Sh.Virender Kumar, Proprietor & ors. vs M/s.Sundaram Finance Ltd.

These petitions have been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called the Act) to set aside the awards passed by the learned Arbitrator in three claim petitions filed by the respondent finance company.

These petitions are yet to be numbered. The Registry raised an objection stating that the arbitral awards are dated 21.11.2013 and the time limit to file original petitions to set aside the award came to an end on 21.2.2014. But, the petitioners filed these petitions only on 02.9.2016 and therefore, the petitions have been presented beyond the time permitted under Section 34(3) of the Act. Further, the Registry stated that if the Court is satisfied that the petitioners were prevented by sufficient cause from making an application within the said period of three months, it may entertain the petitions within a further period of 30 days, but not thereafter. Therefore, the Registry returned the papers to the petitioners'' counsel with an endorsement that ''in view of the time limit prescribed under Section 34 of the Act, the challenge to the awards cannot be made beyond the prescribed period."

The papers were represented by the learned counsel for the petitioners with an endorsement that the original copies of the arbitration awards have not been delivered to the petitioners till date and the existence of the awards came to the petitioners'' knowledge only when summons dated 28.11.2015 were served on them in the execution petitions in November 2015. The petitioners request and representations to the learned Arbitrator for signed copies of the awards on 30.11.2015, 12.12.2015 and 15.12.2015 evinced no reply. The petitioners'' counsel demand for signed copies by notices dated 28.12.2015, 7.1.2016, 18.1.2016, 6.2.2016 and 16.2.2016 also remained unreplied. The learned Arbitrator also did not pass any order on the demand made by either the petitioners or their counsel. Only xerox copies of the awards came to be served during the hearing of the execution petitions and as coercive measures by way of execution have commenced, the petitioners are constrained to challenge the awards along with applications seeking to dispense with the original copies of the awards in A.(SR).Nos.33323, 33325 and 33330 of 2016.

Reliance was placed on the decision of the Hon''ble Supreme Court in the case of State of Maharashtra Vs. M/s.Ark Builders Private Limited [reported in AIR 2011 SC 1374] for the proposition that limitation would commence only from the date a signed copy of the award is delivered/ received by the party.

The Registry placed papers before this Court and the matters were directed to be list for maintainability. This Court thought fit to issue notice to the counsel for the respondent finance corporation, who had obtained instructions and filed a typed set of papers. However, subsequently, the matters stood adjourned for the convenience of Mr.J.C.Gupta, learned counsel for the petitioners to appear in these matters.

I have heard Mr.J.C.Gupta, learned counsel for the petitioners and Mr.S.Suresh, learned counsel appearing on behalf of M/s.Srinivasaraghavan & Associates, learned counsel on record for the respondent.

The only issue to be considered is as to whether the objection raised by the Registry is sustainable.

Section 34(3) of the Act deals with limitation, within which, an application for setting aside the award may be made. The time limit prescribed under the Statute is 90 days and if the applicant is prevented by sufficient cause from making the application within the said period of 90 days, the Court may entertain the application within a period of 30 days, but not thereafter. Thus, this Court would have no jurisdiction to entertain an application, which has been presented beyond 120 days. In the instant case, the petitioners have not filed any application for condonation of the delay in filing the original petitions, as admittedly, the petitions presented challenging the awards dated 21.11.2013 are clearly time barred.

The petitioners state that the limitation for filing the petition under Section 34 of the Act would commence only when the party, who intends to challenge the award, receives the signed copy of the award and it is their consistent case that the signed copies of the awards have not been communicated to the petitioners. To substantiate their contention that they had knowledge of the award only when execution proceedings were initiated by the respondent finance company before the Additional District Court, Hapur, U.P. and that in the execution proceedings, the petitioners filed miscellaneous applications requesting the Executing Court to direct the learned Arbitrator to provide the petitioners with the duly signed and/or certified copies of the award dated 21.11.2013, true copies of the arbitration invocation notices from the claimant side, true copies of the communications from the learned Arbitrator as to the entry of reference in the matters, true copies of the entire case files including as that of the claim petitions, supporting documents, annexures, agreements, etc., true copies of the evidence of the claimant witnesses either oral or through an affidavit, true copies of the entire order sheet, and true copies of the entire postal proof as to the proof of sending notices, summons or other communications, etc.

