State of Gujarat and Another vs M/s. Banyan and Baerry Construction Pvt. Ltd.

Bhaskar Bhattacharya, C.J.—This First Appeal u/s 39 of the Arbitration Act, 1940 is at the instance of the State of Gujarat and is directed against an order dated 23rd March 1992 passed by the learned Civil Judge [Senior Division], Mirzapur, Ahmedabad, in Civil Misc. Application No. 84 of 1989, thereby passing a decree in terms of the award after rejecting an application under sections 30 and 33 of the Arbitration Act, 1940 [the Act, hereafter] filed by the present appellant. Being dissatisfied, the State of Gujarat has preferred the present First Appeal, while the claimant has filed a Cross Objection challenging a portion of the order passed by the learned trial Judge by which the learned trial Judge refused to grant interest during the period of arbitration. Though the Cross Objection had been filed in the year 1992, the same appears to have not been admitted so far. However, since the First Appeal arising out of the selfsame order is admitted, we admit the Cross Objection and the same is also taken up for hearing today along with the First Appeal.

The following facts are not in dispute:

2.1 A retired Chief Secretary of Public Works Department, Government of Gujarat, was appointed a Sole Arbitrator vide Government of Gujarat, Irrigation Department Memorandum dated 20th June 1987 for resolving the disputes between the present appellant and respondent for construction work of 60 cms. thick RCC disphram for Guhai Reservoir Project. Ultimately, the Arbitrator filed the award u/s 14 of the Act read with rule 4 of the Rules framed by the High Court u/s 44 of the Act. The award was filed on 27th April 1989 and thereafter, both the parties were issued with notice to file objections or reply. Prior to that, the parties were given notice regarding filing of the award within the jurisdiction of the Court. Notice was issued to the respondent-State on 31st July 1989 and the appellant entered appearance in the proceedings before the court below by engaging a lawyer on August 14, 1989. Subsequently, the appellant filed their written objections on 3rd October 1989. The objections were not recorded in the Court by the then the Presiding Officer and it remained un-exhibited as it was filed beyond the period of limitation. The claimant, on the other hand, filed an application u/s 15 and 16 of the Act pointing out that the Arbitrator has not granted interest for 615 days between the period from 21st August 1987 and 27th April 1989, during the pendency of the arbitration proceedings, which, according to the claimant, was an error apparent on the face of the record. The claimant, therefore, prayed for modification of the award granting interest at the rate of 17% per annum for the aforesaid period. Such application was filed on 6th February 1992, long after the filing of the award.

2.2 In view of the aforesaid facts, the learned trial Judge framed the following issues:-

Whether the opponent proves that the Arbitrator is guilty of misconduct as contemplated under Sec. 30 of the Arbitration Act?

Whether the opponent proves that the Arbitrator has committed an error in deciding the claims as stated in the grounds mentioned in the application for setting aside the award?

Is it proved that Arbitrator has acted beyond jurisdiction and express authority?

Whether the opponent proves that the Arbitrator has no power to entertain the claim of lite or future interest and therefore, the award is required to be set aside?

Whether the award is liable to be set aside

What order?

2.3 The trial Court, by the order impugned herein, has answered the above issues in the following manner.

In the negative

In the negative

In the negative

In the negative

In the negative

As per the final order

2.4 Ultimately, after holding that there was no illegality in the award impugned, the learned trial Court passed a decree to recover Rs. 37,40,292-53 from the properties of the present appellant with interest at the rate of 11% per annum for the period from 4th September 1986 to 20th August 1987 on the above amount and further interest at the rate of 17% per annum from the date of the award till the date of the decree and further interest on the above amount at the rate of 9% per annum from the date of the decree till the date of realization.

2.5 As indicated earlier, the State of Gujarat has preferred the present appeal and the claimant has filed the Cross Objection thereby claiming interest during the pendency of the arbitration proceedings which was not granted by the Arbitrator.

