GEORGE STUART & CO. LTD v. LANKEM TEA & RUBBER PLANTATION LTD

034-SLLR-SLLR-2004-V-1-GEORGE-STUART-CO.-LTD-v.-LANKEM-TEA-RUBBER-PLANTATION-LTD.pdf


246
Sri Lanka Law Reports
[2004] 1 Sri L.R
GEORGE STUART & CO. LTD.v
LANKEM TEA & RUBBER PLANTATIONS LTD.
SUPREME COURTBANDARANAYAKE, J.
EDUSSURIYA, J. ANDYAPA, J.
SC (CHC) LA NO 12/2002HC (ARB) NO. 773/2001
JUNE 25, NOVEMBER 7 AND DECEMBER 23 AND 17, 2003Arbitration – Act, No. 11 of 1995 – Order of the High Court under section 31 ofthe Act for enforcement of award – Leave to appeal from the order of the HighCourt under section 37 – Time of application for leave from the High Court.
On the application of the respondent, the High Court of Colombo by its orderdated 1.3.2002 made under section 31 of the Arbitration Act, allowed theenforcement of the arbitral award made in favour of the respondent. An appli-cation was made by the petitioner on 18.6.2002 (108 days after the order of1.3.2002) for leave to appeal to the Supreme Court under section 37 of the Act.
Held:
In the absence of provision in section 37, or a rule under section 43 ofthe Act prescribing time to seek leave to appeal, the application forleave to appeal should be made within a reasonable time. An applica-tion made 108 days after the order of the High Court is unreasonable.
Cases referred to:
1. Mahaweli Authority of Sri Lanka v United Agency Construction (Pvt)Ltd. – (2002) 1 Sri L R 08
sc
George Stuart & Co. Ltd. v Lankem Tea & Rubber Plantations Ltd.
(Bandaranayake, J‘) •
247
Billimoria v Minister of Lands and Land Development – (1978-79-80) 1Sri LR 10
Ganeshanatham v Vivienne Gunawardene and others – (1984) 1 SriLR 319'
Jeyaraj Femandopulle v Premachandra de Silva and others (1996) 1Sri LR 70
Young v Bristol Aeroplane Co. Ltd – (1994) 2 ALL ER 293
GTE Directories Lanka (Pvt) Ltd v Mukthar Marikkar and another -(1998) 2 Sri LR 180
Morelle Ltd v Makeling – (1955) ALL ER 708 –
APPLICATION for leave to appeal from the order of the High CourtK. Kang-lswaran. P.C. with Anil Tittawela and Avindra Rodrigo for petitionersRomesh de Silva P.C. with Harsha Amarasekera for respondent
Cur.adv.vult
January 29, 2004
SHIRANI BANDARANAYAKE, J.
The claimant-respondent-petitioner (hereinafter referred to as the 01petitioner) entered into a Management Agreement with the respon-dent-petitioner-respondent (hereinafter referred to as the respondent)on 04.09.1995. By the said Agreement, it was agreed that the man-agement fees for the period specified in the said agreement shouldaccrue to the then current shareholders of the petitioner company.Upon the respondent failing to comply with the conditions of the saidagreement, the petitioner as provided by Clause 23 of the saidAgreement invoked the Arbitration Clause. The Arbitration Tribunalheld on 15.02.2000, that the alleged dispute cannot constitute the 10subject matter of the proceedings before it and any finding in relationto substantive questions covered by the other issues would serve nopurpose as they are outside their jurisdiction. The Arbitration Tribunalmade an award against the petitioner and he was directed to pay Rs.750,000/- to the respondent as costs of Arbitration. The petitionerthereafter instituted action in the District Court of Colombo against therespondent seeking to set aside the award of the Arbitration Tribunaland for a declaration that there exists a valid and subsisting agree-ment to arbitration. The matter is still pending before the District Courtof Colombo.20
248
Sri Lanka Law Reports
[2004] 1 Sri L.R
Meanwhile the respondent by petition dated 14.02.2001, institut-ed proceedings in the High Court of Colombo seeking to have theaward made by the Arbitral Tribunal dated 15.02.2000, enforcedunder section 31(1) of the Act. The High Court made order on01.03.2002 holding that the respondent is entitled to recover the sumof Rs. 750,000/- as awarded by the Arbitral Tribunal and furtherordered the petitioner to pay the respondent a sum ofRs. 15,000/- as costs.
Being aggrieved by the order of the High Court, the petitionersought leave to appeal from this Court.
