Raj Babu Singh vs General Manager, N.T.P.C.

Sudhir Agrawal, J.—Heard Sri Yogesh Agrawal, Advocate for petitioners and Sri Vivek Ratan, Advocate for respondents. In both these matters, common parties are involved and the facts and issues of law are also common, therefore, as agreed by learned Counsel for the parties, these matters have been heard together and are being decided by this common judgment. Further as requested, Writ Petition No. 31577 of 2009 is taken as leading case and for the purpose of narration of facts and pleadings, leading case would be referred.

This writ petition under Articles 226/227 of the Constitution of India has come up at the instance of two petitioners Raj Babu Singh and Surendra Pratap Singh, both are brothers and aggrieved by order dated 17.2.2007 passed by Additional Civil Judge (Senior Division), Sonbhadra, rejecting objection against the impugned award dated 23.11.1997 of the Arbitrator and judgment and order dated 15.5.2009 whereby IInd Additional District Judge, Sonbhadra has dismissed petitioners'' Civil Appeal No. 14 of 2007, confirming the order of learned Civil Judge.

The facts in brief giving rise to the present dispute are as under:

Sri Prem Singh, father of two petitioners, a Contractor was awarded work contract vide letter dated 2.5.1989 which also contains terms and conditions of the agreement. There was a clause for arbitration, in case of any dispute. Respondent National Thermal Power Corporation (hereinafter referred to as "NTPC") finding that work contract has not been discharged in accordance with terms and conditions, by letter dated 16.6.1992 demanded Rs. 3,09,094.44 as penalty, for non-fulfillment of contract relating to lifting of coal mill reject from canteen site.

The contractor, raising a dispute, served a notice dated 5.10.1993 claiming refund of Rs. 5,46,800/- which it had deposited in the shape of Bank Guarantee, F.D.R. and earnest money. Having received no response and non-appointment of Arbitrator by respondents, Contractor Prem Singh filed suit No. 40 of 1994 for appointment of Sole Arbitrator as per Clause 18 of the agreement dated 2.5.1989. The Trial Court decreed the suit vide order dated 21.3.1997 and dispute was referred to arbitration by General Manager/Additional General Manager, NTPC/SSTP, Shaktinagar, Sonbhadra himself or by appointing any other person as Arbitrator. He was to complete arbitration proceeding within six months and submit award in the Court.

Pursuant thereto, Dr. S.D. Deshpande was appointed as Sole Arbitrator. The order of appointment was received by contractor on 26.4.1997, whereby Sole Arbitrator required him to submit his claim. Accordingly, claim for a total of sum of Rs. 15,22,210/- was submitted on 23.6.1997 before Sole Arbitrator Dr. S.D. Deshpande. A counter statement dated 22.7.1997 was filed by NTPC through its authorized representative disputing the claim of contractor. 22.10.1997 was fixed for argument before Arbitrator. Contractor, Prem Singh, father of petitioners, sought adjournment on the ground of his ill health. Accepting the same, Arbitrator fixed next date as 4.11.1997 for hearing. On 4.11.1997 the claimant as well as opposite party appeared before Arbitrator. The matter was argued and the award was reserved. The claimant was directed to deposit stamp papers of the value of Rs. 2350/- for making and publishing the award. On 10.11.1997, the claimant made an application for submitting some more papers and requested 15 days'' time. This application was rejected on the same day and claimant was directed to deposit stamp papers on 13.11.1997 but the same could be submitted by him on 17.11.1997. Arbitrator thereafter by award dated 23.11.1997, allowed a sum of Rs. 87,202/- to the Contractor Prem Singh as full and final settlement of all the disputes referred for arbitration. The said amount was directed to be paid to the contractor by NTPC by 31.12.1997, failing which the claimant was to be paid interest at the rate of 9% per annum from the date of Award till the date or payment.

The Award was submitted in Court on 10.12.1997 whereupon notices were issued to the parties by Civil Court.

Though the contractor attended proceedings before Civil Court on various dates but did not file any objection for a long time. Ultimately an objection was filed on 18.11.1998. Affidavit dated 18.11.1998 was also filed by Sri Prem Singh in support of his objection.

