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2014 DIGILAW 1193 (RAJ)

Gopi Ram v. Union of India

2014-05-21

ALOK SHARMA

body2014
Hon'ble SHARMA, J.—This misc. appeal under Section 39 (vi) of the Arbitration & Conciliation Act, 1940 (hereinafter `the Act of 1940') has been filed against the judgment and decree dated 11.4.1991 passed by the Addl. District Judge No. 1, Ajmer (hereinafter `the trial court') whereby the objection of the claimant appellant to the award dated 28.12.1984 passed by the Sole Arbitrator were dismissed and the application under Section 17 of the Act of 1940 filed by the respondent Central Public Works Department allowed making the award in issue the rule of the Court and directing that a decree be drawn in terms thereof. Facts: 2. In a nutshell the facts of the case are that appellant filed a claim petition before the trial court stating therein that he entered into a contract agreement No. EE/1 of 1975-76 with the respondent No. 1 Union of India through the Executive Engineer CPWD, Ajmer for development of "land for CRPF works" at Ajmer S.H. providing water meters in residential quarters type II/168, Type III/4 and Type IV/4, Nos. at Foysagar Ajmer. It was stated that according to the clause 24 of the said agreement, if any, dispute arose out of the said contract, the same was to be referred to the Sole Arbitrator of a person appointed by the Chief Engineer (Central PWD) Northern Zone. It was submitted that as a dispute in respect of the claim of the contract between the parties for Rs. 28,614.34 paisa arose as a result of which the appellant invoked the arbitration clause for settlement of the disputes by his notice dated 15.2.1979 to the Chief Engineer, Northern Zone, CPWD, New Delhi under Section 4 read with Section 8(1) of the Arbitration Act, 1940 (Act of 1940). Appointment of an Arbitrator to settle the dispute in respect of the appellant's claim was sought. One G.V.G. Krishnamurthy was appointed as the Sole Arbitrator and entered upon reference. Claims were filed. They were denied and counter claim laid. Mr. G.V.G. Krishnamurthy resigned on 4.3.1983. The respondent Railways then appointed one C.H. Prabhakhar Rao on 16.6.1983 who entered upon the reference on 27.6.1983. Documents in support of the respective cases filed. 3. The time for pronouncing the award extended on various occasions. Claims were filed. They were denied and counter claim laid. Mr. G.V.G. Krishnamurthy resigned on 4.3.1983. The respondent Railways then appointed one C.H. Prabhakhar Rao on 16.6.1983 who entered upon the reference on 27.6.1983. Documents in support of the respective cases filed. 3. The time for pronouncing the award extended on various occasions. The Arbitrator fixed the date of hearing in the matter on 4.12.1984 at Delhi vide his letter dated 4.8.1984 and also required the appellant-claimants consent for enlargement of time upto 31.12.1984 for making and the publishing award. The appellant telegraphically sought adjournment on the said date i.e. 4.12.1984 as he was allegedly suffering from fever and sent a confirmatory letter on 4.12.1984 to the same effect. The Arbitrator without considering the request of the appellant for adjournment is stated to proceed ex-parte and without further intimation made and signed the award on 28.12.1984. Thereunder the Arbitrator dismissed the claims of the appellant and allowed the respondent railways counter claims to an extent of Rs. 19971.42 (Rupees Nineteen Thousand Nine Hundred and Sixty One and Paisa Forty Two). In the circumstances the appellant submitted an application under Section 30 read with Section 33 of the Indian Arbitration Act in the Court of District Judge, Ajmer challenging the award dated 28.12.1984. Vide order dated 11.4.1991 the application was dismissed. Hence this appeal. 4. I find no force in the contention of Mr. Ranjan, Sr. Counsel that the Arbitrator ought to have necessarily adjourned the matter on request for adjournment vide telegram dated 3.12.1984 followed by the letter to the same effect on 4.12.1984 pleading inability to appear on 4.12.1984 because of illness. In my considered opinion a mere request for adjournment on the ground of illness without any supporting document/prescription was/is of no avail. It is not the case of the appellant claimant that any such document of illness was produced before the Arbitrator even along-with the letter dated 4.12.1984. The telegram dated 3.12.1984 as also the letter dated 4.12.1984 are not stated to have contained the nature of illness suffered as alleged by the claimant