred, which is in consonance with the pro-enforcement bias spoken
about by a large number of judgments referred to in Vijay Karia (supra).
Kochuni’s case (supra) dealing with an entirely different Act with a
different object cannot, therefore, possibly apply to construe this word
in the setting in which it occurs.
19.As a matter of fact, three earlier judgments of this Court, all under the
Arbitration Act, 1940, are also instructive. The ground on which a
domestic award could be set aside under Section 30 of the 1940 Act,
inter alia, was if the arbitrator misconducted himself or the proceedings.
It will be seen that “misconduct” as a ground for setting aside an award
24
is conceptually much wider than a party being unable to present its case
before the arbitrator, which is contained in Section 48(1)(b). Thus, in
Ganges Waterproof Works (P) Ltd. v. Union of India (1999) 4 SCC
33, this Court was faced with the legality and validity of the arbitration
proceedings, three grounds being raised as follows:
“2. Challenge to the legality and validity of the arbitration
proceedings has been laid on three grounds: firstly, that
the claimant-Union of India (respondent herein) filed an
additional statement accompanied by documents before
the arbitrator on 11-8-1982, which was the last day of
hearing, and that was taken into consideration by the
arbitrator without affording the petitioner an opportunity
for contesting the same or even delivering a copy thereof
to the petitioner; secondly, though no oral evidence was
adduced by any of the parties, yet the arbitrator has in
his award expressed having heard the evidence which
shows inapplication of mind to the record of the
proceedings and material available before the arbitrator;
and thirdly, that the arbitrator in the sitting held on 11-8-
1982 heard the parties hardly for five or seven minutes
in which limited time, no real hearing could have taken
place. It is submitted that the manner in which the
arbitrator has conducted himself, has resulted in violation
of the principles of natural justice and vitiated the
arbitration proceedings. Similar grounds were raised
before the learned Single Judge as also in the intra-court
appeal before the High Court and have been turned
down. Having heard the learned counsel for the parties,
we are also of the opinion that here too the petitioner
must meet the same fate.”
So far as the first ground was concerned, it was held that as a matter of
fact, nothing was filed by the Union of India on 11.08.1982 and the
additional statement and documents that were filed by the Union of India
before the learned arbitrator was way before on 31.05.1982. This being
25
so, and as no specific case was made out in an additional affidavit
before the learned single Judge supporting the plea that the additional
statement and documents that were furnished could not be effectively
dealt with by the appellant, plea no.1 was turned down. The third
contention was then disposed of as follows:
“6. The third and the last plea urged is equally devoid of
any merit. The burden of substantiating the averment
urged as an objection tantamounting to misconduct on
the part of the arbitrator or complaining of violation of
the principles of natural justice was on the petitioner. No
evidence was adduced to substantiate the plea. The
best person to depose as to what had actually
transpired at the hearing and whether the same was a
real hearing or an eyewash merely was the counsel who
actually made submissions on behalf of the petitioner
before the arbitrator. The least that was expected of the
petitioner was to have filed an affidavit of the counsel
before the Court. That was not done. No timely protest
was raised before the arbitrator. The hearing was
concluded on 11-8-1982 and the award was made on
23-8-1982. During these 12 days also, the petitionerCompany never urged before the arbitrator that
submissions on its behalf were not permitted to be
made by the arbitrator. The learned Single Judge, as
also the Division Bench, have arrived at a finding that
the plea was an afterthought and certainly not
substantiated. We also do not find any reason to take a
view different from the one taken by the High Court.”
20.In Sohan Lal Gupta v. Asha Devi Gupta (2003) 7 SCC 492, this Court
dealt with the arbitrator misconducting the proceedings as follows:
“27. The arbitrator, as appears from the minutes of the
meeting, proceeded only on the documentary evidence.
No party appears to have presented oral evidence.
Thus, the question of cross-examination of the
witnesses appearing on behalf of the other parties did
26
not arise. Submissions must have been made by the
parties themselves. Ghanshyamdas Gupta does not
say that he had difficulty in appearing on 15-6-1976 or
any subsequent date and he had asked for an
adjournment. Even otherwise, a party has no absolute
right to insist on his convenience being consulted in
every respect. The matter is within the discretion of the
arbitrator and the Court will intervene only in the event
of positive abuse. (See Montrose Canned Foods
Ltd. [(1965) 1 Lloyd's Rep 597] ) If a party, after being
given proper notice, chooses not to appear, then the
proceedings may properly continue in his absence.
(See British Oil and Cake Mills Ltd. v. Horace Battin &
Co. Ltd. [(1922) 13 LI L Rep 443] )”
 (emphasis supplied)
In a significant paragraph which foreshadowed the law as it is today, this
Court referred to the Minmetals (supra) judgment and held as follows:
“43. Furthermore, in this case Ghanshyamdas Gupta
expressly relinquished his right by filing an application
stating that he would withdraw his objection. Such
relinquishment in a given case can also be inferred from
the conduct of the party. The defence which was
otherwise available to Ghanshyamdas Gupta would not
be available to others who took part in the proceedings.
They cannot take benefit of the plea taken by
Ghanshyamdas Gupta. Each party complaining
violation of natural justice will have to prove the
misconduct of the Arbitration Tribunal in denial of justice
to them. The appellant must show that he was
otherwise unable to present his case which would mean
that the matters were outside his control and not
because of his own failure to take advantage of an
opportunity duly accorded to him. (See Minmetals
Germany GmbH v. Ferco Steel Ltd. [(1999) 1 All ER
(Comm) 315] ) This Court's decision in Renusagar
Power Co. Ltd. v. General Electric Co. [1994 Supp (1)
SCC 644 : AIR 1994 SC 860] is also a pointer to the
said proposition of law.” (emphasis supplied)
27
21.In Hari Om Maheshwari v. Vinitkumar Parikh (2005) 1 SCC 379, this
Court recorded the arguments of learned counsel appearing on behalf
of the appellant on the natural justice aspect of the case as follows:
“7. Shri Jaideep Gupta, learned Senior Counsel
appearing for the appellant herein contended that the
grounds on which the High Court has set aside the
award are not the grounds contemplated under Section
30 of the Act. He submitted that arbitration proceedings
having started in the year 1995 could not be completed
even in the year 1999, therefore, the High Court ought
not to have interfered with the award. He pointed out
that in Reference Case No. 313 of 1995 pertaining to
Deepa Jain the evidence had already concluded and
the explanation given by the respondent for not leading
evidence on 10-5-1999 was frivolous and the arbitrators
rightly did not entertain a prayer for granting a further
opportunity for leading evidence. Such a denial of a
further opportunity by the arbitrators would not be a
ground contemplated under Section 30 of the Act to set
aside the award. Hence, the courts below have gone
beyond the scope of Section 30 of the Act while allowing
petitions to set aside the arbitration awards.”
The learned Single Judge’s finding in the aforesaid case, which was
accepted by the Division Bench judgment on the facts of the case, is set
out in paragraph 12 of the said judgment as follows:
“12. It is the above award that was challenged under
Section 30 of the Arbitration Act, 1940 before the
learned Single Judge by the respondent which came to
be allowed by the learned Single Judge. While doing so
learned Single Judge observed:
“the cross-examination of M/s D. Jain and Co. was over
in 1997, the cross-examination of witness examined in
Shri Maheshwari's reference was completed on 8-4-
1999 and the arbitrators adjourned the matter to 10-5-
1999 and 11-5-1999 for the petitioner to lead his
28
evidence. However, it appears that the petitioner noted
a wrong date and therefore, he did not appear on 10-5-
1999. It is clear from the record that there is an
application submitted by the petitioner before the
arbitrators on 20-5-1999 regarding the mistake
committed by him in recording the date of hearing and
requested the arbitrators to give an opportunity to lead
the evidence. One can understand if the arbitrators
have after closing the matter for award delivered the
award immediately but since the arbitrators had not
delivered their award by 20-5-1999, they also did not
deliver their award immediately thereafter, but waited till
November 1999 to make their award, the arbitrators
could have easily permitted the petitioner to lead
evidence. I do not think that the arbitrators were justified
in denying the petitioner an opportunity to lead
evidence….”
This finding of the learned Single Judge has been
accepted by the Division Bench without any further
discussion.”
This Court then set aside the Single Judge’s judgment in language that
is even more appropriate today, given the object of the Arbitration Act,
1996, as follows:
“16. From the above it is seen that the jurisdiction of
the court entertaining a petition or application for
setting aside an award under Section 30 of the Act is
extremely limited to the grounds mentioned therein
and we do not think that grant or refusal of an
adjournment by an arbitrator comes within the
parameters of Section 30 of the Act. At any rate the
arbitrator's refusal of an adjournment sought in 1999
in an arbitration proceeding pending since 1995
cannot at all be said to be perverse keeping in mind
the object of the Act as an alternate dispute resolution
system aimed at speedy resolution of disputes.”
22.Shri Banerjee then referred to a number of judgments including
Cuckurova Holding A.S. v. Sonera Holding B.V. (2014) UKPC 15 of
29
the Privy Council. In this judgment, the Minmetals (supra) test was
referred to with approval as follows:
“31. Section 36(2)(c) is in the same terms as section
103(2)(c) of the Arbitration Act 1996 in England. They
reflect Article V(1)(b) of the New York Convention. In
Minmetals Germany GmbH v Ferco Steel Ltd [1999]
CLC 647, 658 Colman J said that the subsection
contemplates that the enforcee has been prevented
from presenting his case by matters outside his control,
which will normally cover the case where the procedure
adopted has been operated in a manner contrary to the
rules of natural justice. In Kanoria v Guinness [2006]
EWCA Civ 222 Lord Phillips CJ held in the Court of
Appeal that, on the ordinary meaning of section
103(2)(c), a party to an arbitration is unable to present
his case if he is never informed of the case he is called
upon to meet. He referred to the statements in
Minmetals referred to above with approval.
xxx xxx xxx
34. The general approach to enforcement of an award
should be pro-enforcement. See eg Parsons &
Whittemore Overseas Co Inc v Société Générale 508 F
2d 969 (1974) at 973:
“The 1958 Convention’s basic thrust was to liberalize
procedures for enforcing foreign arbitral awards … [it]
clearly shifted the burden of proof to the party defending
against enforcement and limited his defences to seven
set forth in Article V.”
