Research › Browse › Judgment

Madras High Court · body

1975 DIGILAW 597 (MAD)

The Collector of Ramanathapuram at Madura, representing the Divisional Engineer, Highways successor to the District Board, Ramanathapuram and Another v. K. R. Ramakrishna Raja

1975-11-27

RAMAPRASADA RAO, RATNAVEL PANDIAN

body1975
Judgment :- RAMAPRASADA RAO, J. 1. This is an appeal by the State to which a memorandum of cross objections has been filed by the plaintiff in O.S. No. 63 of 1961 on the file of the Subordinate Judge of Ramanathapuram at Madurai. The plaintiff was an Engineering Contractor. In connection with the construction of a submergible bridge over the Vaipar river at mile 8/1 Sivakasi—Kalugumalai Road, the plaintiffs tender was accepted, and in consequence an agreement Ex. B-4 was drawn up between the plaintiff on the one hand, and the Divisional Engineer (H), Special Bridges Division, Sattur, on the other. It is common ground that under this agreement, any dispute which may arise between the parties should be referred to arbitration as provided for under the agreement. After the agreement was so entered into in July, 1956, the contractor was put on the job, but it appears that the plaintiff committed default and inordinate delay in the matter of the completion of the contract which resulted in the termination of the contract on 23rd April 1958. Aggrieved by this and as, according to the plaintiff, disputes arose not only by reason of the termination of the contract but also otherwise, he invoked the arbitration clause under Ex. B-4 and sought for reference of all such disputes to the named Arbitrator, viz., the Superintending Engineer, Highways, Madras Circle. The Superintending Engineer accepted to be an Arbitrator, and he was so appointed by the Chief Engineer, as per the provisions of the agreement on 15th December 4959. It is common ground that the Arbitrator entered upon the reference in January, 1960. The Department filed then statement before the Arbitrator on 16th February 1960. The plaintiff who sought for the arbitration, however, would not file his reply statement till 19th August 1960. By this time, the period of four months which is statutorily fixed for the Arbitrator to render his award after he entered upon the reference expired. The Arbitrator, without reference to the provisions of law, but taking advantage of clause 73 in the Madras Detailed Standard Specifications which formed part and parcel of the agreement, Ex. B-4, extended the time twice suo motu under Exs. B-76 and B-83. The Arbitrator, without reference to the provisions of law, but taking advantage of clause 73 in the Madras Detailed Standard Specifications which formed part and parcel of the agreement, Ex. B-4, extended the time twice suo motu under Exs. B-76 and B-83. On each of these occasions, it is common ground, that he did not consult the parties nor did he obtain their consent for such extension of time for passing the award but he took umbrage under the expression ‘ suo motu ’ appearing in Clause 73 of the Madras Detailed Standard Specifications, and under Ex. B-76 dated 13th December 1960, extended the time for passing of the award by three months and for another such like period under Ex. B-83 dated 7th May 1961. Ultimately, he passed an award on 31st May 1961. The plaintiff, in the course of the proceedings asked under Ex. A-81 dated 20th October 1960 to send the award, if any passed by him, but as we find from the records, the Arbitrator was not ready with the award on that date, but on the other hand, acted on his own and extended the time for passing of the award twice under Exs. B-76 and B-83. After the plaintiff was made aware of the passing of the award on 31st May 1961, he filed the present suit on 23rd October 1961 under S. 14 of the Indian Arbitration Act praying for an order directing the Arbitrator to file the award into court for the purpose of enabling him to state his objections to the said award and in particular to its binding nature and validity. The State of Madras through the Collector of Ramanathapuram was made the defendant and the Superintending Engineer, Highways, Madras Circle, was impleaded as Arbitrator. The State of Madras through the Collector of Ramanathapuram was made the defendant and the Superintending Engineer, Highways, Madras Circle, was impleaded as Arbitrator. The defendant pleaded on merits with which, as we shall presently indicate, we are not concerned, but on the legal contention of the plaintiff that the Arbitrator did not have the requisite jurisdiction under the Act to act under Clause 73 of the Madras Detailed Standard Specifications and suo motu extend the time for passing the award without the concurrence of the parties to the reference or without the sanction of the Court, the defendant would say that the Arbitrator was within his rights under the contract between the parties to so extend the time for passing the award and that the award was validly passed on 31st May 1961 and the plaintiff cannot therefore have a grievance. They raised various objections on merits and ultimately sought for a dismissal of the suit. The plaintiff, in order to make the record complete, filed his objections to the award of the Arbitrator alleging misconduct and sought for the setting aside of the award