Mr. Bhatt, the learned Assistant Government Pleader appearing on behalf of the appellant-State, strenuously contended before us that the learned trial Judge committed substantial error of law in rejecting the application under sections 30 and 33 of the Act by not condoning the delay in filing the said objections although a specific prayer was made in the application u/s 30 and 33 of the Act for condonation of delay. According to Mr. Bhatt, the learned trial Judge should have condoned the delay and entertained the objections filed by the State.

Mr. Shelat, the learned advocate appearing for the respondent-claimant, on the other hand, opposed the aforesaid submissions of Mr. Bhatt and submitted that the learned trial Judge has rightly declined to consider the application filed by the State u/s 30 and 33 of the Act as it was filed beyond the period of limitation. Mr. Shelat further submitted that the claimants are entitled to get interest pendente lite during the period of arbitration.

After hearing the learned advocates appearing for the parties and after going through the application u/s 30 and 33 of the Act, we find that indisputably, the same was filed beyond the period of limitation and in the penultimate paragraph of the application, there was a prayer for condonation of delay; but apart from the prayer for condonation of delay, no reason whatsoever was disclosed to show what prevented the State from filing the objections within the period of limitation. It further appears that although the learned trial Court has refused to enter into the merits of the Objections, it has taken into consideration the fact that there was no illegality in the award.

Therefore, the only question that arises for determination in this appeal is whether in the facts of the present case, the learned trial Judge was justified in refusing to condone the delay in filing the application under sections 30 and 33 of the Act.

After hearing the learned counsel for the parties and after going through the provisions contained in the Act as well as the provisions of the Limitation Act, there is no dispute that the period of limitation for filing an application u/s 30 of the Arbitration Act is 30 days from the date of service of notice of filing the Award in court and not from the date of knowledge of award. (See Union of India (UOI) and Another Vs. Deepak Electric and Trading Company and Another, . In the present case, admittedly such notice was issued by the Court on 31st July, 1989 and the appellant before us entered appearance on August 14, 1989 through its learned Advocate while the State filed their written objections u/s 30 of the Act on 3rd October 1989. Therefore, indisputably, there was a delay in filing the objection.

The law is equally settled that Section 5 of the Limitation Act applies to an application u/s 30 and 33 of the Act, if the same is filed beyond the period of limitation. We are quite conscious of the position of law that section 5 of the Limitation Act gives jurisdiction to the Court to condone the delay in filing an appeal or an application (except an application under any of the provisions of Order 21 of the Code of Civil Procedure) beyond the period of limitation provided sufficient cause is shown for not filing the appeal or application within the period of limitation. In the case before us, we find from the application u/s 30 and 33 of the Act filed by the State that after raising various objections within the meaning of sections 30 and 33 of the Act, the appellant in paragraph 9 of the application stated that it reserved its right to make further arguments during the course of hearing. Thereafter, in the next paragraph, the following averments were made:

The opponents request the Hon''ble Court to condone the delay in filing the objections.

The opponents therefore pays to the Hon''ble Court to please set aside the award published the arbitrator u/s 30 and 33 of the arbitration Act, 1940.

8.1 In the entire body of the purported application u/s 30 and 33 of the Act, there is no other averment to indicate what prevented the State from filing the objections within the period of limitation.

We, thus, find that although a prayer was made to condone the delay, no reasons whatsoever were shown explaining the delay.

It is now well settled law that if an application or appeal is filed beyond the period of limitation, the same should not be entertained by a Court unless delay in filing such appeal or application has been explained and a prayer is made for condonation of delay. Such delay can be condoned after giving an opportunity of hearing to the opposite party to whom a right has accrued after the expiry of the period of limitation. Law is also equally settled that so long delay is not condoned, the appeal or application filed beyond the period of limitation is non est in the eye of law and acceptance of sufficient cause shown by the applicant gives jurisdiction to the Court to condone the delay and for that reason, the explanations given in the application for condonation of delay is treated to be the jurisdictional fact which gives authority to the Court to exercise the jurisdiction. In the case before us, there is no reason given in the body of the application filed by the State u/s 30 and 33 of the Act, and in the absence of existence of such jurisdictional fact, the Court is devoid of any power to exercise such jurisdiction even if a prayer is made in the application for condonation of delay As pointed out by the Supreme Court in the case of D. Gopinathan Pillai Vs. State of Kerala and Another, , when a mandatory provision is not complied with and when the delay is not properly, satisfactorily and convincingly explained, the court cannot condone the delay, only on the sympathetic ground.

