K. A. Mahboob Basha & Another v. K. A. Mohamed Ibrahim & Others
2007-06-09
S.RAJESWARAN
body2007
DigiLaw.ai
Judgment : This Original Petition has been filed to set aside the award dated 12. 1994 filed into this Court on 14. 1996 in O.P. No. 763 of 1995. 2. The petitioners are aggrieved by the award of respondents 2 to 4 and Another arbitrator S.K.L. Ratan (who passed away after the award was passed) dated 12. 1994 by which some properties were allotted to 1st respondent and some properties were allotted to the petitioners. 3. According to the petitioners, 1st respondent and the petitioners are brothers and there were disputes among themselves with regard to properties and assets of their father late K.A, Adam. At the instance of 4th respondent, who is their family friend. Thiru S.K.L. Ratan and respondents 3 and 4 were appointed as arbitrators to resolve the disputes. The petitioners insisted that 2nd respondent should also be one of the four arbitrators as 3rd respondent and S.K.L. Ratan are very much interested in the welfare of first respondent. Thereafter on 12. 1994, a meeting was held by the four arbitrators at the residence of S.K.L. Ratan. 1st respondent was separately called and some papers were received from him. Then the petitioners were called separately and a typed list of all the properties of their father was taken from them. Thereafter nothing happened, but they were informed that the arbitrators would pass an award with the concurrence of three arbitrators except 2nd respondent. On 3. 1995, a letter was sent by the three arbitrators barring 2nd respondent informing that pursuant to the proceedings held on 12. 1994, draft of the award by the four arbitrators which was prepared has since been stamped and the petitioners were asked to take appropriate steps under the Indian Arbitration Act, 1940. Till today no copy of the award was sent to the petitioners by the arbitrators. 1st respondent filed a petition for under Section 14(2) of the Arbitration Act, 1940, hereinafter called ‘the Act, directing the arbitrators to file the award into Court. Counsel for arbitrators, respondents 1, 3 and 4 filed the award into this Court on 14. 1996 and the notice was served on the petitioners on 28. 2000. The petitioners filed the above petition under Sections 30, 32 and 33 of the Indian Arbitration Act, 1940, challenging the award dated 12. 1994. 4.
Counsel for arbitrators, respondents 1, 3 and 4 filed the award into this Court on 14. 1996 and the notice was served on the petitioners on 28. 2000. The petitioners filed the above petition under Sections 30, 32 and 33 of the Indian Arbitration Act, 1940, challenging the award dated 12. 1994. 4. The petitioners contend that there was no enquiry conducted nor any procedure laid down under the Act, 1940 followed in the conduct of the arbitration. It is further stated that 2nd respondent was kept in dark all through and 2nd respondent has not signed the award. They further alleged that the principles of natural justice was openly flouted and the award is patently illegal and non-est in the eye of law. 5. 1st respondent entered appearance through his counsel and filed a counter statement on 18. 2001 and stated that the arbitrators enquired both the parties in the presence of each other and 1st respondent filed two documents, which were narked as Exhibits A-1 and A-2. The petitioners did not file any documents but made their submissions. It is further stated that 2nd respondent participated in the proceedings on 12. 1994 and the award is valid in law as 3 out of the 4 arbitrators signed the same. A specific objection was raised in the counter of 1st respondent as to the petition being barred by limitation as notice of filing the award was served on the counsel for the petitioners long back. Therefore he pleaded for the dismissal of the O.P. 6. The 2nd respondent/arbitrator has also filed a counter statement on 27. 2001. In his counter statement 2nd respondent stated that he was not party to the award said to have been passed on 12. 1994. He further stated that there was only discussion among the arbitrators on 12. 1994 and there was no consensus arrived at among the arbitrators as to how the disputes were to be settled and nothing was finalised on 12. 1994. He went to the extent of adding that there was no award passed on 12. 1994 as alleged by the other arbitrators. He further stated that on 12. 1994, there was a discussion separately with the petitioners on the one hand and 1st respondent on the other hand and they were asked to submit their claim.
