Union of India vs M/s. Balaji Bros. and another

The revision petitioner herein was the first defendant in OS No.2494 of 1985 on the file of the IX Assistant City Civil Judge, Madras. The first

respondent herein was the plaintiff and the second respondent herein was the second defendant in that suit. In this order the parties to this revision

will hereinafter be referred to in the same rank in which they are described in the plaint. It appears that the plaintiff and the first defendant were

parties to a contract. It also appears that there had been a breach of the terms of the said contract. Therefore the dispute was referred to an

arbitrator, who was the second defendant in that suit. The arbitrator went into the matter and passed an award on 22.2.1985. Thereafter the

plaintiff filed the present suit before the lower court and the reliefs which are relevant for the purpose of deciding this case and contained therein are

extracted hereunder:

(a) direct the sole Arbitrator, the 2nd respondent herein, to file the Award published by him on 22.2.1985 and served on the petitioner on

25.2.85 into this Honourable Court along with the entire records;

(b) pass a decree in terms of the Award in favour of the petitioner;

On this, summons had been issued to the defendants. The second defendant being the arbitrator and who passed the award, naturally remained

absent. However the first defendant appeared and filed his statement dated 11.11.86. From the statement it is seen that the grievance of the first

defendant was that no notice regarding the filing of the award, as mandatorily contemplated under sub-section (2) of section 14 of the Arbitration

Act, 1940, was served on him and therefore prayed for the dismissal of the suit. No oral evidence was let in on behalf of both the contesting

parties and the award dated 22.1.1985 came to be marked by consent as Ex.A.l. The learned trial Judge overruled the objections of the first

defendant as stated above and decreed the suit in terms of the award. The correctness of the said decree is being questioned in this revision.

I heard Mr. Rahul Balaji, learned counsel appearing for the revision petitioner and Mr. K. Gunasekaran, learned Additional Central Government

Standing Counsel appearing for the first respondent. According to the learned counsel for the revision petitioner notice regarding the filing of the

award to be issued by the court to the parties concerned as contemplated under sub-section (2) of section 14 of the Arbitration Act is a

mandatory requirement and unless such notice is issued, the proceedings before the lower court to pass a decree in terms of the award would be

without jurisdiction. Therefore the submission of the learned counsel for the revision petitioner is that only after the issue of such notice to him and

from the date of receipt of such notice, the period of limitation of 30 days starts running and hence the first defendant cannot be blamed in the eye

of law for not taking any steps either to set aside the award and remit it back or for any other relief connected therewith. The learned counsel for

the revision petitioner further added that the learned trial Judge had completely overlooked the statutory requirement as referred to above and thus

erred in law in decreeing the suit. Opposing these submissions, the learned counsel for the first respondent would contend that the first defendant

participated in the proceedings right from the date of serving of the summons and therefore he is deemed to have knowledge about the filing of the

award before the court. According to the learned counsel for the first respondent if this position is accepted, then the failure on the part of the first

defendant to take any appropriate action within a period of 30 days in challenging that award would automatically result in the decree being passed

in favour of the plaintiff.

In the light of the submissions made by the learned counsel on either side, I perused the records as well as the order under challenge. On going

through the same, I am of the following opinion:

(a) It is no doubt true that the arbitrator had signed the award and gave notice in writing to both the parties concerned about the making and

signing of the same. Ex.A.1 is the letter dated 22.2.1985 sent by the arbitrator to both the parties enclosing the signed award with that. Therefore it

is clear that the requirement of section 14(1) of the Arbitration Act has been fully complied with. But that does not end the matter. The court

before whom the award was filed should necessarily give a notice about the filing of the award to the parties concerned under sub-section (2) of

section 14 of the said Act. The notice contemplated under sub-section (1) of section 14 of the said Act as well as the notice contemplated under

sub-section (2) of section 14 of the said Act operate in two different circumstances and therefore mere compliance of the requirement of sub-

section (1) of section 14 of the said Act would not by itself amount to complying with the requirement of sub section 2 of section 14 of the said

Act.

(b) Though the arbitrator authorised the parties to the award to take appro-priate steps for filing the award into court, yet I do not find, as

submitted by the learned counsel for the revision petitioner, that such authority given by the arbitrator was not even pleaded in the plaint and

proved in a manner known to law before the court. No particular form is prescribed in sending a notice under sub-section (2) of section 14 of the

Arbitration Act, 1940, but it is only the sum and substance of the notice that is material. In other words, the communication or intimation from the

court should put the parties on notice about the filing of the award and if it is done, then it is an end to the matter.

(c) From the records available in this case, I am not able to lay my hands on any material from which it can be safely inferred or gathered that such

a communication or intimation had been sent to the first defendant. Mere participation of the first defendant in the proceedings would not take the

place of the court complying with the mandatory requirement of sub-section (2) of section 14 of the Arbitration Act. Of course, sending of such

notice by the court under sub-section (2) of section 14 of the said Act may lose it''s significance or will become immaterial, if it is estab-lished from

the records that the party opposing the award had either knowledge or information about the filing of the award before the court and if on such

knowledge or information they enter appearance and seek time to file objections. In such an event, the time of 30 days prescribed for taking steps

to set aside the award will start running from the date of such knowledge. Even in this angle, I searched the records but I am unable to find any

material which will establish atleast prima facie that the first defendant had knowledge or information about the award having been filed before the

court. If atleast the summons sent for service on the opposing party contains any information about the filing of the award before the court, it can

be taken as compliance of sub-section (2) of section 14 of the Arbitration Act, 1940. Even the served summons are not available in the records.

The plaintiff also had neither pleaded nor proved before the court below that he had the authority from the arbitrator to file the award into court.

Therefore the sum and substance of the position that emerges from the records as well as from the order under challenge is that, notice had never

been sent as provided for under sub-section (2) of section 14 of the Arbitration Act by the court to the first defendant. Equally there is no material

whatsoever on record from which it can be gathered that the first defendant had knowledge or information about the award having been filed

already before the court. Mere participation in the proceedings, in the absence of a notice under sub-section (2) of section 14 of the Arbitration

Act, 1940 or knowledge or information about the award having been filed into court, would not absolve the court from complying with the

mandatory requirement of section 14(2) of the above said Act. Therefore the decree challenged in this revision is definitely bad in law. Each and

every finding and the reasons given by me in coming to this conclusion is a reflection of the judgment of the Honourable Supreme Court of India

reported in, Secretary to Government of Karnataka and another Vs. V. Harishbabu, . Almost all the points referred to above by me in this order

are available in that judgment from which I have drawn the force to conclude this case in favour of the revision petitioner. Accordingly this revision

is allowed and there will be ho order as to costs.

However in view of the fact that the award itself came to be passed some time in the year 1985 and the proceedings had been initiated in the

same year itself, I hereby direct the first defendant/opposing party to the award, to file his objections or take such other steps as is legally

permissible to him within 30 days from the date of receipt of the steno copy of this order by him. The lower court is directed to act on the

production of the steno copy of this order by either of the parties before it, without in any way waiting for the official communication of the same

through the Registry of this Court. On receipt of the objections by the first defendant/opposing party to the award and such other steps as he may

take within the period mentioned above, the trial court is directed to provide all further opportunities to both the parties concerned and dispose of

the proceedings in any event, not later than 31.7.1998 and send a report about the same to this court.