The Fazilka Electric Supply Company Ltd. vs The Punjab State and another

A.N. Grover, J.—This is an appeal against on order of the learned Senior Sub-Judge, Ferozepore, directing that the award given by the Umpire, Shri Meher Chand Mahajan, Ex-Chief Justice of India, (now deceased) be made a rule of the Court and passing a decree in accordance with the award in the sum of Rs. 5,87,937/- against the Punjab and the Punjab State Electricity Board.

The appellant company was taken over by the Punjab Government in the year 1949. In the arbitration proceedings the Umpire, Shri Meher Chand Mahajan (now deceased) gave an award on 30th July 1961. It was determined that the total amount of compensation payable to the appellant company was Rs. 9,05,628/- out of which a sum of Rs. 3,17,691/- had already been received by it. An award was, therefore, made for payment of Rs. 5,87,937/- to the company. The award was filed in Court on 20th November 1961. Notice of filing of the award was given to the parties for 29th December 1961. Harbhagwan Nanda, Managing Director of the company, appeared on that date but did not file any objections to the award. On 31st January 1962 he filed an application in which two main points were raised. The first was that the Umpire having found that he had no jurisdiction to award the costs had left the matter to the discretion of the Court and that a sum of Rs. 50,000/- be awarded on account of costs. The second was that interest should have been allowed in accordance with the provisions contained in the Punjab Electricity Act (Punjab Act No. VI of 1939) for twelve years during which period the company was deprived of its money decreed under the award. It appears that the Umpire had awarded interest for a lesser period for the reasons stated in the award. The prayer in this application was that a sum of Rs. 50,000/- be awarded as costs and the award be modified u/s 15 of the Arbitration Act, 940 (hereinafter to be referred to as the Act) and interest granted for the full period of twelve years at the proper rate of interest. It is unnecessary to mention the other prayers made. The application was opposed by the respondents on the ground of limitation and it has been dismissed as barred by time.

The first question is whether the application which was filed by the company, was governed by article 158 of the Limitation Act. The period of limitation for an application under the Act to set aside an award or to get an award remitted for reconsideration is thirty days from the date of service of notice of the award. It has been submitted that the application which was made in the Court below was not for setting aside of the award or for getting it remitted for reconsideration. It was made u/s 15 of the Act which reads-

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.

It has been sought to bring this case within the second part of clause (b). From the language of article 158 and even according to decided cases (see Kiroti and Another Vs. Behari Lal article 158 is not applicable where the power of the Court is invoked u/s 15. The question, however is whether the prayers made in the application which was admittedly filed beyond the period prescribed by article 158 could be granted under that section. Mr. Sarin has not contended that the award is imperfect in form. According to him, it contains an obvious error which can be amended without affecting the decision. The error pointed out in the matter of interest is that the provisions of section 7 of the Indian Electricity Act, 1910, read with Punjab Act VI of 1939, have not been followed. The second proviso to section 4 of the Punjab Act provided that the purchase money would be paid to the licensee within a period not exceeding six months of the specified or fixed date for the purchase and if for any reason the purchase money was not paid within such period, the licensee would be entitled to interest at 1 per cent above the Reserve Bank of India rate from the expiry of such period. This is what the learned Umpire said in paragraph 36 of the award in respect of interest.

The ex-licensee has also claimed in the reference interest on the claim. I award him interest on the amount unpaid at 41/2% for a period of eight years only, taking into consideration the time that was wasted during or before the arbitration owing to his dilatory conduct or spent in the proceedings to get the appointments of Mr. Jagraj as sole arbitrator set aside. I have also looked at the provisions of the amendment made in 1939 in the Electricity Act, section 7 about interest, though this provision has since then been repealed.

I cannot see how the relief sought or the prayer made on the question of interest can possibly fall within clause (b) of section 15. If the objection is to the legality of the award in respect of interest and is apparent on the face of it, the matter falls within section 16 which relates to remission of the award on various grounds including an objection to the legality of the award apparent upon its face. That would be specifically covered by article 158.

As regards the costs, the learned Umpire said in paragraph 38 that the reference did not authorise him to award costs and, therefore, the matter was being left to the discretion of the Court, Mr. Sarin says that the Court had to determine the costs and there was no question of the application being barred qua the matter of costs. Mr. Awasthy has called attention to the provisions contained in paragraph 8 of the First Schedule to the Act according to which the costs of the reference and award shall be in the discretion of the arbitrators or umpire who may direct to, and by whom and in what manner, costs or any part thereof shall be paid, and may tax or settle the amount of cost to be so paid or any part thereof and may award costs to be paid as between legal practitioner and client. It is somewhat unfortunate that this provision was not brought to the notice of the learned Umpire who was otherwise a great and eminent Judge and would not have left the matter to the discretion of the Court in case this provision had been present to his mind. Mr. Sarin contends that the statement in the award in the matter of costs is an obvious error which can be amended without affecting the decision given in the award I cannot see how this argument is sustainable. It was within the jurisdiction of the Umpire to award costs. If he has failed to do so. the Court cannot substitute its decision, for his decision (see Tuljomal Chimandas v. Bikhohand Bhawandas AIR 1943 Sind 131. The only course open to the appellant-company was to have moved the Court u/s 16(1)(a) of the Act according to which where the award has left undetermined any of the matters referred to arbitration, the award can be remitted for reconsideration. Here again article 158 of the Limitation Act would be at once attracted, with the result that both the reliefs sought and prayers made in the application could not have been entertained and were not rightly entertained by the Court on the ground of bar of limitation. The appeal fails and it is dismissed but in the circumstances I leave the parties to bear their own costs.