1994. He went to the extent of adding that there was no award passed on 12. 1994 as alleged by the other arbitrators. He further stated that on 12. 1994, there was a discussion separately with the petitioners on the one hand and 1st respondent on the other hand and they were asked to submit their claim. According to 2nd respondent, it was decided to have a further meeting on 11. 1995 among the arbitrators and even on 11. 1995, the meeting of the arbitrators was also inconclusive and nothing was finalised. He was asked by 3rd respondent to sign an award said to have been passed on 12. 1994, but he declined to comply with the request of 3rd respondent. He also stated that no copy of the award was served on him and he was not aware of the contents of the said award. 7. On 19. 2002, an affidavit was sworn by 3rd respondent/arbitrator, wherein, he, while refuting the averments made by 2nd respondent, has stated that all the persons were present for sometime before the arbitrators on 12. 1994 and it is incorrect to state that the parties were called upon individually in the absence of others to state the facts. It is his further averment that 2nd respondent/arbitrator did not sign the award for reasons best known to him even though he agreed for the award in the presence of all the parties. This affidavit was filed 3rd respondent/arbitrator after the passing away of the 2nd respondent/arbitrator. 8. In view of the peculiar facts of this case, evidence was let in by the parties in this O.P., before this Court. 9. Heard Mr. S. Parthasarathy, learned senior counsel for the petitioners, the learned counsel for 1st respondent, learned counsel for 2nd respondent and learned counsel for third and 4th respondents. I have also perused the documents tiled and the judgments referred to in support of their submissions. 10. The learned counsel for 1st respondent specifically submitted that the O.P., was hopelessly barred by limitation and the same is to be dismissed on this ground alone. The learned counsel for 1st respondent submitted that notice of filing the award was served on the counsel for the petitioners on 14. 1996 itself by the counsel for the arbitrators in O.P.No.763 of 1995 and in such circumstances the present O.P., filed on 19.
The learned counsel for 1st respondent submitted that notice of filing the award was served on the counsel for the petitioners on 14. 1996 itself by the counsel for the arbitrators in O.P.No.763 of 1995 and in such circumstances the present O.P., filed on 19. 2000 is hit by the law of limitation. The learned counsel relied on the decisions of the Honble Supreme Court reported in Nilkantha v. Kashinath AIR 1962 SC 666 and Indian Rayon Corpn. Ltd v. Raunaq and Co. Pvt. Ltd. AIR 1988 SC 2054 : (1988) 4 SCC 31 in this regard. 11. The learned senior counsel for the petitioners submitted that the O.P., has been filed well within the time as per Article 119(b) of the Limitation Act, according to which the period of limitation is 30 days and it begins to run from the date of service of notice of the filing of the award from the Court and not from the counsel. He relied on the decisions of the Supreme Court reported in Secy., to Govt., of Karnataka v. V. Harihbabu 1996 AIR SCW 2994 and CH. Ramalinga Reddy v. Superintending Engineer (1999) 9 SCC 610 in support of his submissions. The learned counsel further submitted that when the award is patently illegal even when the petition has not been filed within the period of limitation, the Court has got suo motu powers to set aside the award. For this proposition the learned senior counsel relied on the decision of the Supreme Court reported in Dharma Prathishthanam v. Madhok Constructions (P) Ltd. AIR 2005 SC 214 : (2005) 9 SCC 686. 12. First let me consider whether the O.P. is to be dismissed on the ground of limitation. 13. Article 119 of the Limitation Act, 1963 deals with the period of limitation for filing an application for setting aside an award passed under the Arbitration Act, 1940. Article 119 reads as under: Description of application Period of limitation Time from which period begins to run 119. Under the Arbitration Act, 1940- .(a) for the filing in Court of an award .(b) for setting aside an award or getting an award remitted for reconsideration Thirty days Thirty days The date of service of the notice of the making of the award The date of service of the notice of the filing of the award 14.