In IPCO (Nigeria) v Nigerian National Petroleum [2005]
2 Lloyd’s Rep 326, Gross J said at para 11, when
considering the equivalent provision of the English
Arbitration Act 1996:
“… there can be no realistic doubt that section 103 of
the Act embodies a pre-disposition to favour
enforcement of New York Convention awards,
reflecting the underlying purpose of the New York
Convention itself …”
30
The Board agrees. There must therefore be good
reasons for refusing to enforce a New York Convention
award. The Board can see no basis upon which it
should refuse to enforce the award here if Cukurova
fails to show that it was unable to present its case for
reasons beyond its control.”
The Privy Council, on facts, then dealt with the natural justice
ground by rejecting it as follows:
“53. The approach of the Tribunal described above and
the reasoning in the First Partial Award shows that it
gave Cukurova every opportunity to develop its case.
The basis upon which the Tribunal reached its
conclusions is clear. As stated above, the Tribunal
indicated that it assumed Mr Berkmen’s evidence to be
true. It is therefore difficult to see on what grounds
Cukurova can properly complain. It is not suggested
that the Tribunal deliberately ignored Mr Berkmen’s
evidence. Although Cukurova submits that the outcome
of the arbitration would have been different if Mr
Berkmen had had an opportunity to be heard, it does
not identify on what basis. It is of course no part of the
role of the enforcing court to consider whether the
decision was correct either in law or on the facts.”
23.In Eastern European Engineering v. Vijay Consulting (2019) 1 LLR
1 (QBD), the Queen’s Bench Division dealt with the “inability to present
case” challenge by following Cukorova Holdings (supra) and
Minmetals (supra), and then concluding:
“89. It was also common ground that, as indicated as a
"given" by Lord Clarke in Cukorova at [53], the party
challenging the award must also demonstrate that the
outcome of the arbitration would have been different
had there been no breach of natural justice.”
31
Applying the test of “matters outside one’s control”, it was found that
VCL’s challenge on this ground was not outside its control as follows:
“98. In this specific context what VCL did not do (and
perfectly well could have done) was to raise with the
arbitrator the question of whether the form of his order
in fact shut them out from putting in a statement from Dr
du Toit Malan, or to make submissions as to why they
needed to get evidence from some other identified
person in order to respond to the submissions made.
Instead they chose to seek to challenge the decision on
the basis that they should be allowed to put in new
evidence which covered all issues, not simply in
response to Large 3. This decision to challenge on one
basis and not the other is a matter which was entirely
within VCL's control.
99. In those circumstances too I accept the submission
that the admission of Large 3 (or failure to allow
responsive evidence) would not have had an impact on
the result of the arbitration. The liability decision was
based on the earlier reports of Mr Large and other
witnesses. That is common ground. In relation to
quantum, the arbitrator's reliance upon Large 3 had the
effect of reducing the quantum awarded to EEEL (by
some €9 million). It therefore cannot be said that VCL
was prejudiced by Large 3. If it was prejudiced it was by
its failure to avail itself of the opportunity given it to
respond.” (emphasis supplied)
24.Jorf Lasfar (supra), referred to in paragraph 61 of Vijay Karia (supra),
is also instructive. This case deals with a specific plea relating to natural
justice in relation to a Tribunal’s procedural orders as follows:
“7. We disagree. AMCI was given a full and fair
opportunity to present its case. However, AMCI failed to
meet its obligations under the Tribunal's procedural
orders, 3 and suffered the consequences. It failed to
submit any witness statements by the deadline set forth
by the Tribunal. Rather, AMCI attempted to name Mr.
32
Thrasher as a witness after the deadline, and without
submitting a witness statement. AMCI submitted no
documentary evidence save a governmental report
indicating that coal was in short supply around the time
of the alleged breach.
xxx xxx xxx
9. The requirements of Procedural Order No. 4 are
clear, reasonable, and common in international
arbitration practice. There is no dispute that AMCI
understood what the Order required at the time. A party
cannot purposefully ignore the procedural directives of
a decision-making body, and then successfully claim
that the procedures were fundamentally unfair, or
violated due process. Under the circumstances, we find
that AMCI has failed to satisfy its burden to prove that
the arbitral process violated our basic notions of
fundamental fairness and justice. As such, AMCI
cannot avail itself of either the Article V(1)(b) defense or
the Article V(2)(b) defense.” (emphasis supplied)
25.Shri Banerjee then referred to two United States District Court
judgments. In Consorcio Rive v. Briggs of Cancun 134 F. Supp 2d
789, the US District Court, E.D. Louisiana, found that Briggs of Cancun,
the respondent before it, refused to participate in the arbitration due to
alleged criminal proceedings in Cancun. At the trial, David Briggs
(representative of the respondent therein) testified that he did not seek
alternative ways to appear at the hearings such as by way of telephone,
nor did he send a representative of the company to appear on behalf of
the company. In this fact situation, Article V(1)(b) of the New York
Convention was referred to, the court finding:
“26. Because Briggs of Cancun was continuously
informed of all hearing dates and was provided
33
sufficient opportunity to present witnesses and
evidence in defense of the action, Briggs of Cancun was
given proper notice of the arbitration proceedings.
27. The due process guarantee incorporated in article
V(1) (b) of the Convention requires that "an arbitrator
must provide a fundamentally fair hearing." Generica
Ltd., 125 F.3d at 1130. "A fundamentally fair hearing is
one that `meets "the minimal requirements of fairness"
adequate notice, a hearing on the evidence, and an
impartial decision by the arbitrator.'" Id. "[P]arties that
have chosen to remedy their disputes through
arbitration rather than litigation should not expect the
same procedures they would find in the judicial
arena." Id. Essentially, in exchange for the convenience
and other benefits obtained through arbitration, parties
lose "the right to seek redress from the court for all but
the most exceptional errors at arbitration." Dean v.
Sullivan, 118 F.3d 1170, 1173 (7th Cir.1997).
28. Consistent with the federal policy of encouraging
arbitration and enforcing arbitration awards, the
defense that a party was "unable to present its case"
raised pursuant to article V(1) (b) of the Convention is
narrowly construed. Parsons & Whittemore Overseas
Co. v. Societe Generale de L'Industrie du Papier, 508
F.2d 969, 975 (2d Cir.1974).
29. In the instant case, the Court finds that Briggs of
Cancun was not "unable to present its case," because
Briggs of Cancun could have participated by means
other than David Briggs's physical presence at the
arbitration. For instance, Briggs of Cancun could have
sent a company representative to attend; could have
sent its attorney to attend; or David Briggs could have
attended by telephone.
30. Moreover, the evidence indicates that Briggs of
Cancun did participate to the extent that it designated
an arbitrator and filed over 80 pages of legal argument
and documentation in support of its position. Because
Briggs of Cancun has brought forward no additional
information or evidence that it would have presented at
the arbitration if it had the opportunity to do so, the Court
34
finds that Briggs of Cancun did have an opportunity to
meaningfully participate in the arbitration.
xxx xxx xxx
33. For the foregoing reasons, the Court finds that
Briggs of Cancun's defense under article V(1) (b) of the
Convention must fail. The Court also specifically finds
that even if there was a valid arrest warrant pending
against David Briggs for some period of time, Briggs of
Cancun is not entitled to a defense under article V(1)
(b) of the Convention because Briggs of Cancun could
have participated through its Mexican attorney or
corporate representative or by telephone. Further,
Briggs of Cancun has not demonstrated that it was
prejudiced in any way by whatever restrictions the
alleged criminal action might have imposed, because it
has not pointed to exonerating evidence that it would
have presented, but could not, but for the filing of the
criminal Statement of Facts.”
26.In Four Seasons Hotels v. Consorcio Barr S.A. 613 Supp 2d 1362
(S.D. Fla. 2009), the U.S District Court, S.D. Florida, dealt with the
respondent, having discontinued its participation in the arbitral
proceedings just prior to the final evidential hearings, as follows:
“Moreover, regardless of the decision ultimately
reached by the Court of Appeals concerning the waiver
issue in the previous action to confirm the Partial
Arbitration Award, the issue of the Arbitral Tribunal’s
jurisdiction and the propriety of the anti-suit injunction
was to be conclusively decided one way or the other in
the action to confirm the Partial Arbitration Award. With
the jurisdictional and anti-suit injunction issues thus
decided, Consorcio’s withdrawal from the final
evidentiary hearing, the proceeding governing the
issuance of the Final Award, in an attempt to preserve
its right to contest jurisdiction, was futile. Consorcio’s
withdrawal was thus ineffective to preserve its right to
contest jurisdiction or the anti-suit injunction in the
35
appeal of the Partial Arbitration Award or in this action
to confirm the Final Award.
Given that Consorcio’s withdrawal from the arbitration
proceeding was unnecessary to preserve its rights
Consorcio was not precluded from or unable to present
its case. Even if Consorcio’s decision to withdraw from
the proceeding was taken based on a good faith
subjective belief that such action was necessary to
preserve its rights on appeal, such a misgiving did not
render Consorcio unable to present its case within the
meaning of Article V(1)(b). Therefore, Consorcio has
not met its burden of proving that Article V(1)(b) applies
as a defense.”
27.Shri Banerji then referred to a judgment of the Supreme Court of Hong
Kong, reported in Nanjing Cereals v. Luckmate Commodities XXI
Y.B. Com. Arb. 542 (1996). In paragraph 5 of the judgment the court
held:
“5. However, it appeared that the Defendants had had
ample opportunity to present their own evidence as to
quantum to the Tribunal, but by their own admission
they had failed to do so. In addition, regarding the issue
of whether I should exercise my discretion in refusing in
any case to set aside the Award, Mr. Chan conceded
that the fact that the final Award was lower than that
claimed by the Plaintiffs was against his clients.
xxx xxx xxx
7.…At all events, the Defendants maintain that they did
not submit their own figures to the Tribunal, though this
was clearly going to be an issue before the Tribunal,
nor, it appears, did they avail themselves of the
opportunity to submit them later. That decision was up
to them. They must now live with its consequences.
