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1984 DIGILAW 214 (MAD)

Central Warehousing Corporation,rep. by the Warehouse Manager,having office at Bye-pass Road,Madurai Town v. P. Gunasekaran

1984-06-15

V.RATNAM

body1984
Order. 1. This civil revision petition has been preferred against the order passed by the Court below allowing an application in O.P. No. 62 of 1980 (Principal Sub Court, Madurai) filed by the first respondent herein under section 31 of the Arbitration Act praying that the reference made by the petitioner to the second respondent for arbitration is not valid in law and the second res-pendent is, therefore, not entitled to proceed with the arbitration proceedings. The circumstances giving rise to the civil revision petition are as under: On 17th January, 1974, the first respondent entered into a contract with the petitioner at Madurai town for doing the work of handling and transport of food grains, fertilizers etc., or a period of one year. On the expiry of the period, the petitioner renewed the contract in favour of the first respondent for one more year; but the first respondent declined to continue to do the work for the extended period stating that he did not want any further extension. However, the petitioner maintained that it bad the option to extend the period and that during the course of such extended period, the first respondent must continue to do the work as per the rates fixed in the agreement. Ultimately, the first respondent refused to do the work within the extended period with the result that the petitioner was obliged to employ some other contractors for completing the work in respect of which the petitioner claimed to have incurred an expenditure of nearly Rs. 88,837.66. In the agreement entered into on 17th January, 1974, between the first respondent and the petitioner, provision was made for decision of disputes by reference to arbitration and clause (20) of the agreement was incorporated for this purpose. A dispute with reference to the work of handling and transport of food-grains and fertilizers and for the recovery of a sum of Rs. 88,837.66 having arisen for the extended period between the first respondent and the petitioner, the petitioner appointed one K.L.N. Rao, as the arbitrator for the purpose of deciding the dispute. The appointment was questioned by the first respondent herein by the institution of a suit in O.S.No. 1428 of 1978 (District Munsif's Court, Madurai Town) and the suit was ultimately dismissed. The arbit-rator so appointed commenced the proceedings on 19th January, 1977. The appointment was questioned by the first respondent herein by the institution of a suit in O.S.No. 1428 of 1978 (District Munsif's Court, Madurai Town) and the suit was ultimately dismissed. The arbit-rator so appointed commenced the proceedings on 19th January, 1977. Since the period fixed for submitting the award expired, the petitioner secured extension of time periodically and finally in O.P.No. 221 of 1978, time was extended upto 28th September, 1979 for the submission of the award, Meanwhile, there was a change in the arbitrator and the second respondent sent a notice to the first respondent to the effect that he had been appointed as an arbitrator and that the enquiry will be held in Madurai on a specified date. The first respondent sent a reply stating that the time granted by the Court had already expired and in view of that, the arbitrator was not competent to make a further enquiry in the matter. It appears that the second respondent had sent a telegram subsequently to the first respondent stating that he was proceeding with,the enquiry and if the first respondent did not participate therein, an ex parte award would be passed. Thereupon, the first respondent again instituted O.S. No. 11 of 1980, District Munsif's Court, Madurai, for a permanent injunction restraining the second respondent from making enquiry in the matter either on the date fixed or on any other adjourned date. But that suit was finally dismissed on the ground that the District Munsif's Court had no jurisdiction to entertain the suit. It is thereafter the first respondent filed O.P. No. 62 of 1980 purporting to be under section 31 of the Arbitration Act stating that the second respondent had been appointed to continue the arbitration proceedings commenced by his predecessor in Madurai, that be should have submitted his award within the extended time granted by the Sub Court, that he is not entitled to take four months time and further that the petitioner cannot grant further time to the second respondent and that therefore it has become just and necessary to pass an order that the second respondent is not entitled to proceed with the arbitration proceedings. 2. 2. In the statement of objections filed by the petitioner and the second respondent, it was stated that the second respondent is a fresh Arbitrator and as such, be would have four months time from the date of bis entering upon his duties to complete the arbitration proceedings and under those circumstances, the objection of the first respondent that the second respondent is not entitled to take four months time or the petitioner cannot grant four months time to conduct the arbitration proceedings is unsustainable. Relying upon the suits instituted by the first respondent, the petitioner as well as the second respondent contended that the first respondent was estopped from questioning the validity of the agreement and the arbitration proceedings thereunder. The locus standi of the first respondent to question the appointment of the second respondent as an arbitrator and his further proceeding with the arbitration was also questioned. The petitioner and the second respondent charged the first respondent with non-co-operation with the arbitrator in the matter of the conduct of the arbitration proceedings with a view to protract the proceedings and gain time so as to cause unnecessary loss and hardship to the petitioner. Under those circumstances, the petitioner prayed that the application filed by the first respondent should be dismissed. 