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2005 DIGILAW 782 (KER)

Union of India, Rep by Commanders Works Engineer (P), NW Cochin v. Vailankanni Trading Corporation

2005-12-14

J.M.JAMES

body2005
Judgment :- The questions that arise for consideration are, when the appellant knew that the arbitral award was filed by the Arbitrator before the Court, on a particular date, whether a further notice as contemplated under Section 14(2) of the Arbitration Act, 1940 is necessary, and which is the date to be considered for the calculation of the prescribed period of limitation under Article 119(b) of the Limitation Act, 1963. 2. Petitioner, Union of India, represented by Commander Works Engineers (P), Katari Bagh, Naval Base, Cochin, in Arbitration (OP) No.37/1997, on the file of the III Additional Sub Court, Ernakulam, is the appellant. It filed the Arbitration O.P. praying to set aside Ext.X1 award dated 31.7.1992. The facts of the case reveal that, a dispute arose between the respondent, hereinafter referred to as the ‘Contractor’, as well as the appellant, regarding the supply of furniture for the additional class room in INS Dronacharya, as per an agreement dated 6.7.1989. As the Contractor did not comply with the conditions contained in the agreement, by supplying the furniture, the Contract was cancelled with effect from 5.12.1989, and the matter was communicated to the Contractor through the letter dated 30.11.1989. Thereafter, the contract was awarded to another agency which resulted in an additional expenditure for the appellant. Therefore, an amount of Rs.1,60,408/= was sought to be compensated with interest. But the Contractor declined to remit the said amount. Accordingly, the dispute was referred to a sole arbitrator, one S.S. Joshi, Superintending Engineer (SG), in the Department of Chief Engineer, Navy. He filed the award as per Ext.X1 on 28.9.1992, through one of his subordinates, as could be seen from Ext.X2, which is also of the same date, on the request of the Contractor. The award was however filed before the Sub Court, Ernakulam. 3. The jurisdiction of the Contract, being within the Sub Court, Kochi, the appellant filed Arb.O.P.No.26/1992 on 4.11.1992, praying to set aside the award. In paragraph 9 of the said Original Petition, it was stated, inter alia, that the award was filed before the Sub Court, Ernakulam, on 7.10.1992. However, as the award was not before the Sub Court, Kochi, Arb.O.P.No.26/1992 was dismissed. In paragraph 9 of the said Original Petition, it was stated, inter alia, that the award was filed before the Sub Court, Ernakulam, on 7.10.1992. However, as the award was not before the Sub Court, Kochi, Arb.O.P.No.26/1992 was dismissed. Similarly, Arb.O.P.No.10/1996 filed by the Contractor before the Sub Court, Kochi, was withdrawn, on knowing that the award was filed before the Sub Court, Ernakulam, but without prejudice to his right to file a fresh petition before the Sub Court, Ernakulam. 4. The appellant, thereafter filed Arb.O.P.No.37/1997 on 18.11.1997, praying to set aside the award. The Contractor took up various contentions including that the arbitration petition filed was barred by limitation under Article 119(b) of the Limitation Act. The III Additional Sub Court, Ernakulam, through its impugned judgment dated 22.2.2000 dismissed the petition, holding mainly that it was barred by limitation under Article 119(b) of the Act. The prayer of the Contractor was allowed and decree was passed in terms of Ext.X1 award, directing the appellant to pay an amount of Rs.55,029/= with interest at the rate of 6% per annum from 31.7.1992, the date of the award, till realization, and another sum of Rs.10,950/= without interest. The same is under challenge through this appeal. 5. The learned counsel appearing for the appellant submitted that when award is filed before the Court, a notice under Section 14(2) of the Arbitration Act, 1940, in short ‘the old Arbitration Act’, is mandatory, and the appellant had not received any such notice. Therefore, the court below went wrong in holding that the arbitration appeal filed by the appellant is barred by limitation. 6. The learned counsel appearing for the Contractor, however, submitted that the appellant fully knew that the arbitration award was filed before the Sub Court, Ernakulam, on 7.10.1992, and, therefore, there is no justification in filing Arb.O.P.37/1997 on 18.11.1997, before the Sub Court, Ernakulam, which is clearly barred by limitation, under the Act. 7. I agree that under Section 14(2) of the old Arbitration Act, notice will have to be given to the parties by the Court before which an award was filed. This had been reiterated in Union of India v. Tecco Trichy Engineers and Contractors (AIR 2005 SC 1832). In this reported case, notice to the arbitration proceedings were issued to the Chief Engineer representing the Union of India. He was participating in the proceedings before the Arbitrator also. This had been reiterated in Union of India v. Tecco Trichy Engineers and Contractors (AIR 2005 SC 1832). In this reported case, notice to the arbitration proceedings were issued to the Chief Engineer representing the Union of India. He was participating in the proceedings before the Arbitrator also. However, when the award was filed before the Court, notice was given to the General Manager of the Southern Railway. The Supreme Court found that “service of arbital award on General Manager by way of receipt in his inwards office cannot be taken to be sufficient notice, so as to activate the Department to take appropriate steps in respect of and in regard to the award passed by the arbitrators to constitute starting point of limitation for the purposes of Section 34(3) of the Act”. (New Arbitration Act). I respectfully agree with the legal principles contained in the authority cited above. But in the case at hand, the facts fully reveal that the appellant was aware of the filing of the award dated 31.7.1997 by the sole arbitrator before the Sub Court, Ernakulam. Hence, the facts contained in Tecco Trichy Engineers & Contractors case, supra, is inapplicable to the facts of the case at hand. It is for the appellant to establish why he did not file the Arb.O.P. before the Sub Court, Ernakulam, even after admittedly knowing that the award was filed before that Court on 7.10.1992. Exts.X1 and X2 dated 28.9.1992 further reveal that the Arbitrator gave notice to the parties about the filing of the award before Court. In the light of the admission by the appellant regarding the filing of the award, unless the contrary is proved, it is to be presumed that the appellant had received notice, and, therefore, no further notice as per the old Arbitration Act is necessary. 8. The counsel for the Contractor had placed reliance on Indian Rayon Corporation Ltd. V. Raunaq and Company Pvt. Ltd. (AIR 1988 SC 2054). In it, the Supreme Court found that the party filed an affidavit before the High Court and acknowledged that the award had been filed and notice was issued to it, in respect of the said award. Therefore, the application to set aside the award filed subsequent to the date permitted by law was barred by limitation. In it, the Supreme Court found that the party filed an affidavit before the High Court and acknowledged that the award had been filed and notice was issued to it, in respect of the said award. Therefore, the application to set aside the award filed subsequent to the date permitted by law was barred by limitation. There also the award was filed before the High Court, and the party applied for certified copy of the same. In the case at hand, as discussed above, the appellant had stated that it knew the filing of the award on 7.10.1992 before the Sub Court, Ernakulam. Hence, 7.10.1992, in the facts of this case, has to be considered as the date of service of notice stated in Article 119(b) of the Limitation Act, 1963, particularly, in the light of Exts.X1 and X2 dated 28.9.1992. In such circumstances, the filing of Arb.O.P.No.37/1997 on 18.11.1997, before the Sub Court, Ernakulam, is clearly barred by limitation, as per Article 119(b) of the Limitation Act. In view of the above discussions, I hold that there is nothing to interfere with the judgment passed by the Sub Court, Ernakulam, allowing the amount awarded by the sole arbitrator. Hence, this petition is dismissed.