It has been further submitted that even prior to this, the petitioners as well as their counsel addressed the learned Arbitrator to provide signed copies of the award as well as other documents and records and since the said request was not considered and the respondent is initiating coercive steps before the Executing Court, the petitioners had rushed to this Court and filed the above original petitions challenging the award also seeking to dispense with the production of the original awards.

Apart from relying upon the decision in the case of M/s.Ark Builders Private Limited (cited supra), the learned counsel for the petitioners relied upon the decisions of (i) the Bombay High Court in the case of S.M.Kejriwal Vs. P.C.Goenka [reported in 1998 Law Suit (Bom.) 1115];

(ii) the Delhi High Court in the case of Yogesh Jain Vs. Rakesh Jain [reported in 2014 Law Suit (Del.) 2291];

(iii) the Hon''ble Division Bench of the Delhi High Court in the case of N.P.C. Corporation Ltd. Vs. B.B.C. Co. [reported in AIR 2007 Delhi 202] and

(iv) the Hon''ble Supreme Court in the case of Benarsi Krishna Committee Vs. Karmyogi Shelters Pvt. Ltd. [reported in 2012 (9) SCC 496].

The learned counsel for the respondent prefaced his submission by bringing to the notice of this Court the conduct of the petitioners/borrowers and the difficult circumstances, to which respondent finance corporation was pushed to repossess the vehicles and contended that the vehicles were concealed and the vehicles were not traceable. It is further submitted that the petitioners are chronic defaulters and the present attempt is only to drag on the matter to defeat the interests of the respondent finance company and that the contentions raised by the learned counsel for the petitioners are factually incorrect. To demonstrate the same, the learned counsel for the respondent referred to the typed set of papers filed by them containing the records of the learned Arbitrator.

It is further pointed out by the learned counsel for the respondent that the notices were sent to the addresses given to the company and all those notices sent by the learned Arbitrator on 05.12.2013 were returned unclaimed in respect of all the three cases. The learned Arbitrator sent a letter to the first petitioner, since the petitioners are all related and the first petitioner was representing the other petitioners as well. Since all the covers were returned unclaimed, in the letter dated 22.1.2016, the learned Arbitrator forwarded the certified copies of the awards dated 21.11.2013 for all the three agreements along with postal receipts and the returned postal covers in respect of all the three matters. This was to inform the petitioners that the learned Arbitrator already sent notices and claim statements with documents by registered post with acknowledgment due and that therefore, he is not obliged to send the same to the petitioners once again. However, the learned Arbitrator was willing to produce the arbitral file relating to all the three matters before any court on receipt of any notice from any court. The letter was sent to the address given by the first petitioner in his letter dated 12.12.2015. This communication was returned with the postal endorsement ''not met''.

Subsequently, there has been e-mail correspondence between the learned Arbitrator and the learned counsel for the petitioners and the learned Arbitrator maintained the stand that earlier, the communication as well as the copies of the awards were sent to the addresses given by the petitioners and they have been returned with the endorsement ''unclaimed'' or ''not met'' and he is not bound to once again furnish the copies of the same.

By relying upon this document, the learned counsel for the respondent would state that the present attempt of the petitioners is to get over the limitation and to show as if the notices as well as the copies of the awards were not communicated to them and that the petitioners should not be granted any indulgence.

The Hon''ble Supreme Court in the decision in M/s.Ark Builders Pvt. Ltd. (cited supra), referred to its earlier decision in the case of Union of India Vs. Tecco Trichy Engineers & Contractors [reported in 2005 (4) SCC 239] and held that the delivery of arbitral award to the party, to be effective, has to be ''received'' by the party and this delivery by the Arbitral Tribunal and receipt by the party of the award sets in motion several periods of limitation such as 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. It was further held that as this delivery of the copy of the 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 the date, the delivery of the copy of the award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbital proceedings. It was also held that the period of limitation can commence only from the date, on which, the order/award was received by the party concerned in the manner prescribed by law.

The decision of the Delhi High Court in Yogesh Jain (cited supra) followed the decisions of the Hon''ble Supreme Court in M/s.Ark Builders Pvt. Ltd. (cited supra) and M/s.Tecco Trichy Engineers and Contractors (cited supra), in which, the same principle had been reiterated. So also is the decision of the Hon''ble Division Bench of the Delhi High Court in the case of M/s.N.P.C. Corporation Ltd. (cited supra) emphasizing that it is essential that the procedure contemplated for delivery and service of arbitral award must be meticulously and properly effected.