8. Their omission was similar to that of the Defendants
in another case, namely Qinghuangdao Tongda
Enterprise Development Co. v. Million Basic Co. Ltd.
[1993] 1 HKLR 173, where I held:-
36
"It is not accepted that the defendant had no opportunity
to present its case. On the contrary, the defendant
made full use of the ample opportunity given and only
complained after the proceedings had finally been
closed, having foregone the opportunity of asking for an
extension of those proceedings. All proceedings must
have a finite end."
9. In conclusion, I am not satisfied that the Defendants
have made out sufficient grounds for me to refuse leave
to enforce the Award under S.44 of the Arbitration
Ordinance. Even if they had made out sufficient
grounds, in my opinion this is a classic case where a
court should exercise its discretion to refuse to set aside
an award, due to the failure of the Defendants to
prosecute their own case properly by submitting their
own evidence to the Tribunal. The fact that the award
was lower than that sought by the Claimants is also a
powerful factor against exercising discretion not to
enforce.” (emphasis supplied)
28.Shri Banerjee then referred to a judgment to the Supreme Court of Italy
reported in De Maio Giuseppe v. Interskins Y.B. Comm. Arb. XXVII
(2002) 492. The Italian Supreme Court, in considering the ground
contained in Article V(1)(b) of the New York Convention held as follows:
“[5] "The first two grounds for appeal, which must be
examined together since they concern the same issues,
are unfounded. Art. V(1)(b) of the New York Convention
provides that the failure to communicate either the
arbitrator's appointment or the arbitral proceedings,
which makes it impossible to present one's case, is a
ground for refusing enforcement of the award. De Maio
maintains that it was unable to present its case because
it was given only fourteen days to appoint an arbitrator.
[6] "This Court deems that there was no violation of due
process as alleged by De Maio, and that one or more
missing pages on this issue in the Court of Appeal's
decision do not make this decision invalid. Since this is
37
a procedural defect, we can settle the issue directly,
independent of whether the lower decision failed to give
reasons on this issue, the more so as we deal here
exclusively with the interpretation and the application of
a procedural provision.
[7] "Art. V(1) provides that the party against whom the
award is invoked has the burden to prove the ground for
refusal of enforcement under letter (b), as well as the
other grounds in that paragraph. Further, we must
consider that, according to the spirit of the Convention,
the recognition of arbitral awards depends on specific
requirements which must be interpreted narrowly.
[8] "Since in the present case it is undisputed that
Interskins informed De Maio that it had appointed an
arbitrator, the reasons given in the lower decision,
which deems that this information and the time limit
[given to De Maio] guaranteed due process, suffice,
independent of a failure to give reasons on the
objections raised by De Maio.
[9] "Second, we must consider that the ground for
refusal under letter (b) concerns the impossibility rather
than the difficulty to present one's case. De Maio does
not argue and certainly does not prove that it could not
present its case when the arbitration was commenced
or while it was held.”
29.We now come to the facts of the present case. Shri Raval’s plea that
this Court cannot go into the question posed before it as there was no
difference of opinion on HCL being unable to present its case, Justice
Chatterjee J’s being the only judgment on this score, has no legs to
stand. The reference order that is extracted by us in paragraph 7 above,
and that is contained in paragraph 1 of the decision in Centrotrade
[2017] (supra), makes it clear that, “in view of difference of opinion, the
matter is referred to a larger bench for reconsideration”. That the
38
expression the matter was understood as meaning the entire matter and
not merely issue 1, is further made clear by paragraph 5 of the said
judgment as follows:
“For the present, we propose to address only the first
question and depending upon the answer, the appeals
would be set down for hearing on the remaining issue.
We have adopted this somewhat unusual course since
the roster of business allowed us to hear the appeals
only sporadically and therefore the proceedings before
us dragged on for about three months.”
Finally, the 3 Judge Bench concluded:
48. In view of the above, the first question before us is
answered in the affirmative. The appeals should be
listed again for consideration of the second question
which relates to the enforcement of the appellate
award.”
In this view of the matter, we have proceeded to examine the
correctness of Chatterjee J’s views.
30.Shri Raval has argued that the London arbitrator ought to have
determined the question of jurisdiction as a preliminary question, as he
himself had initially indicated, before going into the substantive issues
relating to the contract. We are afraid that this is an argument that has
never been raised earlier, and has been raised by Shri Raval here for
the first time. Even otherwise, and even if we were to go by the
documents that were submitted to us for the first time by Shri Raval, the
fax sent on 20.12.2000 by the arbitrator to the parties is incomplete.
Even otherwise, it speaks of issues of jurisdiction and Indian law having
39
to be addressed as a primary question before matters of substance
relating to the dispute on the contract. None of this clearly and
unequivocally shows that the learned arbitrator sought to take up the
plea as to jurisdiction as a preliminary objection which should be
decided before other matters. This plea of Shri Raval, being taken here
for the first time and for the reasons given by us, is devoid of substance.
31.Shri Raval then argued that HCL was unable to present its case as the
learned arbitrator did not heed the stay order of the Rajasthan High
Court dated 27.04.2000. First and foremost, the stay order of the
Rajasthan High Court was not and could not be directed against the
arbitrator – it was directed only against the parties to the proceeding.
Secondly, the learned arbitrator initially began the proceedings, after the
green signal given to him by the ICC Court to proceed with the
arbitration, by directing that the appellant serve submissions along with
supporting evidence, followed by the respondent’s response and
evidence on 19.01.2001. This, however, was reiterated only on
03.05.2001, by which time the Supreme Court had vacated the adinterim ex parte order on 08.02.2001. This plea taken by Shri Raval,
also taken before us for the first time, has no legs to stand on.
32.Shri Raval then strenuously argued that considering that the last
extension expired on 12.09.2001, the learned arbitrator ought to have
40
taken onboard two other bundles of documents and granted time for the
same, given the terrorist attack in New York on 11.09.2001.
33.The sequence of events, even from the documents presented by Shri
Raval for the first time, is that legal submissions were furnished after
11.09.2001 and received by the arbitrator’s office on 13.09.2001. The
arbitrator then stated that these submissions have been fully taken into
account in the award and that by 18.09.2001, there would be no scope
for any further material being supplied, as the publication of the award
will follow shortly. This was communicated by fax on 18.09.2001 by the
learned arbitrator to Fox & Mandal, the Attorneys of HCL. It is only
thereafter, on 19.09.2001, that a couriered letter is sent to the learned
arbitrator stating that Fox & Mandal would be deeply obliged if
documents contained in paper binder no.1 would also be taken into
account. It was then added that paper binder no.2, containing judgments
of the Courts of law and authorities are being sent separately and it may
take 7 to 10 days’ more time beyond 19.09.2001.
34.At this stage, it is important to point out that the learned arbitrator had
given a large number of opportunities to file documents and legal
submissions. On 03.05.2001 the learned arbitrator directed that the
appellant serve submissions along with supporting documents,
following the respondent’s response and evidence therein, with a right
in the appellant to put in a reply, in accordance with a clear time table
41
that was set out. On 30.07.2001, since no defence submissions or
supporting evidence was served by the respondent within the time
prescribed, the time was extended, giving the respondent one last
opportunity to put in their defence and to seek extension of time for so
doing. Until August 2001, it may be stated that respondent did not
participate in the arbitral proceedings, even though invited to do so. It is
only on 09.08.2001, when the learned arbitrator informed the parties that
he is proceeding with the award, that on 11.08.2001, the learned
arbitrator received a fax from Fox & Mandal, Attorneys for HCL,
requesting for an extension of one month’s time to put in their defence.
This was acceded to by the learned arbitrator on 16.08.2001, giving time
upto 31.08.2001. However, on 27.08.2001, Fox & Mandal sought for a
further three weeks’ extension of time, which was also granted by the
learned arbitrator, allowing a final extension of time until 12.09.2001.
Despite the fact that the legal submissions running into 75 pages were
submitted beyond time, that is only on 13.9.2001, in view of the
11.09.2001 attack in New York, the learned arbitrator received the same
and took the same into account despite being beyond time. It was only
on 29.09.2001 that the learned arbitrator then passed his award. Given
the aforesaid timeline, it is clear that the learned arbitrator was
extremely fair to the respondent. Having noticed that the respondent
wanted to stall the arbitral proceedings by approaching the Courts in
42
Rajasthan and having succeeded partially, at least till February 2001,
the conduct of the respondent leaves much to be called for. Despite
being informed time and again to appear before the Tribunal and submit
their response and evidence in support thereof, it is only after the
arbitrator indicated that he was going to pass an award that the
respondent’s attorneys woke up and started asking for time to present
their response. This too was granted by the learned arbitrator, by not
only granting extension of time, but by extending this time even further.
Finally, when the legal submissions of 75 pages were sent even beyond
the time that was granted, the learned Arbitrator took this into account
and then passed his award. This being the case, on facts we can find
no fault whatsoever with the conduct of the arbitral proceedings.
35.Justice Chatterjee, however, in his judgment, made several errors of
fact. First and foremost, in paragraph 166 of Centrotrade [2006]
(supra), the learned Judge quoted the penultimate line in paragraph 8
of the award, without even adverting to the line just before the aforesaid
line which indicated that the material that was received from HCL was
in fact taken into consideration while making the award, even beyond
the stipulated time of 12.09.2001. Secondly, in paragraph 167,
Chatterjee,J. conjectured that between 13th and 29th September, 2001,
the Arbitrator did receive further material from HCL which he did not
consider while making the award, on the ground that they were received
43
after the time limit granted by him to HCL. Factually, there is no
supporting material to show that any such further material was received
by the learned arbitrator, except documents that have been presented
by Shri Raval for the first time before us. They were clearly not before
Chatterjee,J. when this surmise was made by the learned Judge,
Further, the arbitrator cannot be faulted on this ground as, given the
authorities referred to by us hereinabove, the arbitrator is in control of
the arbitral proceedings and procedural orders which give time limits
must be strictly adhered to. In paragraph 168, the learned Judge then
said that given the attack in New York on 11.09.2001, the learned
arbitrator should have excused further delay and should not have acted
on frivolous technicalities. This approach of a Court enforcing a foreign
award flies in the face of the judgments referred to by us hereinabove.