under S. 30 of the Arbitration Act. 2. On the above pleadings, the following issues were framed: XXX [Issues are omitted as unnecessary—Ed.] 3. The learned Judge, on the legal question held that the award was unenforceable in the eye of law and on merits also he agreed with the plaintiff that excepting for one item, the award of the Arbitrator has to be set aside. In that view he decreed the suit. It is as against this, the State has come up in appeal. The learned Assistant Government Pleader took us through the relevant records. The clause which comes up for interpretation by us as contained in the Madras Detailed Standards Specifications and which formed part of Ex. In that view he decreed the suit. It is as against this, the State has come up in appeal. The learned Assistant Government Pleader took us through the relevant records. The clause which comes up for interpretation by us as contained in the Madras Detailed Standards Specifications and which formed part of Ex. B-4 agreement runs as follows: “The Arbitrator shall see that the award is passed if reasonably possible, within the period of four months from the date of the entering upon the reference, but if any extension of that period is considered by him to be necessary, either sue motu , or on the application of either party to the reference, the parties hereby agree and consent to such extension as the arbitrator may from time to time consider reasonably necessary and any such extension shall forthwith be communicated by him in writing to each of the parties hereto.” It is seen that under this clause, the Arbitrator is given the power, suo motu to extend time for the making of the award. There is also another sub-clause in it which enables the Arbitrator to so extend the time on an application of either party to the reference and on their expressing consent to such extension from time to time. The two limbs of the relevant clause which would enable the Arbitrator to act when he has not completed the making of the award within the statutory period of four months from the date of entering upon the reference are: (a) He could on his own volition extend the time: and (b) on an application made for such purpose by all the parties concerned, he could so do. The question is whether the agreement in so far as it provides or enables the Arbitrator to act suo motu and extend the time for making the award is legal and valid. 4. We have already referred to the relevant facts. Even assuming that by the plaintiffs participating in the enquiry and filing his statement on 19th August 1960, the time for passing the award within four months from the date of reference has not expired, since the Arbitrator could not have made the award without the relevant pleading or material before him, yet the award should have been passed at least on or before 19th December, 1960. That has not been done. That has not been done. On the 20th October, 1960, the plaintiff under Ex. A81 enquired of the Arbitrator as to when the award was expected as it was nearly a year since he applied for the award. What the Arbitrator did was, on 13th December, 1960 by invoking the suo motu powers referred to in Cl.73, he extended the time for passing the award by three months under Ex. B76. It is common ground that he did not consult the parties nor did he refer to them and obtain their consent for extending the time for passing of the award. A similar order was passed by him under Ex. B83, d. 7th May 1961 whereunder he further extended time for making the award till 30th June, 1961. Whilst the Government Pleader would strongly rely upon the expression “ suo moiu ” in Cl.73 which according to him would enable him to act on his own volition and extend time for the passing of the award, learned counsel for the respondent would say that no agreement could be opposed to the letter and spirit of law. It is fundamental that there cannot be an estoppel against statutory provisions and any agreement which is the off-shoot of consensus between the parties having an impact on law and its provisions and which is contrary to the dictates and prescriptions of law is unenforceable and void. This is an elementary proposition. 5. Under S. 28 of the Arbitration Act of 1940 appearing in Chapter V of the Act, two’ possibilities are provided for by the Parliament for extending the time for making the award. The first one is the vesting of such a power in court to enlarge the time for making the award from time to time provided the matter is brought before it in an application for the purpose made by the parties interested in it. It may be, one or the other of the contesting parties may bring such matters before it or the Arbitrator himself may approach the court for extension of time. This is the first method prescribed by the Act under S. 28(1) to enlarge the time for making the award. The second possibility whereby the time for making such an award could be extended is contemplated, though not expressly but by necessary implication, under S. 28(2) of the Act. This is the first method prescribed by the Act under S. 28(1) to enlarge the time for making the award. The second possibility whereby the time for making such an award could be extended is contemplated, though not expressly but by necessary implication, under S. 28(2) of