3. Before the Court below, on behalf of the first respondent Exhibits A-1 to A-3 were marked and no documents were marked on behalf of the petitioner. No oral evidence was also Jet in on both sides. On a consideration of the rival contentions of the parties, the learned Principal Subordinate Judge found that the second respondent who had taken the place of Sri K.L.N. Rao who was originally appointed as arbitrator cannot be considered to be a new arbitrator but that as per clause (9) of the agreement, the appointment of the second respondent was only in continuation of the proceedings for arbitration earlier commenced by his predecessor. However, the learned Subordinate Judge was of the view that the Court last extended the time in O.P. No. 221 of 1978 upto 28th September, 1979, and since there was a failure to get a further extension of time either with the consent of both parties or by an order of Court, the petitioner and the second respondent were not entitled to proceed further in the arbitration proceedings. In that view, the learned Subordinate Judge concluded that the reference by the petitioner to the second respondent for arbitration was not valid in law and that the second respondent was not entitled to proceed with the arbitration. In the result, O.P-No.62 of 1980 was allowed. It is the correctness of this order that is challenged in this civil revision petition. 4. During the pendency of the civil revision petition, the petitioner had filed C.M.P. No. 17268 of 1983 under section 28 of the Arbitration Act praying for extension of time to direct the second respondent to proceed with the arbitration expeditiously and also to pass an award within such time as this court may deem fit and proper. In the affidavit filed in support of that application, the petitioner bad narrated how the several steps taken by the petitioner and the predecessor of the second respondent were held up owing to proceedings initiated by the first respondent and that section 28 of the Arbitration Act permitted the extension of time by the Court in the interest of justice and therefore, the first respondent cannot be permitted to take advantage of his obstructive tactics resulting in manifest miscarriage of justice. In the counter filed by the first respondent, he stated that the petitioner did not make any application for extension of time before the lower court after orders were passed in O.P. No. 221 of 1978 and that the application for further extension of time, if any, would be barred under Article 137 of the Limitation Act and the petitioner cannot be permitted to take advantage of its own laches. 5. The principal contention of the learned counsel for the petitioner is that section 28 of the Arbitration Act (hereinafter referred to as this Act) confers power on the Court to enlarge the time for making the award whether it had expired or not and that overlooking this provision, the entire arbitration proceedings cannot be defeated. 5. The principal contention of the learned counsel for the petitioner is that section 28 of the Arbitration Act (hereinafter referred to as this Act) confers power on the Court to enlarge the time for making the award whether it had expired or not and that overlooking this provision, the entire arbitration proceedings cannot be defeated. The learned counsel further submitted that in view of the application in C.M.P.No.17268 of 1983 filed by the petitioner praying for an extension of time, the reasoning in the order of the court below cannot be sustained, On the other band, the learned counsel for the first respondent strenuously contended that after the lower court passed orders in O.P. No. 221 of 1978 extending the time upto 28th September, 1979, there was no further extension and having regard to the expiry of the extended time, the Court below was quite justified in concluding that the arbitration proceedings could not be further proceeded with by the second respondent. In addition, the learned counsel also submitted that the application filed by the petitioner for extension of time was barred by limitation under Article 137 of the Limitation Act. 6. There is no dispute now before this Court that originally Sri K.L.N. Rao, was appointed as an arbitrator and his place was subsequently taken up by the second respondent. There is no dispute also that the second respondent came in only with a view to continue the arbitration proceedings com. menced previously by the then arbitrator. The only ground upon which the Court below was inclined to hold that the arbitration proceedings could not be further taken up by the second respondent is that the time for submission of the award earlier extended upto 28th September, 1979, in O.P. No. 221 of 1978 had not been further extended. In doing so, the Court below omitted to take into account the large amplitude of power conferred on Courts in the matter of enlargement of time for making an award under section 28 of the Act. The power conferred on the Court is so wide that the Court can extend the time before the expiry of the time originally fixed or even there after whether or not the award has been made. The power to extend the time conferred on the Court under section 28 of the Arbitration Act for making the award has expired. The power conferred on the Court is so wide that the Court can extend the time before the expiry of the time originally fixed or even there after whether