We, thus, find that in the facts of the present case, the learned trial Judge rightly refused to exercise the jurisdiction of condonation as there was no averment of any cause whatsoever not to speak of sufficient cause for not preferring the application within the period of limitation.

We, thus, find that the learned trial Judge rightly passed the decree in terms of the award by not taking into consideration the various objections raised by the State in the so called application u/s 30 and 33 of the Act filed beyond the period of limitation.

As regards the Cross Objection filed by the claimant, we find that the claimant filed an application u/s 15 and 16 of the Act pointing out that the Arbitrator has not granted interest pendente lite for 615 days between the period from 21st August 1987 and 27th April 1989, during the pendency of the arbitration proceedings, which, according to the claimant, was an error apparent on the face of the record. The claimant, therefore, prayed for modification of the award granting interest pendente lite at the rate of 17% per annum for the aforesaid period. Such application was filed on 6th February 1992, long after the service of notice of filing of the award in court.

The next question, therefore, is whether such prayer can be entertained more than 2 years after the service of notice of filing of award in court.

In our opinion, if the claimant was dissatisfied with refusal of interest during pendency of the arbitration proceedings, it should have also raised an objection in terms of section 30 and 33 of the Act within the period of limitation, and long 2 years after the service filing of the award, it could not make such application by describing it as an application under sections 15 and 16 of the Act when in their written objection to the application u/s 30 and 33 of the Act filed in the month of December, 1989, they contended that there was no error and a decree should be passed in terms of the award. Sections 15 and 16 of the Act gives power to the Court to modify the award or to remit the award under the circumstances described in the said sections, which are quoted below:

Power of the Court to modify award:-

The Court may by order modify or correct an award-

(a). where it appears that a part of the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter referred; or

(b). where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or

(c). where the award contains a clerical mistake or an error arising from an accidental slip or omission.

Power to remit award:-

(1). The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpires for reconsideration upon such terms as it thinks fit,-

(a). where the award has left undetermined any of the matters referred to arbitration or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or,

(b). where the award is so indefinite as to be incapable of execution; or

(c). where an objection to the legality of the award is apparent upon the face of it.

(2). Where an award is remitted under sub-section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: provided that any time so fixed may be extended by subsequent order of the Court.

(3). An award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.

In our opinion, if the Arbitrator refused to award interest pendente lite the arbitration proceedings, such objection must be raised u/s 30 of the Act within the period of limitation and thus, even if the application filed by respondent is treated to be one u/s 30 of the Act in substance, the application filed by the claimant in the year 1992 is not tenable when the same was also not accompanied by any reason for not filing the application within the period of limitation. The Court below, therefore, has rightly ignored such prayer of the claimant.

We, therefore, find that in the facts of the present case, the learned trial Judge rightly refused to entertain the objections raised by the State under sections 30 and 33 of the Act as no cause whatsoever was shown for condonation of delay and at the same time, rightly refused to add interest in the award as the claimant also did not raise any objection within the period of limitation. Thus, the appeal and the Cross Objection fail and are dismissed. In the facts of the case, there will be, however, no order as to costs.

FURTHER ORDER:

After this judgment was pronounced, Mr. Shelat, the learned advocate appearing for the respondent draws our attention to the fact that during the pendency of the appeal, a Division Bench of this Court permitted his client to withdraw 70% of the amount on furnishing a Bank Guarantee, and such Bank Guarantee has been given and is kept alive, and now that the appeal is dismissed, the Bank Guarantee should be permitted to be released.

In view of the fact that we have dismissed the appeal, we direct that the Bank Guarantee be released after a period of one month from today.