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2008 DIGILAW 574 (AP)

Union of India v. O. Narayana

2008-07-25

A.GOPAL REDDY, S.ASHOK KUMAR

body2008
JUDGMENT :- This appeal under Section 39 of the Arbitration Act 1940, is filed against the judgment and decree dated 31.8.1999 passed in OS No.17 of 1998 by the learned Senior Civil Judge, Penukonda, Ananthapur District. 2. The facts giving rise to filing of this appeal briefly stated as under : The appellants/Railways entered into a contract with the respondent/contractor for collection and supply of 50 mrn size granite stone ballast from Kms 116/6 to 122/6 in PW 1/Hindupur Section and the terms of the contract were reduced into writing in the form of agreement between the parties on 9.11.1989. As per the agreement and the general conditions of the contract, all the disputes and the differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the works or after their completion and whether before or after the determination of the contract, shall be referred by the contractor to the Railway and the Railway shall within a reasonable time notify its decision thereon in writing. Further the agreement provides that in the event of any dispute or difference between the parties as to the construction or operation of the contract, or the rights and liabilities of the parties on any matter or difference of any kind or as to withholding by the Railway of any certificate to which the contractor claims to be entitled or if the Railway fails to make a decision within a reasonable time, then and in any such case, except referred in Clause 62 of the conditions, the contractor after 90 days of his claim may demand in writing that the dispute or difference be referred to arbitration to a sole arbitrator who shall be the General Manager or a person nominated by him if the claim does not exceed Rs.3,00,000/and the issues involved are not of a complicated nature and to two arbitrators who shall be Gazetted Railway Officers of equal status in case of the claim exceeds Rs.3,00,000/-. 3. It is stated that the respondent/contractor made arrangements for completing the supply as agreed, in five months. However, it is stated, the appellants/Railways changed the location for dumping the ballast and there was delay on the part of the Railways in fixing up the location for the said purpose. In the meanwhile rate of ballast got increased. 3. It is stated that the respondent/contractor made arrangements for completing the supply as agreed, in five months. However, it is stated, the appellants/Railways changed the location for dumping the ballast and there was delay on the part of the Railways in fixing up the location for the said purpose. In the meanwhile rate of ballast got increased. In that view of the matter, certain disputes and differences arose between the parties as to entitlement of the contractor to the enhanced cost of 75% per 10 cubic meters. When the contractor requested the appellants to re-enter into fresh agreement as there was loss by way of transportation, labour and time, the appellants/Railways gave notice dated 27.4.1991 terminating the agreement. As such, the contractor requested the appellants/Railways to refer the dispute for arbitration as per the clause contained in the contract agreement. But, the appellants/Railways did not refer the matter. Hence, the contractor filed suit in OS No.19 of 1994 pointing out that he is entitled to a sum of Rs.7,18,560/- from the appellants/Railways and praying to refer the dispute to the arbitrator appointed by the Court. In spite of service of suit summons and having appeared through advocate, the appellants/Railways did not file written statements for more than two years and therefore, the Court below set the appellants/Railways ex parte. The Court below by order dated 11.3.1997 directed the appellants/Railways to file general conditions of contract agreement dated 9.11.1989. Despite the same, the appellants/Railways did not file the same. Hence, the Court below passed order dated 3.7.1997 appointing one Sri S. Jayaram Reddy, a retired District Judge, as sole arbitrator. The arbitrator, who enquired into the matter, gave notices to the parties. In the said arbitration proceedings, the appellants/Railways appeared before the arbitrator, led evidence and put-forth their arguments. The arbitrator, after hearing the contractor and appellants/Railways, passed the award and communicated the same to the parties. The arbitrator, who enquired into the matter, gave notices to the parties. In the said arbitration proceedings, the appellants/Railways appeared before the arbitrator, led evidence and put-forth their arguments. The arbitrator, after hearing the contractor and appellants/Railways, passed the award and communicated the same to the parties. Thereafter, the contractor filed IA Nos.349 and 350 of 1998 in as No.19 of 1994, seeking to pass a decree for the amount for which he is entitled to, and, to record evidence in as No.17 of 1998, which was filed under Section 17 of the Arbitration Act, 1940 seeking to direct the arbitrator to file award dated 22.10.1997 into Court and to make the same as a rule of the Court, and treat the same as evidence in the suit in as No.19 of 1994. The Court below dismissed both the said applications as unnecessary. The contractor also filed IA No.307 of 1998 in as No.17 of 1998 seeking to pass a decree making the award passed by the arbitrator as a rule of the Court as much as the appellants! Railways did not file written statement or application to set aside the same within the time prescribed by law. The said application was also dismissed by the Court below in view of the fact that both the suits stood finally disposed of. 4. It is to be seen that in as No.17 of 1998, the appellants/Railways filed written statement opposing the said suit. In the said suit, the contractor/plaintiff examined himself as PW1 and marked documents Exs.A1 to A5. On behalf of the Railways/ defendants, Senior Section Engineer was examined as DW1; however, no documents were marked on their behalf. The Court below observing that since the appellants/ Railways have no grievance in appointing the arbitrator, the proceedings in as No.19 of 1994 shall stand terminated, and, accordingly decreed the suit in as No.17 of 1998, making the award as a rule of the Court. 5. Questioning the legality and validity of the judgment and decree passed in OS No.17 of 1998, this Civil Miscellaneous Appeal is preferred. 6. At the threshold of hearing the appeal, when we pointed out that this appeal under Section 39 of the Arbitration Act, 1940 is not maintainable, the learned Standing Counsel for the appellants/Railways seeks time for filing necessary application for conversion of the appeal into revision. 