Shreyas Keshav Bhade vs Sitakant Anant Shetgaonkar And Another

C.V. Bhadang, J

The challenge in this appeal under Section 37 of the Arbitration and Conciliation Act 1996 (Act, for short) is to the judgment and order dated 03.11.2017 passed by the learned Principal District Judge at Panaji, in Arbitration and Conciliation Petition No. 1 of 2016.

By the impugned judgment, the learned District Judge has dismissed the petition under Section 34 of the Act filed by the appellant, challenging the award dated 26.09.2012 passed by the learned Arbitrator in Arbitral Dispute No. 1 of 2012.

The brief facts are that the dispute between the parties was referred to the sole Arbitrator in the aforesaid Arbitral Dispute and the Arbitrator by an Award dated 26.09.2012, allowed the claim filed by the respondents, inter alia, directing the appellant to handover physical possession of the suit shop to the respondents and for damages.

The appellant challenged the same before the learned District Judge in a petition under Section 34 of the said Act. The learned District Judge framed the following points for determination:

(i) Whether the proceedings are barred by the law of limitation?

(ii) Whether the applicant was duly served in the matter before the Ld. Arbitrator?

(iii) Whether the other grounds of objection raised by the applicant herein can be entertained?

The learned District Judge found that the petition under Section 34 filed by the appellant was barred by limitation as it was not filed within the period as prescribed by Section 34(3) of the said Act. A perusal of para 27 of the impugned judgment shows that in view of the petition being found to be barred by limitation, the learned District Judge has not entered into the merits of the challenge. The learned District Judge has dismissed the petition by the impugned judgment dated 03.11.2017.

I have heard Mr. Desai, the learned Counsel for the appellant and Mr. Nigel Costa Frias, the learned Counsel for the respondent. Perused record.

The only contention raised on behalf of the appellant is that the signed copy of the award was never served by the Arbitrator on the appellant and as such the petition filed could not be said to be barred by limitation. It is submitted that the limitation for challenging the award commences from the time the copy of the arbitral award is received by the party.

The learned Counsel for the respondent submitted that the appellant had notice of the arbitration proceedings and of the passing of the award and as such the learned District Judge had rightly found the petition to be barred by limitation.

I have considered the submissions made. Sub-section (3) of Section 34 of the Act which is relevant for the purpose reads thus:

"Section 34(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."

It can thus be seen under sub-section (3) of Section 34 of the Act, an application for setting aside of award has to be made within three months from the date on which the party making the application had received the arbitral award. Section 31 of the Act is also relevant for the purpose. Subsection (5) of Section 31 provides that after the arbitral award is made, a signed copy has to be delivered to each of the parties.

There was some debate during the course of the arguments at bar as to whether the Arbitrator had served a signed copy of the Award on the appellant or not. In order to ascertain the same, the records of the arbitration proceedings were called for and a perusal of the record including the proceeding sheet dated 26.09.2012 does not show that a copy of the arbitral award was served on the appellant. It appears that the appellant applied for the certified copy on 30.12.2015. The copy was delivered on 04.01.2016 and the petition under Section 34 of the Act, came to be filed on 15.01.2016.

In this regard, a useful reference may be made to the decision of the Supreme Court in the case of Union of India v. Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239, in which it is held thus in para 8 of the judgment:-

"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 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."

A similar view has been taken in the case of The State of Maharashtra v. Ark Builders Pvt. Ltd., (2011) 4 SCC 616.

Thus, if the signed copy of the award was not served on the appellant in compliance of section 31(5) of the Act, strictly speaking, the period of limitation cannot be said to have commenced at all. On this short ground, the present appeal has to succeed.

In the result, the following order is passed:

ORDER

(i) The appeal is allowed.

(ii) The impugned judgment and order dated 03.11.2017 is hereby set aside.

(iii) The Arbitration and Conciliation Petition No. 1/2016 is restored on the file of the learned Principal District Judge at Panaji for disposal on merits in accordance with law.

(iv) The parties to remain present before the learned District Court on 22.07.2019 at 10.00 a.m.

(v) The records and proceedings of the Arbitrator be returned to the learned Principal District Judge.

(vi) In the circumstances, there shall be no order as to costs.