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Madhya Pradesh High Court · body

2007 DIGILAW 1203 (MP)

ASHOK v. K. K. SAXENA

2007-11-20

P.K.JAISWAL

body2007
JUDGMENT P. K. JAISWAL, J. This appeal under Section 39 of the Indian Arbitration Act, 1940 (for short "the Act") has been filed by the appellants, against the order dated 18.02.1991 passed by the Third Additional District Judge, Vidisha in MJC No. 2/1988, by which the trial court rejected the application for making the award rule of the court, filed under Section 16 of the Act and held that the award dated 08.03.1982 was ineffective and void. It is submitted by the learned counsel for the appellants that with the consent of the parties vide agreement dated 29.05.1980 the matter was referred to the arbitrators and they entered upon the reference on 29.07.1980, completed the arbitration proceedings and passed the award on 08.03.1982. The respondents even after expiry of four months period that is, the period prescribed for giving the award, appeared before them, took part in the proceedings before the arbitrators and never raised any objection to the arbitration proceedings and only when an application under Section 16 of the Act for making the award rule of the court was filed, they raised an objection and in such a situation the condition of four months period will be deemed to have been waived. Learned trial court contrary to the decision of the Apex Court in the case of State of Punjab vs. Hardyal, AIR 1985 SC 920 = 1985 Arb. LR 297 (SC) passed the impugned order declaring the award as null and void. It is further submitted that on 10.01.1996 they filed an application to enlarge time for making the award. On the other hand, Shri K. N. Gupta, learned senior counsel for the respondents, opposed the arguments of the learned counsel for the appellants and submitted that in view of the law laid down by the Apex Court in the case of State of Punjab vs. Hardyal (supra) and Division Bench decision of this court in Misc. Appeal No. 72/1986 - Jiyajirao Cotton Mills Ltd., Birlanagar vs. Jindal Handloom Emporium and others decided on 18.10.1996 the trial court has not committed any error in passing the impugned order and dismissing the application filed under Section 16 of the Act by holding that the award after the expiry of four months is null and void. I have heard the arguments of the learned counsel for the parties and perused the record of the case. I have heard the arguments of the learned counsel for the parties and perused the record of the case. Section 28 of the Arbitration Act, 1940 and Clause 3 of First Schedule read as under : Section 28 reads : "28. Power to court only to enlarge time for making award - (1) The court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time, the time for making the award. (2) Any provision in an arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award, shall be void and of no effect." Clause 3 of First Schedule provides : "3. The arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the court may allow." Sub-section (1) of Section 28 is very wide and confers full discretion on the court to enlarge time for making the award at any time. The discretion under sub-section (1) of Section 28 should however, be exercised judiciously. Sub-section (2) of Section 28 also makes it evident that the court alone has the power to extend time. It further provides that a clause in the arbitration agreement giving the arbitrator power to enlarge time shall be void and of no effect except when all the parties consent to such enlargement. It is not open to arbitrators at their own pleasure without consent of the parties to the agreement to enlarge time for making the award. Here in the present case, both the parties voluntarily took part in the arbitration proceedings even after expiry of four months, that is, the period prescribed for giving the award till the date of the award and never raised any objection before the arbitrator that they have no powers to commence the proceedings after expiry of the period of four months. In the case of State of Punjab vs. Hardyal (supra) the Apex Court observed the following in paras 12, 13 and 14 which read as under : "12. In the case of State of Punjab vs. Hardyal (supra) the Apex Court observed the following in paras 12, 13 and 14 which read as under : "12. The next question that crops up for consideration is what will be the effect if a party to the arbitration took part in the proceedings before the arbitrator even after the expiry of four months, that is, the period prescribed for giving the award. Some High Courts have taken the view that in such a situation the condition of four months period will be deemed to have been waived. Such a view has been taken by the Allahabad High Court in Shambhu Nath vs. Surja Devi, AIR 1961 Allahabad 180. A learned Single Judge of that High Court observed : 'A party to an arbitration agreement who voluntarily takes part in the arbitration proceedings after the expiry of four months will be deemed to have waived the implied condition as to time.' A similar view has been taken by the Madhya Pradesh High Court in Shivlal vs. Union of India, 1974 MPLJ 795 = AIR 1975 MP 40 . In Ganesh Chandra vs. Artatrana, AIR 1965 Orissa 17 a Single Judge of the Orissa High Court observed : 'If the parties, after the expiry of four months, submit themselves to the jurisdiction of the arbitrators and take part in the proceedings enabling them to pass an award, it cannot be said that the arbitrators acted without jurisdiction. In such a contingency, the principle of waiver and estoppel would have full application.' 