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1998 DIGILAW 402 (MAD)

UNION OF INDIA v. BALAJI BROTHERS

1998-03-11

R.BALASUBRAMANIAN

body1998
ORDER R. Balasubramanian, J. - 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 25-2-1985 into this Hon'ble 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 11-11-1986. 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.1. 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. 2. 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. The correctness of the said decree is being questioned in this revision. 2. 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 of 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. 3. 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. 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 given 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 (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 appropriate 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 from is prescribed is 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. (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 of will become immaterial if it is established 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. It 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 not 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. 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 abovesaid 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 Hon'ble Supreme Court of India reported in Secretary of Government of Karnataka and another v. Harishbabu ( 1996(5) SCC 400 = 1996(2) Arb. LR 276). All most 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 no order as to costs. 4. 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 of the award, to file his objections or take such other steps as a 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 disposed of the proceedings in any event, not later than 31-7-1998 and send a report about the same to this court. Petition allowed.