SECRETARY, GOVERNMENT OF KARNATAKA, IRRIGATION DEPARTMENT v. C. ABDULLA
2000-07-17
H.N.TILHARI, T.N.VALLINAYAGAM
body2000
DigiLaw.ai
T. N. VALLINAYAGAM, J. ( 1 ) THIS appeal arises out of Arbitration Case (AC) No. 6 of 1992 decided by the Civil Judge, Ranebennur, granting a decree in terms of the award in favour of the respondent after rejecting the application under Section 5 of the Limitation Act filed by the appellant to consider their objections. Agrieved by the same, the appellants are before us. ( 2 ) THE short facts are that the work of Medamaranahalli Tank project in Kanakapura Taluk, Bangalore Rural District, Bangalore, was granted to the respondent-contractor. During the progress of the work, certain disputes and claims arose between the respondent/petitioner and 2nd appellant/2nd respondent and according to Clause 52 of the arbitration agreement, the same were referred to arbitration of the sole arbitrator sri H. V. Gopalarao. The arbitrator passed the award on 30-11-1992. On an application filed by the respondents, arbitrator filed the award into the Court and the Court below pronounced the judgment in terms of the award on 30-11-1992 granting future interest at the rate of 18% p. a. from the date of decree till actual payment. ( 3 ) AFTER issue of notice and after the award was filed, the appellants filed their objections, in particular, contending that there was a delay on the part of the contractor: the claim Nos. 5 and 6 ought not to have been allowed and the arbitrator misconducted himself in granting such an award and the same is liable to be set aside under Section 30 of the arbitration Act. As there was delay in filing the objections i. e. , within the period of 30 days as contemplated by the provisions of the arbitration Act, an application under Section 5 of the Limitation Act was filed by the appellants before the Trial Court for condoning the delay in filing the objections under Section 17 of the Arbitration Act. The same was opposed by the respondent herein by filing the objections. The Court below framed two issues, one on the question of Section 5 of the limitation Act to condone the delay in filing the objections and second, on the findings rendered by the Arbitrator on claims 4 to 6 and also the award of future interest. The Trial Court, after hearing the arguments of the respective Counsels, held that Section 5 of the Limitation Act is not applicable and rejected the objections.
The Trial Court, after hearing the arguments of the respective Counsels, held that Section 5 of the Limitation Act is not applicable and rejected the objections. However, for determination of point No. 2, the Court held that the findings rendered by the Arbitrator is not liable to be set aside under Section 30 of the Arbitration Act. ( 4 ) AGGRIEVED by the same, the appellants namely, the Secretary to the government of Karnataka as well as the Executive Engineer, Minor irrigation Division, Kanakapura, have come before us with the above appeal. ( 5 ) THE learned Government Advocate Sri H. J. Sundar Kumar submitted that Section 5 of the Limitation Act is applicable for condonation of delay in filing the objections to the award. Sections 5 to 14 of the limitation Act are applicable to proceedings under Arbitration Act and the court has jurisdiction to consider the application under Section 5 of the limitation Act. He also submitted that there is no prohibition for application under Sections 5 to 14 of the Limitation Act to the proceedings under the Arbitration Act. The submissions were made on the merits as well. ( 6 ) ON the other hand Sri G. Subba Rao appearing for the respondent submitted primarily that Section 5 of the Limitation Act will not apply. He referred to Rule 7 of the Rules under the Arbitration Act, 1940, framed by the High Court of Karnataka. It reads as under:"rule 7. If any party interested in the award makes an application for setting aside the award within the time allowed for the purpose under the law, the application shall be registered as a suit, the applicant being treated as a plaintiff and the parties to the award other than the applicant being treated as defendants and the proceedings thereafter shall be continued as in the case of a suit". His contention was Section 5 is applicable only to application or appeal and word 'suit' is not found in Section 5. His submission was in view of Rule 7, Section 5 was not applicable to objections filed under section 30 of the Arbitration Act.