at the relevant time. It is not the case of the appellant claimant that any such document of illness was produced before the Arbitrator even along-with the letter dated 4.12.1984. The telegram dated 3.12.1984 as also the letter dated 4.12.1984 are not stated to have contained the nature of illness suffered as alleged by the claimant at the relevant time. Adjournments are matter of discretion of the Arbitration and unless the discretion is shown to have been unjustly and unfairly exercised in the facts of a case it can not constitute a denial of natural justice and bring it within the scope of misconduct sections 33 and 34 of the Act of 1940. From the facts on record such does not appear to be in the present case. No misconduct can thus be attributed to the Arbitrator solely in the circumstance of his having refused the adjournment as sought by the claimant appellant, Sr. Counsel's contention and proceeded thereafter ex-parte to pronounce the award. The award being vitiated by the denial of principles of natural justice and consequent misconduct is without force and is rejected. 5. Mr. Ranjan, Sr. counsel appearing for the appellant has further submitted that the award dated 28.12.1984 passed by the Sole Arbitrator was further vitiated on two counts (1) it was an unreasoned award and (2) it was passed beyond the agreed period for passing the award i.e. beyond 4.12.1984. For the first ground of challenge reliance has been placed on the Judgment of the Hon'ble Supreme Court reported in the case of State of Uttar Pradesh & Ors. vs. Combined Chemicals Company Private Limited (2011) 2 SCC 151 and Raipur Development Authority vs. Chokhamal Contractors (1989) 2 SCC 721 as also the judgment of this Court in S.B. Civil Misc. Appeal No. 184/1999 Union of India vs. Jitendra Kumar Sharma (J.K. Sharma) decided on 19.11.2013. On the second aspect of the challenge i.e. passing of the award beyond the agreed time upto 4.12.1984 (award passed on 28.12.1984) reliance has been placed on the judgment of the Hon'ble Supreme Court in the case of State of Punjab vs. Hardyal, AIR 1985 SC 920 . 6. None has, as usual, appeared on behalf of the respondent Union of India in-spite of service. The lack of accountability and uncaring attitude of Union of India is shocking not only in this case but in series of other similar cases. 7. 6. None has, as usual, appeared on behalf of the respondent Union of India in-spite of service. The lack of accountability and uncaring attitude of Union of India is shocking not only in this case but in series of other similar cases. 7. I have heard the counsel for the appellant and perused the award dated 28.12.1984. I have also gone through the judgments relied upon by the counsel for the appellant. 8. The principle that the Arbitration both under the Act of 1940 as also under the Act of 1996 is a private law adjudication is a settled proposition. Private law adjudication depends on the agreement between the parties in contest superimposed by the relevant Arbitration laws promulgated by the Legislature. No provision of the Act of 1940 provided for passing of a reasoned award. Such a situation was only brought about under Section 31(3) of the Act of 1996. The award dated 28.12.1984 passed by the Arbitrator is admittedly an award under the Act of 1940. It is not the appellant's case that the arbitration clause between the parties in the contract entered into between them in 1975-76 required the passing of a reasoned award. It was thus not contractually mandatory or otherwise a requirement of law under the extant Arbitration Act that a reasoned award be passed in respect of the pre-dispute 25.1.1996 between the parties referred to the Arbitrator (arbitration proceedings had commenced as early as 1983). This position is well established from the Judgment of the Constitution Bench of the Hon'ble Supreme Court of Raipur Development Authority vs. Chokhamal Contractors (supra) wherein the Hon'ble Constitution Bench of the Apex Court recognized the distinction between private law adjudication by the Arbitrators and public law adjudication by the Courts exercising the sovereign power of the State. The Hon'ble Apex Court recorded the fact that under general law settlement of dispute under public law requires the giving of reason. But not so unless the contractual parties resorting to private law adjudication by the Arbitrator otherwise expressly agreed and required the passing of a reasoned award. Contrary to the submission of Sr. The Hon'ble Apex Court recorded the fact that under general law settlement of