Under the Arbitration Act, 1940- .(a) for the filing in Court of an award .(b) for setting aside an award or getting an award remitted for reconsideration Thirty days Thirty days The date of service of the notice of the making of the award The date of service of the notice of the filing of the award 14. From the above it is very clear that the period of limitation prescribed for setting aside an award is 30 days and the period begins to run from the date of service of notice of the filing of the award. 15. It is the contention of the learned counsel for 1st respondent that the notice contemplated in Article 119 is not necessarily a notice from the Court and even if a notice to this effect was served on the counsel of the parties, or the parties themselves by a person other than the counsel or the parties or the counsel have the knowledge of filing of the award through any source, still it is said to be a notice as per Article 119(b) of the Limitation Act and the period of limitation would start running from that date of service of such notice or from the day when the parties or their counsel have knowledge about the same. Per contra, the learned senior counsel urged that the notice means a notice sent by the Court and in the present case the notice sent by the Court was served by the petitioners on 28. 2000 only and the O.P., filed on 19. 2000 was well within time as per Article 119(b) of the Limitation Act. The learned senior counsel further drew my attention to Section 14(2) of the Act, 1940, according to which, the Court shall give notice to the party of the filing of the award and therefore the notice mentioned in Article 119(b) of Limitation Act, 1963 is the notice given by the Court and not by the counsel or any other person. 16. In Nilkantha v. Kashinath (supra), the Honble Supreme Court held as follows: "(7) The first question to determine is whether limitation for filing an application to set aside the award began to run against the appellant-defendant No.12 from a date more than a month before November 9, 1948, when a written statement on his behalf was filed staling that the award be declared null and void.
According to Article 158 of the First Schedule to the Indian Limitation Act, the period of limitation for an application to set aside an award under Arbitration Act, 1940, begins to run from the date of service of the notice of the filing of the award. No notice in writing was issued by the Court to the appellant or his guardian intimating that the award has been filed in Court. It is therefore urged for the appellant that the period of limitation for filing an application to set aside the award never began to run against him. There could be no date of service of notice, when no notice had been issued. On the other hand, it is submitted for the respondents, that the limitation began to run from 22. 1948, the date on which the Court adjourned the case for parties say to 23. 1948, and that, in any case, from 9. 1948, when his guardian had applied for time to file the statement after having received summons from the Court on 9. 1948 on 22. 1948, the pleaders were present, according to the entry against the date in roznama of the Court. Notice to the counsel of the filing of the award means or amounts to notice to the party. (8) Sub-section (1) of Section 14 of the Arbitration Act, I940 (Act X of 1940) requires the arbitrators or umpire to give notice in writing to the parties of the making and signing of the award. Sub-section (2) of that Section requires the Court, after the tiling of the award, to give not ice to the parties of the filing of the award. The difference in the provisions of the two sub-sections with respect to the giving of notice is significant and indicates clearly that the notice which the Court is to give to the parties of the filing of the award need not be a notice in writing. The notice can be given orally. No question of the service of the notice in the formal way of delivering the notice or tendering it to the party can arise in the case of a notice given orally. The communication of the information that an award has been filed is sufficient compliance with the requirements of subsection (2) of Section 14 with respect to the giving of the notice to the parties concerned about the filing of the award.
The communication of the information that an award has been filed is sufficient compliance with the requirements of subsection (2) of Section 14 with respect to the giving of the notice to the parties concerned about the filing of the award. Notice does not necessarily mean communication in writing. Notice, according to the Oxford Concise Dictionary means intimation, intelligence, warning and has this meaning in expressions like give notice, have notice and it also means formal intimation of something, or instructions to do something and has such a meaning in expressions like notice to quit, till further notice. We are of opinion that the expression give notice in sub-section (2) of Section 14, simply means giving intimation of the filing of the award, which certainly was given to the parties through their pleaders of 22. 1948. Notice to the pleader is notice to the party, in view of Rule 5 of Order III, Civil Procedure Code, which provides that, any process served on the pleader of any party shall be presumed to be duly communicated and made known to the party whom the pleader represents and, unless the Court otherwise directs, shall be as effectual for all purposes as if the same had been given to or served on the party in person." 17. In the above decision the Honble Supreme Court held that notice under Section 14 (2) of the Arbitration Act, 1940 can be given orally and need not he in writing. On the facts of the above decision, where after the award was filed into the Court by the arbitrator, the civil judge adjourned the matter "for parties" say to the arbitrators report. Only in that context, the Supreme Court held that the intimation to the pleaders of the parties by the Court on that day amounted to service of notice on the parties about the filing of the award. The Supreme Court does not say that the notice required to be sent under Section 14(2) of the Arbitration Act 1940 need not he given by the Courts and even if it is given by the counsel, it would amount to giving a notice under Section 14(2) of the Act, 1940. 18. But the learned counsel for 1st respondent submitted that in view of the orders passed by this Court on 24.