When the learned President’s Counsel for the petitioner sought tosupport the application for leave to appeal, a preliminary objectionwas raised on behalf of the respondent that this application was outof time and therefore it should be rejected.
It is common ground that the order of the High Court was madeon 01.03.2002 and that the petitioner filed this application on
which is 108 days after the said order.
Learned President’s Counsel for the respondent relied on thedecision of this Court in Mahaweli Authority of Sri Lanka v UnitedAgency Construction (Pvt) Lfc/1)- In the said case the application forleave to appeal from the judgment of the High Court to the SupremeCourt was made 55 days after the order of the High Court and thisCourt held that the period of 55 days taken by the petitioner to file thisapplication for leave to appeal cannot be considered as reasonable.
Learned President’s Counsel for the petitioner however submittedthat the said decision in case of Mahaweli Authority of Sri Lanka(supra) was given per incuriam and therefore cannot be taken as anauthority which has laid down the time period within which an appealfrom an order of the High Court should be lodged in the SupremeCourt.
Regard to this matter learned President’s Counsel for the peti-tioner cited the decisions in Billimoria v Minister of Lands and LandDevelopment and Mahaweli Development2 Ganeshanantham vVivienne Goonawardene and three otherd3')’ Jeyaraj Fernandopullev Premachandra de Silva and otherd4 He also referred to twoClasses of decisions regarded as per incuriam. As pointed out byGreene, M.R in Young v Bristol Aeroplane Co. Ltd5) and referred to
30
40
50
sc
George Stuart & Co. Ltd v Lankem Tea & Rubber Plantations Ltd.
(Bandaranayake, J.)
249
in the decision in Billimoria (supra) the two Classes of decisionsare:-
a decision in ignorance of a previous decision of its60
own Court or of a Court of co-ordinate jurisdiction cov-ering the case; and
a decision in ignorance of a decision of a higher Courtcovering the case which binds the lower Court,
Learned President’s Counsel for the petitioner relied on the deci-sion in GTE Directories Lanka (Pvt) Ltd v Mukthar Marikkar andanotheffl where the question arose as to the time limit within whichan appeal should be lodged under the Code of Intellectual PropertyAct, No. 52 of 1979. This Act does not provide a time limit within anappeal should be lodged in the District Court in terms of section 182 70of the Act. In the District Court, a preliminary objection was taken thatthe appeal should be dismissed as it has not been filed within a rea-sonable time. The Supreme Court, setting aside the order of theDistrict Court and the judgment of the Court of Appeal held that anappeal under section 182 of the Code of Intellectual Property Actcould be filed within 3 years of the decision of the Registrar. Referringto the judgment, in GTE Directories Lanka (Pvt) Ltd (supra) learnedPresident’s Counsel for the petitioner contended that, in the saidcase, the Court had held that, when the law does not prescribe anappealable period, the provisions of section 10 of the prescription 80Ordinance would apply and that an appeal could therefore be madewithin a period of 3 years.
Learned President’s Counsel for the petitioner also took up theposition that the right of appeal under section 37 of the Arbitration Actis a vested right and such a vested right cannot be taken away orrestricted unless it is expressly and unambiguously provided bystatute. It was submitted that when the Supreme Court is conferredwith powers to make rules in respect of practice and procedure relat-ing to appeals to the Supreme Court, any limitations with regard tosuch matters relating to appeals could only be prescribed by express 90and unambiguous rules made in compliance with the procedure pro-vided for making such Rules in terms of Article 136 of theConstitution.
250
Sri Lanka Law Reports
[2004] 1 Sri L.R
He submitted that no such Rules were made by the SupremeCourt in terms of Article 136 of the Constitution and section 43 of theArbitration Act prescribing a time frame within which an applicationfor leave to appeal should be made to the Supreme Court under sec-tion 37 of the Arbitration Act. It was contended on behalf of the peti-tioner that considering the procedure laid down in Article 136 of theConstitution, the Court cannot formulate such Rules by applying the 100doctrine of reasonable time.
Furthermore, learned President’s Counsel for the petitioner sub-mitted that denial of litigant’s vested right of appeal is violative of hisconstitutional right under Article 12(1) which has been enacted forthe purpose of upholding the Rule of Law and granting such protec-tion under the law.
Finally, it was contended that although the Arbitration Act does notprovide for an appealable time frame from an order of the High Courtto the Supreme Court, section 31 (1) provides that a party may with-in one year and after the expiry of fourteen days of the making of an noaward apply to the High Court for the enforcement of the award. Itwas therefore submitted that, in view of section 31(1) of theArbitration Act, that a reasonable time should not exceed a period of42 days cannot be maintained.
