State and Another vs P.P. Poulose

Mansoor Ahmad Mir, J.—By the medium of this appeal Appellants have questioned the judgment and order dated 9.7.2008 passed by the

Principal District Judge, Srinagar in an application, titled as State of J&K v. P.P. Poulouse, on the grounds taken in the memo of appeal

(hereinafter, for short, impugned order).

Appellants invoked the jurisdiction of Principal District Judge, Srinagar in terms of Section 34 of J&K Arbitration & Conciliation Act, 1997

(hereinafter, for short, Act) for setting aside the award dated 15.11.2003 passed by the arbitrators. It is averred that Appellants/applicants got the

knowledge of the award only on 17.12.2004, thus the petition made was within time. It is profitable to reproduce para 9 of the said petition herein

That since the applicants got knowledge of the award only on 17.12.2004 when Hon'ble Court issued notice to applicant and immediately

application for certified copy of the award was made to Hon'ble Court as the arbitrator had neither furnished the copy of the award to applicants

nor notified the same to them. Therefore, the time of limitation will be deemed to start from the date the applicant receives the notices from the

court.

Respondents-non-applicants filed objections and resisted the petition on the plea that motion was belated. Learned District Judge after hearing

learned Counsel for the parties passed the impugned order and held that the petition was barred by time and, accordingly, dismissed the same. It is

observed in the impugned order that the award was opened in presence of learned Counsel for the parties in the open court on 6.10.2004. The

Appellants/applicants were also aware of passing of the award on 15.11.2003 itself as per the dates, minutes and events maintained by the

arbitrators and, accordingly, held that Appellants acquired the knowledge about the award on 15.11.2003 and also on 6.10.2004. Learned

District Judge also held that the Appellants avoided or failed to pay costs/fees to the arbitrators, thereby avoided to receive copy of the award

and, accordingly, held that the petition was time barred. It is appropriate to reproduce operative parts of the impugned order herein:

The covering letter of the award which was received by the court sufficiently indicates that such copies were ready to be forwarded to the parties

and were not so forwarded because of non-payment of the arbitration fee and the incidental charges. If a party to the arbitration proceedings

willfully avoids to pay the arbitration fee and allows the Arbitral Tribunal to exercise lien over the award, such party cannot turn around and

complain that it was not provided the signed copy of the award in terms of Section 31(5) of the Act and that time to file an application u/s 34(3)

for setting aside of the award shall start running from the date when he at his choice obtained certified copy of the award...

and if the applicants avoided or failed to receive the copy or directly or indirectly thwarted its delivery, the applicants cannot file application in

terms of Section 34(3) of the Act for setting aside of the award after delay of more than one and half years i.e. much beyond the period

prescribed, on the plea that the copy of the award was not delivered by the arbitral tribunal, when the applicant by avoiding to pay the fee and

incidental charges made it practically impossible for the arbitral tribunal to deliver the original copy of the award. So viewed, the application is time

barred and liable to be dismissed. In the circumstances, the application being hit by limitation, rendered not maintainable, is dismissed. It shall go to

records after due compilation.

The core question involved in this appeal is whether limitation for filing an application u/s 34 of the Act for setting aside an arbitral award will

start to run from the date copy of the award is received by the objector by any source, method or means, or from the date a signed copy of the

award is delivered to him by the arbitrator in terms of the mandate of Section 31(5) read with Section 34(3) of the Act. It is profitable to

reproduce Section 31(1) & (5) herein:

form and contents of arbitral award

(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal.

(2)....

(3)....

(4)....

(5) After the arbitral award is made, a signed copy shall be delivered to each party;

Section 31(1) mandates that the arbitral tribunal/arbitrator has to make the award in writing and to sign it. Section 31 (5) provides, rather

mandates that a signed copy of the award shall be delivered to each party. It is also profitable to reproduce Section 34(1) and (3) herein:

Application for setting aside arbitral award

(1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with Sub-section

(2) and Sub-section (3).

(2)......

(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 an request had been made u/s 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.

Section 34(3) provides time frame for filing an application and that application can be made by the party who had received the arbitral award.

This provision is to be read in the light of Section 31(5) of the Act which mandates that a signed copy of the award be delivered to each party.

While keeping in view Section 31(5) and Section 34(5), one comes to an inescapable conclusion, rather it is crystal clear that limitation

prescribed or period of limitation commence from the date a signed copy of the award is delivered to the party making the application for setting

aside and not otherwise. My this view is fortified by the judgment of Apex Court in Union of India (UOI) Vs. Tecco Trichy Engineers and

Contractors, .1 deem it proper to reproduce para-8 of the said judgment herein:

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 u/s 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 u/s 33(1), an

application for making an additional award u/s 33(4) and an application for setting aside an award u/s 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.