Even otherwise, Chatterjee, J., refers to the judgment in Hari Om
Maheshwari (supra) as well as Minmetals (supra), but then does not
proceed to apply the ratio of the said judgments. Had he applied the
ratio of even these two judgments, it would have been clear that an
arbitrator’s refusal to adjourn the proceedings at the behest of one party
cannot be said to be perverse, keeping in mind the object of speedy
resolution of disputes of the Arbitration Act. Further, the Minmetals
(supra) test was not even adverted to by Chatterjee,J., which is that HCL
was never unable to present its case as it was at no time outside its
44
control to furnish documents and legal submissions within the time given
by the learned arbitrator. HCL chose not to appear before the arbitrator,
and thereafter chose to submit documents and legal submissions
outside the timelines granted by the arbitrator.
36.Even otherwise, remanding the matter to the ICC arbitrator to pass a
fresh award in paragraph 169, is clearly outside the jurisdiction of an
enforcing court under Section 48 of the 1996 Act.
37.For all these reasons, it is clear that Chatterjee, J.’s judgment cannot be
sustained. As a result, Centrotrade’s appeal, being Civil Appeal No.
2562 of 2006, is allowed. The judgment of Chatterjee,J is set aside.
HCL’s appeal, being Civil Appeal No. 2564 of 2006, is dismissed.
Resultantly, the foreign award, dated 29.09.2001, shall now be
enforced.
….……………………………J.
 (R.F. Nariman)
….……………………………J.
 (S. Ravindra Bhat)
….……………………………J.
 (V. RAMASUBRAMANIAN)
New Delhi;
June 02, 2020.

Order VII Rule 11 of the Code of Civil Procedure, 1908 - The plaint came to be rejected by the trial Court under Order VII Rule 11(d) of the CPC on the ground that it was barred by law of limitation, as it was filed beyond the period of three years prescribed in Article 113 of the Limitation Act, 1963

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2514 OF 2020
(Arising out of SLP (C) No. 30209/2017)
Shakti Bhog Food Industries Ltd. ...Appellant(s)
Versus
The Central Bank of India & Anr.        ...Respondent(s)
With
CIVIL APPEAL NO. 2515 OF 2020
(Arising out of SLP (C) No. 30210/2017)
J U D G M E N T
A.M. Khanwilkar, J.
CIVIL APPEAL NO. 2514 OF 2020
(Arising out of SLP (C) No. 30209/2017)
1. Leave granted.
2. This   appeal   takes   exception   to   the   judgment   and   order
dated 2.1.2017 passed by the High Court of Delhi at New Delhi
(for short, “the High Court”) in R.S.A. No. 391/2016, whereby the
High Court affirmed the decision of the Court of Civil Judge–05,
2
Central District, Tis Hazari Courts, Delhi, dated 6.1.2016 in C.S.
No.   950/2014   allowing   the   application   filed   by   the
respondents/defendants for rejection of the plaint under Order
VII Rule 11 of the Code of Civil Procedure, 1908 (for short, “the
CPC”),   instituted   by   the   appellant/plaintiff.     The   Additional
District & Sessions Judge, Central, Tis Hazari Courts, Delhi, vide
order   dated   23.7.2016   in   R.C.A.   No.   61794/2016   had   also
affirmed the order of rejecting the plaint.  The appellant had filed
the stated suit on 23.2.2005 for a decree for rendition of true and
correct accounts in respect of the interest/commission charged
and   deducted   by   the   respondent­Bank   relating   to   current
account No. CCM 20225 of the appellant for the period between
1.4.1997 and 31.12.2000 and also for recovery of the excess
amount charged by the respondent­Bank consequent to rendition
of accounts with interest at the rate of 18% per annum from the
date of deduction including interest  pendente lite  realization of
the amount and future interest.
3. The plaint came to be rejected by the trial Court under
Order VII Rule 11(d) of the CPC on the ground that it was barred
by law of limitation, as it was filed beyond the period of three
years prescribed in Article 113 of the Limitation Act, 1963 (for
3
short, “the 1963 Act”), as applicable to the present case, from the
date when the right to sue accrued to the appellant in October,
2000.  The entire discussion of the trial Court in that regard can
be traced to paragraphs 10 and 11, which read thus: ­
‘‘10. As stated above the plaintiff by way of present
suit has sought two reliefs i.e. rendition of account
and repayment of excess money.   Limitation Act,
1963   does   not   provide   any   specific   article   with
regard to time period within which accounts can be
sought by party from its bank. As such, Article 113
of Limitation Act came into picture which provides a
limitation period of three years for suits for which no
limitation period is provided, from the date when
right to sue accrues.
11. In the present case in hand, as per averments
made by the plaintiff in his plaint, the facility was
availed   by   the   plaintiff   from   the   defendants   till
October 2000. Further as per averments made in the
plaint   the   alleged   amount   so   charged   by   the
defendant from the plaintiff, in excess from agreed
amount, was till October, 2000. As such, at best can
be said right to sue accrues in favour of the plaintiff
in October, 2000.  Considering the law as stated in
above   paragraph,   plaintiff   could   have   filed   the
present   suit   i.e.   for   rendition   of   account   and
repayment of excess amount till October 2003. ...”
After so observing, the trial Court considered the submission of
the   appellant   that   the   cause   of   action   had   accrued   to   the
appellant   only   upon   rejection   of   the   representation   by   the
respondent­Bank   entailing   in   refusal   or   denial   of   liability,
communicated to the appellant vide letters dated 19.9.2002 and
3.6.2003 and after the final legal notice was served upon the
4
respondents on 7.1.2005.  That contention has been rejected by
adverting to the decision of the same High Court in C.P. Kapur
vs. The Chairman & Ors.1
, wherein it is held that exchange of
correspondence between the parties cannot extend the limitation
period for institution of a suit, once the right to sue had accrued,
which in this case had accrued in October, 2000, as has been
asserted   even   in   the   plaint.     Whereas,   the   suit   was   filed   in
February, 2005 beyond the period of three years from the date on
which right to sue accrued to the appellant, as prescribed in
Article 113 of the 1963 Act.  The view so taken by the trial Court
commended to the District Court in first appeal and also the High
Court in second appeal, which judgment is the subject matter of
challenge in the present appeal.
4.  We have heard Mr. Nischal Kumar Neeraj, learned counsel
for the appellant and Mr. Anuj Jain, learned counsel for the
respondents.
5. Be it noted that the appellant had relied on Articles 2, 3 and
22 of the 1963 Act to urge that the suit filed in February, 2005
was within limitation.   This plea, however, did not impress the
trial Court, the first appellate Court or the High Court.   The
1 (2013) 198 DLT 56
5
Courts proceeded on the basis that Article 113 is attracted in the
facts of the present case, as the reliefs claimed by the appellant
were not covered under any specific Article with regard to time
period within which accounts can be sought by party from its
bank, as noted by the trial Court in paragraph 10 of its judgment
reproduced above. 
6. The central question is: whether the plaint as filed by the
appellant could have been rejected by invoking Order VII Rule
11(d) of the CPC?   Indeed, Order VII Rule 11 of the CPC gives
ample   power   to   the   Court   to   reject   the   plaint,   if   from   the
averments in the plaint, it is evident that the suit is barred by
any law including the law of limitation.  This position is no more
res integra.  We may usefully refer to the decision of this Court in
Ram   Prakash   Gupta   vs.   Rajiv   Kumar   Gupta  &   Ors.2
.   In
paragraph  Nos. 13 to  20 of the reported  decision,  the  Court
observed as follows: ­
“13. As per Order 7 Rule 11, the plaint is liable to
be rejected in the following cases:
“(a)  where   it   does   not   disclose   a   cause   of
action;
(b)  where the relief claimed is undervalued,
and the plaintiff, on being required by the
court   to   correct   the   valuation   within   a
2 (2007) 10 SCC 59
6
time to be fixed by the court, fails to do
so;
(c)  where   the   relief   claimed   is   properly
valued   but   the   plaint   is   written   upon
paper   insufficiently   stamped,   and   the
plaintiff, on being required by the court to
supply the requisite stamp paper within a
time to be fixed by the court, fails to do
so;
(d)  where   the   suit   appears   from   the
statement in the plaint to be barred by
any law;
(e)  where it is not filed in duplicate;
(f)  where the plaintiff fails to comply with the
provisions of Rule 9.”
14. In Saleem   Bhai   v.   State   of   Maharashtra
[(2003) 1 SCC 557] it was held with reference to
Order 7 Rule 11 of the Code that
“9. … the relevant facts which need to be
looked   into   for   deciding   an   application
thereunder   are   the   averments   in   the
plaint.   The   trial   court   can   exercise   the
power … at any stage of the suit — before
registering   the   plaint   or   after   issuing
summons   to   the   defendant   at   any   time
before the conclusion of the trial. For the
purposes of deciding an application under
Clauses (a) and (d) of Rule 11 of Order 7
CPC,   the   averments   in   the   plaint   are
germane; the pleas taken by the defendant
in the written statement would be wholly
irrelevant at that stage,…” (SCC p. 560,
para 9).
15. In I.T.C.   Ltd. v. Debts   Recovery   Appellate
Tribunal [(1998) 2 SCC 70] it was held that the basic
question   to   be   decided   while   dealing   with   an
application filed under Order 7 Rule 11 of the Code
is whether a real cause of action has been set out in
the   plaint   or   something   purely   illusory   has   been
stated with a view to get out of Order 7 Rule 11 of
the Code.
16. “The trial court must remember that if on a
meaningful—no formal—reading of the plaint it is
manifestly vexatious and meritless in the sense of
7
not disclosing a clear right to sue, it should exercise
its power under Order 7 Rule 11 CPC taking care to
see that the ground mentioned therein is fulfilled. If
clever drafting has created the illusion of a cause of
action, [it has to be nipped] in the bud at the first
hearing by examining the party searchingly under
Order 10 CPC.”