Admittedly, the Arbitration Act, No. 11 of 1995, does not stipulatea time frame in respect of application for leave to appeal.
Section 31(1) of the Act provides for an application for theenforcement of the award and section 32(1) provides for an applica-tion to be made for setting aside the arbitral award. Under section37(1) an application has to be made within one year after the expiry 120 1of fourteen days of the making of an award whereas in terms of sec-tion 32(1) an application for setting aside an arbitral award can bemade within 60 days of the award being made.
The contention of the learned President’s Counsel for the peti-tioner was that, as provision has been made for a period of one yearto make an application for the enforcement of the award, it would notbe reasonable to limit the time frame to make an application for leaveto appeal to 42 days.
Section 31(1), as pointed out earlier deals only with the enforce-ment of an award. An arbitrator’s award, is different to an order or a 130
sc
George Stuart & Co. Ltd. v Lankem Tea & Rubber Plantations Ltd.
(Bandaranayake, J.)
251
judgment of a Court, as it does not immediately entitle the success-ful party to take action for execution against the assets of the unsuc-cessful party. Prior to taking such action on the award, the success-ful party must take steps to convert the award into a judgment or anorder of Court. It is only thereafter that the successful party would beentitled to commence execution. Therefore it would be necessary tohave a long time span for both parties to take necessary action afterthe pronouncement of an arbitral award.
An appeal on the other hand is made by a party who is dissatis-fied with the decision made by the arbitrator. In such circumstances,an appeal cannot wait until the enforcement of award is made andmust be made at the earliest possible instance so as to avoid unduedelay. In a situation where no such time frame is specified in the Act,it would be necessary to refer to the Supreme Court Rules in orderto ascertain the requirements in filing a leave to appeal application.As contended quite correctly by the learned President’s Counsel forthe petitioner there are no Rules pertaining to leave to appeal appli-cations from an order of the High Court to the Supreme Court.Although in terms of section 43 of the Arbitration Act, the SupremeCourt could make such Rules regulating the practice and procedureof the Court, it cannot be taken as a mandatory requirement thatsuch Rules be made by the Supreme Court. Section 43 of theArbitration Act only sets out that the Supreme Court ‘may’ makeRules. Moreover, Article 136(1) of the Constitution which refers toRules of the Supreme Court reads thus,
“Subject to the provision of the Constitution and of anylaw, the Chief Justice with any three Judges of theSupreme Court nominated by him, may, from time totime, make rules regulating generally the practice andthe procedure of the Court”
It is to be remembered that direct applications for leave to appealfrom the High Court to the Supreme Court came into being only afterthe 13th amendment to the Constitution was enacted providing forthe establishment of High Courts of the Provinces.
Prior to the enactment of the Arbitration Act and the establishmentof the High Courts of the Provinces, leave to appeal applications formthe Court of Appeal to the Supreme Court followed the procedure laiddown in terms of the Rules of the Supreme Court. Accordingly when
140
150
160
252
Sri Lanka Law Reports
[2004] 1 Sri L.R
a leave to appeal application is made to the Supreme Courtr Rule19(3) provides that it may be made in terms of Rule 7 of the Supreme 170Court Rules 1990. Rule 7 is the following terms.
“Every such application shall be made within six weeksfor the order, judgment, decree or sentence of the Courtof Appeal in respect of which special leave to appeal issought (emphasis added).”
When no provision is made in the relevant Act, specifying the timeframe in which an application for leave to appeal be made to theSupreme Court and simultaneously when there are Rules providingfor such situations, the appropriate procedure would be to follow thecurrent Rules which govern the leave to appeal application to the ieoSupreme Court. Consequently such an application would have to befiled within 42 days from the date of the award.
Learned President’s Counsel for the petitioner strenuously arguedthat the Court could not take away a vested right and that it was onlya matter for the legislature to take such action. His position was that.the Court has no power to take away by way of interpretation the rightof appeal given to a party.
On the other hand, learned President’s Counsel for the respon-dent quite correctly pointed out that the contention of the petitioner isbased on a wrong premise. His position was that there is no such 190‘vested right’ as in an appeal, as it is necessary ‘to obtain leave’ ini-tially from the Supreme Court.
Section 37(1) of the Arbitration Act refers to appeals from anyorder, judgment or decree of the High Court to the Supreme Court.
