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2015 DIGILAW 521 (JHR)

R. M. Sinha v. State of Jharkhand

2015-04-23

SHREE CHANDRASHEKHAR

body2015
ORDER Seeking quashing of order dated 18.05.2013 in Arbitration Application No. 01 of 2011 and order dated 29.05.2014, the present writ petition has been filed. 2. The petitioner-company was awarded work of erection of four steel gates in Gumani Barrage at Barhait and an agreement was executed between the parties on 04.03.2000. A dispute arose as to change in items and subsequent increase in value of work. The claimant was directed to execute a revised agreement which it refused to sign and finally, the contract was rescinded and the security deposit was forfeited. In compliance of order passed in Arbitration Petition No. 08 of 2007 the retired Engineer-in-Chief of Water Resources Department was constituted as the Arbitral Tribunal. An award dated 16.08.2010, which was corrected on 22.08.2010, was prepared and signed by the learned Arbitrator. The award was served upon the respondent-State of Jharkhand on 26.08.2010. An application under Section 34 of the Arbitration and Conciliation Act, 1996 was filed on 14.02.2011. However, vide order dated 18.05.2013 the delay in filing the Arbitration Application No. 01 of 2011 was condoned, exparte and summon was issued to the claimant-petitioner herein. The claimant appeared and filed written statement on 26.09.2013 and it also filed reply to application under Section 5 of the Limitation Act, on 26.09.2013 itself. Another application dated 09.01.2014 under Section 151 C.P.C. was filed by the claimant seeking recall of order dated 18.05.2013 however, vide order dated 29.05.2014 the application seeking recall of order dated 18.05.2013 has been dismissed. Constrained, the petitioner has approached this Court. 3. The learned counsel for the petitioner submits that, in view of provision under Section 34 (3) of the Arbitration Conciliation Act, 1996, the Limitation Act, 1963 is applicable to arbitration matters covered under 1996 Act however, except as expressly provided for under Section 34 (3) of the Arbitration and Conciliation Act, 1996. It is submitted that, the period prescribed under the Limitation Act, 1963 could have been extended only by a period of thirty days by the Court under the proviso to Section 34 (3) of the 1996 Act and no application under Section 34 challenging the award can be entertained by the Court beyond the period of limitation prescribed thereunder. 4. Per contra, Mr. 4. Per contra, Mr. V. K. Prasad, the learned S.C. (L&C) for the respondent-State of Jharkhand submits that, order dated 18.05.2013 by which the delay in filing the Arbitration Application was condoned has not been challenged by the petitioner by approaching this Court. It is further submitted that, the trial court entertaining an application under Section 34 of the Arbitration and Conciliation Act, 1996 has no power to recall its own order and therefore, application filed by the petitioner seeking recall of order dated 18.05.2013 has rightly been dismissed vide order dated 29.05.2014. 5. Having heard the learned counsel for the parties and after perusing the documents on record, I am of the opinion that the present writ petition deserves to be allowed. In the Arbitration Application under Section 34 of the Arbitration and Conciliation Act, 1996, the applicant has clearly averred that a copy of award dated 16.08.2010/22.08.2010 was received on 26.08.2010. The said application was filed in the Court of Subordinate Judge-I Sahibganj on 14.02.2011 and vide order dated 18.05.2013 the delay in filing the Arbitration Application was condoned and the Arbitration Application was admitted for hearing. The petitioner-opposite party in Arbitration Application, appeared on 26.09.2013 and filed written statement taking objection of limitation. Section 34 of the Arbitration and Conciliation Act, 1996 reads as under: 34. “Application for setting aside arbitral award. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and subsection (3). Section 34 of the Arbitration and Conciliation Act, 1996 reads as under: 34. “Application for setting aside arbitral award. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and subsection (3). (2) An arbitral award may be set aside by the Court only if (a) the party making the application furnishes proof that (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation. - Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or section 81. Explanation. - Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or section 81. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under subsection (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.” 6. In “Union of India Vs. Popular Construction Company” reported in (2001) 8 SCC 470 , the Hon'ble Supreme Court has held that Section 5 of the Limitation Act is not applicable in arbitration matters falling under 1996 Act. It has been held that, the expression “but not thereafter” used in proviso to Sub-Section 3 of Section 34 would amount to an express exclusion within the meaning of Section 29 (2) of the Limitation Act. The Hon'ble Supreme Court has further held as under; 16. “Furthermore, Section 34(1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award “in accordance with” subsection (2) and subsection (3). Subsection (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, subsection (3) would not be an application “in accordance with” that subsection. Subsection (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, subsection (3) would not be an application “in accordance with” that subsection. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The importance of the period fixed under Section 34 is emphasised by the provisions of Section 36 which provide that “where the time for making an application to set aside the arbitral award under Section 34 has expired … the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court”. This is a significant departure from the provisions of the Arbitration Act, 1940. Under the 1940 Act, after the time to set aside the award expired, the court was required to “proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow” (Section 17). Now the consequence of the time expiring under Section 34 of the 1996 Act is that the award becomes immediately enforceable without any further act of the court. If there were any residual doubt on the interpretation of the language used in Section 34, the scheme of the 1996 Act would resolve the issue in favour of curtailment of the court’s powers by the exclusion of the operation of Section 5 of the Limitation Act.” 7. Referring to Section 2 (j) of the Limitation Act, 1963 in “Assam Urban Water Supply and Sewerage Board Vs. Subash Projects and Marketing Limited” reported in (2012) 2 SCC 624 , the Hon'ble Supreme Court held as under; 14. “........ Section 2 (j) of the 1963 Act when read in the context of Section 34 (3) of the 1996 Act, it becomes amply clear that the prescribed period for making an application for setting aside an arbitral award is three months. The period of 30 days mentioned in the proviso that follows subsection (3) of Section 34 of the 1996 Act is not the “period of limitation” and, therefore, not the “prescribed period” for the purposes of making the application for setting aside the arbitral award. The period of 30 days mentioned in the proviso that follows subsection (3) of Section 34 of the 1996 Act is not the “period of limitation” and, therefore, not the “prescribed period” for the purposes of making the application for setting aside the arbitral award. The period of 30 days beyond three months which the court may extend on sufficient cause being shown under the proviso appended to subsection (3) of Section 34 of the 1996 Act being not the “period of limitation” or, in other words, the “prescribed period”, in our opinion, Section 4 of the 1963 Act is not, at all, attracted to the facts of the present case”. 8. As noticed above, the Arbitration Application No. 01 of 2011 was filed beyond the period of limitation however, the trial court admitted the application for hearing vide order dated 18.05.2013. The trial court apparently committed an error in law in condoning the delay in filing Arbitration Application, without hearing the opposite party. The learned counsel for the petitioner has submitted that, the petitioner-opposite party has filed reply to the application under Section 5 of the Limitation Act. 9. Considering the above facts, impugned orders dated 18.05.2013 and 29.05.2014 are hereby set-aside in so far as, the question of limitation is concerned. The matter is remitted back to the trial court which shall hear application under Section 5 of the Limitation Act, first and after hearing both parties, shall pass appropriate order.