dispute under public law requires the giving of reason. But not so unless the contractual parties resorting to private law adjudication by the Arbitrator otherwise expressly agreed and required the passing of a reasoned award. Contrary to the submission of Sr. Counsel, the Hon'ble Constitution Bench in the case of Raipur Development Authority vs. Chokhamal Contractors (supra) has not laid down that under the Act of 1940 a reasoned award was mandated even in the absence of a specific requirement on that count in the agreement between the parties. The Hon'ble Apex Court has only observed on the desirability of the state instrumentalities and the State itself dealing with public monies that while entering into contracts with an arbitration clause they specifically provide for passing of a reasoned award by the Arbitrator to whom disputes were to be referred under the contract. That however, cannot be construed to be the ratio descendi of the Hon'ble Apex Court authoritatively holding that even under the Act of 1940 awards were to be necessarily reasoned awards, absence of such a condition in the contract between the parties and the arbitration clause itself not withstanding. To my mind the well settled, consistently held and in any event the dominant legal position with regard to arbitration awards under the Act of 1940 is that unless otherwise provided for in the arbitration clause of the agreement between the parties unreasoned awards are not per se a ground of misconduct of the arbitrator under Section 30 of the Act of 1940 sufficient for setting aside such awards. This very legal position has been reiterated and asserted by the Hon'ble Supreme Court in the cases of State of Rajasthan vs. Nav Bharat Construction Co. (2006) 1 SCC 86 , State of Andhra Pradesh & Ors. vs. R.V. Rayanim and others, (1990) SCC 433 and Rajendra Construction Co. vs. Maharashtra Housing & Area Development Authority & Ors. (2005) 6 SCC 678 . In these circumstances I find myself unable to hold that the Judgment of the Hon'ble Supreme Court in the case of Union of India vs. Jitendra Kumar Sharma (J.K. Sharma) (supra) renders a binding contrary view. vs. Maharashtra Housing & Area Development Authority & Ors. (2005) 6 SCC 678 . In these circumstances I find myself unable to hold that the Judgment of the Hon'ble Supreme Court in the case of Union of India vs. Jitendra Kumar Sharma (J.K. Sharma) (supra) renders a binding contrary view. In the aforesaid judgment no such ratio descendi is discernable and if at all it could be it would be palpably per-incurium being contrary to the judgment of the Constitution Bench in the case of Raipur Development Authority (supra) as also the specific statement of law on this issue by the Hon'ble Apex Court in State of Rajasthan vs. Nav Bharat Construction Co., State of Andhra Pradesh & Ors. vs. R.V. Rayanim and others and Rajendra Construction Co. vs. Maharashtra Housing & Area Development Authority (supra). In the circumstances the judgment of this Court in S.B. Civil Misc. Appeal No. 184/1999 Union of India vs.Jitendra Kumar Sharma (J.K. Sharma) and connected CMA No. 168/2001, Jitendra Kumar Sharma vs. The Union of India & Ors., decided on 19.11.2013 holding that reasoned awards de hors any express provision in regard thereto in the agreement between the parties reflected in the arbitration clause or otherwise were mandatory even under the Act of 1940 is not the correct statement of law and not binding on the Court. I also do not find any good reason to refer the matter to a Larger Bench even while disagreeing with the judgment passed by a Hon'ble Co-ordinate Bench in Union of India vs. Jitendra Kumar Sharma (J.K. Sharma) and Jitendra Kumar Sharma vs. The Union of India & Ors. (supra) as the said judgment is per-incurium and flies in the face of not only a Constitution Bench Judgment of the Hon'ble Supreme Court in the case of Raipur Development Authority (supra) but also a series of other judgments of the Hon'ble Supreme Court referred to here-in-above. 