The State of Maharashtra v. M/s Ark Builders Private Limited

Judgment

2 1 This is an appeal preferred by State of Maharashtra and others under Section 37 of the Arbitration & Conciliation Act, 1996 (for short, “the Act of 1996”), challenging the order passed by Principal District Judge, Latur in Civil Application No.84/2005, decided on 15.02.2007. 2 Appellants herein moved an application for the purposes of setting aside the award passed by sole Arbitrator on 20.03.2003. It appears from record that initially the proceedings were registered as Special Civil Suit No.1/2004 on 20.01.2004. Later on, however, matter came to be transferred to District Court, whereupon, it came to be registered as Civil Application No.84/2005. On issuance of notice by the District Court to the opponent-Respondent herein, an objection was raised by the opponent-Respondent herein by presenting application at Exhibit-19 objecting to the maintainability of the application on the ground of limitation.

It is contended by the Respondent in the objection application presented at Exhibit-19 before the District Court that the application presented by the State Government – appellants herein requesting for setting aside the award is beyond time prescribed under Section 34(3) of the Act of 1996 and as such, same cannot be entertained. 3 Learned Principal District Judge, Latur, who decided the application, framed two issues and those are: I. Whether this Court has jurisdiction to decide the present application filed under Section 34 of the Arbitration and Conciliation Act, 1996?

And the answer given to the issue is in the affirmative. The second issue is: II. Whether the application/petition is filed within the period of limitation? And the learned Principal District Judge held that the application is barred by limitation and as such, rejected the same. 3 4 That, so far as entertainability of the application by the District Court is concerned, there cannot be dispute that the application for setting aside the award is required to be entertained by the principal District Court of original Civil Jurisdiction in the district i.e. District Court. However, finding recorded by the District Court, on the point of limitation, is subjected to challenge by the appellants in this appeal. 5 Certain happening of events and dates are material for consideration of the contentions raised by the appellants. The award in the matter came to be passed by the sole arbitrator on 20th March, 2003. The Respondent Contractor supplied copy of award to the office of Executive Engineer on 29th March, 2003. The Executive Engineer submitted proposal to the Chief Engineer as well as Financial Advisor and Joint Secretary for preferring an application for challenging the award on 16th April, 2003. The Contractor, on second occasion, wrote a letter addressed to the Chief Engineer and requested for releasing of amount covered by the award on 13th June, 2003. The contractor, on third occasion, wrote a letter and requested the Secretary and Special Commissioner to take steps for releasing the amount in favour of the Contractor in accordance with the award passed by the Arbitrator, by communication dated 8th January, 2004. A letter is also placed on record whereby the Executive Engineer communicated the Contractor acknowledging all the three earlier communications i.e. dated 29th March 2003, 13th June, 2003 and 8th January, 2004 and further informing him that the Government / appellants have decided to raise challenge to the award before appropriate forum. The letter issued by Executive Engineer to the Contractor is dated 15th January, 2004. 6 It is the contention of appellants that the Department has granted permission to present proceedings for challenging the award on 16th December, 4

2003. The Arbitrator had not issued copy of the award and, therefore, a messenger was sent to the arbitrator with a request letter dated 17th January 2004, praying for certified copy of the award. It is further contended that the Arbitrator has endorsed on the application dated 17.01.2004 presented by the appellants that the original award has been handed over to the claimant contractor as per his request and xerox copy is handed over to the appellants, which is now certified as a true copy. The endorsement appears to have been made certifying the xerox copy as true copy by the Arbitrator on 19.01.2004. The appellants, as such, submitted that after securing the endorsement from the sole Arbitrator on the xerox copy of award on 19.01.2004, appellants proceeded to present proceedings raising challenge to the award by filing suit on 20.01.2004. According to the appellants, challenge raised to the award is within prescribed period, as provided under Section 34(3) of the Act of 1996. 7 Learned Principal District Judge, who considered the application presented by the State raising challenge to the award passed by sole Arbitrator, was pleased to dismiss same holding that same is barred by limitation. 8 In order to appreciate the contentions of rival parties, it is appropriate to refer to provisions of Section 31(5) and Section 34(3) of the Act of 1996, which read thus:

31. Form and contents of arbitral award: (1) ..................................................................................... (2)...................................................................................... (3)...................................................................................... (4)...................................................................................... (5) After the arbitral award is made, a signed copy shall be delivered to each party. 5

