Amit Kumar Jain and another vs Anil Kumar Jain and others

Present appeal under Section 37 of the Arbitration and

Conciliation Act, 1996 (for short ''1996 Act'') is filed by Amit Kumar Jain

and Smt. Shashi Jain (appellants) seeking quashing of order dated

17.04.2012, passed by Ld. Additional District Judge, Chandigarh whereby

their objection petition filed under Section 34 of the Act against award dated

26.07.2002 has been dismissed on the ground of limitation.

Mr. P.S. Rana, counsel of the appellant contended that the

appellants were not aware of the arbitration proceedings as well as

arbitration award dated 26.7.2002. The arbitrator failed to communicate to

them the signed copy of award, in terms of requirement of Section 31(5) of

the Act. The appellants in second week of April''2003 came to know about

the award and then served a notice dated 17.04.2003 on the arbitrator to

send them signed copy of award or to their counsel. The Arbitrator received

said notice on 19.04.2003 but did not supply copy of award and they again

sent reminder dated 02.05.2003. In reply to said reminder, arbitrator sent a

copy of award along with forwarding letter dated 06.05.2003. The award

was received on 08.05.2003, therefore objections petition under Section 34

of the Arbitration and Conciliation Act, 1996 (for short ''Act'') was within

limitation period, however, Ld. AdJ has wrongly rejected their petition on

the ground of limitation. Ld. Counsel cited judgment of Supreme Court in

the case of State of Maharashtra Vs. Ark Builders Pvt. Ltd 2011 (2) RCR

(Civil) 598 wherein while interpreting effect of Section 31(5) and 34(3),

court has held that service of signed copy of award upon parties is

indispensable and limitation would start only from the date of delivery of

copy.

Per contra, Mr. Shelender Jain, Senior Advocate for

respondent Nos. 2 to 5 has argued that appellants were well aware of the

award and they even acted upon the award. There was no dispute between

the parties and it was a case of family settlement. A memorandum of

understanding was executed between the parties and there was oral partition

of properties between the parties. The arbitrators were appointed only for

the sake of giving legal color to the oral understanding. For the appointment

of arbitrators, an MOU was signed by all the parties and accordingly

arbitrators were appointed. The appellants had already enjoyed the award

and just on account of greed as well harass the other parties are dragging the

respondent to undesired litigation. Ld. Counsel relied upon decision of the

Delhi High Court in the case of Continental Telepower Industries Ltd. Vs

Union of India 2010 (2) R.A.J. 559 wherein Court has held that limitation

for filing petition under Section 34 would be counted from the date of

receipt of photocopy of the award as service of photocopy of award is

sufficient.

I have considered arguments of both the parties and short

issue involved is whether petition filed under section 34 was barred by

limitation or not.

Before dwelling into facts and controversy involved, it would

be gainsaid to look into relevant provisions of the Act. For the just decision

of the present controversy, section 3 / 31 / 34 of the Act are relevant and

quoted below:-

Receipt of written communication.--(1) Unless otherwise agreed by

the parties,--

(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business habitual residence or mailing address, and (b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee''s last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it. (2) The communication is deemed to have been received on the day it is no delivered. (3) This Section does not apply to written communications in respect of proceedings of any judicial authority. 31. Form and contends of arbitral award.- (1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. (2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated. (3) The arbitral award shall stated the reasons upon which it is based, unless. (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under section 30. (4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place. (5) After the arbitral award is made, a signed copy shall be delivered to each party. 34. Application for setting aside arbitral award.- (1) Recourse to a Court against an arbitral award may be made only by any application for setting aside such award in accordance with sub-section (2) and sub- section (3). (2). Xxxxxxxxxxxxxxxxxxxxxxxxxxx (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.

[emphasis supplied]

From the above quoted sections, it is culled out that arbitrator is

duty bound to deliver signed copy of award and delivery of award is not

mere formality. The Limitation for filing appeal starts from the date on

which party making application had received award. Like Section 27 of

General Clauses Act, there is Section 3 in the Act of 1996 creating deeming

provision that any written communication shall be deemed to be received if

it is delivered to the addressee personally or at the place of business,

habitual residence or mailing address. In any case, Section 3 requires that

written communication should be delivered and Section 31(5) of the Act

also requires delivery of the order.

Hon''ble Supreme Court in the case of Ark Builders ibid relying

upon its earlier decision in the case of Union of India Vs. Tecco Trichy

Engineers (2005) 4 SCC 239 held that limitation prescribed under Section

34(3) of the Act would start running only from the date a signed copy of the

award is delivered/received by the party making the application for setting

aside award under Section 34(1) of the Act. Supreme Court in Para 17 has

gone to the extent that appellant would appear to be deriving undue

advantage due to the omission of arbitrator to give them a signed copy of

the award but that would not change the legal position and it would be

wrong to tailor the law according to the facts of a particular case.

Hon''ble Supreme Court in the case of Union of India Vs.

Deepak Electric and Trading Company 2012 (12) SCC 509 while dealing

with Article 119 of the Schedule to the Limitation Act, 1963, which

prescribes the period of limitation for filing application under the

Arbitration Act, 1940 held that starting point of limitation for filing the

application for setting aside award would be the date of service of notice on

the executive engineer as provided in Article 119 (b) of the Schedule-II of

the Limitation Act and not the date of knowledge of the filing of the award.

The Supreme Court set aside findings of the High Court that executive

engineer had knowledge of the filing of the award and limitation should be

counted from the date of the knowledge.