His contention was Section 5 is applicable only to application or appeal and word 'suit' is not found in Section 5. His submission was in view of Rule 7, Section 5 was not applicable to objections filed under section 30 of the Arbitration Act. ( 7 ) THE objection filed by the learned Counsel for the respondents is that the word "suit" occurring in Rule 7 of the Rules framed under the arbitration Act stand in the way of Section 5 of the Limitation Act and section 5 of Limitation Act is not applicable. ( 8 ) IN the light of the submissions made by the respective Counsels we are considering only the question of limitation, as to the applicability of section 5 of the Limitation Act to the application filed under Section 30 of the Arbitration Act to set aside the award. ( 9 ) THE learned Counsel for the respondents contended that Rule 7 of the Rules under Arbitration Act, 1940, is framed by the High Court of karnataka. Rule 7 reads as under:"rule 7. If any party interested in the award makes an application for setting aside the award within the time allowed for the purpose under the law, the application shall be registered as a suit, the applicant being treated as a plaintiff and the parties to the award other than the applicant being treated as defendants and the proceedings thereafter shall be continued as in the case of a suit". No doubt, Rule 7 says that it shall be continued as in the case of suit. It only directs how an application has to be registered and it provides that it shall be registered as a suit and shall be continued as in the suit. The effect of the suit cannot be to make an application under Section 30 of the Arbitration Act to be suit. It is only a direction for the registry to number the application for setting aside the award. Rules are framed under the provisions of Article 225 of the Constitution and the provisions of the relevant Act. But, rules cannot run in conflict with the provisions of law that is made by the Parliament and are always subject to any law made by appropriate Legislature as per Article 225 itself.
Rules are framed under the provisions of Article 225 of the Constitution and the provisions of the relevant Act. But, rules cannot run in conflict with the provisions of law that is made by the Parliament and are always subject to any law made by appropriate Legislature as per Article 225 itself. At this juncture, it has to be clearly indicated that for the purpose of the limitation Act which applies to the proceedings before the Civil Court and it governs the limitation for filing of the application for setting aside the award, vide Article 119 of Limitation Act, 1960 (Articles 158/178 of old Limitation Act), Section 2 (1) clearly defines what suit means. Section 2 (1) defines that the suit does not include an appeal or an application. It clearly indicates an application is not included within the framework of the term "suit" and especially when Limitation Act so provides, then application for setting aside of arbitration award made under Section 30 cannot be included and cannot be deemed to be a suit. So, rule may be said to be for the purpose of routine working of the office, but is not applicable and does not control the application of Limitation Act and its provisions i. e. , Section 3 or 5. It is under the Limitation Act vide Article 119 (vide Article 158 and Article 178 of the old Act) the period of limitation is prescribed for moving an application under Section 30 of the arbitration Act for setting aside of the award, and the Limitation Act refers such applications as applications and treats it as application and not as suit vide classification made and indicated by its Schedule dividing it into three divisions and we find applications under Arbitration Act to which Article 119 (Articles 158 and Article 178) applies in Part 1 of the III Division Schedule to Limitation Act. Thus considered the contention made by the learned Counsel for respondent based on Rule 7 of the rules is without substance and is rejected. We hold that Section 5 of the limitation Act is and has been applicable to present case and applications under Arbitration Act.
