PRAKASH CHAND v. DIVISIONAL MANAGER — 1999 DIGILAW 121 (HP)

JUDGMENT D. RAJU, C.J.—The above appeal has been filed under Section I 39 of the Arbitration Act against the judgment of the learned District I Judge, Solan dated 16.4.1991 in case No. l-S/2 of 91/89, whereunder the learned Judge while dismissing the objections filed by the appellant (the respondent in the Court below) made the Award the rule of the Court by passing a decree for a sum of Rs. 76,739.52 with interest as indicated therein. The contesting parties hereto have entered into an agreement pursuant to invitations calling for participation in an open auction for the work relating to extraction of resin from Government, as well as private forest trees in its various units/forest working divisions. The conditions for inviting rates of extraction etc. during 1983-84 resin season applicable to the auction proposed to be held in which the appellant participated and was held to be successful before entering into an agreement has been filed by the respondent-Corporation as Annexure C-1 alongwith their claim before the Arbitrator. The bid offered by the appellant and the orders in this regard has been filed as Annexure C-2. Annexure C-3 is the formal and regular agreement entered into between the appellant and the contesting respondent on the prescribed stamp paper. The terms and conditions of auction as also the agreement deed for the rate of extraction etc. for the resin for the year 1983-84 contained meticulous details relating to the conditions and terms subject to which the work has been entrusted with the appellant. The agreement entered into between the parties by virtue of Clause 2 was agreed to remain in force w.e.f. 15.2.1983 to 31.12.1983, with further scope for extension to carry the extracted resin to road side depot even beyond 31.12.1983 upto 31.1.1984. The terms and conditions of the auction as well as the agreement provided for the mandatory delivery of the resin collected by the appellant in the manner and within the time stipulated with initial payment, in portion and on account, of remuneration for the work to be carried out with provision for final determination and settlement of such accounts. The terms and conditions of the auction as well as the agreement provided for the mandatory delivery of the resin collected by the appellant in the manner and within the time stipulated with initial payment, in portion and on account, of remuneration for the work to be carried out with provision for final determination and settlement of such accounts. Clause 11 of the terms of the agreement stipulated that the quantity of net pure resin shall be as determined at the Resin and Turpentine Factory the resin is carried by the Forest Corporation after deducting the weight of the container, sakki and other impurities and that it shall have to be accepted by the agents to be correct and final. Clause 17 provided that running payments upto 30% of the total value of the work done can be made after verification by the Assistant Manager concerned after having extracted and stacked the resin in the forest at the approved place and another 50% after delivery of resin at the road side depot and that the balance final after percentage of sakki and other impurities having been determined in the Resin and Turpentine Factory of the Corporation to which the resin is supplied. Clause 25 stipulated that in case the appellant fails to extract the minimum yield fixed for each lot, a compensation of Rs. 750 per quintal for short fall shall be recovered from the agent(s) by the Corporation and that the compensation for decrease upto 10% may be waived off if the Managing Director/ Director concerned is satisfied that the decrease in yield is on account of circumstances beyond the control of the agents. Clause 31 provides that the final payment to the agents will be made only after due satisfaction of the Corporation that the agents have discharged all their obligations/ liabilities towards his/their labour/workmen/employees and to the Corporation, on the finalisation of their accounts. After arriving at the quantity of pure resin delivered, the respondent-Corporation determined the net short fall at 154.67 quintals and submitted a claim and thereafter, having regard to the dispute referred the matter to Arbitration of the second respondent in accordance with the terms of the agreement. The Arbitrator, after considering the materials produced before him made his Award on 29.6.1989 holding that the respondent-Corporation is entitled to recover a sum of Rs. 76,739.52. 2. The Arbitrator, after considering the materials produced before him made his Award on 29.6.1989 holding that the respondent-Corporation is entitled to recover a sum of Rs. 76,739.52. 2. Thereupon, the respondent appears to have made an application to the Court under Section 14 read with Section 16 of the Arbitration Act, 1940 for making the Award dated 29.6.1989 the rule of the Court and for a judgment in respect thereof. The original Award was said to have been filed in the Court by the respondent-Corporation. The appellant also appears to have moved an application on 26.7.1989 under Section 14 (2) for issuance of directions to the Arbitrator to file his Award, documents etc. in the Court and he was informed that the Award has been already filed in the Court on 20.7.1989. The application so filed by the appellant under Section 14 (2) was said to have been ordered on 11.1.1990 to be tagged with the record in the other case. Objections to the Award under Sections 30 and 33 of the Act were said to have been filed by the appellant on 12.7.1990. The learned District Judge after conducting the necessary inquiry into the matter ultimately passed his judgment, as indicated earlier. It may be pointed out at this stage, since it becomes relevant for considering the issues raised before us at the time of hearing, that initially the Award came to be filed before the Senior Sub-Judge, Solan and since the learned Judge held that he had no jurisdiction in the matter, it was placed before the District Judge. 