or not the award has been made. The power to extend the time conferred on the Court under section 28 of the Arbitration Act for making the award has expired. Proceeding to set out the effect of an order of enlargement of time, it is stated time the extended time is to be treated as if it had been originally given in the arbitration agreement and therefore, the award and all things done in the arbitration during such extended time is rendered valid and effective It is further pointed out that the power to enlarge the time conferred on the court is entirely discretionary and will not be exercised unless the court thinks fit to do so in a particular case; but in exercising its discretion, the court will have regard to the terms of the submission and see whether the condition as to the time for making the award was an essential element of the submission or merely a regulation for the observance of the arbitrator. It is thus clear that there is no fetter on the power of the Court to exercise its discretion in the matter of enlargement of time. It is no doubt true that in this case there was no anlargement of time after 28th September, 1979; but the question is whether the petitioner has to suffer. Earlier, it has been seen that the petitioner has taken steps in the arbitration even on 19th January, 1977 by appointing Sri K.L.N. Rao as the arbitrator. On account of the pendency of the suit insti-tuted by the first respondent in O.S. No. 1428 of 1978 against the petitioner and Sri K.L.N. Rao the proceedings in arbitration did not make any progress till the dismissal of the suit. Again the second respondent after having come in the place of Sri K.L.N. Rao. issued a notice to the first respondent requiring the participation of the first respondent in the arbitration proceedings and also informing him that if the first respondent did not attend the enquiry, and ex parte award would be passed. Again the second respondent after having come in the place of Sri K.L.N. Rao. issued a notice to the first respondent requiring the participation of the first respondent in the arbitration proceedings and also informing him that if the first respondent did not attend the enquiry, and ex parte award would be passed. That again led to the institution of O.S. No. 11 of 1980 by the first respondent for a permanent injunction restraining the second respondent from making enquiry in the matter on 4th January, 1980 or on any other adjourned date. Ultimately, the suit was also dismissed. It is thus seen that the petitioner has not been in any manner responsible for holding up of the arbitration proceedings The first respondent, however, had resorted to proceedings before the civil Courts at least on two occasions and had effectively towarted the progress of the arbitration proceedings by instituting O.S. No. 1428 of 1978 which was pending till 21st April, 1979 and O.S. No. 11 of 1980 which was filed on 21st January, 1980. It is not unlikely that on account of the pendency of these proceedings initiated by the first respondent, the petitioner did not apply to the court for an extension of time. Indeed, if the first respondent had succeeded either in O.S. No. 1428 of 1978 or O.S. No. 11 of 1980, there would have been absolutely no necessity whatever for the arbitration proceedings at all, since the very agreement containing the arbitration clause was challenged in O.S. No. 1428 of 1978 and the authority of the second-respondent to proceed with the arbitratton was questioned in O.S. No. li of 1980, Taking this into account, it cannot be said that the omission oh the part of the petitioner to have sought an enlargement of time after 28th September, 1979, was either deliberate or intentional. It also does not appear that the time for making the award was an essential element of the submission. It was, having regard to the terms of the agreement, merely intended for the observance of the arbitrator. As seen earlier, under section 28 of the Act, the court has got ample powers to enlarge time either be-fore the award has been made or even after it has been made and that there is absolutely no fetter on the power of the court to enlarge time taking into account the circumstances of each case. As seen earlier, under section 28 of the Act, the court has got ample powers to enlarge time either be-fore the award has been made or even after it has been made and that there is absolutely no fetter on the power of the court to enlarge time taking into account the circumstances of each case. In this case, as seen earlier, the pendency of the proceedings before the civil Courts, undoubtedly, had a vital bearing upon the further course of the arbitration proceedings and till these proceedings before the civil Courts came to a close, there was no certainty that the arbitration proceedings would survive at all to enable the arbitrator to further proceed in the matter and under those circumstances the failure on the part of the petitioner to apply for and obtain an enlargement of time beyond 28th September, 1979, cannot be put against the petitioner. In any event the petitioner has since filed an application before this Court in C.M.P. No, 17268 of 1983 for the purpose of extending the time. The only objection raised by the first respondent to such extension prayed for by the petitions is that the application is barred under Article 137 of the Limitation Act. Having regard to the scope and content of the power conferred on the Court under section 28 of the Act, the objection regarding limitation has absolutely no merit. Under section 28 of the Act, the Court is empowered whenever if thinks fit to enlarge the time for making the award from time to time irrespective of the fact whether the time for making the award had expired