Hon''ble Supreme Court in the case of Benarsi Krishna

Committee and Ors. Vs. Karmyogi Shelters Pvt. Ltd. 2012 (9) SCC 496 has

held that delivery of signed copy of award upon the counsel of the parties is

not sufficient and signed copy of award has to be delivered to the party. If

signed copy of award is not delivered to the party himself, it would not

amount to compliance of provisions of Section 31 (5) of the Act.

The undisputed facts emerging from pleadings and oral

arguments of counsel are that the parties in appeal are family members and

were holding various properties jointly. For the sake of partition they

executed an MOU dated 31.05.2002, whereby four arbitrators were

appointed. It was also agreed that award given by the arbitrators shall be

binding on all the parties and no party shall have right to appeal in any court

of law against the award. The MOU is dated 31.05.2002 and it has been

signed by eight persons who are members of same family. In view of oral

understanding, property was partitioned and partition of property took place

even prior to declaration of award dated 26.07.2002. The appellant in his

cross-examination admitted that residential property could not be transferred

on the basis of award and for that purpose separate relinquishment deed was

signed. The appellants were staying with Mr. Anil Kumar Jain (respondent

No. 1) who is father of appellant No.1 and husband of appellant No.2. Mr.

Anil Kumar Jain (respondent No. 1) admitted in his cross-examination that

from 01.06.2002, the rent of SCF-4A, Sector 7C, Chandigarh was received

by Mr. Pardeep Jain and Kuldeep Jain as per terms and conditions of the

award.

The above facts and arguments of counsel for the respondents

indicate that appellants were aware about the proceedings before the

arbitrator and outcome of the proceedings. The arbitration award was

nothing more than legal colour to oral settlement consented by all the parties

and there was constructive knowledge to the appellants and they have acted

upon on the basis of said knowledge. There are various acts regarding

properties which took place even prior to pronouncement of award like Mr.

Pardeep Jain and Mr. Kuldeep Jain received rent w.e.f. 01.06.2002 and

relinquishment deed was executed on 08.07.2002 whereas award is dated

26.07.2002.

This court is not oblivious of the law laid down by Hon''ble

Supreme Court in umpteen number of cases that delay beyond 30 days from

the normal period of limitation i.e. 3 months cannot be condoned by Court

under Section 34(3) of the Act. Therefore, if it is held that constructive

knowledge is sufficient and amounts to compliance of Section 31, the

petition filed by appellant would be barred by limitation. However, it is

settled law that if an act is required to be done in a particular manner and it

affects rights and liabilities of parties, it cannot be done in any other

manner. Section 31 (5) of the Act candidly requires that signed copy of

award should be delivered. Delivery may take place by hand or by post,

however, actual delivery of signed copy is indispensable. In the present

case, I do not find either any evidence or any concrete argument of the

respondent that signed copy of award was duly delivered upon the

appellants before 8.5.2003. The appellants having acted upon the award is

not sufficient because parties to award acted even prior to date of award so

it cannot be assumed that signed copy of award was delivered prior to

8.5.2003. The parties could be present at the time of final arguments still

compliance of section 31(5) is mandatory. Supreme Court in para-17, in

case of Ark Builders has held that even though appellants would appear to

be deriving undue advantage, the legal position cannot be changed and it

would be wrong to tailor the law according to facts of a particular case. For

the ready reference said Para 17 is reproduced below:

"In the facts of the case the appellants would appear to be deriving undue advantage due to the omission of the arbitrator to give them a signed copy of the award coupled with the supply of a copy of the award to them by the claimant-respondent but that would not change the legal position and it would be wrong to tailor the law according to the facts of a particular case."

In the present case, no doubt the argument of respondent

appears to be convincing that parties were aware of the award, however,

there is nothing on record to show that signed copy of award was delivered

prior to 8.5.2003, therefore, this court has no option except to hold that

petition filed under Section 34 of the Act was not barred by limitation.

Staying of appellants with respondent No. 1, return of record by Arbitrators

to respondent No. 1 or forwarding letter dated 6.5.2003 of the arbitrators, at

the most cumulatively indicate that appellants were aware of the award,

however constructive knowledge, in the absence of delivery of award, is not

sufficient to start limitation for filing appeal. The right of appeal is a right

created by Statute and it is trite law that legislature while granting right to

appeal may impose certain limitations including limitation of time. Court

has limited power to condone delay of upto 30 days from the expiry of time

granted to file appeal i.e. three months. Section 34(3) of the Act mandates

counting of limitation from date of delivery and not knowledge. The

provisions of limitation Act are not applicable so 1996 Act needs to be

interpreted strictly. Delay beyond 30 days may deprive a party his valuable

right of appeal so provisions of Section 31(5) of the Act in the backdrop of

proviso to Section 34(3) of the Act needs to be interpreted strictly. The

language of Section 31(5) of the Act is plain and unambiguous so this court

has no right to add or subtract any word in said sub section. As held by

Hon''ble Supreme Court in the case of ARK Building (supra) law can not be

tailored according to the facts of a particular case and applying the said

judgment to the facts of present case, this court holds that limitation for

filing objection petition under Section 34 of the Act would start from

8.5.2003. Hon''ble Supreme Court has rejected delivery of signed copy of

award even upon counsel of the party so judgment of Delhi High Court in

the case of Continental Telepower (supra) does not advance the cause of

the respondent.

Accordingly, the instant appeal is allowed and the impugned

order dated 17.04.2012 is set aside; the Petition dated 4.6.2003 filed under

Section 34 of the Act before Ld. ADJ, Chandigarh is ordered to be restored.

The matter is pending since 2013 so I think it appropriate to direct Ld. ADJ

to decide the matter expeditiously, preferably within 6 months from the date

of receipt of certified copy of this order.