9. As far as the argument of the counsel for the appellant with regard to the award dated 28.12.1984 being passed beyond the agreed time limit between the parties and therefore vitiated by the Arbitrator's misconduct is concerned, it too is without any substance. It is on record that the time was extended by the parties from time to time for passing of the award. It is on record that the time was extended by the parties from time to time for passing of the award. The Arbitrator thereafter sought the consent of the appellant (as the claimant before him) for extension of time in passing the award. Vide a telegram sent in response on 3.12.1984, the appellant contractor informed the Arbitrator that he was ill and could not thus be present on 4.12.1984 and prayed that the matter be adjourned. This the Arbitrator construed as also did the lower court as an implied consent of the claimant contractor for extension of time upto 3.4.1985 as sought by the Arbitrator and the other party. This conclusion was based on the inferential fact that in the event the appellant contractor had refused the extension of time, he would have so specifically stated whereupon the non-claimant CPWD would have had an option of approaching the competent court under Section 28 of the Act of 1940 for extension of time. In my considered view the reasoning of the Arbitrator as upheld by the lower appellate court with regard to extension of time on the basis of implied consent of the appellant from his request for adjournment of the matter beyond 4.12.1988 cannot be faulted with. It was a reasonable inference. It is no doubt true that in the event the appellant contractor had specifically refused extension of time and not sought adjournment to a future date owing to his illness, the respondent CPWD as the non-claimant before the Arbitrator would have approached the competent court seeking extension of time under Section 28 of the Act of 1940. That would no doubt not have been unreasonably withheld. Aside of the aforesaid, even otherwise time can be extended by the appellate court in its discretion in given circumstances. Section 28 of the Act of 1940 provides as under: "28. Power to Court only to enlarge time for making award: (1) 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 provisions in an arbitration agreement whereby the arbitration of 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." 10. (2) Any provisions in an arbitration agreement whereby the arbitration of 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." 10. The Hon'ble Supreme Court had held in the case of Hindustan Steel Works Construction Ltd. vs. C. Rajasekhar Rao (1987) 4 SCC 93 that post reference to the arbitrator, the parties can extend time by consent and I may add, by implied consent when evident from their conduct. The same legal position was earlier stated by the Hon'ble Supreme Court in the case of Hari Krishan Wattal vs. Vaikunth Nath Pandya (Dead) by L.Rs. and Another (1973) 2 SCC 510 . Further in any event in the case of State of Punjab vs. Hardayal (1975) 2 SCC 629 the Hon'ble Supreme Court has held that "it is therefore, clear that the arbitrator gets the jurisdiction to enlarge the time for making the award only in a case where after entering on the arbitration, the parties to the arbitration agreement consent to such enlargement of time." The Hon'ble Apex Court in the aforesaid case drawing on section 28 (1) of the Act of 1940 held that the Court has the power to extend time for making of an award even where an award has been passed subsequent to expiry of time for making the award agreed upon between the parties. It has been specifically held that the power can also be "exercised even by the appellate court." In the aforesaid case, considering the fact that the appeal being heard by the Hon'ble Supreme Court in 1985 pertained to the year 1970, in-stead of remanding the matter to the trial court for deciding whether time for making the award in issue ought to be extended or not, the Hon'ble Apex Court itself extended the time and enlarged it till the date of the passing of the award by the Arbitrator. It was held that "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 demur, this will be a fit case, in our opinion, for the extension of time. "A similar if not a better situation obtains in the present case. "A similar if not a better situation obtains in the present case. The award is dated 28.12.1984 and was passed about 30 years ago as of today. Remand to the trial court for exercise of its power under Section 28(1) of the Act of 1940 would further delay the matter and defeat the policy of law that arbitration proceedings should be expedited. The conduct of the appellant in seeking adjournment to a date beyond 4.12.1984 could be reasonably inferred as an implied consent for extension of time for making of the award. Hence I would be inclined to enlarge, in the alternative, time for making of the award by the Arbitrator till the passing of the award dated 28.12.1984. 11. No other argument was made before me. 12. In the circumstances, I find no force in this appeal. Dismissed.