M/s. Shadani Builders vs M/s. Begraj Agrawal

Abhay Manohar Sapre, J.—This is an appeal filed by the applicant/plaintiff u/s 37(1)(b) of the Arbitration and Conciliation Act 1996 (for short hereinafter for brevity called--"the Act") against the order dated 13-5-2010 passed by District Judge Raipur in Civil (Arbitration) Case No. 32A/2009. By impugned order, the learned District Judge dismissed the appellant''s application made u/s 34 of the Act essentially on the ground of it being not maintainable by virtue of bar of res judicata contained in Section 11 of C.P. Code.

So the question that arises for consideration in this appeal is whether learned District Judge was justified in dismissing the application of the appellant made u/s 34 of the Act and if not then what orders are called for in the facts of this case.

Though the question involved in the case is short and legal, yet in order to appreciate the same, it will be necessary to state the factual background of the case in short and to the extent necessary which eventually led to filing of this appeal.

A dispute arose between the parties to this appeal regarding construction of 500 shops, which as per agreements entered into between them were to be constructed by the respondent (contractor) for the appellant on the land belonging to the appellant. The dispute which was raised between the parties essentially centers round to certain outstanding payments not being made to the respondent for the work alleged to had been done by the respondent (contractor).

By order dated 12-12-97, the Supreme Court in SLP No 2111/97 filed by the parties to this case, against certain orders passed by the High Court constituted one man arbitral tribunal for settlement of disputes by means of arbitration. Justice C.P. Sen (Rtd.) was accordingly nominated as sole arbitrator to adjudicate the disputes arising between the parties which as stated supra were essentially related to alleged non payment of certain outstanding payments payable to the respondent for the work claimed to had been done by them. The sole arbitrator on receipt of the two arbitration reference cases being Arbitration Case No. 1 and 2 of 98 embarked upon the same. Both the parties then submitted to the jurisdiction of the arbitrator, filed their respective claims, adduced evidence and contested the dispute as per their respective stand taken in their statements.

By final award dated 3-10-1999, the learned Arbitrator awarded a total sum of Rs. 58,35,717.50 paisa to the respondent against their total claim which inter alia included claim towards their unpaid bill for the works done by them and interest on such unpaid amount. The awarded sum was to carry interest at the rate of 18 % payable from the date of final payment.

The appellant who suffered the aforesaid adverse award at the instance of the respondent in these arbitration proceedings felt aggrieved of the same filed an application u/s 34 of the Act before the District Judge being application No. 9-A/2007 and sought for its setting aside on the grounds specified in Section 34 of the Act. By order, dated 30-6-2007, the District Judge dismissed the application and upheld the award finding no error therein. The appellant then filed the appeal being Arbitration Appeal No. 25/2007 u/s 37 of the Act before this Court. By order dated 10-7-2007, this Court in substance dismissed the appeal and upheld the award except with a modification that the rate of interest awarded by the learned arbitrator was reduced from 18% to 9%. The appellant not being satisfied with the order of the High Court then pursued the matter further by filing special leave to appeal being SLP No. 12240 of 2009 to Supreme Court against the order of the High Court. By order dated 6-7-2009, the Supreme Court dismissed the SLP and in consequence upheld the order of the High Court.

The appellant then moved an application u/s 33 of the Act before the Sole Arbitrator (Arbitral Tribunal) on 11-7-2009 in which they inter alia prayed for correction of certain arithmetical mistakes/errors which according to them had crept in the original award and which were also noticed by the High Court while deciding the appeal earlier. It was contended that if the mistakes/errors pointed out by the appellant in their application made u/s 33 of the Act are accepted and indeed deserves to be accepted being in the nature of clerical and arithmetical errors then the awarded amount awarded by the award in question would get substantially reduced as against what has been awarded to the respondent by the learned Arbitrator. The appellant also made an application u/s 5 of the Limitation Act seeking condonation of delay in filing the application u/s 33 ibid because according to them, the application u/s 33 of the Act was not filed within the time prescribed in Section 33 ibid. It was contended that there was sufficient cause for condoning the delay/extending the period by taking recourse to provisions of Section 33 (4) ibid in filing the application and hence the learned Arbitrator should first condone the delay/extend the period of filing the application and then proceed to decide the application made by the appellant u/s 33 of the Act on merits and eventually allow it in appellant''s favour by reducing the awarded amount by correcting the mistakes/errors pointed out by the appellant in the award.

The learned Arbitrator by order dated 26-8-2009 dismissed the application made u/s 5 of the Limitation Act. He held that there was no sufficient cause made out for condonation of delay/extending the period in filing the application u/s 33 ibid by the appellant. In his opinion, the delay of 10 long years in filing this application was not properly explained by the appellant and hence, there was no justification for condoning/extending such long unexplained delay in filing the application u/s 33 of the Act. As a consequence, the application made u/s 33 of the Act was dismissed as being barred by limitation. The Arbitrator in these circumstances did not consider it necessary to decide the application made u/s 33 on its merit and declined to examine the issue as to whether there existed any clerical or arithmetical errors in the main award as alleged by the appellant so as to call for any modification in the main award in appellant''s favour.