13. Once we hold that the law precludes parties from extending time after the matter has been referred to the arbitrator, it will be contradiction in terms to hold that the same result can be brought about by the conduct of the parties. The age long established principle is that there can be no estoppel against a statute. It is true that the time to be fixed for making the award was initially one of agreement between the parties but it does not follow that in the face of a clear prohibition by law that the time fixed under Clause 3 of the Schedule can only be extended by the court and not by the parties at any stage, it still remains a matter of agreement and the rule of estoppel operates. It need be hardly emphasized that the Act has injuncted the arbitrator to give an award within the prescribed period of four months unless the same is extended by the court. The arbitrator has no jurisdiction to make an award after the fixed time. If the award made beyond the time is invalid the parties are not estopped by their conduct from challenging the award on the ground that it was made beyond time merely because of their having participated in the proceedings before the arbitrator after the expiry of the prescribed period. 14. The policy of law seems to be 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. As observed earlier, the court has got the power to extend time even 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. The High Court in our opinion was justified in taking the view that it did. This power, however, can be exercised even by the appellate court. The present appeal has remained pending in this court since 1970. No useful purpose will be served in remanding the case to the trial court for deciding whether the time should be enlarged in the circumstances of this case. 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, 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." The Apex Court in the case of Hindustan Steelworks Construction Ltd. vs. C. Rajasekhar Rao, (1987) 4 SCC 93 = 1987 (2) Arb. LR 200 (SC) held that the court has got the power to extend time even 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. LR 200 (SC) held that the court has got the power to extend time even 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. This power-however, could be exercised even by the appellate court. In the case of Nagar Palika, Mirzapur vs. Mirzapur Electric Supply Co. Ltd., AIR 1990 SC 2273 = 1991 (1) Arb. LR 22 (SC) the time for arbitration expired on 31.12.1970 and the award was made by the arbitrator 27 days late on 27.01.1971 without formal extension of time. The Apex Court had held that conduct of the parties is a major factor to waive the extension of time given by the court and held that the time should be taken as extended. 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 my opinion, for the extension of time. The unreported decision of this court in the case of Jiyajirao Cotton Mills Ltd., Birlanagar will not be applicable in the present facts and circumstances of the case. In the aforesaid view of the matter, I am unable to accept the submission on behalf of Shri K. N. Gupta, learned senior advocate, that the award was beyond time and time cannot be extended. I, accordingly, extend the time for giving the award and the award dated 08.03.1982 will be deemed to have been given in time. The other questions involved in the case, however, have not been dealt with by the learned Additional District Judge. The objector - respondent had raised a number of pleas to challenge the award. It was, therefore, obligatory for the trial court to consider those points. However, the case will, therefore, have to be sent back to the trial court for deciding the other issues involved in this case. The objector - respondent had raised a number of pleas to challenge the award. It was, therefore, obligatory for the trial court to consider those points. However, the case will, therefore, have to be sent back to the trial court for deciding the other issues involved in this case. I, accordingly, allow the appeal in part and set aside the order dated 18.02.1991 passed by the Third Additional District Judge, Vidisha in MJC No. 2 of 1988 and remand the case to the trial court for deciding the application filed under Section 17 of the Act for making award rule of the court in accordance with law. Since it is an old case it is, therefore, directed that the trial court shall decide the application within three months from the date of receipt of record from the arbitrators. Parties are directed to appear before the Third Additional District Judge, Vidisha on 03.01.2008. In the circumstances of the case, the parties shall bear their own costs.