The Municipal Corporation of Gr.Mumbai v. M/s.Kulkarni & Co

Mr.Milind Wasudeo i/b Mrs.B.N.Dalal for the Respondents. ... - 2 - CORAM: D.K.DESHMUKH & J.H.BHATIA, JJ. DATED: 10TH OCTOBER, 2007 P.C.:

1. By this Appeal, the Appellant challenges the order passed by the learned single Judge dated 10th July, 2000 in Arbitration Petition No.21 of 2000. That petition was filed by the present Appellant challenging the award dated 30th March, 1999 passed by the learned arbitrator. Admittedly, the work of construction of school building was awarded by the Appellant to the Respondent No.1. Disputes regarding payments under that contract were referred to arbitration. When the matter was before the arbitrator, one of the objections raised on behalf of the Corporation was that the claim is barred by the law of limitation. The Arbitrator made the award directing the Corporation to pay certain amounts with interest. Admittedly, the objection as to limitation was not decided by the learned arbitrator. One of - 3 - the grounds on which the award was challenged was that the question of limitation was not decided by the learned arbitrator, though the objection that the claim is not within limitation was raised before the learned arbitrator.

2. It appears that the learned single Judge held an inquiry into that aspect of the matter and reached the conclusion that the claim made by the Respondent was within the period of limitation. Objections raised by the Corporation on other aspects were also rejected, except the objection in relation to the interest. With slight modification the award made by the learned arbitrator has been made rule of the Court.

3. The first submission made by the learned Counsel appearing for the Appellant is that admittedly the work was completed, even according to the Respondent, in the year 1984. The reference to arbitration was made in the year 1992. Admittedly, an objection was raised in the written statement filed by the Corporation before the learned arbitrator that the claim is barred by the law of limitation. The question whether the claim is barred by the law of - 4 - limitation is a mixed question of law and fact. According to the learned Counsel, therefore, the learned single Judge could not have decided that question. Proper course for the learned single Judge was to remit the award back to the learned arbitrator for a decision on the question of limitation. The learned Counsel further submits that amounts have been awarded for damages as also for escalation. Interest has been awarded on those amounts even for the pre-reference period. According to the learned Counsel, interest could not have been awarded in relation to the amount of escalation and damages for the pre-reference period as also during the period when the reference was pending. He submits that the matter was delayed because the Respondent/contractor did not submit his final bill till 1992, therefore, there was no justification for awarding of interest for the period from 1984 till 1992.

4. We have heard the learned Counsel appearing for the Respondent. He does not dispute that the question of claim being barred by the law of limitation was raised before the learned arbitrator. He also does not dispute that that question was not decided by the learned arbitrator. But according to - 5 - him, the learned single Judge could have decided that question. We also heard him on the question of awarding of interest.

5. So far as first question is concerned, admitted position is that an objection was raised in the written statement filed by the Corporation before the learned arbitrator that the claim made by the Respondent is barred by the law of limitation. It is also an admitted position that, that question was not decided by the learned arbitrator. In our opinion, therefore, the provisions of Section 16 of the Arbitration Act, 1940 are relevant. They read as under:-

16. Power to remit award.- (1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit,- (a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be - 6 - separated without affecting the determination of the matters referred; or (b) where the award is so indefinite as to be incapable of execution; or (c) where an objection to the legality of the award is apparent upon the face of it. (2) Where an award is remitted under sub-section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: provided that any time so fixed may be extended by subsequent order of the Court. (3) An award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed. It is clear from the above referred provisions that when the court finds that the award has left undetermined any aspect of the matter referred to - 7 - arbitration, then the course open to the court is to remit the award back to the arbitrator. In the present case, the question of limitation was raised before the learned arbitrator, and it was not decided by the learned arbitrator while making the award. In our opinion, therefore, in view of the provisions of Section 16 the learned single Judge, considering that the question of limitation is always a mixed question of fact and law, in stead of deciding that question for the first time in the petition, should have remitted the award back to the arbitrator.

6. After having gone through the record, we find that there are several disputed questions arising for decision on the question of limitation, which may also require oral evidence to be led by the parties. In our opinion, therefore, the learned single Judge was not justified in deciding the question of limitation for the first time in the petition. In our opinion, therefore, the award is liable to be remitted back. We also find that there is substance in the submission made by the learned Counsel appearing for the Appellant that interest could not have been awarded on the amount of damages and the amount of escalation for the pre-award period. - 8 - However, in view of the fact that we are remitting the award back, we do not propose to record any final decision on that. In our opinion, it would be appropriate to direct the learned arbitrator to decide the question of interest afresh in accordance with law, without being influenced by the award made by the learned arbitrator as also any observations that have been made by the learned single Judge in her judgment.

7. In the result, therefore, appeal suceeds and is allowed. The judgment dated 10th July, 2000 passed in Arbitration Petition No.21 of 2000 is set aside. The award is remitted back to the Hon’ble Mr.Justice S.M.Daud (Retired) ( whose name has been suggested joinly by the parties). The learned arbitrator shall make an award in accordance with law and in the light of observations made in this order. It is clarified that the learned arbitrator is not required to look into other aspect of the award, except the aspect of limitation and the award in relation to interest. The learned arbitrator is requested to make an award as expeditiously as possible, in any case within a period of six months from the date on which he enters upon the reference. It is agreed between the parties - 9 - that the learned arbitrator will have to give reasons for award. (D.K.DESHMUKH, J.) (J.H.BHATIA, J.)