It is against this order of the learned Arbitrator; the appellant filed an application u/s 34 of the Act before the District Judge out of which this appeal arises praying for its setting aside on the grounds specified in Section 34 of the Act.

The District Judge by impugned order dismissed the application by essentially taking recourse to the provisions of Section 11 of C.P. Code. It was held that since the issue sought to be raised by the appellant in the application was already raised by them in the earlier round of litigation in Section 34 proceedings in this very case before the District Judge which travelled up to the Supreme Court against the appellant and hence, the present proceedings filed u/s 33 of the Act before the Arbitrator and now pursued before the District Judge u/s 34 of the Act are not maintainable. In his opinion, these proceedings were hit by the principle of res judicata as contained in Section 11 of the Code against the appellant and hence cannot be tried on their merits. It is with these findings, the District Judge dismissed the application as being not maintainable. It is against this order, the applicant/plaintiff has felt aggrieved and filed this appeal.

No one appeared for the appellant to argue the appeal whereas Shri Sachin Singh Rajput appeared for the respondent. We, however, did not consider it proper to dismiss the appeal for want of prosecution because we felt with our experience that dismissal of any case for want of prosecution does not serve any one''s purpose and rather it prolongs the litigation without yielding any fruitful results. In order to do complete justice, and with a view to find out as to whether appeal has any merit; we perused the record with the assistance of learned counsel appearing for the respondent and also heard his submissions on merits. We also granted another opportunity to parties and in particular to the appellant to file their written submissions within three days in case if they so wish. Despite grant of such indulgence, the appellant did not choose to file any written submission in support of their case and nor appeared on the adjourned date whereas the respondent argued the case and also submitted their written submissions which we perused.

Having perused the record of the case and on hearing the arguments of the learned counsel for the respondent, we are constrained to allow the appeal and while setting aside of the impugned order, remand the case to the District Judge for deciding the application made by the appellant u/s 34 ibid afresh on its merits in accordance with law.

Coming first to the queer reasoning of the District Judge that led to dismissal of the application made by the appellant, with respect, we are at a loss to appreciate as to how and on what basis; the provisions of Section 11 of the C.P. Code could have been applied and pressed into service by the District Judge for dismissal of the application made by the appellant u/s 34 ibid. In the first place, neither any issue nor any finding was referred to show that due to one particular categorical finding on the issue in the earlier orders between the parties in this very case, the same issue now can not be permitted to be raised by the appellant in these proceedings which are barred by Section 11 ibid. Secondly, the learned District Judge failed to see that mere reference to earlier proceedings between the parties by itself would not attract the rigour of Section 11 ibid against the appellant unless it had been specifically pointed out as to which issue and which particular finding recorded thereon would operate as res judicata and bar fresh trial on such issue. Thirdly, the District Judge further failed to see that in order to invoke the provisions of Section 11 against any party, it was necessary for the Court or to party raising such plea to point out from the pleadings, that such relief was claimed in the pleadings, that it was denied by other party, that the Court then framed issue on such relief and lastly, it was decided by recording a finding on its merits by the Court of first instance which in turn attained finality inter se parties. It was only then; such finding could be held to operate as res judicata inter se parties in subsequent litigation in relation to same dispute preventing the parties to again claim fresh trial and invite fresh finding because public policy bars any further adjudication on such issue once gone into and decided by the competent Court earlier and lastly such was admittedly not the case here when we examine the facts of the case and issue raised.

In the facts of this case, the only question before the District Judge was whether learned Arbitrator was justified in dismissing the application made u/s 33 of the Act as barred by limitation ? In other words, the only question which the District Judge was called upon to decide in the proceedings before him was whether learned Arbitrator was justified in dismissing the application made u/s 5 of the Limitation Act and in consequence the main application made u/s 33 ibid by holding that the appellant failed to make out any sufficient cause for condoning the delay in filing application u/s 33 of the Act resulting in dismissal of both the applications. Obviously the case of the appellant before the learned Arbitrator and then before the District Judge was that Arbitrator had committed an error in rejecting their application seeking condonation of delay in filing the application u/s 33 ibid and, the same should have been condoned by extending its period to enable the Arbitrator to decide the application made u/s 33 ibid on its merits.

Now by no stretch of imagination, we can hold by upholding the impugned order of the District Judge that the aforesaid issue was raised by the parties or it could be said to have been raised; or was capable of being raised; or was available for being raised; or was decided either by implication or expressly by any Courts in the earlier round of litigation that ensued between the parties which went upto Supreme Court. The question that was eventually decided in the first round of litigation which ended in Supreme Court was as to whether the award passed by the arbitrator was legal and proper and if not then whether it was liable to be set aside on any of the grounds specified in Section 34 ibid ? Indeed, the question relating to clerical or arithmetical errors was not at all the subject matter of the earlier proceedings within the meaning of Section 33 of the Act and the same arose for the first time before the learned Arbitrator after conclusion of first round of litigation from the Supreme Court, In fact, the parties were at liberty to raise such type of grievance at any time subject to ensuring compliance of requirements of Section 33 ibid regardless of earlier proceedings.