the Act. This provision reads thus: “Any provision in an arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award shall be void and of no effect.” There is, therefore, an express ban on the jurisdiction of the Arbitrator or umpire to enlarge the time for making the award except under the circumstances stated in the section. It, therefore, follows that any provision in an agreement vesting a suo motu power in the Arbitrator or the umpire to enalarge the time for making the award shall be void and of no effect. If, in exercise of such void power any act it done or purported to be done by the Arbitrator resulting in the passing of the award ultimately, it equally follows that such acts, deeds and events including the award made by him would be deemed to be non-est as it is void. There is, however, engrafted an exception in the matter of exercise of such power of the Arbitrator in S. 28(2). If all the parties to the arbitration agreement consent to the enlargement of such time for making the award, then the result from the exercise of such power and all acts done pursuant thereto would be valid and enforceable unless otherwise held to be unenforceable by any other provisions of the Arbitration Act. Therefore, in a given case the court has to consider two possibilities and adjudicate upon the validity or enforceability of the award made by the Arbitrator. If the time for making the award has been extended by the court, on an application by the concerned parties, then there is no difficulty. In cases where all the parties to the reference express their consent for such enlargement of time in the matter of the making of the award, there is equally no difficulty. If, however, the Arbitrator on his own volition and, to borrow the expression in Clause 73 of the Madras Detailed Standard Specifications which is incorporated in Ex. In cases where all the parties to the reference express their consent for such enlargement of time in the matter of the making of the award, there is equally no difficulty. If, however, the Arbitrator on his own volition and, to borrow the expression in Clause 73 of the Madras Detailed Standard Specifications which is incorporated in Ex. B4, suo motu acts and enlarges the time for making the award, he is doing something which he cannot do under the provisions of the Arbitration Act, and the award which results from such an unauthorised or illegal activity would certainly be termed as an equally unenforceable or illegal award. The Supreme Court, considering the effect of S. 28 (2) in Hari Krishna v. Vaikunth Nath A.I.R. 1973 S.C. 247 said that an Arbitrator can enlarge time for making the award if after entering on the arbitration the parties mutually agree to such enlargement, that it is not the requirement of law that the power to enlarge time by a subsequent agreement must be stipulated in the arbitration agreement itself, and such a consent must be a post reference consent is clear from S. 28(2) which renders null and void a provision in the original agreement to that effect and that in a sense where a provision is made in the original agreement that the Arbitration may enlarge the time, such a provision always implies mutual consent for enlargement but such consent initially expressed in the original agreement does not save the provision from being void. 6. It is, therefore clear that unless the appellant could establish that the Arbitrator extended the time in concurrence with or in consultation with the parties to the reference after obtaining their consent, the resultant award passed by him cannot be held to be an enforceable one in the eye of law. There is no proof in this case that the Arbitrator ever consulted the parties or obtained their consent, but it is urged that the Arbitrator notified to the parties that he has enlarged the time for passing of the award. This is placing the cart before the horse. The consent should precede the exercise of jurisdiction to enlarge. On the other hand, the Arbitrator in this case enlarged the time and informed the parties that the time for making the award has been so extended. This is placing the cart before the horse. The consent should precede the exercise of jurisdiction to enlarge. On the other hand, the Arbitrator in this case enlarged the time and informed the parties that the time for making the award has been so extended. This is a process which has been reversed by the Arbitrator and is not envisaged or sanctioned by law. It, therefore, follows that the resultant award passed by him on 31st May 1961 is unenforceable in the eye of law and the relief asked for by the plaintiff by coming to court in this action for setting aside the award as a non-est one is a justifiable request The trial court has correctly decreed the suit and set aside the award. 7. We have already stated that in the view as above, it is not necessary to go into the merits of this case. If there is no award then the question of setting aside something which is not existing does not arise. The memorandum of cross-objections which has been formally filed by the plaintiff-respondent has to be dismissed in the circumstances of the case. 8. In the result, both the appeal and the memorandum of cross objections are dismissed, Both the parties will bear their respective costs, in both.