(See T. Arivandandam v. T.V. Satyapal [(1977) 4 SCC
467], SCC p. 468.).
17. It is trite law that not any particular plea has
to be considered, and the whole plaint has to be
read. As was observed by this Court in Roop  Lal
Sathi v. Nachhattar   Singh   Gill [(1982)   3   SCC   487],
only a part of the plaint cannot be rejected and if no
cause of action is disclosed, the plaint as a whole
must be rejected.
18. In Raptakos   Brett   &   Co.   Ltd. v. Ganesh
Property [(1998) 7 SCC 184] it was observed that the
averments in the plaint as a whole have to be seen
to find out whether Clause (d) of Rule 11 of Order 7
was applicable.
19. In Sopan   Sukhdeo   Sable v. Asstt.   Charity
Commr. [(2004) 3 SCC 137] this Court held thus:
(SCC pp. 146­47, para 15)
“15. There   cannot   be   any
compartmentalisation,   dissection,
segregation and inversions of the language of
various paragraphs in the plaint. If such a
course is adopted it would run counter to
the   cardinal   canon   of   interpretation
according to which a pleading has to be read
as a whole to ascertain its true import. It is
not permissible to cull out a sentence or a
passage and to read it out of the context in
isolation. Although it is the substance and
not merely the form that has to be looked
into, the pleading has to be construed as it
stands   without   addition   or   subtraction   or
words or change of its apparent grammatical
sense. The intention of the party concerned
is to be gathered primarily from the tenor
and terms of his pleadings taken as a whole.
At the same time it should be borne in mind
that   no   pedantic   approach   should   be
8
adopted   to   defeat   justice   on   hair­splitting
technicalities.”
20. For   our   purpose,   Clause   (d)   is   relevant.   It
makes it clear that if the plaint does not contain
necessary averments relating to limitation, the same
is liable to be rejected. For the said purpose, it is the
duty of the person who files such an application to
satisfy the court that the plaint does not disclose
how the same is in time. In order to answer the said
question, it is incumbent on the part of the court to
verify the entire plaint. Order 7 Rule 12 mandates
where a plaint is rejected, the court has to record
the order to that effect with the reasons for such
order.”
On the same lines, this Court in Church of Christ Charitable
Trust   &   Educational   Charitable   Society   vs.   Ponniamman
Educational Trust3
, observed as follows: ­
“10 …  It is clear from the above that where the plaint
does not disclose a cause of action, the relief claimed is
undervalued and not corrected within the time allowed by
the court, insufficiently stamped and not rectified within
the time fixed by the court, barred by any law, failed to
enclose   the   required   copies   and   the   plaintiff   fails   to
comply with the provisions of Rule 9, the court has no
other option except to reject the same. A reading of the
above   provision   also   makes   it   clear   that   power   under
Order 7 Rule 11 of the Code can be exercised at any stage
of the suit either before registering the plaint or after the
issuance of summons to the defendants or at any time
before the conclusion of the trial.
11. This   position   was   explained   by   this   Court   in
Saleem Bhai vs. State of Maharashtra, (2003) 1 SCC 557,
in which, while considering Order 7 Rule 11 of the Code,
it was held as under: (SCC p. 560, para 9)
“9.   A   perusal   of   Order   7   Rule   11   CPC
makes   it   clear   that   the   relevant   facts
which need to be looked into for deciding
an   application   thereunder   are   the
3 (2012) 8 SCC 706
9
averments   in  the  plaint.  The  trial  court
can exercise the power under Order 7 Rule
11 CPC at any stage of the suit — before
registering   the   plaint   or   after   issuing
summons   to   the   defendant   at   any   time
before the conclusion of the trial. For the
purposes of deciding an application under
clauses (a) and (d) of Rule 11 of Order 7
CPC,   the   averments   in   the   plaint   are
germane; the pleas taken by the defendant
in the written statement would be wholly
irrelevant   at   that   stage,   therefore,   a
direction   to   file   the   written   statement
without   deciding   the   application   under
Order   7   Rule   11   CPC   cannot   but   be
procedural   irregularity   touching   the
exercise of jurisdiction by the trial court.”
It is clear that in order to consider Order 7 Rule 11, the
court has to look into the averments in the plaint and the
same can be exercised by the trial court at any stage of
the suit. It is also clear that the averments in the written
statement are immaterial and it is the duty of the Court
to scrutinize the averments/pleas in the plaint. In other
words, what needs to be looked into in deciding such an
application are the averments in the plaint. At that stage,
the pleas taken by the defendant in the written statement
are wholly irrelevant and the matter is to be decided only
on   the   plaint   averments.   These   principles   have   been
reiterated   in  Raptakos   Brett   &   Co.   Ltd.   vs.   Ganesh
Property,  (1998) 7 SCC 184 and  Mayar (H.K.) Ltd. vs.
Vessel M.V. Fortune Express, (2006) 3 SCC 100.
12. It   is   also   useful   to   refer   the   judgment   in  T.
Arivandandam   vs.   T.V.   Satyapal,   (1977)   4   SCC   467,
wherein while considering the very same provision i.e.
Order   7   Rule   11   and   the   duty   of   the   trial   court   in
considering such application, this Court has reminded
the trial Judges with the following observation: (SCC p.
470, para 5)
“5. …  The learned Munsif must remember
that   if   on   a   meaningful   –   not   formal   –
reading   of   the   plaint   it   is   manifestly
vexatious, and meritless, in the sense of
not   disclosing   a   clear   right   to   sue,   he
should exercise his power under Order 7,
Rule 11 C.P.C. taking care to see that the
10
ground mentioned therein is fulfilled. And,
if clever drafting has created the illusion of
a cause of action, nip it in the bud at the
first   hearing   by   examining   the   party
searchingly   under   Order   10,   C.P.C.   An
activist   Judge   is   the   answer   to
irresponsible   law   suits.   The   trial   courts
would   insist   imperatively   on   examining
the party at the first hearing so that bogus
litigation can be shot down at the earliest
stage. The Penal Code is also resourceful
enough to meet such men, (Chapter XI)
and must be triggered against them.”
It   is   clear   that   if   the   allegations   are   vexatious   and
meritless and not disclosing a clear right or material(s) to
sue, it is the duty of the trial Judge to exercise his power
under Order 7 Rule 11. If clever drafting has created the
illusion of a cause of action as observed by Krishna Iyer
J., in the above referred decision, it should be nipped in
the bud  at  the  first  hearing by examining the parties
under Order 10 of the Code.”
We may also advert to the exposition of this Court in Madanuri
Sri Rama Chandra Murthy vs. Syed Jalal4
.  In paragraph 7 of
the said decision, this Court has succinctly restated the legal
position as follows: ­
“7.  The plaint can be rejected under Order 7 Rule 11 if
conditions enumerated in the said provision are fulfilled.
It is needless to observe that the power under Order 7
Rule 11, CPC can be exercised by the Court at any stage
of the suit. The relevant facts which need to be looked
into for deciding the application are the averments of the
plaint only. If on an entire and meaningful reading of the
plaint, it is found that the suit is manifestly vexatious and
meritless in the sense of not disclosing any right to sue,
the court should exercise power under Order 7 Rule 11
CPC. Since the power conferred on the Court to terminate
civil   action   at   the   threshold   is   drastic,   the   conditions
enumerated under Order 7 Rule 11 CPC to the exercise of
4 (2017) 13 SCC 174
11
power of rejection of plaint have to be strictly adhered to.
The averments of the plaint have to be read as a whole to
find out whether the averments disclose a cause of action
or whether the suit is barred by any law. It is needless to
observe that the question as to whether the suit is barred
by any law, would always depend upon the facts and
circumstances of each case. The averments in the written
statement as well as the contentions of the defendant are
wholly   immaterial   while   considering   the   prayer   of   the
defendant   for   rejection   of   the   plaint.   Even   when   the
allegations made in the plaint are taken to be correct as a
whole on their face value, if they show that the suit is
barred by any law, or do not disclose cause of action, the
application for rejection of plaint can be entertained and
the power under Order 7 Rule 11 CPC can be exercised. If
clever drafting of the plaint has created the illusion of a
cause of action, the court will nip it in the bud at the
earliest so that bogus litigation will end at the earlier
stage.”
Keeping in  mind  the  well settled legal  position, we may now
proceed to analyse the averments in the plaint, as filed by the
appellant, to discern whether it was a fit case for rejection of the
plaint under Order VII Rule 11(d) of the CPC.  As noticed from
the trial Court judgment, it is evident that the trial Court did not
make any attempt to analyse the plaint in the manner predicated
in the aforesaid decisions.  Even the District Court dealing with
first appeal and the High Court with second appeal omitted to do
so.  It is the bounden duty of the Court to examine the plaint as a
whole and not selected averments therein.  For that, we need to
advert to the averments in the plaint.  Paragraphs 8 to 15 of the
12
plaint, which according to us, are the relevant averments, read as
follows:­
‘‘8. That the facility as referred to in the foregoing paras
was extended with effect from 01.04.1997 and somewhere
in the month of July, 2000 it was noticed by the Plaintiff
that the Defendants were charging interest/commission
@   Rs.4/­   per   thousand   rupees   on   local   cheques   and
drafts   in   an   arbitrary   manner   in   violation   of   the
assurance given to the Plaintiff.
9. That   after   the   detection   of   the   above
overcharging   of   interest/commission   the   Plaintiff
sent   a   letter   to   the   Defendants   on   21.07.2000
complaining   about   the   overcharging   and   thereafter
the   interest/commission   was   charged   as   per
assurance given.
10. That   the   amount   overcharged   as
commission/interest was not refunded to the Plaintiff and
the Plaintiff sent the following letters addressed to the
Bank i.e. General Manager and Senior Manager indicating
therein that amount overcharged should be refunded to
the Plaintiff with interest thereon: ­
Letter   dated   12.10.2000,   24.10.2000,   30.10.2000,
7.11.2000,   24.12.2000,   01.03.2001,   28.03.2001,
22.5.2001   and   20.06.2001.     In   all   the   above   letters
requests were made to clarify as to how the commission
were calculated and deducted from the Plaintiff.