The Apex Court after discussing the scope of Sections 30, 31, 32, 33 & 34 of the Act held that the period of limitation u/s 34(3) of the Act

would start to run only from the date a signed copy of the award is delivered or received by the party making the application for setting aside u/s

34 of the Act. It specifically provides the delivery of the award by the arbitral tribunal and its receipt by the party.

The District Judge has lost sight of what was the purpose of using the expression delivering of the award and receipt by the party. This question

also came up for consideration before the Apex Court in a case titled as State of Maharashtra v. Ark Builders Pvt. Ltd. AIR 2011 SCW 1617. It

is profitable to reproduce paras 13, 14, 15, 16 & 17 herein:

The highlighted portion of the judgment extracted above, leaves no room for doubt that the period of limitation prescribed u/s 34(3) of the Act

would start running only from the date a signed copy of the award is delivered to/received by the party making the application for setting it aside

u/s 34(1) of the Act. The legal position on the issue may be stated thus. If the law prescribes that a copy of the order/award is to be

communicated, delivered, dispatched, forwarded, rendered or sent to the parties concerned in a particular way and in case the law also sets a

period of limitation for challenging the order/award in question by the aggrieved party, then the period of limitation can only commence from the

date on which the order/award was received by the party concerned in the manner prescribed by the law.

We may here refer to a decision of the Patna High Court in Dr. Sheo Shankar Sahay v. Commissioner, Patna Division and Ors. 1965 BLJR

Section 18(1) of the Bihar Building (Lease, Rent and Eviction) Control Act, 1947 prescribed a period of limitation of 15 days for filing an

appeal against an order of the House Controller and provided as follows: ""any person aggrieved by an order passed by the Controller may, within

fifteen days from the date of receipt of such order by him, prefer an appeal in writing to the appellate authority"" It was contended on behalf of the

Petitioner before the High Court that the order-sheet of the House Controller was shown to the lawyer of the Respondent on June 10,1959 and

therefore, that would be the starting point of limitation u/s 18(1) of the Bihar Building (Lease, Rent and Eviction) Control Act, 1947. A division

bench of the High Court consisting of Chief Justice V. Ramaswami (as his Lordship then was) and Justice N.L. Untwalia (as his Lordship then

was) rejected the submission observing as follows:

... But we shall assume that the Petitioner is right in alleging that the order was shown to the lawyer on the 10th June, 1959. Even so, we are of

opinion that the appeal preferred by Respondent No. 4 before the Collector of Shahabad was not barred by limitation. The reason is that Section

18(1) provides limitation of fifteen days ""from the date of receipt of the order"" and not from the date of communication of the order. It is significant

that Section 14 of the Bihar House Rent Control Order, 1942, had provided that ""any person aggrieved by an order of the Controller may, within

fifteen days from the date on which the order is communicated to him, present an appeal in writing to the Commissioner of the division"". Section

18(1) of Bihar Act III of 1949 is couched in different language. In our opinion, Section 18(1) implies that the Controller is bound, as a matter of

law, to send a written copy of his order to the person aggrieved, and limitation for filing an appeal does not start unless and until the copy of the

order is sent. In the present case it is not disputed that no copy of the order was sent to Respondent No. 4. It is true that the Respondent himself

applied for a copy of the order on the 11th December, 1959, and obtained a copy on the 14th December, 1959. In any event, therefore, limitation

will not start running against Respondent No. 4 u/s 18(1) of the Act till the 14th December, 1959, and as the appeal was filed on the 26th

December, 1959, there is no bar of limitation in this case....

We are in respectful agreement with the view taken by the Patna High Court in the case of Dr. Sheo Shankar Sahay.

In light of the discussions made above we find the impugned order of the Bombay High Court unsustainable. The High Court was clearly in

error not correctly following the decision of this Court in Tecco Trichy Engineers & Contractors and in taking a contrary view. The High Court

overlooked that what Section 31(5) contemplates is not merely the delivery of any kind of a copy of the award but a copy of the award that is duly

signed by the members of the arbitral tribunal.

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.

Admittedly signed copy of the award was not delivered to the Appellants/applicants by the arbitrators in the case in hand because the

Appellants had failed to pay the costs of arbitration and fees to the arbitrators as pleaded by the Respondents and held by the District Judge. The

same question was involved in the case before the Apex-Court (supra) and held that limitation will start to run from the date copy of the award,

duly signed by the arbitrators/arbitral tribunal, is delivered to the party objecting the award. Section 31(5) does not contemplate to deliver any kind

of copy of the award, but mandates that a copy of the award duly signed by the members of arbitral tribunal is to be delivered. Thus, the impugned

judgment is bad in law and merits to be set aside.

Accordingly, the appeal is allowed and impugned order is set aside. The motion laid by the Appellants u/s 34 of the Act shall stand

revived/restored. Principal District Judge, Srinagar is directed to decide the petition on merits in accordance with law, preferably within a period of

six months from the date of receipt of copy of this order.