Thus considered the contention made by the learned Counsel for respondent based on Rule 7 of the rules is without substance and is rejected. We hold that Section 5 of the limitation Act is and has been applicable to present case and applications under Arbitration Act. That Section 5 of the Limitation act provides that if an appeal or application is made after the expiry of period of limitation, the Court is empowered to admit the belated application moved after the expiration of period of limitation if the applicant satisfies the Court to sufficient cause for delay in moving the appeal or application. The point is directly governed by the Division Bench ruling of this Court in the case of State of Karnataka v M/s. Naveena constructions, Gulbarga and Another, where the Division Bench has held that section 5 is applicable and there is no prohibition to application of section 5 to the application to condone the delay in filing the objections and application under Section 30 of Arbitration Act to set aside the award under Section 30 of the Arbitration Act. The Division Bench's observations are as follows:"sub-SECTION (1) of Section 37 of the Act is clear on the question of the applicability of the provisions of the Limitation Act, 1963. The sub-section enjoins that it 'shall apply to the arbitrations' as they apply to proceedings in Court, meaning thereby that the provisions of the Limitation Act are equally applicable to proceedings arising under the provisions of the Act. There is no provision in the Act to exclude the applicability of the provisions of Section 5 of the Limitation Act, 1963. The thirty days period for making the application for filing objection is prescribed under the provisions of the Limitation Act on which the claimants rely". ( 10 ) IN fact, we are concerned with the Arbitration Act, 1940 where under Section 37 dealing with limitation the provisions reads as follows:"37. Limitations. (1) All the provisions of the Indian Limitation act, 1908 (9 of 1908) shall apply to arbitration as they apply to proceedings in Court.
( 10 ) IN fact, we are concerned with the Arbitration Act, 1940 where under Section 37 dealing with limitation the provisions reads as follows:"37. Limitations. (1) All the provisions of the Indian Limitation act, 1908 (9 of 1908) shall apply to arbitration as they apply to proceedings in Court. (2) Notwithstanding any term in an arbitration agreement to the effect that no cause of action shall accrue in respect of any matter required by the agreement to be referred until an award is made under the agreement, a cause of action shall, for the purpose of limitation, be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term in the agreement. (3) For the purpose of this section and of the Indian Limitation act, 1908 (9 of 1908), an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement, requiring that the difference be submitted to the person so named or designated. (4) Where the terms of an agreement to refer future differences to arbitration provide that any claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within a time fixed by the agreement, and a difference arises to which the agreement applies, the court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed was expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.
(5) Where the Court orders than an award be set aside or orders, after the commencement of an arbitration, that the arbitration agreement shall cease to have effect with respect to the difference referred, the period between commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Indian Limitation Act, 1908 (9 of 1908) for the commencement of the proceedings (including arbitration) with respect to the difference referred". In particular, sub-clause (i) says all provisions of Indian Limitation Act, 1908 (9 of 1908) shall apply to arbitration as they apply to proceedings in Court. So the words "proceedings in Court" must be construed as to include suit, appeal and application. That no contrary interpretation has been produced before us. It is also to be noted that Rule 7 is only the procedural in nature as to how a particular case has to be numbered, and in what form. An omission to follow a particular procedure does not nullify the proceedings itself. The procedure is handmade of law and it is provided that they have to be followed in a particular way while disposing of a case and that cannot be construed as destroying the effect of law. In any event when Section 37 of the Arbitration Act is very clear, the effect of such a section in a main Act cannot be taken away by a rule. The argument of the learned Counsel is, therefore, liable to be rejected. ( 11 ) IN the light of the Division Bench ruling of this Court with which we agree, the finding rendered by the Court below has to be set aside and the matter has to go back to the Trial Court to consider the question i f delay has been sufficiently explained, in filing and if yes, then the trial Court has to consider the application i. e. , objections by the Govern- ment for setting aside the award i. e. , objection to the award and pass orders on the merits thereof. ( 12 ) ON the request of both the learned Counsels for the parties, we do not want to go into the merits of the case as it is for the Trial Court to pass orders after considering the objections, ( 13 ) IN this view of the matter, appeal is allowed.
( 12 ) ON the request of both the learned Counsels for the parties, we do not want to go into the merits of the case as it is for the Trial Court to pass orders after considering the objections, ( 13 ) IN this view of the matter, appeal is allowed. Subject to the active co operation of the learned Counsels for the parties, the Trial Court is directed to dispose of the matter within a period of one year from the date of receipt of copy of the judgment of this Court. --- *** --- .