11. That   the   Assistant   General   Manager,   Sh.   P.S.
Bawa   of   Regional   Office­B,   Delhi   vide   letter   dated
9.7.2001 informed the Plaintiff that the comments of
the   Branch   Office   have   been   invited   on   the
representation of the Plaintiff in respect of the local
cheques/DDs   discounted   during   the   relevant   period
and the matter will be decided as early as possible. No
progress was made in the matter and the Plaintiff had
to   submit   letter   dated   31.10.2001   to   the   Hon’ble
Finance Minister, Govt. of India, New Delhi.
13
12. That the Defendants have charged interest for some
time for the actual number of days for the Defendants
remained out of funds.
13. That   vide   letter   dated   08.05.2002,   the   Senior
Manager informed the Plaintiff that the cheques were
being   purchased   at   the   prevailing   rates.   That   reply
was   given   to   sidetrack   the   real   issue   in   respect   of
which letter dated 09.07.2001 was received from Shri
P.S.   Bawa,   Assistant   General   Manager   of   Regional
Office as referred to in the foregoing paras.
14. That,   thereafter,   the   Plaintiff   sent   letters   dated
12.07.2002, 22.09.2002, 24.3.2003 alongwith which the
details of the proposed/estimated excess amount charged
were   given   and   it   was   requested   that   a   sum   of
Rs.31,57,484/­   approximately   appears   to   have   been
charged   in   excess   of   what   should   have   been   actually
charged and the exact amount should be calculated and
refunded to the Plaintiff.  No reply was given by the Bank
to these letters.
15. That   Senior   Manager   of   the   Defendant   No.   2
vide   letter   dated   19.09.2002   had   informed   that
everything   was   done   according   to   rules   and   the
matters   need   not   to   be   pursued   any   further   and
thereafter   the   Plaintiff   sent   another   letter   dated
03.06.2003.”
(emphasis supplied)
Again, in paragraph 28 of the plaint, it is stated as follows: ­
“28. That the cause of action to file the suit accrued in
favour of the Plaintiff and against the Defendants when
the   illegal   recoveries   were   noticed   and   letter   dated
21.07.2000 was sent to the Defendants to clarify as to
how the interest was being calculated and recovered and
on various other dates when the letters were sent to the
Defendants with request for refund of the excess amounts
charged   and   on   9.7.2001   when   assurance   for   proper
calculation and refund was conveyed to the Plaintiff and
on   8.5.2002,   12.7.2002   and   22.9.2002   when   requests
were   again   made   to   settle   the   matter   on   19.9.2002,
3.6.2003 and the cause of action arose on 23.12.2003
when the legal notice was served upon the Defendant and
on 28.12.2003 when the reply to the notice was received
14
and   finally   on   07.01.2005.   When   the   legal   notice   for
rendition of accounts was served upon the Defendants
and the cause of action still subsists as the accounts
have not been rendered so far nor the excess amount
charged has been refunded by the Defendants.”
From the averments in the plaint, if read as a whole, it would
appear that the assertion of the appellant is that the respondents
had   extended   financial   facility   with   effect   from   1.4.1997   till
October, 2007, but somewhere in the month of July, 2000, the
appellant noticed that the respondents were unilaterally charging
interest/commission at the rate of Rs.4 per thousand rupees on
local cheques and drafts in an arbitrary manner in violation of
the assurance given to the appellant.  Immediately thereafter, the
appellant   wrote   to   the   respondent­Bank   vide   letter   dated
21.7.2000   for   taking   corrective   steps   in   the   matter.     Then
correspondence ensued between the parties in that regard and
the   appellant   was   assured   by   the   Regional   Office   of   the
respondent­Bank that an appropriate decision will be taken at
the earliest.   The relevant assertion in that regard is found in
paragraph 11 of the plaint, wherein it is mentioned that the
Assistant General Manager ­ Shri P.S. Bawa of Regional Office­B,
Delhi,   vide   letter   dated   9.7.2001   informed   the   appellant   that
comments from the concerned Branch Office have been invited
15
and appropriate decision will be taken on its representation as
early as possible.  Thereafter, on 8.5.2002, the Senior Manager of
the respondent­Bank informed the appellant that the cheques
were   being   purchased   at   the   prevailing   rates;   which   plea,
according   to   the   appellant,   was   to   deviate   from   the   position
stated by the Assistant General Manager of Regional Office in his
letter   dated   9.7.2001   referred   to   earlier.     Resultantly,   the
appellant   wrote   to   the   officials   of   the   respondent­Bank   vide
letters dated 12.7.2002, 22.9.2002 and 24.3.2003.  Notably, it is
averred in paragraph 15 of the plaint that the Senior Manager of
the respondent­Bank vide letter dated 19.9.2002 had informed
the appellant that everything was being done in accordance with
the rules and the appellant need not pursue the matter any
further.  It is asserted that despite this intimation, the appellant
continued   to   correspond   with   the   respondent­Bank   with   a
sanguine hope that the issue will be resolved at the appropriate
level by the Bank and finally issued a legal notice on 28.11.2003,
which   was   duly   responded   to   by   the   respondent­Bank   vide
Advocate’s letter dated 23.12.2003.  Nevertheless, the appellant
gave another legal notice on 7.1.2005 and thereafter, proceeded
to file the subject suit in February, 2005. 
16
7. All these events have been reiterated in paragraph 28 of the
plaint, dealing with the cause of action for filing of the suit.
Indeed, the said paragraph opens with the expression “the cause
of action to file the suit accrued in favour of the plaintiff and
against the defendants when the illegal recoveries were noticed
and letter dated 21.7.2000 was sent to the defendants to clarify
as to how the interest was being calculated.”   This averment
cannot be read in isolation.  As aforesaid, on reading the plaint
as a whole, it is seen that the gravamen of the case made out in
the plaint is that the appellant noticed the discrepancy in July,
2000 and immediately took up the matter with the officials of the
respondent­Bank   at   different   levels   and   in   response,   the
Assistant General Manager of Regional Office of the Bank had
communicated   in   writing   to   the   appellant   vide   letter   dated
9.7.2001   that   its   representation   was   being   examined   and
comments   of   the   Branch   Office   have   been   invited   and   after
receipt thereof the matter will be decided as early as possible.  As
no further communication was received by the appellant, it had
to make a representation to the Finance Minister, Government of
India, vide letter dated 31.10.2001 and presumably because of
that, the appellant received a communication from the Senior
17
Manager vide letter dated 8.5.2002 informing the appellant that
the cheques were being purchased at the prevailing rates.  This
stand taken by the Senior Manager was to side­track the issue
pending   consideration   before   the   Assistant   General   Manager,
Regional Office referred to in his letter dated 9.7.2001.  The case
made   out   by   the   appellant   is   that   no   communication   was
received by the appellant from the Assistant General Manager,
Regional Office and instead, for the first time it was informed vide
letter   dated   19.9.2002   sent   by   the   Senior   Manager   of   the
respondent­Bank, that all actions taken by the Bank are as per
the rules and, therefore, the appellant need not correspond in
this regard any further.  This response of the Bank could also be
regarded as a firm denial or refusal by the authorised official of
the Bank, giving rise to cause of action to sue the Bank.
8. Thus   understood,   the   letter   dated   8.5.2002   sent   by   the
Senior Manager of the respondent­Bank, at best, be reckoned as
accrual   of   the   cause   of   action   to   the   appellant   to   sue   the
respondent­Bank.  It is then stated that the appellant received a
communication dated 19.9.2002, informing the appellant that it
should not carry on any further correspondence with the Bank
18
relating to the subject matter.   Until then, the appellant was
having   a   sanguine   hope   of   favourable   resolution   of   its   claim
including   by   the   Regional   Office   of   the   respondents.     The
appellant, therefore, had to send a legal notice on 28.11.2003, to
which   the   Bank   responded   on   23.12.2003.     Reckoning   these
dates, the plaint filed on 23.2.2005 was within limitation, as
stated in paragraph 28 of the plaint.  Resultantly, the question of
rejecting such a plaint under Order VII Rule 11(d) of the CPC did
not arise.
9. The expression used in Article 113 of the 1963 Act is “when
the right to sue accrues”, which is markedly distinct from the
expression used in other Articles in First Division of the Schedule
dealing with suits, which unambiguously refer to the happening
of a specified event.   Whereas, Article 113 being a residuary
clause and which has been invoked by all the three Courts in this
case, does not specify happening of particular event as such, but
merely refers to the accrual of cause of action on the basis of
which the right to sue would accrue. 
10. Concededly, the expression used in Article 113 is distinct
from the expressions used in other Articles in the First Division
19
dealing with suits such as Article 58 (when the right to sue “first”
accrues), Article 59 (when the facts entitling the plaintiff to have
the instrument or decree cancelled or set aside or the contract
rescinded “first” become known to him) and Article 104 (when the
plaintiff is “first” refused the enjoyment of the right).   The view
taken by the trial Court, which commended to the first appellate
Court and the High Court in second appeal, would inevitably
entail in reading the expression in Article 113 as – when the right
to sue (first) accrues.  This would be re­writing of that provision
and doing violence to the legislative intent.  We must assume that
the   Parliament   was   conscious   of   the   distinction   between   the
provisions   referred   to   above   and   had   advisedly   used   generic
expression “when the right to sue accrues” in Article 113 of the
1963 Act.  Inasmuch as, it would also cover cases falling under
Section 22 of the 1963 Act, to wit, continuing breaches and torts.
11. We may usefully refer to the dictum of a three­Judge Bench
of this Court in Union of India & Ors. vs. West Coast Paper
Mills Ltd. & Anr.
5
, which has had an occasion to examine the
expression used in Article 58 in contradistinction to Article 113 of
5 (2004) 2 SCC 747
20
the 1963 Act.  We may advert to paragraphs 19 to 21 of the said
decision, which read thus: ­
“19.  Articles 58 and 113 of the Limitation Act read thus:
Description of suit Period   of
limitation
Time   from   which
period   begins   to
run
58. To   obtain   any
other declaration.
