M/S.Gurbax
Singh Vs. Punjab Mandi Board [2003] Insc 666 (18 December 2003)
N.Santosh
Hegde & B.P.Singh
1 7442
2003 5 of 2003 1 15844 2003 SANTOSH HEGDE,J.
Leave
granted.
A
dispute which arose between the parties to these appeals came to be referred to
arbitration as per the contract clause contained in the agreement between the
parties. Before the arbitrator there was a claim and counter-claim by the
parties. The arbitrator after considering the said claims by his award dated
26.10.1991 awarded a sum of Rs.58,74,691.12 towards the claim of the appellant
herein.
He
also awarded Rs.8,82,923.60 towards the claim of the respondent herein.
Deducting the said amounts awarded to the respondent from the amount awarded to
the appellant the arbitrator directed the respondent to pay the balance amount
of Rs.49,91,767.52 within 30 days of the signing of the said award failing
which he directed an interest @ 12% per annum. It is admitted from either side
that as per the terms of the arbitration clause the same did not require the
arbitrator to make a reasoned award.
A copy
of the signed award was despatched to both the parties on 28.10.1991 by the
arbitrator with a direction to file the same before an appropriate court to
make the same rule of the court. The appellant herein on 29.10.1991 filed the
award in the Court of the Additional Senior Sub-Judge, Sultanpur Lodhi, which
court issued a notice of the filing of the said award on 30.10.1991 to the
respondent herein. Though the said notice mentioned the next date of hearing as
24.12.1991, as per Article 119 of the Limitation Act the respondent had to file
its objections if any, within 30 days from the service of notice. As per the
postal endorsement received by the court the said notice of the court was
sought to be served on the respondent on 6.11.1991 but the same was refused to
be accepted hence a deemed service came to be effected. Consequently, the
respondent became liable in law to file its objections on or before 6.12.1991
i.e. within 30 days from the date of deemed service. On 30.10.1991 along with a
fresh notice by substituted service to the respondent herein, a notice was also
issued to the arbitrator who was impleaded as second respondent to the
application filed by the appellant to make the award a rule of the court.
On
24.12.1991 when the matter was listed for further orders, the court was pleased
to pass the following order :
"24.12.91
Present : Counsel for the Petitioner Respondent No. 2 Shri M.S. Sikand has been
served. But none is present on his behalf. He is proceeded against exparte.
Respondent No.1 has refused process. He be served through substituted service
by way of publication in the news paper Nawan Jamana, Jullunder. To come up on
30.1.92." As per the said order it is seen that since nobody represented
the arbitrator, he was set ex parte. The court also noticed the fact that the
respondent herein had refused process therefore a direction was given to serve
it through substituted service by way of publication in the newspaper. The
matter was then listed to be brought up before the court on 30.1.1992.
It
seems that after passing the above order, the arbitrator appeared in the court
in person on 24.12.1991 itself and moved an application for setting aside the
ex parte proceedings against him.
That
application was accepted and the court recorded another order on the same day
which reads thus :
"24.12.91
Present : (At this stage) counsel for petitioner.
Respondent
No.2 appeared in person. S.G.S. Suchdeva Adv. filed PA for Respondent No. 1.
Application
for set aside order of Respondent No.2 accepted. Exparte order set aside.
Arbitration file (Award & proceedings) produced. Be placed on file. Now to
come up for filing objections if any on or before 30.1.92 dated already
fixed." As per this subsequent order of 24.12.1991 it records that the
arbitrator appeared in person on that day and requested for setting aside the
ex parte order while the respondent herein was represented by his Power of
Attorney. The court accepted the arbitrator's application to set aside the ex parte
order against him. It also directed the arbitrator by that order to produce the
file pertaining to the award and proceedings. It gave 1.1.1992 which was the
date already fixed by the previous order as the next date of hearing. On
18.1.1992 the respondent herein filed an objection purporting to be one under
sections 16, 30/33 of the Act. The trial court as per its order dated 6.6.1992
rejected the said objections filed by the respondent herein on the ground of
limitation. Consequently, it made the award a rule of the court.
Against
the said order of the trial court respondent herein preferred an appeal before
the High Court of Punjab & Haryana at Chandigarh raising various grounds;
one of which was challenging the finding of the trial court on the question of
bar of limitation invoked by the trial court as against the objections filed by
it. It was also argued before the High Court, inter alia, that the filing of
the award by itself without the connected papers would not amount to a proper
filing as contemplated under the Act therefore the trial court ought to have
rejected the said application filed by the appellant under section 14/17 of the
Act. The High Court by the impugned order firstly came to the conclusion that
mere filing of the award would not satisfy the requirement of law hence notice
of such filing would not start the period of limitation running because such
filing is not as contemplated under section 14(2) of the Act attracting Article
119(b) of the Limitation Act. It further observed that since all the connected
papers were filed only on 24.12.1991 the period of limitation would run only
from that day hence the objection filed by the respondents on 18.1.1992 would
be within the period of limitation. Primarily, on this basis the High Court set
aside the award of the trial court on the ground that the objections of the
respondents were erroneously rejected without going into the merits of the
same. The High Court also went into certain other issues raised by the
respondents herein and gave its finding on those issues also. In our opinion in
this appeal it is not necessary for us to go into those questions if the
finding of the trial court in regard to the applicability of the bar of
limitation is a just view. In other words, if the trial court is right in its
view of applicability of limitation, then other issues will not arise for
consideration because the court will have to proceed with original application
as if there was no objection to the award. Therefore, we will consider the
question of limitation first.