One cannot perhaps dispute as would be clear from mere reading of Section 33 ibid that Section 33(1)(a) of the Act is partly akin to Section 152 of C.P. Code and enables the Arbitrator in addition to exercising any other powers specified therein to also exercise powers to correct any computation, clerical, typographical or similar kind of errors, if noticed, in the award either suo moto or at the instance of the party to the award. Since Section 33 provides a limitation for seeking such relief and empowers the Arbitrator to extend a period of limitation originally fixed for exercise of such power at the instance of party applying for grant of such relief and hence, the appellant was within their right to invoke this power of the Arbitrator by filing an application seeking extension of period of time for filing such application and then praying for consideration of their case for grant of relief as claimed in their main application. Since in the opinion of learned Arbitrator, no case had been made out for extension of time, for entertaining the application made u/s 33(1)(a) of the Act for correction of alleged errors pointed out and hence the application filed u/s 33 of the Act was rejected on the ground of limitation without going into its merits.

In our considered opinion, the application made by the appellant u/s 34 ibid, out of which, this appeal arises could not have been dismissed as being not maintainable by virtue of rigour contained in Section 11 ibid because, the ground raised by the appellant before the Arbitrator in their application was neither raised nor decided by the Courts in earlier round of litigation but were raised for the first time after conclusion of first round of litigation by taking recourse to the provisions of Section 33 ibid. In our opinion, the same could be resorted to in law at any time by the parties'' concern subject however to ensuring compliance of requirements of Section 33 ibid and making out a ground on facts for claiming relief therein.

In these circumstances, in our considered opinion, invocation of bar contained in Section 11 of the Code by the respondent which found acceptance to the District Judge for dismissal of the appellant''s application made u/s 33 ibid at its thresh hold on such ground was totally misconceived and had to be set aside being devoid of any merit.

In the light of foregoing discussion, we cannot concur with the queer reasoning of the District Judge rendered for dismissal of application made by the appellant which is factually and legally unsustainable. It is liable to be set aside.

This takes us to one objection raised by the learned counsel for the respondent while opposing the appeal. According to him, the order passed by the learned Arbitrator dated 26-8-2009 dismissing the appellant''s application made u/s 33 of the Act read with Section 5 of the Limitation Act could not be termed as an award much less an additional or an interim award under any provisions of the Act and hence application made by the appellant before the District Judge u/s 34 of the Act against such order of the learned arbitrator was not maintainable and in consequence, this appeal too should be held as not maintainable u/s 37 of the Act. In other words, the submission was that any order passed by the Arbitrator u/s 33 ibid could not be termed as an award within the meaning of Section 34 and since the application u/s 34 is maintainable only against the award and not against the order and hence the application made by the appellant u/s 34 against such order was not maintainable and liable to be dismissed as such.

Suffice it to say, this objection was not raised by the respondent before the District Judge while opposing the application made by the appellant and hence no finding of any nature was rendered by the District Judge on such objection. In the absence of any finding not being recorded by the District Judge on such objection, this Court as an Appellate Court does not consider it proper to deal and decide such objection for the first time in this appeal.

We may consider apposite to mention here that our entertaining the appeal for remanding the case to District Judge should not be construed as holding that proceedings arising out of an order passed u/s 33 of the Act could be entertained u/s 34 by the District Judge. As observed supra, since we have not decided this issue in this appeal at this stage except to take note of the same and have left it to be decided by the District Judge after remand in accordance with law, if raised by the respondent, and hence, we do not express any opinion either way.

In the light of foregoing discussion, the appeal succeeds and is allowed. The impugned order is set aside. The case is remanded to the District Judge to decide the application made by the appellant u/s 34 ibid afresh on merits. Indeed the remand of this case appears to be inevitable because the District Judge had decided only one issue and dismissed the application and the same having been reversed by this Court; the application is now required to be decided afresh on merits on all other issues arising in the case. Needless to say, the respondent would be at liberty to raise all such objections as are permissible in law before the District judge which arise in the case except the one which this Court has decided in this order. The District Judge will now decide the application strictly in accordance with law keeping in view the scope, and objections raised by the respondent.

The Parties are directed to appear before the District Judge on 10-7-2012. The record of the case be sent back to the District Judge to enable him to decide the application as directed within six months from the date of parties appearance. Since no one had appeared for the appellant in this appeal and hence, the District Judge will issue fresh notice to the appellant for their appearance in the case before him prior to disposal of the case on merits. No fresh notice be issued to the respondent because they were represented before this Court. If however, no one appears on behalf of the appellant despite service of notice to the appellant by the District Judge, then, the District Judge will be free to pass appropriate orders as are permissible in law and in case if any one appears for the appellant either pursuant to issuance and service of notice to them or otherwise then the District Judge will decide the application on merits keeping in view our observations made supra. No cost.