Arunachal Pradesh Vs. M/S. Damani Construction  Insc 231 (28 February 2007)
A.K.MATHUR & V.S. SIRPURKAR
ARISING OUT OF S.L.P.(C) NO.14804 OF 2005 With CIVIL APPEAL NO. 1100 OF 2007
(Arising out of S.L.P.(c) No.12954 of 2005) A.K.MATHUR,J.
Leave granted in both the Special Leave Petitions.
Since the question of law involved in both the appeals is common, they are
disposed of by this common judgment. For the sake of convenience, the facts
stated in Civil Appeal arising out of S.L.P.(c) No.14804 of 2005 are taken into
This appeal is directed against the order passed by learned Single Judge of
the Gauhati High Court, Itanagar Bench in Writ Petition No.408 of 2004 whereby
learned Single Judge set aside the order dated 15.9.2004 passed by the Deputy
Commissioner cum District Judge, Papum Pare, District, Yupia in Miscellaneous
Application No.10 of 2004 condoning the delay in making application under
Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter to be
referred to as 'the Act' ), being not maintainable. Hence, the order dated
15.9.2004 was set aside and the writ petition was allowed.
Aggrieved against this order passed by the High Court of Gauhati, Itanagar
Bench, State of Arunachal Pradesh has preferred the present appeal.
Brief facts which are necessary for disposal of this appeal are that the
respondent herein entered into a contract agreement bearing No.DD/03 of 1992-93
with the State of Arunachal Pradesh in Public Works Department for executing
the contractual work of construction of road bridges. The value of the work in
question although was initially fixed at Rs.77.43 lakhs but on the basis of the
post tender negotiation by and between the parties, the price of the work was
re-fixed at Rs.1.15 crores. The work was to be completed within two calendar
years from the date of commencement of the work.
The work commenced on 10.4.1993 and it was completed in March, 1999.
According to the petitioner-respondent herein the delay in execution of the
work was due to deviation from the original scope of work and several
obstructions and difficulties including delay in approval of the design and
drawings and also in making payment against running accounts bills from time to
time. The respondent herein raised bill for the contractual work which
according to the respondent was refused to be paid due to certain arbitrary and
untenable reasons. Such refusal gave rise to a dispute and accordingly, need
arose for arbitration. The respondent then approached the Court under section
11(6) of the Act which was numbered and registered as Arbitration Case No.21 of
2000 and the same was disposed of by the High Court appointing an arbitrator to
adjudicate the dispute between the parties. One arbitrator was appointed on
18.10.2001 but subsequently that arbitrator was changed by the present
arbitrator. On 12.10.2003 the arbitrator passed an interim award awarding
Rs.65,52,878/- with simple interest to be calculated if the award amount was
not paid within 60 days from the date of the award. However, the period of
limitation prescribed under Section 34 (3) of the Act for setting aside the
award expired in the meantime. The appellant then wrote a letter to the
arbitrator for review of the award and also sought clarification in respect of the
award on 2.4.2004. On 10.4.2004 the arbitrator by his letter stated that he had
no jurisdiction to entertain the request for review of the award and also
informed that the award dated 12.10.2003 was in fact a final award pertaining
to the issues involved. On 21.6.2004 the respondent- petitioner filed an
application for execution of the interim award dated 12.10.2003 before the
Deputy Commissioner. On 6.8.2004 the appellant filed an application under
Section 34 of the Act for setting aside the award dated 12.10.2003 together
with an application under Section 5 of the Limitation Act read with Section
34(3) of the Act for condonation of delay in filing the application for setting
aside the award. The said application was entertained and was fixed for hearing
on condonation of delay after 15 days. Aggrieved against this order, a writ
petition was filed by the respondent herein but the same was disposed of by the
High Court with the observation that as the matter was pending before the court
below it would not be appropriate to interfere at this stage and left the
Deputy Commissioner to decide the matter.
The Deputy Commissioner, Papum Pare, Itanagar by the impugned order dated
15.9.2004 decided the application condoning the delay in preferring the
application under Section 34 of the Act by the appellant. Aggrieved against
this order, the present writ petition was filed by the respondent herein. It is
the legality of this order which was challenged before the High Court. Learned
Single Judge of the High Court after hearing both the parties came to the
conclusion that the order passed by the Deputy Commissioner in condoning the
delay was not correct and it took the view that under section 34 of the Act,
there was a delay of seven months from the date of first order and a delay of
six months from the date of second order.
The plea of the appellant- State before the court below was that the award
was passed on 12.10.2003 and a copy was received on 23.10.2003. As such, the
period of limitation started from 23.10.2003. Since the letter was sent by the
appellant to the arbitrator on 2.4.20043 for review of the award and a reply
thereof was received on 10.4.2004 whereby the matter was clarified by the
arbitrator, therefore, the cause of action accrued in favour of the appellant
on 10.4.2004 and application under Section 34 of the Act was filed on 6.8.2004
i.e. within three months and the extended period of one month, therefore, it
was within limitation.