Mr.
P.P. Rao, learned senior counsel appearing for the appellants submitted that
the finding of the High Court that the filing of mere signed award by itself
would not amount to a proper filing in the eye of law under Section 14(2) of
the Act is contrary to the judgment of this Court in East India Hotels Ltd. v.
Agra Development Authority [2001 4 SCC 175]. Learned counsel submitted there is
no legal obligation to file all the papers pertaining to the arbitration
proceedings while seeking the court's intervention for making the award a rule
of the court. In East India Hotels' case (supra) this Court while dealing with
a similar argument, held thus :
"We
may now consider the submission of Mr Dwivedi, learned Senior Counsel for the
respondent. Learned Senior Counsel has contended that the stage of issuance of
notice would come only after filing of the records by the Arbitrator/Umpire and
as no records were filed on 13.11.1998, the order passed by the court on that
date could not be treated as notice to the parties. We cannot accept this
contention.
From a
plain reading of sub-section (2) of Section 14 it would appear that under this
sub- section the stage at which notice is required to be given by the court is
after "filing of the award" and the notice pertains to the fact of
"filing of the award" in court. It is the duty of the
Arbitrator/Umpire to file depositions, documents, etc. along with the award. If
only award is filed and other documents are not filed, the court may issue
notice under this sub- section after the award is filed. It need not postpone
issuing of notice till all the documents are filed. In our view a notice issued
after filing of the award but before filing of other documents is a valid
notice under sub-section (2) of Section 14 of the Act and no fresh notice need
be issued after filing of other documents by the Arbitrator/Umpire." From
the above enunciation of law by this Court, it is clear that for the purpose of
entertaining an application for making the award a rule of the court and for
issuing notice thereon it is not necessary that the application should contain
all or any other papers apart from the signed award. In the instant case it is
an admitted fact that the signed award was filed in the court and based on that
a notice was issued to the respondent herein and the arbitrator.
Mr. Har
Dev Singh, learned senior counsel appearing for the respondents, per contra
submitted that the law laid down by this Court in the case of East India Hotels
(supra) may not be a correct proposition of law in view of the two judgments of
this Court; one of which is of a larger Bench. They are : Ch. Ramalinga Reddy
v. Superintending Engineer & Anr. [1999 (9) SCC 610] a judgment of 3-Judge
Bench; and Deo Narain Choudhury v. Shree Narain Choudhury [2000 (8) SCC 626].
Learned counsel for the respondents in support of his above contention relied
on paragraphs 8, 11 and 16 of Ramalinga Reddy's case (supra). We have gone
through the judgment of this Court in Ramalinga Reddy's case (supra) with
special reference to the abovementioned paragraphs but we do not find any
proposition of law contrary to one laid down by this Court in East India
Hotels' case (supra). In our opinion the issue as it arises in the case in hand
and as decided by this Court in East India Hotels' case (supra) did not arise
in the case of Ramalinga Reddy (supra). The larger Bench judgment in Ramalings
Reddy's case (supra) merely states that the notice which the court issues to
the parties for filing an award need not be in writing but the notice under
section 14(2) must be served by the court. Therefore we do not think the
judgment of the larger Bench in Ramalinga Reddy's case (supra) is of any
assistance to the appellant in supporting its argument that there is a
requirement of the entire arbitration papers being filed along with the
application before issuing notice of the said application under section 14(2)
of the Act.
We are
also of the opinion that the decision of this Court in Deo Narain Choudhury
(supra) does not assist the respondents which while following the earlier
judgment in Ramalinga Reddy's case (supra) only held that the notice should be
issued by the court and not by an arbitrator as was the fact in Choudhury's
case (supra).
In the
instant case there is no dispute in regard to the fact that the notice was
actually issued by the court.
Learned
counsel then contended that the notice dated 13.10.1991 issued by the court was
recalled by it on 24.12.1991 and a fresh notice was issued on that day which
would give the respondent 30 days' time from that date which will be uptil
23.1.1992 and the respondent having filed its objections on 18.1.1992 the same
was within time hence the trial court was legally bound to have considered the
said objections. We do not think that we can agree with this argument of the
learned counsel also. We have already extracted the two orders of 24.12.1991
hereinabove and if we peruse the same once again we notice that the court on
24.12.1991 has not recalled its notice issued on 30.10.1991 by either of the
two orders made on 24.12.1991. By the first order of that day, it placed the
second respondent arbitrator ex parte. It also noticed the fact that respondent
No.1 who is also respondent herein but had refused process hence it had ordered
a substituted service by way of publication. That issuance of a fresh notice by
substituted service would not take away the effect of a deemed service which
was effected on the respondent on 6.11.1991. For the purpose of Article 119 of
the Limitation Act, 1963 the date of service will have to be taken as the first
service effected. In the instant case it cannot be legally disputed that the
service effected on 6.11.1991 was not an effective service. If that be so the
limitation of 30 days would start from that day namely 6.11.1991. Even the
second order of 24.12.1991 does not make the issuance of notice by the court on
30.11.1991 ineffective. Therefore, this argument of learned counsel would also
fail.
If the
appellant succeeds on the question of bar of limitation in filing the
objections, in the eye of law there being no objection to the award other
questions do not arise for our consideration. For the reasons stated above,
these appeals succeed. The impugned order of the High Court is set aside and
that of the trial court restored. The appeal is allowed with costs.
SLP)
No. 15844/2003 We find no merit in this petition. The special leave petition is
dismissed.
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