6. At the threshold of hearing the appeal, when we pointed out that this appeal under Section 39 of the Arbitration Act, 1940 is not maintainable, the learned Standing Counsel for the appellants/Railways seeks time for filing necessary application for conversion of the appeal into revision. However, no steps have been taken by the appellants/Railways for conversion of the appeal into revision by filing necessary application. On the other hand, the appellants/Railways filed additional memorandum of grounds. 7. The learned Standing Counsel appearing for the appellants-Railways mainly contended that in the absence of issuance of notice as contemplated under Section 14(2) of the Arbitration Act, 1940, the judgment and decree of the Court below is a nullity and the same is liable to be set aside, by converting the appeal into revision suo motu. 8. We propose to consider the contention that non-issuance of notice under Section 14(2) of the Act is bad in law, along with the preliminary objection, on merits. 9. Suit in OS No.19 of 1994 was filed for appointment of Arbitrator. Having received the summons in the said suit and entering the appearance, the appellants/Railways did not file written statements for more than two long years and ultimately the Court below set the Railways ex parte. However, before the arbitrator appointed by the Court below pursuant to the order dated 3.7.1997, the appellants/Railways led documentary evidence and advanced their arguments. After passing of the Award, the same was communicated to the parties. In the cross-examination of Sri C. Papi Reddy, Senior Section Engineer of the Railways, who was examined as DW1 in OS No.17 of 1998, he admitted the receipt of the award sent by the contractor. The original award was marked as Ex.C.1 and a copy of the same was marked as EX.A.1. In the said suit, written statement was filed opposing the said suit and contending that the contractor received the copy of the award on 24.11.1997, but, however, the suit was filed even prior to the receiving of the said award from the arbitrator into the Court and therefore, the said suit is bad in law and not maintainable. 10. Section 14(1) of the Arbitration Act 1940 requires arbitrator or umpires to give notice in writing to the parties of the making and signing of the award. 10. Section 14(1) of the Arbitration Act 1940 requires arbitrator or umpires to give notice in writing to the parties of the making and signing of the award. Section 14(2) of the Act requires the Court, after the filing of the award, to give notice to the parties of the filing of the award. The difference in the provisions of the two subsections 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 and the same can be given orally. In Nilkantha v. Kasinath ( AIR 1962 SC 666 ), the Apex Court held that such notice need not necessarily be in writing, and, it is upon the date of service of such notice that the period of limitation begins for an application to be filed for setting aside the award. As such oral intimation of filing of the award to the advocate of the party or party is service of notice within the meaning of Section 14(2) of the Act. In the instant case, it has been pointed out that the award was filed into Court and the same was marked as Ex.C.1. A copy of the award was also marked as EX.A.5. The appellants/Railways thereafter participated in the trial. However, no application was filed to set aside the award at any point of time before the disposal of the suit. It seems, even no contention appears to have been raised before the Court below that they had no notice of the filing of the award. The said ground is raised for the first time in the appeal that notice of filing the award under Section 14(2) of the Act was not given and therefore, they have been denied the opportunity of filing of such an application and therefore, the judgment under appeal is a nullity under law. In view of the above, it is clear that the appellant/Railways had knowledge of filing of the award by the arbitrator in the Court and therefore, it cannot be said that the appellants did not have notice of the award within the meaning of Section 14(2) of the Act. In view of the above, it is clear that the appellant/Railways had knowledge of filing of the award by the arbitrator in the Court and therefore, it cannot be said that the appellants did not have notice of the award within the meaning of Section 14(2) of the Act. Non-filing of the application by the Railways to set aside the award, in our view, is not by virtue of non service of notice so as to contend that they were denied the opportunity of filing such application, but it is purely of their conduct in pursuing the matter. Further, it is settled that a waiver of right may be oral or written or inferred from conduct. It is thus, the appellants knowing fully well the fact that the arbitrator had filed the award into Court, contested the OP for making the award as rule of the Court; but, did not raise any objection with regard to service of notice as contemplated under Section 14(2) of the Act. As such, they were waived their right for issuance of such notice. In that view of the matter, we do not see any merit in the contention advanced by the learned Standing Counsel for the appellants. 11. We may notice that on decreeing the suit in as No.17 of 1998, the Railways failed to pay the amount in due satisfaction of the decree. As such, the contractor filed EP No.18 of 1999 and got the bank accounts of the Railways attached and recovered the decreetal amount. On such recovery of the amount only, the Railways filed the present appeal. 12. Furthermore, we pointed out in the first instance that the appeal under Section 39 of the Act is not maintainable, inasmuch as the appellants/Railways having knowledge of filing of the award in the Court by the arbitrator failed to file an application to set aside the award. Therefore, the judgment under appeal cannot be said to be an order refusing to set aside the award within the meaning of Section 39 of the Act and, as such, the appeal is not maintainable. 13. In Metha Teja Singh & Co. v. Fertilizer Corporation of India. AIR 1968 Del. Therefore, the judgment under appeal cannot be said to be an order refusing to set aside the award within the meaning of Section 39 of the Act and, as such, the appeal is not maintainable. 13. In Metha Teja Singh & Co. v. Fertilizer Corporation of India. AIR 1968 Del. 188 , the Division Bench of Delhi High Court held that if an appeal is held to be incompetent, then the memorandum of appeal can, in a fit case, be treated as a revision provided there is no other legal infirmity in adopting the said course and of course, cause of justice so demands. In our view, it is not a fit case where this Court can covert the appeal into revision suo motu. 14. Though the learned Counsel for the appellants raised several other grounds in the Memorandum of additional grounds, but in view of our foregoing discussion with regard to maintainability of the appeal, holding that appeal is not maintainable under Section 39 of the Arbitration Act, 1940, there is no need to go into the same. 15. The civil miscellaneous appeal is accordingly dismissed as not maintainable. No order as to costs.