Though this contention prevailed before the trial court but the same failed
before the High Court on the ground that the cause of action accrued to the
appellant on 23.10.2003 when the appellant received the copy of the award and
the letter which was written on 2.4.2004 was totally misconceived. The interim
award was final with regard to the claims raised therein, therefore, the whole
exercise undertaken by the appellant was totally misconceived. Hence, learned
Single Judge allowed the writ petition and set aside the order of the trial
court. Aggrieved against this order passed by the learned Single Judge, the
present appeal was filed.
We have heard learned counsel for the parties and perused the record.
Learned counsel for the appellant tried to persuade us that in fact the cause
of action has arisen to the appellant on 10.4.2004 when the letter was received
from the arbitrator and therefore, the appellant was entitled to count the
period of limitation from the date of receipt of the letter from the arbitrator
and if the limitation was to start from 10.4.2004 then the appellant has a
right to move an application for setting aside of the award under section 34 of
the Act within three months and the extended period of one month and the
appellant having filed the application on 6.8.2004, therefore, it was within
time. The submission of learned counsel for the appellant is totally
misconceived and it cannot be accepted. A perusal of the interim award passed
by the arbitrator clearly shows that it was final to the extent of the claims
decided therein and it may be relevant to refer to the concluding portion of
the award which reads as under :
" I further direct that the awarded amount is indicated above along
with the interest, wherever shown till the date of interim award amounting to
Rs.65,52,878.00 (Rupees Sixty five lakhs fifty two thousand Eight hundred
seventy eight only), shall be paid by the Respondents to the Claimant within 60
days from the date of the award, failing which a simple interest on the unpaid
amount @ 18% (Eighteen percent) per annum shall be payable to the Claimant by
the respondents after 60 days of this interim award."
Therefore, this interim award which did not mince any word and determined
the amount after discussing the claims in detail and finally calculated the
amount under each of the claims. Therefore, there was no confusion in this
award. It was absolutely thoughtlessness on the part of the appellant to have
written a letter after six months i.e. on 2.4.2004 seeking review of the
interim award to the following effect:
" While submitting the request for review the case, it is also
requested that your honour may kindly consider (sic.) the following points
regarding mode of payments, if at all, the payment is to be made, as the award
given by your honour is for the interim payment.
Whether payment is to be made directly to M/s. Damani Construction Co.
or through honourable court.
In case, the payment is to be made directly to M/s.Damani Construction
Co., an equivalent Bank Guarantee Bond from any Nationalized Bank shall be
required from the Contractor since it will be an interim payment and final
Submitted for your kind consideration please."
Firstly, the letter had been designed not strictly under section 33 of the
Act because under Section 33 of the Act a party can seek certain correction in
computation of errors, or clerical or typographical errors or any other errors
of a similar nature occurring in the award with notice to the other party or if
agreed between the parties, a party may request the arbitral tribunal to give an
interpretation of a specific point or part of the award. This application which
was moved by the appellant does not come within any of the criteria falling
under Section 33(1) of the Act. It was designed as if the appellant was seeking
review of the award. Since the Tribunal had no power of review on merit,
therefore, the application moved by the appellant was wholly misconceived.
Secondly, it was prayed whether the payment was to be made directly to the
respondent or through the Court or that the respondent might be asked to
furnish Bank guarantee from a nationalized Bank as it was an interim award,
till final verdict was awaited.
Both these prayers in this case were not within the scope of Section 33.
Neither review was maintainable nor the prayer which had been made in the
application had anything to do with Section 33 of the Act. The prayer was with
regard to the mode of payment. When this application does not come within the
purview of Section 33 of the Act, the application was totally misconceived and
accordingly the arbitrator by communication dated 10.4.2004 replied to the
" However, for your benefit I may mention here that as per the scheme
of the Act of 1996, the issues/ claims that have been adjudicated by the
interim award dated 12.10.2003 are final and the same issues cannot be gone
into once again at the time of passing the final award."
Therefore, the reply given by the arbitrator does not give any fresh cause
of action to the appellant so as to move an application under Section 34 (3) of
the Act. In fact, when the award dated 12.10.2003 was passed the only option
with the appellant was either to have moved an application under Section 34
within three months as required under sub-section (3) of Section 34 or within
the extended period of another 30 days. But in stead of that a totally
misconceived application was filed and there too the prayer was for review and
with regard to mode of payment. The question of review was totally misconceived
as there is no such provision in the Act for review of the award by the
arbitrator and the clarification sought for as to the mode of payment is not
contemplated under Section 33 of the Act. Therefore, in this background, the
application was totally misconceived and the reply sent by the arbitrator does
not entitle the appellant a fresh cause of action so as to file an application
under Section 34(3) of the Act, taking it as the starting point of limitation
from the date of reply given by the arbitrator i.e. 10.4.2004.
Thus, in this background, the view taken by learned Single Judge appears to
be justified and there is no ground to interfere in this appeal. Consequently,
there is no merit in both the appeals and the same are dismissed with no order
as to costs.