Civil Judge (Senior Division), Sonbhadra considered the aforesaid objection which was registered as Misc. Case No. 97 of 2001 and rejected the same by order dated 17.2.2007. There against petitioners'' appeal has also been rejected by the Appellate Court by order dated 15.5.2009.

Sri Yogesh Agrawal, learned Counsel appearing for petitioners contended that the time granted for award was only six months. It was never extended. Therefore, the award is wholly without jurisdiction and this aspect has been wrongly considered by Courts below against petitioners. He placed reliance on Apex Court''s decision in State of Punjab Vs. Hardyal, .

Per contra, learned Counsel appearing for NTPC contended that in view of peculiar facts and circumstances of the case, the award cannot be said to be illegal only on the ground that it was given after six months.

In the present case, the parties have not disputed that arbitration proceedings have been conducted under Arbitration Act, 1940 and continued thereunder. Clause 3 of First Schedule of Arbitration Act, 1940 provides that the award must be given within four months of arbitrator entering on the reference or after having been called upon to act by the notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow. In the present case, the Court itself granted six months time for Award. Order dated 21.3.1997 shows that six months period for award was to commence from the date, the person, required to act as arbitrator, received copy of order of the Court. The award shows that this order was received by arbitrator on 26.4.1997. Therefore initial period of six months would obviously expire on 25.10.1997. The arbitrator had fixed the date for hearing on 22.10.1997 when the claimant himself sought adjournment showing his inability to attend the proceeding on account of his ill health. Accordingly, the arbitrator fixed 4.11.1997 for arguments. The claimant did not raise objection that this is a date, subsequent to the expiry of six months period, but on the contrary, appeared before arbitrator, voluntarily participated in the proceeding and argued the matter. In fact, both the parties participated voluntarily and without any objection.

It is noteworthy that not only on 4.11.1997, the claimant contractor raised no protest with regard to period within which the award was to be given that it has expired but he deposited stamp papers much later on. Firstly he himself took time on 10.11.1997 and then submitted same on 17.11.1997.

Under section 28(2) of Act 1940 power to extend time for giving award has been conferred upon Court. It is a very wide provision. In para 10 of Judgment State of Punjab v. Hardyal (supra) it has been observed that it is not open to arbitrators at their own pleasure, without consent of parties to the agreement, to enlarge time for making award. In para 14 of judgment, it has been said that the Court has got power to extend time, even if formal extension has not been given, when award is submitted in the Court. Such time can be extended even by Appellate Court.

In Nagar Palika, Mirzapur Vs. The Mirzapur Elect. Supply Co. Ltd., , the Court has observed as under:

"Dr. Ghosh further pointed out that the time for arbitration expired on 31st December, 1970 and the Award was made by the Arbitrator 27 days late on 27.1.1971 without formal extension of time. This argument does not appeal to us. The conduct of the parties is a major factor to waive the extension of time given by the Court. The time be taken as extended."

In the present case, the Arbitrator did not extend the time on its own. It is true that the period of six months expired on 25.10.1997 but even thereafter both the parties voluntarily and willingly appeared before the Arbitrator and participated in the proceedings. It is well within the right of Arbitrator, in these circumstances, to treat consent of both the parties for extension of time. It is not the case of petitioners that till the award has been given by Arbitrator, any objection was raised on behalf of contractor-claimant that the time of award having already expired, Arbitrator has become functus officio and cannot pass any award thereafter. In fact, even before the Civil Court, no objection was filed by claimant-contractor for setting aside the award within the time prescribed. In these circumstances, the Court below had no option but to make the award rule of the Court under the Statute. The question of limitation is being raised at much later stage, particularly, when the judgments of Apex Court have shown that if the parties have voluntarily participated before the Arbitrator, the technical objection of extension of time can be removed by granting such sanction even at any later stage and if such sanction is required, this Court is granting the same by this order.

In the peculiar facts and circumstances of the case, I am clearly of the view that here is not a case which requires inference with the award impugned in this writ petition in exercise of extraordinary equitable jurisdiction under Article 226/227 of the Constitution. The writ petitions are, accordingly, dismissed. No order as to costs.