3. Mr. K.D. Sood, learned Counsel appearing for the appellant contended by way of challenge to the judgment of the learned District Judge that the Court below committed an error in law in dismissing the objections filed under Sections 30 and 33 of the Arbitration Act and making the Award rule of the Court thereby. According to the learned Counsel, the objections of the appellant to the Award could not be said to have been belated, warranting its rejection. The learned Counsel also contended that the claim of the respondent-Corporation itself is barred by limitation and that, therefore, could not have been countenanced either by the Arbitrator or by the Court below and on that ground also the judgment of the learned District Judge requires to be set aside. The learned Counsel also contended that the claim of the respondent-Corporation itself is barred by limitation and that, therefore, could not have been countenanced either by the Arbitrator or by the Court below and on that ground also the judgment of the learned District Judge requires to be set aside. Finally, it was contended by the learned Counsel that the Arbitrator came to pass the award beyond the stipulated period of four months and as such the award which was illegal on that ground, could not have been made the rule of the Court by passing a decree, as has been done, by the learned District Judge. 4. Per contra Mr. Prem Goel, learned Counsel for the first respondent-Corporation, while adopting the reasoning of the learned District Judge as also that of the Arbitrator contended that the challenge on the above three grounds made to the award as well as to the judgment of the District Judge does not merit our acceptance. It has been also contended for the respondent-Corporation that the issue relating to the award having been passed beyond the period of four months, without the consent of parties or an order obtained therefor from the competent Court has not been raised before the Court below and, therefore, the appellant must not be allowed to take such an objection in these proceedings. It may even at this stage be pointed out that this type of objection has been taken in the form of an application for review before the learned District Judge which also came to be dealt with elaborately by the learned District Judge by his subsequent decision dated 17.6.1991 and the learned District Judge has rejected the said ground of objection, too. 5. We have carefully considered the submissions of the learned Counsel appearing on either side. So far as the question relating to belated nature of the objections filed by the appellant under Sections 30 and 33 of the Arbitration Act before the Court to the award passed by the Arbitrator are concerned, in our view, it is to some extent, academic only for the reason that, notwithstanding, the learned District Judge has gone into the merits of the contentions of the parties on other grounds as well. In any event, having regard to the submissions made on either side, we are felt obliged to express our view. In any event, having regard to the submissions made on either side, we are felt obliged to express our view. Reliance has been placed by the learned Counsel for the appellant on the decision reported in (1996) 5 SCC 400, Secretary to the Government of Karnataka and another v. V. Harishbabu, wherein their lordships of the Apex Court had an occasion to deal with the period of limitation and the manner in which such limitation has to be computed in a case of challenge for filing of objections seeking to set aside the award. It was held therein that the period of limitation for filing objections seeking for the setting aside of an arbitration award commenced from the date of the service of the notice issued by the Court upon the parties regarding the filing of the award under Section 14 (2) of the Act and that the date of service of notice issued by the Arbitrator under Section 14 (1) of the Act or the date of obtaining an endorsement on the award by the Arbitrator for the period concerned, is irrelevant for determining the question for filing objections under Article 119 (b) of the Limitation Act, 1963. It was also further held therein that the issuance of notice under Section 14 (2) of the Act by the Court is a mandatory requirement though the Section does not prescribe any formal mode for the service of the notice and that it is the substance and not the form of the notice which is relevant. On the basis of the above dictum, learned Counsel for the appellant, in our view, rightly contend that the mandatory requirement envisaged under Section 14 (2) being the issuance of a notice by the Court, which should in our view also mean by the competent Court. Concedingly, in this case, initially the award has been filed and notice issued by the Court not competent, namely, the Court of learned Senior Sub-Judge and it is only on his finding to be so the matter was taken before the District Court by which time even the objections were also on record and that there is a controversy also that the learned District Judge has not issued any fresh notice, of the filing of the award. Consequently, we are unable to approve the reasoning of the learned District Judge in holding that the objections filed by the appellant to the award were belated. 