and whether the award has been made or not. This section confers unlimited power upon the Court to enlarge time and is not subjected to or circumscribed by any period of limitation. In other words, whenever it appears to the Court to be just and necessary and expedient in the interest of justice, it could always enlarge the time provided the Court is satisfied that its discretion ought ho be exercised in favour of enlarging time. In other words, whenever it appears to the Court to be just and necessary and expedient in the interest of justice, it could always enlarge the time provided the Court is satisfied that its discretion ought ho be exercised in favour of enlarging time. Even on the assumption that Article 137 of the Limitation Act would apply, it is not under dispute that the application for enlargement of time had been filed before this Court within three years of the disposal of O.S. No. 11 of 1980 which put in peril the arbitration process which was attempted to be continued by the second respondent herein. In the circumstances of this case referred to earlier, the extension of time prayed for by the petitioner ought to be granted. It may be that the petitioner did not make the application for enlargement of time before the Court below; but that, however, cannot prevent this Court, which is a Court within the meaning of section 2 (c) of the Act, from considering the circumstances of this case and granting an enlargement of time. Earlier the circumstances under which the petitioner could not apply for and obtain an enlargement of time beyond 28th September, 1979 have been noticed. Taking that into account, and also the interest of justice, the time for submission of the award is enlarged upto 31st December, 1984 from 28th October, 1979. C.M.P.No. 17268 of 1983 is therefore ordered accordingly. Thus, the main ground upon which the Court below was inclined to invalidate the proceedings does not appear to be available in law and therefore, the Court below was in error in holding that the reference made by the petitioner to the second respondent for arbitration is not valid and that the second respondent is not entitled to proceed with the arbitration proceedings. 7. It was submitted by both sides during the course of arguments that the second respondent who had stepped in as arbitra-trator is no longer available and that in the event of the further proceedings in arbitration being allowed to go on, it would be necessary to name another arbitrator in the place of the second respondent. 7. It was submitted by both sides during the course of arguments that the second respondent who had stepped in as arbitra-trator is no longer available and that in the event of the further proceedings in arbitration being allowed to go on, it would be necessary to name another arbitrator in the place of the second respondent. Counsel on both the sides were granted time to consider the question of naming another arbitrator in the place of the second respondent and they reported that they and their parties are agreeable for the appointment of Thiru V. Balasubramanian, a retried Judge of this court, as arbitrator in the place of the second respondent. When asked about the remuneration for the arbitrator, counsel on both sides really and fairly stated that a sum of Rs.10,000 may be fixed as the remuneration for the arbitrator, the petitioner and the first respondent contributing Rs. 5,000/- each and that the other incidental expenses of the arbitrator would be met by the petitioner and the first respondent in moieties. Accepting the suggestions made by the petitioner and the first respondent and their counsel, Thiru V. Balasubramanian. Retired Judge of the High Court, Madras, is appointed as Arbitrator in the place of the second respondent on a remuneration of Rs. 10,000/-the petitioner and the first respondent each paying a sum of Rs. 5,000/- to the arbitrator. Besides, the incidental expenses of the arbitrator have also be paid by the petitioner and the first respondent in moieties. In the first instance, petitioner and the first respondent will each pay a sum of Rs. 2,500/- to the arbitrator towards his remuneration on or before 30th June, 1984. On such payment, the arbitrator will enter upon his duties and proceed with the arbitration and on the completion thereof, will be paid the balance of his remuneration. Taking into account the pendency of the arbitration proceedings since 1977 and with a view to see to it that the very object of referring the dispute to arbitration is not totally frustrated, it is hoped that the arbitrator will immediately enter upon his duties and proceed with the arbitration and complete the same as expeditiously as possible. Taking into account the pendency of the arbitration proceedings since 1977 and with a view to see to it that the very object of referring the dispute to arbitration is not totally frustrated, it is hoped that the arbitrator will immediately enter upon his duties and proceed with the arbitration and complete the same as expeditiously as possible. The petitioner as well as the first respondent are directed to make available all material records and extend their fullest co-operation and assistance to the arbitrator to enable him to enter upon his duties immediately and complete the arbitration work before 31st December, 1984. In the event of the arbitration proceedings not coming to a close by 31st December, 1984, it would be open to the petitioner and the first respondent, as the case may be, to apply to this Court for farther enlargement of time, if need be. 8. In the result, the order of the court below is set aside and the civil revision petition is allowed and ordered accordingly. There will be no order as to costs. Petition allowed.