34. Application for setting aside arbitral award.- (1) .......................................................................................... (2) ..................................................................................... (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months, it may entertain the application within a further period of thirty days, but not thereafter. 8 Learned Government Pleader appearing for appellants has vehemently contended that it is the responsibility of the Arbitrator to deliver a signed copy of the award to each party, as mandated by sub-section (5) of Section 31 of the Act of 1996. It is contended that the sole Arbitrator did not supply copy of award to the appellants. It is contended that in the concluding meeting before the Arbitrator, which took place on 22nd February, 2003, proceedings of the meeting were recorded as below: “ Both parties submitted additional documents which are taken on record and marked as C-5 and R-5. They stated that they were given full opportunity to present their case & had nothing further to add. The Arbitrator, therefore, declared that the case has been closed and that he will proceed with the framing of his award which will be declared & copies send to both parties in due course. He thanked both parties for their close co-operation.” 9 It is, thus, contended that the Arbitrator has assured to send copies to both the parties after declaration of award. Appellants, thus, were waiting 6 patiently for receipt of copy of award, however, copy was not supplied. Ultimately, appellants secured endorsement on the xerox copy supplied by the Contractor to the effect that same is a true copy on 19.01.2004 and presented proceedings, as contemplated by Section 34 of the Act on 20.01.2004, which, according to appellants, are within prescribed period of limitation. 10 Appellants seeks to place reliance on the judgment of the Apex Court in the matter of Union of India Vs. Tecco Trichy Engineers & Contractors, reported in AIR 2005 SC 1832. Appellants contend that delivery of arbitral award under sub-section (5) of Section 31 is not a matter of mere formality and it is a matter of substance. According to learned Government Pleader appearing for appellants, the Arbitrator is expected to comply with the mandate strictly and only on receipt of certified copy, appellants / applicants would be in a position to raise challenge to the arbitral award. The signed copy was secured only on

19.01.2004 having an endorsement of the Arbitrator and thereafter appellants proceeded to file proceedings raising challenge to the arbitral award on

20.01.2004, which, according to appellants / applicants will have to be construed to be falling within period of limitation, as provided by Section 34(3) of the Act. The appellants seeks to place reliance on paragraph 8 of the judgment cited supra, which reads thus: “8 The delivery of an arbitral award under sub-section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of arbitral award to the party, to be effective, has to be “received” by the party. This delivery by the arbitral tribunal and receipt by the party of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award within 30 days under Section 33(1), an application for 7 making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings.” 11 It is also contended by the appellants that copy of award was handed over to the Senior Clerk in the office of Executive Engineer and, therefore, it cannot be said that the Contractor has handed over copy of the award to the proper party. The State Government is impleaded as party to the award represented by the Executive Engineer, Integrated Unit No.4, however, according to the appellants, the copy has been handed over to the Senior Clerk, which cannot be said to be a compliance of mandate, as provided by sub- section (5) of Section 31 of the Act. Placing reliance on the ratio laid down in the judgment cited supra, it is canvassed by the learned Government Pleader appearing for appellants that service of copy on some other official in the office of Executive Engineer is not the proper compliance of provisions of Arbitration Act and it cannot be said that award has been served on proper party. It is contended that learned Principal District Judge has committed a grave error in rejecting the application holding same as barred by limitation. 12 Learned Counsel for Respondent has controverted the contentions raised by appellants by contending that appellants were made aware of passing of the award as long back as on 29th March 2003. It is pointed out that not only on 29th March 203, however, subsequently also, on 13th January 2003, appellants/applicants were made aware of the award by the Respondent- Contractor by tendering applications requesting them to honour the terms of award and disburse the amount. It is also pointed out that the Executive 8 Engineer, in his communication issued to the Contractor i.e. Respondent on

15.01.2004, has himself acknowledged receipt of copy of award and communication dated 13th June 2003, however, in spite of receipt of copy of award and also after making appellants / applicants aware of passing of the award, even on subsequent dates, they failed to take steps. The Executive Engineer himself has admitted that he sent the proposal to the Chief Engineer as well as Financial Advisor and Joint Secretary in respect of raising challenge to the award on 16th April, 2003, however, decision was taken by the State Government to challenge the award only on 16th December 2003 i.e. after eight months. Appellants / applicants have to blame themselves for their laxity. The delay caused in approaching the Court being beyond the period prescribed under Section 34(3) of the Act, cannot be condoned. 13 I have heard arguments advanced by the parties and perused the record. An affidavit is tendered in the matter by one Pravin Shrivastav, Financial Advisor and Joint Secretary, Relief and Rehabilitation, Revenue & Forest Department, Government of Maharashtra, on behalf of appellants. It is stated in the affidavit that the opponent party had sent xerox copy of the award to the Executive Engineer, Integrated Unit No.4, Latur on 29th March 2003 and Executive Engineer, Latur, had sent proposal on 16th April 2003 to the Chief Engineer as well as Financial Advisor and Joint Secretary seeking necessary guidance. The Department has granted permission on 16th December 2003 to challenge the award under Section 34 of the Act and thereafter Special Civil Suit No.1/2004 was presented by the Executive Engineer, in the Court at Latur on 20.01.2004. 14 From the sequence of events narrated in the affidavit on behalf of appellants itself, it is quite clear that appellants were in receipt of copy of award as long as back in March 2003 and decision for raising challenge to the award itself was taken after about nine months of receipt of the copy of award. 9 15 Another affidavit is presented on behalf of State Government / appellants sworn by one Yadav Balajirao Manurkar, presently working as Deputy Engineer, holding additional charge of Executive Engineer, Integrated Unit No.4, Latur. He has stated in the affidavit that it was incumbent upon the Arbitrator to provide signed and certified copy of the award to each of the party to the award and appellants did not get copy of award till 19.01.2004. It is further stated in the affidavit that in the meeting held on 22.02.2003, it was assured to the appellants that certified copy of the award would be provided in due course of matter. In paragraph no.5 of the affidavit, it is stated that copy of letter issued by the present Respondent along with xerox copy of award to the office of deponent i.e. Executive Engineer Mr.Yadav, was received by the office on