6. So far as the contention on behalf of the appellant that the award of the Arbitrator stood vitiated for the reason that the same was made by the Arbitrator after the expiry of the time prescribed for making the award is concerned, we have to, at the expense of repetition, point out that no such ground appears to have been raised even in the objections filed under Sections 30 and 33 of the Act. It is only on- account of the same subsequently on 16.4.1991, a review application appears to have been filed raising the said objection and the learned District Judge ultimately recorded his finding, taking into account the materials placed before him and the submissions urged for the parties, that the time stood validly extended with the consent of the parties and that, therefore, the award dated 29.6.1989 cannot be said to be a nullity. In coming to such a conclusion, the learned District Judge has adverted to the following factual details from the record of the arbitration proceedings and it can be usefully set out as contained in the order :— "A perusal of the record of the arbitration proceedings shows that the time for making the award was extended with the consent of the parties till 10.6.1989 on 20.4.1989. This time was further extended till 10.10.1989 on 15.5.1990. According to the learned Counsel since the respondent never consented to the extension of time till 10.10.1989, the time for making the award stood expired on 10.6.1989 and, therefore, the award made on 29.6.1989 after the expiry of the time is on the face of it a nullity. I do not find force in the contention of the learned Counsel for the petitioner. The record of the Arbitrator shows that on 15.5.1989 parties made statements before the Arbitrator consenting to the extension of time for making the award till 10.10.1989. Though the statement of the petitioner recorded by the arbitrator is signed by the petitioner, the statement made on behalf of the respondent is not signed by any one on behalf of the respondent. Though the statement of the petitioner recorded by the arbitrator is signed by the petitioner, the statement made on behalf of the respondent is not signed by any one on behalf of the respondent. It is under these circumstances that it has been contended by learned Counsel for the petitioners that there was no consent to the extension of time by the respondent. The learned Counsel for the respondent has stated at the Bar that the respondent had consented to such an extension and the statement of the respondent came to be recorded which inadvertantly could not be signed on behalf of the respondent. Besides, to my mind it does not lie in the mouth of the petitioner to contend that since the statement is not signed, the same tentamounts to non-consent on the part of the respondent. It was for the respondent to raise such objection. There appears no other circumstance in the case which may point out that the respondent did not give his consent to the extension of time till 10.10.1989/ 7. Reliance has been made by the learned Counsel for the appellant on the decision reported in AIR 1985 SC 920, State of Punjab v. Hardyal, wherein it was observed that so far as the time limit prescribed in Clause 3 of Schedule 1 for giving the award, is concerned the Arbitrator cannot extend and it is the Court alone which can do so and that there was no such extension of time, in this case. It may also be pointed out that in the very same judgment, their lordships of the Apex Court held that the Court has got the power to extend the time even after the award has been given or after the expiry of the period prescribed for the award, though such power has to be exercised in a judicial manner. After adverting to the fact in that case that the parties have been taking part willingly at the proceedings before the Arbitrator without demur, and that therefore the case would be a fit one for extension of time and as a matter of fact, also their lordships extended the time for giving the award by declaring that the award will be deemed to have been given in time. In (1987) 4 SCC 93, Hindustan Steel Works Construction Limitedv. In (1987) 4 SCC 93, Hindustan Steel Works Construction Limitedv. C. Rajasekhar Raojet another Bench of the Supreme Court, after adverting to the decision reported in AIR 1985 SC 920 (supra) held relying upon an earlier decision of the Apex Court itself that parties can also extend time by consent. Sabyasachi Mukharji, J. as the learned Judge then was, observed in this context as follows:— "He, however, firstly contends that the award was made beyond time. He further contends that the Umpire had no jurisdiction to proceed with the arbitration on or about December 18, 1984 as the period of two months from the date of his entering upon the references viz., October 20, 1984 had expired on December 18, 1984. According to the said objections, the Umpire became functus officio. It was contended that the power to extend the period of passing the award was vested in the Court alone under Section 28 of the Arbitration Act and it was not permissible for the parties to extend the time. We are unable to accept this position. Mr. Markandeya drew our attention to certain observations of this Court in the case of State of Punjab v. Hardyal, (1985) 3 SCR 649. He relied on the observations of the Court at page 656 and emphasised that law precludes parties from extending time after the matter had been referred to the arbitrator; it would be a contradiction in terms to hold that the same result could be brought about by the conduct of the parties. These observations, in our opinion, are out of context. The policy of law is that the arbitration proceedings should not be unduly prolonged. The arbitrator therefore has to give the award within the time prescribed or such extended time as the Court concerned may in its discretion extend and the Court alone has been given the power to extend time for giving the award. The Court has got the power to extend time ever after the award has been given or after the expiry of the period prescribed for the award. But the Court has to exercise its discretion in a judicial manner. In that case this Court found that the High Court was justified in taking the view that it did. This power, however, could be exercised even by the appellate Court. But the Court has to exercise its discretion in a judicial manner. In that case this Court found that the High Court was justified in taking the view that it did. This