Three
years
When the right to
sue first accrues.
* * *
113. Any suit for which
no   period   of
limitation   is
provided elsewhere
in this Schedule.
Three
years
When the right to
sue accrues.
20.  It was not a case where the respondents prayed for
a declaration of their rights. The declaration sought for by
them as regards unreasonableness in the levy of freight
was granted by the Tribunal.
21.  A distinction furthermore, which is required to be
noticed is that whereas in terms of Article 58 the period of
three years is to be counted from the date when “the right
to sue first accrues”, in terms of Article 113 thereof, the
period of limitation would be counted from the date “when
the   right   to   sue   accrues”.    The   distinction   between
Article 58 and Article 113 is, thus, apparent inasmuch
as the right to sue may accrue to a suitor in a given
case at different points of time and, thus, whereas in
terms of Article 58 the period of limitation would be
reckoned from the date on which the cause of action
arose first, in the latter the period of limitation would
be differently computed depending upon the last day
when the cause of action therefor arose.”
(emphasis supplied)
12. Similarly, in  Khatri  Hotels  Private  Limited  &  Anr.  Vs.
Union  of   India  &  Anr.6
, this Court considered the expression
6 (2011) 9 SCC 126
21
used in Article 58 in contradistinction to Article 120 of the old
Limitation Act (the Indian Limitation Act, 1908).   In paragraph
24, the Court noted thus: ­
“24. The Limitation Act, 1963 (for short “the 1963 Act”)
prescribes time limit for all conceivable suits, appeals,
etc. Section 2(j) of that Act defines the expression “period
of limitation” to mean the period of limitation prescribed
in the Schedule for suit, appeal or application. Section 3
lays down that every suit instituted, appeal preferred or
application   made   after   the   prescribed   period   shall,
subject to the provisions of Sections 4 to 24, be dismissed
even though limitation may not have been set up as a
defence. If a suit is not covered by any specific article,
then it would fall within the residuary article. In other
words, the residuary article is applicable to every kind
of suit not otherwise provided for in the Schedule.”
(emphasis supplied)
The distinction between the two Articles (Article 58 and Article
120) has been expounded in paragraphs 27 to 30 of the reported
decision, which read thus: ­
“27. The   differences   which   are   discernible   from   the
language of the above reproduced two articles are:
(i)  The   period   of   limitation   prescribed   under
Article 120 of the 1908 Act was six years whereas
the period of limitation prescribed under the 1963
Act is three years and,
(ii)  Under   Article   120   of   the   1908   Act,   the
period of limitation commenced when the right
to   sue   accrues.   As   against   this,   the   period
prescribed under Article 58 begins to run when
the right to sue first accrues.
28.  Article 120 of the 1908 Act was interpreted by the
Judicial Committee in  Bolo  v.  Koklan  [(1929­30) 57 IA
325: AIR 1930 PC 270] and it was held: (IA p. 331)
22
“There can be no ‘right to sue’ until there is an
accrual of the right asserted in the suit and its
infringement, or at least a clear and unequivocal
threat   to   infringe   that   right,   by   the   defendant
against whom the suit is instituted.”   The same
view   was   reiterated   in  Annamalai   Chettiar  v.
Muthukaruppan Chettiar  [ILR (1930) 8 Rang 645]
and  Gobinda   Narayan   Singh  v.  Sham   Lal   Singh
[(1930­31) 58 IA 125] .
29.  In Rukhmabai v. Lala Laxminarayan (AIR 1960 SC
335),   the   three­Judge   Bench   noticed   the   earlier
judgments   and   summed   up   the   legal   position   in   the
following words: (Rukhmabai case [AIR 1960 SC 335, AIR
p. 349, para 33)
“33. … The right to sue under Article 120 of the
[1908   Act]   accrues   when   the   defendant   has
clearly  or  unequivocally  threatened   to   infringe
the   right   asserted   by   the  plaintiff   in   the   suit.
Every threat by a party to such a right, however
ineffective and innocuous it may be, cannot be
considered to be a clear and unequivocal threat
so   as   to   compel  him   to   file   a   suit.  Whether   a
particular   threat   gives   rise   to   a   compulsory
cause   of   action   depends   upon   the   question
whether   that   threat   effectively   invades   or
jeopardizes the said right.”
30.  While   enacting   Article   58   of   the   1963   Act,   the
legislature   has   designedly   made   a   departure   from   the
language of Article 120 of the 1908 Act. The word “first”
has been used between the words “sue” and “accrued”.
This   would   mean   that   if   a   suit   is   based   on   multiple
causes of action, the period of limitation will begin to run
from the date when the right to sue first accrues. To put
it differently, successive violation of the right will not give
rise   to   fresh   cause   and   the   suit   will   be   liable   to   be
dismissed if it is beyond the period of limitation counted
from the day when the right to sue first accrued.”
(emphasis supplied)
Notably, the expression used in Article 113 is similar to that in
Article 120, namely, “when the right to sue accrues”.  Hence, the
23
principle   underlying   this   dictum   must   apply  proprio   vigore  to
Article 113.
13. It is well established position that the cause of action for
filing a suit would consist of bundle of facts.  Further, the factum
of suit being barred by limitation, ordinarily, would be a mixed
question of fact and law.  Even for that reason, invoking Order
VII Rule 11 of the CPC is ruled out.   In the present case, the
assertion in the plaint is that the appellant verily believed that its
claim   was   being   processed   by   the   Regional   Office   and   the
Regional   Office   would   be   taking   appropriate   decision   at   the
earliest.  That belief was shaken after receipt of letter from the
Senior Manager of the Bank, dated 8.5.2002 followed by another
letter dated 19.9.2002 to the effect that the action taken by the
Bank was in accordance with the rules and the appellant need
not correspond with the Bank in that regard any further.  This
firm response from the respondent­Bank could trigger the right of
the appellant to sue the respondent­Bank.   Moreover, the fact
that   the   appellant   had   eventually   sent   a   legal   notice   on
28.11.2003 and again on 7.1.2005 and then filed the suit on
23.2.2005,   is   also   invoked   as   giving   rise   to   cause   of   action.
Whether   this   plea   taken   by   the   appellant   is   genuine   and
24
legitimate, would be a mixed question of fact and law, depending
on the response of the respondents.
14. Reverting   to   the   argument   that   exchange   of   letters   or
correspondence   between   the   parties   cannot   be   the   basis   to
extend the period of limitation, in our opinion, for the view taken
by us hitherto, the same need not be dilated further.  Inasmuch
as, having noticed from the averments in the plaint that the right
to sue accrued to the appellant on receiving letter from the Senior
Manager,   dated   8.5.2002,   and   in   particular   letter   dated
19.9.2002, and again on firm refusal by the respondents vide
Advocate’s letter dated 23.12.2003 in response to the legal notice
sent by the appellant on 28.11.2003; and once again on the
follow up legal notice on 7.1.2005, the plaint filed in February,
2005 would be well within limitation.   Considering the former
events of firm response by the respondents on 8.5.2002 and in
particular,   19.9.2002,   the   correspondence   ensued   thereafter
including the two legal notices sent by the appellant, even if
disregarded, the plaint/suit filed on 23.2.2005 would be within
limitation in terms of Article 113. 
25
15. The respondents had relied on the exposition of this Court
in  Boota Mal  vs.  Union  of  India7
,  S.S.  Rathore  vs.  State  of
Madhya  Pradesh8
,  Venkappa  Gurappa  Hosur   vs.  Kasawwa
C/o   Rangappa   Kulgod9
, and  Kandimalla   Raghavaiah   &
Company   vs.  National   Insurance  Company  &  Anr.10 and of
Delhi High Court in  C.P.  Kapur  (supra), to buttress the above
argument,   which,   as   aforesaid,   is   unavailable   in   light   of   the
averments in the plaint under consideration.  Suffice it to observe
that going by the averments in the plaint, the argument of the
respondents   that   the   appellant   had   placed   reliance   on   the
correspondence   to   get   extension   of   the   limitation   period,   is
untenable.     The   averments   in   the   plaint,   however,   are   very
explicit to the effect that the grievance of the appellant about
unilateral charging of interest/commission by the respondentBank was firmly denied or refused by the Senior Manager of the
respondent­Bank  vide  letter  dated  8.5.2002  and  in   particular
letter   dated   19.9.2002   and   again   by   Advocate’s   letter   on
23.12.2003, giving rise to cause of action and accrual of right to
sue.
7 AIR 1962 SC 1716
8 (1989) 4 SCC 582
9 (1997) 10 SCC 66
10 (2009) 7 SCC 768
26
16. The respondents had also relied on the dictum of this Court
in  Fatehji   And  Company  &   Anr.   vs.  L.M.  Nagpal  &  Ors.11
.
Indeed, in that case, this Court upheld the order of rejection of
plaint on the finding that the suit was barred by limitation under
Article 54 of the 1963 Act, in the fact situation of that case.  The
Court   was   dealing   with   a   suit   for   specific   performance   of   a
written agreement of sale dated 2.7.1973 and as per the terms,
the performance of the contract was fixed for 2.12.1973.  In that
background,   the   Court   noted   that   the   subsequent   letters
exchanged between the parties cannot be the basis to extend the
period of limitation.   Moreover, the Court dealt with the case
governed by Article 54 of the 1963 Act, which stipulates the
timeline for commencement of period of limitation, being the date
fixed for the performance, or, if no such date is fixed, when the
plaintiff   has   notice   that   performance   is   refused.     In   cases
governed by Article 113 of the 1963 Act, such as the present
case, however, what is required to be noted is – “when the right
to sue accrues” (and not when the right to sue “first” accrues). 
11 (2015) 8 SCC 390
27
17. Similarly, in the case of  Hardesh  Ores  (P)  Ltd.  vs.  Hede
and   Company12,   this   Court   upheld   the   order   of   rejection   of
plaint under Order VII Rule 11 of the CPC concerning a suit for
injunction in reference to Article 58, which expressly postulates
that time from which period begins to run is when the right to
sue “first” accrues.   The argument of the appellant therein to
apply Article 113 of the 1963 Act has been noted in paragraph 33
and rejected.  In that view of the matter, the exposition in this
decision will be of no avail to the respondents.