05.04.2003 and immediately thereafter guidance was sought from the Chief Engineer as well as Financial Advisor in respect of raising challenge to the award. In paragraph no.6 of the affidavit, it is stated that xerox copy of the award and proposal were sent to the Chief Engineer on 16th April 2003 for further directions and the Government took a decision to challenge the award only on 16th December 2003. It is further stated in the affidavit that a special messenger was deputed for securing true copy of the award, which was received only on

19.01.2004 and thereafter proceedings were presented in the District Court on

20.01.2004. A communication dated 15.01.2004 issued by the Executive Engineer to the Contractor i.e. Respondent herein is annexed with the affidavit of the Respondent wherein it is acknowledged that the Executive Engineer received the communications issued by Respondent on 29th March 2003, 13th June 2003 and 8th January 2004. Thus, it is clear that the office of Executive Engineer received the copy of award atleast on 5th April 2003. 16 It is also an admitted position that the Executive Engineer sought guidance of superior officers in respect of presenting appropriate proceedings 10 for challenging the award on 16th April 2003. It is also not disputed that appellants received second communication from the Respondent on 13th June 2003. Thus, it is clear that appellants were not only aware of passing of the award, but were in receipt of copy of the award on 5th April 2003 and this fact has been admitted by the Executive Engineer in his communication dated 15th January 2004 as well as affidavits presented in the instant appeal. Now, therefore, appellants cannot take a stand that they were not possessing copy of the award and, therefore, were prevented from taking steps for raising challenge to the award. In spite of receiving copy of the award in the month of April 2003, the Executive Engineer or other officials on behalf of the State Government did not take steps for challenging the award for almost nine months. For the first time, the Government granted permission for presenting proceedings only on 16th December 2003. The action of the State Government of giving consent for filing application raising challenge to the award itself is after about eight months of receipt of copy of the award, which itself is beyond the limitation prescribed under Section 34(3) of the Act of 1996. The State authorities did not take timely steps and now are trying to shift the blame on the Arbitrator for his failure to supply the copy. The ground urged by the appellants seeking excuse in taking timely action for raising challenge to the award is not convincing. 17 It is to be noted that sub-section (5) of Section 31 prescribes that after arbitral award is made, a signed copy shall be `delivered’ to each party. The word `delivered’ appearing in Section 31(5) cannot be equated with “dispatched”. A distinction has to be made between these two words. The `Shorter Oxford English Dictionary’ gives meaning of the word “delivered” as, “to bring and handover a letter, a parcel to the proper recipient or address”. “Deliver” means: (i) bring and handover (a letter or goods) to the proper recipient; (ii) formally hand over (someone); and (iii) provide (something promised or expected). Thus, what is important is that the copy of the award should be 11 handed over to the proper recipient or addressee. In this view of the matter, sub- section (5) of Section 31 does not require that a copy of the arbitral award should be sent off by the Arbitrator to the concerned party, but it is required that copy of the arbitral award be handed over to the proper parties. 18 In the instant matter, admittedly the copy of award was received by the Executive Engineer in the month of April 2003. However, appellants did not act till January 2004 for about nine months. Thus, for their inaction, appellants have to blame only themselves. In the instant matter, it cannot be said that there is non compliance of sub-section (5) of Section 31 of the Act of 1996. There is sufficient compliance of the provisions of Section 31(5), as admittedly, appellants received copy of the award in the month of April 2003. Appellants thereafter did not take steps in respect of raising challenge to the award and allowed the matter to remain in cold storage. The delay occasioned in presenting the application is essentially because of the lapses committed by the appellants only. It is not permissible to condone the delay beyond the period prescribed under sub-section (3) of Section 34 of the Act of 1996. Learned Principal District Judge, Latur, was justified in rejecting the application holding that same is barred by limitation. I do not find any merit in the appeal. 19 In the result, appeal stands dismissed. In the facts and circumstances of this case, however, there shall be no order as to costs. Pending Civil Applications do not survive and stand disposed of accordingly. adb/aa208 (R.M.BORDE) JUDGE *******