power, however, could be exercised even by the appellate Court. In view of the policy of law that the arbitration proceedings should not be unduly prolonged and in view of the fact that the parties have been taking willing part in the proceedings before the arbitrator without a demur and had all along been willing to extend time, this will be a fit case, in our opinion, for the extension of time. We accordingly extend the time for giving the award and the award will be deemed to have been given in time. In this case, it appears that under Section 28 and in the light of Section 3 of the First Schedule the parties are allowed to extend the time. In this connection reference may be made to H.K. Wattal v. V.N. Pandya, (1974) 1 SCR 259, where this Court reiterated that sub-section (2) of Section 28 indicated one exception to the above rule that the arbitrator could not enlarge the time, and that was when the parties agreed to such an enlargement. It is clear this Court reiterated that the arbitrator gets the jurisdiction to enlarge the time for making the award only in a case where after entering on the arbitration the parties to the arbitration agreement consent to such enlargement of time. In this case precisely it so happened. Furthermore the parties have proceeded before the Umpire on that basis which is just and proper and furthermore the time should be extended as was done in the case of State of Punjab v. Hardyal (supra). In the aforesaid view of the matter we are unable to accept the submission on behalf of Shri Markandeya that the award of the Umpire was beyond time." 8. In the aforesaid view of the matter we are unable to accept the submission on behalf of Shri Markandeya that the award of the Umpire was beyond time." 8. In view of the subsequent decision of the Apex Court, as also the conduct of the appellant in this case, in participating in the subsequent proceedings before the Arbitrator after specifically according his consent without demur and even after suffering an award not raising it as an objection at the initial stage, but becoming to be wise later by filing a review petition in urging such a contention, there is no merit in this objection of the appellant and the Court below also, rightly disapproved of such a conduct of a person who has taken a chance to have a decision of the Court below but trying to revolt once the decision of the Arbitrator went against him. Apparently, in this context also, the learned District Judge has chosen to reject the objection, also on merits, holding that the appellant must be taken to have given his consent for the extension of time by signing the statement so recorded by the Arbitrator. We see no patent error of law or perversity of approach in the ultimate conclusion arrived at by the learned District Judge. In any event taking into account the conduct of the appellant who has participated in the proceedings as a willing party and took a chance on the decision of the Arbitrator, we would be also well justified in rejecting the claim of the appellant. By way of abundant caution we feel also justified to order the extension of time for passing of the award and till such time upto the date on which the award was passed and, therefore, the award can also be deemed to have been passed well within the time, to set at rest this controversy. 9. The challenge to the award as also the judgment of the learned District Judge on the further ground that the subject matter of the claim itself was barred and, therefore, the Arbitrator could not have entertained and passed an award in favour of the respondent-Corporation and consequently such award could not have been made rule of the Court by the learned District Judge does not equally merit our acceptance. Such a contention in our view has been urged in total disregard of the factual position emanating from the records, even filed before the Arbitrator. Adverting to this aspect of the matter, the learned District Judge has held in paragraph 16 of his judgment under challenge that the claim of the respondent-Corporation was not barred. The learned District Judge has adverted to the terms of the agreement to find out the real and actual as well as factual cause of action, with reference to which only the period of limitation should be held to start running. The conclusions of the learned District Judge in this regard cannot be said to suffer any infirmity whatsoever. It is only in order to deal with and notice the justification in the finding relating to this aspect of the matter rendered by the learned District Judge in paragraph 16 of his judgment that we were obliged even to refer to the terms and conditions of the agreement itself at considerable length in the beginning itself, which makes it clear that the liability of the appellant could be fixed only after the statement was submitted by the agreed party, namely, Resin and Turpentine Factory, Nahan, after reconciliation of resin received in the factory after purification of the quantity of resin and arriving at the actual quantity of pure resin delivered so as to finally determine the short-fall or shortage in the required and undertaken supply. This statement itself was furnished by the Resin and Turpentine Factory, Nahan with its report dated 29.1.1985 and, therefore, it is not given to the appellant to claim limitation to run against the respondent-Corporation before even finalization of the accounts and making the final bill based on the report of the Resin and Turpentine Factory, Nahan. All these factual aspects that have been justifiably arid properly taken into account by the District Judge will repell this charge also against the award. The reasons assigned by the learned District Judge in this regard do not suffer from any infirmity in law so as to call for our interference in this appeal under Section 39 of the Arbitration Act. For all the reasons stated above, the appeal fails and shall stand dismissed. No costs. Appeal dismissed.