18. But the learned counsel for 1st respondent submitted that in view of the orders passed by this Court on 24. 1996 in O.P.No.763 of 1995 filed by 1st respondent herein to issue necessary directions to the arbitrators to file the award dated 12. 1994 into Court. It is to be taken that sufficient notice under Section 14(2) was already given to the petitioners herein who are respondents 5 and 6 in O.P.No.763 of 1995. The learned counsel for 1st respondent further relied on the notice dated 14. 1996 sent by the counsel for the arbitrators in O.P. No. 763 of 1995 informing that he had filed the award into Court on 14. 1996. This notice dated 14. 1996 was served on the counsel for the petitioners herein who are respondents 5 and 6 in that O.P. According to the learned counsel for 1st respondent, in view of the notice dated 14. 1996 and the order of this Court in O.P.No.763 of 1995, it is clear that the notice contemplated under Section 14 (2) of the Act, 1940 was served on the petitioners herein in April 1996 itself and the above O.P., filed on 19. 2000 is clearly barred by limitation. 19. I am unable to accept the above submission for 1st respondent. 20. The notice dated 14. 1996 sent by the counsel for arbitrators in O.P. No. 763 of 1995 was not sent by the Court. Further, the order of this Court cannot be considered as a notice served on the petitioners under Section 14(2) of the Act, 1940. For better appreciation, the order dated 24. 1996 made in O.P. No. 763 of 1995 is extracted below: "Counsel says that the award has since been filed into Court. Notice of the filing of the award to be sent to the respondent. Proceedings in relation to that award will be registered as a separate O.P. This petition is closed." 21. A reading of the above order will make it very clear that this Court directed that a notice of filing of the award to be sent to the respondent and in such circumstances it cannot be said that a notice under Section 14(2) of the Act, 1940 was served on the petitioners as per the above order of the Court. 22.
22. In Ganges Waterproof Works (P) Ltd. Union of India, AIR 1999 SC 1102 : 1999 (4) SCC 33 , the Supreme Court held as follows: "6. It appears as mentioned before that on 2. 1978 an affidavit had been filed in the High Court, stating on behalf of the appellant that the award had been wrongly filed in that Court. The appellant has, therefore, acknowledged that the award had been filed and a notice was issued to it in respect of the said award. In our opinion, this conclusion irresistibly follows from the narration of events mentioned hereinbefore. In order to be effective both for the purpose of obtaining the judgment in terms of the award and for setting aside the award, the award must be filed in the Court. There must be service of notice or intimation or communication of the filing of the said award by the Court to the parties. If all these factors are established or are present, the mode of service of the notice would be irrelevant. If the sub-stance is clear, the form of the notice is irrelevant but the notice of the award having been filed in the Court, is necessary. The filing in the Court is necessary and the intimation thereof by the Registry of the Court to the parties concerned is essential. Beyond this there is no statutory requirements of any technical nature under Section 14(2) of the Act." "7. This conclusion, in our opinion, irresistibly follows from the principles enunciated by this Court in Nilkantha Shidramappa Ningashetti v. Kashinath Somanna Ningashetti AIR 1962 SC 666 : (1962) 2 SCR 551 , where this Court held that the communication by the Court to the parties concerned or their counsel, of the information the an award has been filed was sufficient compliance with the requirements of sub-section (2) of Section 14 of the Act. In the aforesaid decision this Court reiterated that the notice need not necessarily mean "communication ill writing". The expression "give notice" in subsection (2) of Section 14 of the Act simply means giving intimation of the filing of the award. Such intimation need not be given in writing and could be communicated orally or otherwise. That would amount to service of the notice when no particular mode was specified….." "10.