The above referred to legal principle clearly enunciates the manner, in which, notices are required to be served under the provisions of the Act and the impact of such service on proceedings initiated under Sections 33(4) and 34(3) of the Act. There can be no quarrel to the legal proposition in the judgments referred to by the learned counsel for the petitioners.

The Statute prescribes an outer limit for this Court to exercise its discretion while condoning the delay and such power cannot be exercised beyond the period of 30 days after completion of 90 days. Thus, beyond 120 days, the award cannot be challenged under Section 34 of the Act. If such is the legal position, undoubtedly strict interpretation has to be given with regard to the mode of service of notices, orders and awards or else the interest of the party intending to challenge the award would stand defeated. However, the legal principle cannot be applied in the abstract and is required to be applied to the facts and circumstances of each case.

Therefore, it is to be seen as to whether the Arbitrator issued notices to the petitioners/borrowers, what was the fate of the notices and what was the conduct of the petitioners. The petitioners do not dispute the fact that the notices sent by the learned Arbitrator on 05.12.2013 in respect of all the three cases were returned unclaimed. If that is so, the presumption is that the notices have been duly served. Therefore, nothing further requires to be done by the learned Arbitrator.

Nevertheless, after about nearly three years, the first petitioner addressed the learned Arbitrator not only on behalf of himself but also on behalf of other two petitioners requesting to furnish certified copies of the awards. The learned Arbitrator, in no uncertain terms, sent a notice dated 22.1.2016 clearly stating that the notices and the copies of the awards were already sent by registered post with acknowledgment due and that he is not obliged to send the same again. The learned Arbitrator undertook to produce the arbitration file before any court on notice being received from the court. Along with the letter dated 22.1.2016, the learned Arbitrator enclosed a certified copy of the award dated 21.11.2013 for all the three cases. Since the first petitioner made such a request not only on his own behalf, but also on behalf petitioners 2 and 3, what is shocking to note is that the said communication was returned by the Postal Authorities. The endorsement made by the Postal Authorities is ''not met''.

The learned counsel for the petitioners would submit that the presumption that the notice has been served is a rebuttable presumption.

It may be true that this presumption is rebuttable. But, the burden to rebut the presumption lies on the party challenging the factum of service namely the petitioners. The petitioners have not been able to produce any document to rebut such a presumption. The Postal Authorities make an endorsement ''not met'' and return the cover when there is nobody in the address given to receive the cover. When the Postman meets the addressee in the given address and gives an intimation to come and meet him and collect the postal cover, this is sufficient to hold that the Postal Authorities have given due intimation. If the petitioners have not responded to the intimation, it is undoubtedly a case where the presumption to be drawn is that notices were served on the petitioners and the petitioners had the knowledge of the proceedings.

This view is supported by the decision of the Hon''ble Supreme Court in the case of Madan & Co. Vs. Wazir Jaiwir Chand [reported in AIR 1989 SC 630] wherein it has been held that once the letter is delivered to the post office, he has no control over it. It is then presumed to have been delivered to the addressee under Section 27 of the General Clauses Act. Under the Rules of the Post Office, the letter has to be delivered to the addressee or a person authorised by him. Such a person may either accept the letter or decline to accept it. In either case, there is no difficulty for the acceptance or refusal can be treated as a service on and receipt by the addressee. It was further pointed out that the difficulty is where the postman calls at the address mentioned and is unable to contact the addressee or a person authorised to receive the letter. All that he can then do is to return it to the sender. The Indian Post Office Rules do not prescribe any detailed procedure regarding the delivery of such registered letters. When the Postman is unable to deliver it on his first visit, the general practice is for the postman to attempt to deliver it on the next one or two days also before returning it to the sender. However, he has neither the power nor the time to make enquiries regarding the whereabouts of the addressee; he is not expected to detain the letter until the addressee chooses to return and accept it; and he is not authorised to affix the letter on the premises because of the assessee''s absence.

The said decision clearly supports the case of the respondent and the endorsement in all the communications both ''unclaimed'' and ''not met'' are sufficient to treat the same as service on and receipt by the petitioners.

For all the above reasons, the objections raised by the Registry are sustained and the above original petitions are rejected as not maintainable. Consequently A.(SR.).Nos.33323, 33325 and 33330 of 2016 are also rejected.