This section specifies that an appeal or revision shall be in respect ofany order, judgment or decree of the High Court subject to the provi-sions of sub-section 2 of section 37 of the Act. Section 37(2) of theAct in the following terms:
“An appeal shall lie from an order, judgment or decreeof the High Court referred to in sub-section (1) to the 200Supreme Court only on a question of law and with theleave of the Supreme Court first obtained (empha-sis added)”.
Accordingly there is no vested right of appeal as such, and mak-
sc
George Stuart & Co. Ltd. v Lankem Tea & Rubber Plantations Ltd.
(Bandaranayake, J.)
253
ing an application for leave to appeal cannot be regarded as a rightof appeal given to the petitioner as he has to first obtain leave of theSupreme Court. Furthermore, even if a petitioner has a right ofappeal, it is a necessary requirement that such an application bemade within the prescribed period. For instance, a person who
alleges that his fundamental rights guaranteed in terms of theConstitution have been violated, he must come before Court withinsuch prescribed period. In a situation where such period has lapsed,the petitioner cannot be heard to say that as he had a vested right ofcoming before the Court on the alleged violation of his fundamentalrights, that his petition should be entertained even beyond the pre-scribed period.
In such circumstances, whether there is a vested right or not, it wouldbe necessary to exercise such a right within the prescribed period.
Learned President’s Counsel for the petitioner took up the posi-tion that the decision in Mahaweli Authority of Sri Lanka (supra) wasmade per incuriam.
What makes a decision per incuriam was discussed in detail, asmentioned earlier, in Billimoria v Minister of Lands (supra). In thatdecision, Samarakoon, CJ. had cited the observations of the Court inMorelle Ltd v Wakelingi7) in the following terms:
“As a general rule the only cases in which decisionsshould be held to have been given per incuriam arethose decisions given in ignorance or forgetfulness ofsome inconsistent statutory provision or of some author-ity binding on the Court concerned: so that in such casessome part of the decision or some step in the reasoningon which it is based is found, on that account, to bedemonstrably wrong….”
Considering the decision in Mahaweli Authority of Sri Lanka(supra) it is obvious that it does not come within the scope discussedin Morelle's case or within the scope of Young v Bristol Aeroplane Co.Ltd. (supra). A close scrutiny of the said decision clearly shows thatit is not a judgment, which was given in ignorance of a previous deci-sion of this Court or any other Court. The decision in MahaweliAuthority of Sri Lanka (supra) had discussed air the relevant provi-sions governing the matter and further there is nothing to indicate
210
220
230
240
254
Sri Lanka Law Reports
[2004] 1 Sri L.R
that there was ignorance or forgetfulness of some inconsistent statu-tory provisions or of some authority binding on this Court.Accordingly, I am unable to agree with the submission of learnedPresident's Counsel for the petitioner that the decision in MahaweliAuthority of Sri Lanka (supra) was given per incuriam.
There are two other points I wish to make before I part from thisjudgment.
Firstly, it was pointed out by learned President’s Counsel for therespondent that if the contention of the petitioner is upheld, there is 250not time limit for an application for leave to appeal to be lodged, thensuch an application could even be made after 10 years from the dateof the order of the High Court. While endorsing the contention of thelearned President’s Counsel for the respondent I wish to add furtherthat such a situation would lead to an absurdity in that, the party whowas successful in the High Court in the action for the enforcement ofthe award, will have to wait for an unknown period not knowingwhether there would be a leave to appeal application made by theother party to the Supreme Court. Such a situation would lead to anabsurd system, where it would not be possible for the Arbitration Act 260to work as stipulated. It is a well-known fundamental rule that anyinterpretation given to a statute must not lead to absurdity that woulddirect the smooth functioning of a system in to chaos.
Secondly, the decision in Mahaweli Authority of Sri Lanka (supra)was decided on 12.12.2001 and the order of the High Court in thepetitioner’s case was made on 01.03.2002. By the time the said orderof the High Court was made, the Supreme Court had decided that anapplication for leave to appeal from the High Court has to be madewithin 42 days of the date of the order of the High Court. Therefore thepetitioner had sufficient notice of the time limit to make an application 270for leave to appeal from the High Court to the Supreme Court and suf-ficient notice to comply with the said decision if he wanted to do so.
For the aforementioned reasons, I uphold the preliminary objec-tion raised, and reject this application for leave to appeal.
There will be no costs.
EDUSSURIYA, J.-I agree.
YAPA, J.-I agree.
Application dismissed.