The expression "give notice" in subsection (2) of Section 14 of the Act simply means giving intimation of the filing of the award. Such intimation need not be given in writing and could be communicated orally or otherwise. That would amount to service of the notice when no particular mode was specified….." "10. It was, however, submitted on behalf of the appellant that there cannot be any concession on a question of law. We are of the opinion that this concession (sic contention) does not, as such, help the parties very much. The fact that the parties have notice of the filing of the award is not enough. The notice must be served by the Court. We reiterate again that there must be (a) filing of the award in the proper Court; (b) service of the notice by the Court or its office to the parties concerned; and (c) such notice need not necessarily be in writing. It is upon the date of service of such notice that the period of limitation begins and as at present under clause (b) of Article 119 of the Act, the limitation expires on the expiry of the 30 days of the service of that notice for an application for setting aside of the award. The importance of the matter, which need he emphasised, is the service of the notice by the Court. It is not the method of the service that is important or relevant. In this case as both the Courts have, in fact, found that the notice was issued and served and, in our opinion, that finding is based on cogent material and relevant evidence, prior to 30.7.1981, the application made in this case was clearly barred by lapse of time". 23. In the above decision the Supreme Court held that there must be service of notice or intimation or communication of the filing of the award by the Court to the parties and the intimation by the Registry of the Court to the parties concerned is essential and the fact that the parties have notice of filing of the award is not enough. 24.
24. In Secy., to Govt., of Karnataka v. V. Harihbabu (supra), the Supreme Court held that a notice under Section 14(2) of the Act, 1940 need not be in writing, but what is essential is that the notice of intimation or communication of filing of the award must be issued by the Courts to the parties and served upon the parties concerned. 25. In CH. Ramalinga Reddy v. Superintending Engineer (supra), the Honble Supreme Court held that the fact that the parties have notice of the filing of the award is not enough and the notice must be served by the Court. 26. In the light of the above discussions and the decisions of the Honble Supreme Court. I am of the considered view that the above O.P., filed on 19. 2000 after the Court notice served on the petitioners on 28. 2000 is not hit by law of limitation. 27. On merits the learned senior counsel submitted that there was only one day hearing by the arbitrators, no claim petition nor any counter was filed by the parties and the original award was not signed by one of the arbitrators and in such circumstances the award is patently illegal and such an award can be set aside by this Court suo motu even if the petition is filed after the limitation period. 28. I find force in the submission made by the learned senior counsel for the petitioners. 29. A perusal of the impugned award would show that even though it started with the words "proceedings of the arbitrators namely, Respondents 2 to 4 herein and one S.K.L. Ratan", it was signed only by three arbitrators and there was no reference about the not signing of the award by the second arbitrator who is 2nd respondent herein. Further 2nd respondent filed counter-statement giving reasons for not signing the award, for which an affidavit was filed by third respondent only after the demise of 2nd respondent. 30.
Further 2nd respondent filed counter-statement giving reasons for not signing the award, for which an affidavit was filed by third respondent only after the demise of 2nd respondent. 30. Further, in the deposition of 4th respondent as R.W.2 wherein in his cross-examina-tion he has clearly stated that "we have not recorded anything at the time of arbitration regarding the claim and counter claim of parties and no minutes were drawn during the arbitration proceedings." Similarly, 1st respondent herein as R.W.1, in his cross-examination admitted that there was only one meeting held regarding the arbitration and the arbitrators told them that the matter was decided and asked them to leave and said that the matter would be typed in a stamp paper. He further admitted that that 4th respondent/arbitrator was a partner of Kakas Agency and after he left the agency 1st respondent became a partner in the said agency and 4th respondents wife and his wife were partners in another company. He also accepted that 3rd respondent/arbitrators son is his advocate. 31. A scrutiny of the award, the oral and documentary let in before this Court, the counter statement evidence filed by 2nd respondent/arbitrator and the affidavit filed by 3rd respondent/arbitrator after the death of 2nd respondent/arbitrator would make it very clear that all is not well in the arbitration proceedings which lasted for a day and already there are differences of opinion between 2nd respondent/arbitrator and other arbitrators. It will also prove that the principles of natural justice was not at all followed and in fact there was no decision taken at all on the date of hearing, still an award was passed dividing the properties between the parties. In fact 2nd respondent/arbitrator who was a retired District Judge went on record by saying that he has not seen the award at all and in such circumstances. I have no hesitation in holding that the arbitrators barring 2nd respondent/arbitrator are guilty of misconduct and also for not following the established procedure which is expected to be followed by the arbitrators before passing an award. Thus, in my opinion, the impugned award is patently illegal/and the same is to be set aside. 32. In the result, the O.P., is allowed and the award dated 12. 1994 is set aside. No costs. Petition allowed.