18. Reverting   to   the   decision   in  Kandimalla   Raghavaiah
(supra),   the   Court   interpreted   Section   24A   of   the   Consumer
Protection Act, 1986, which defines the period of limitation to be
within two years from the date on which the cause of action had
arisen.  In light of that provision, the Court noted that the cause
of   action   in   respect   of   subject   insurance   policy   arose   on
22/23.3.1988, when fire in the godown took place, damaging the
tobacco stocks hypothecated with the Bank in whose account the
policy had been taken by the appellant therein.  In other words,
the stipulation in Section 24A of the Consumer Protection Act,
1986 is analogous to the time frame specified in other Articles
12 (2007) 5 SCC 614
28
covered under First Division of the Schedule to the 1963 Act
regarding suits relating to accounts; and not similar to Article
113, which envisages three years’ time from the period when the
right   to   sue   accrues   (and   not   when   the   right   to   sue   “first”
accrues).
19. As regards  Boota  Mal  (supra) and  The   East   and  West
Steamship,   Georgetown,   Madras   vs.   S.K.   Ramalingam
Chettiar13, the Court was dealing with a case relating to Article
31 of the old Limitation Act, which provided that the time from
which period begins to run, is when the goods sought to be
delivered.   Even these decisions will be of no avail to the fact
situation of the present case, which is governed by Article 113 of
the 1963 Act and for the reasons already recorded hereinbefore.
20. Similarly, in  S.S.  Rathore  (supra), the Court was dealing
with   a   case   governed   by   Article   58   of   the   1963   Act,   which
specifically provides that time begins to run when the right to sue
“first” accrues.  In Ram Prakash Gupta (supra), the Court dealt
with   a   case   governed   by   Article   59   of   the   1963   Act,   which
provides that the suit could be filed when the facts entitling the
13 AIR 1960 SC 1058
29
plaintiff to have the instrument or decree cancelled or set aside or
the contract rescinded “first” become known to him.  The Court
opined that the knowledge mentioned in the concerned plaint
could not be termed as inadequate and incomplete.  The Court
reversed the judgment of the Civil Judge and the High Court
rejecting the plaint.  This Court also noted that while deciding the
application under Order VII Rule 11 of the CPC, few lines or
passage from the plaint should not be read in isolation and the
pleadings   ought   to   be   read   as   a   whole   to   ascertain   its   true
import.   Even in that case, the trial Court and the High Court
had failed to advert to the relevant averments, as stated in the
plaint, which approach was disapproved by this Court.   In the
present case, as noticed earlier, the trial Court had failed to
advert to and analyse the averments in the plaint, but selectively
took notice of the assertion in the plaint in question that the
appellant became aware about the discrepancies in July, 2000,
and then proceeded to reject the plaint being barred by law of
limitation having been filed in February, 2005.
21. Taking overall view of the matter, therefore, we are of the
considered opinion that the decisions of the trial Court, the first
appellate Court and the High Court in the fact situation of the
30
present case, rejecting the plaint in question under Order VII
Rule 11(d) of the CPC, cannot be sustained.   As a result, the
same are quashed and set aside.
22. In view of the above, this appeal succeeds and the plaint
stands restored to the file of the trial Court to its original number
for being proceeded  in accordance  with  law.    All contentions
available to both parties are kept open including the issue of
limitation to be decided alongwith other issues on the basis of
plea taken in the written statement and the evidence produced by
the parties in that behalf uninfluenced by the observations made
in the present judgment on factual matters.  There shall be no
order as to costs.  Pending interlocutory applications, if any, shall
stand disposed of.
CIVIL APPEAL NO. 2515 OF 2020
(Arising out of SLP (C) No. 30210/2017)
1. Leave granted.
2. In the present appeal, the factual narration in the plaint is
similar in material respects, if not identical to the plaint in the
companion appeal arising from SLP(C) No. 30209/2017.  To wit,
it is apposite to reproduce relevant averments from the plaint in
question, which read as follows: ­
31
“8. That the facility as referred to in the foregoing paras
was extended with effect from the month of November,
1997 to December, 1999 and somewhere in the month of
July,   2000   it   was   noticed   by   the   plaintiff   that   the
defendants were charging interest/commission @ Rs.4/­
per thousand rupees on local cheques and drafts in an
arbitrary manner in violation of the assurance given to
the plaintiff.
9. That   after   the   detection   of   the   above
overcharging   the   interest/commission   the   plaintiff
sent   a   letter   to   the   defendants   on   21.7.2000
complaining   about   the   overcharging   and   thereafter
the   interest/commission   was   charged   as   per
assurance given.
10. That   the   amount   overcharged   as
commission/interest was not refunded to the plaintiff and
the plaintiff sent the following letters addressed to the
Bank i.e. General Manager and Senior Manager indicating
therein that the amount overcharged should be refunded
to the plaintiff with interest thereon: ­
Letter   dated   12.10.2000,   24.10.2000,   30.10.2000,
7.11.2000,   24.12.2000,   01.03.2001,   28.03.2001,
22.05.2001 and 20.06.2001.
In all the above letters requests were made to clarify as
to how the commission was calculated and deducted from
the plaintiff.
11. That   the   Assistant   General   Manager,   Sh.   P.S.
Bawa   of   Regional   Office­B,   Delhi   vide   letter   dated
9.7.2001 informed the plaintiff that the comments of
the   Branch   Office   have   been   invited   on   the
representation of the plaintiff in respect of the local
cheques/DDs   discounted   during   the   relevant   period
and the matter will be decided as early as possible. No
progress was made in the matter and the plaintiff had
to   submit   letter   dated   31.10.2001   to   the   Hon’ble
Finance Minister, Govt. of India, New Delhi.
12. That the defendants have charged interest for some
time for the actual number of days for the defendants
remained out of funds.
32
13. That   vide   letter   dated   08.05.2002,   the   Senior
Manager informed the plaintiff that the cheques were
being   purchased   at   the   prevailing   rates.   That   reply
was   given   to   sidetrack   the   real   issue   in   respect   of
which letter dated 09.07.2001 was received from Sh.
P.S.   Bawa,   Assistant   General   Manager   of   Regional
Office as referred to in the foregoing paras.
14. That,   thereafter,   the   plaintiff   sent   letters   dated
12.07.2002,   22.07.2002,   24.03.2003   along   with   which
the   details   of   the   proposed/estimated   excess   amount
charged were given and it was requested that a sum of
Rs.5,39,902/­   approximately   appears   to   have   been
charged   in   excess   of   what   should   have   been   actually
charged and the exact amount should be calculated and
refunded to the plaintiff. No reply was given by the bank
to these letters.
15. That Senior Manager of the defendant No.2 vide
letter dated 19.09.2002 had informed that everything
was done according to rules and the matters need not
to be pursued any further and thereafter the plaintiff
sent another letter dated 3.06.2003.
16. That   the   excess   amounts   have   been
recovered/charged   from   the   plaintiff   in   an   arbitrary
manner,   in   utter   violation   of   the   assurances,   rules,
regulations   and   established   cannons   of   business
dealings; and  inspite of the protracted correspondence
made   from   21.07.2000   to   03.06.2003,   the   defendants
have failed to account for or to justify the recovery of
amounts   made   in   an   arbitrary   manner   by   citing   any
rules, regulations or any other authority.
xxx xxx xxx
18.   That   thereafter,   the   plaintiff   got   a   legal   notice
served upon the defendant vide registered letter No.6672
dated 03.12.2003 containing all the details relating to the
transactions   as   could   be   gathered   from   the   books   of
accounts of the plaintiff.
19. That reply to the above noted notice was sent by
the   defendants   through   Sh.   Sanjeev   Kumar   Gupta,
Advocate, vide letter dated 23.12.2003 wherein averments
relating to the excess charges were denied and it was
stated that the interest was charged on DD/cheques as
per   Central   Officer   Circular   No.   C094­95;   233   upto
33
01.12.1999   and   thereafter   as   per   Circular   No.
CO/OPR/SCHGS/CIR/LET/2000­2001   dated
18.08.2000.”
(emphasis supplied)
Again, in paragraph 28, it is stated as follows: ­
“28. That the cause of action to file the suit accrued in
favour of the plaintiff and against the defendants when
the   illegal   recoveries   were   noticed   and   letter   dated
21.07.2000 was sent to the defendants to clarify as to
how the interest was being calculated and recovered and
on various other dates when the letters were sent to the
defendants with request for refund of the excess amounts
charged   and   on   9.7.2001   when   assurance   for   proper
calculation and refund was conveyed to the plaintiff and
on   8.5.2002,   12.7.2002   and   22.9.2002   when   requests
were   again   made   to   settle   the   matter   on   19.9.2002,
3.6.2003 and their cause of action arose on 28.12.2003
where the legal notice was served upon the defendant and
on 23.12.2003 when the reply to the notice was received
and   finally   on   08.01.2005   when   the   legal   notice   for
rendition of accounts was served upon the defendants
and the cause of action still subsists as the accounts
have not been rendered so far nor the excess amount
charged has been refunded by the Defendants.”
3. We have considered the factual position in the present case,
which is similar to the facts in the companion appeal.  Therefore,
for  the  reasons   stated  in   the  judgment  in   companion   appeal
arising from SLP(C) No. 30209/2017, even this appeal should
succeed on the same terms.   Accordingly, this appeal is also
allowed and the impugned judgment and order of the trial Court,
the first appellate Court and the High Court in second appeal are
set aside and the plaint is restored to the file of the trial Court to
be disposed of on the same terms as indicated in the companion
34
appeal (arising from SLP(C) No. 30209/2017).  There shall be no
order as to costs.  Pending interlocutory applications, if any, shall
stand disposed of.
..................................J.
  (A.M. Khanwilkar)
..................................J.
 (Indira Banerjee)
..................................J.
(Dinesh Maheshwari)
New Delhi;
June 05, 2020.