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2017 DIGILAW 1033 (ALL)

EXECUTIVE ENGINEER, NATIONAL HIGHWAY DIVISION v. SATYA PRAKASH & BROTHERS (P) LTD. , NEW DELHI

2017-04-18

DILIP GUPTA, PRABHAT CHANDRA TRIPATHI

body2017
JUDGMENT By the Court.—This First Appeal From Order has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (the Act) for setting aside the order dated 19 November 2016 by which the learned District Judge, Etawah has rejected the objections that had been preferred by the appellants under Section 34 of the Act against the award dated 18 July 2015 of the sole arbitrator. The objections have been rejected for the reason that the application filed by the appellants under Section 5 of the Limitation Act to condone the delay in filing the objections had been rejected. 2. It is against the award dated 18 July 2015 of the sole arbitrator that the appellants had filed objections under Section 34 of the Act on 13 January 2016. Together with the objections, an application under Section 5 of the Limitation Act to condone the delay in filing the objections was also filed. 3. Section 34 of the Act deals with application for setting aside arbitral award. Sub-section (1) 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 sub-section (2) and sub-section (3). While, sub-section (2) deals with the grounds on which the arbitral award may be set aside, sub-section (3) provides that an application for setting aside the award may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award, 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. Sub-section (1) and sub-section (3) of Section 34 of the Act, which are relevant for the controversy involved in this appeal are, therefore, reproduced below : “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 sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) .................. (b) .................. 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 sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) .................. (b) .................. (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.” 5. It is, therefore, clear from a bare perusal of sub-section (3) of Section 34 of the Act that the application for setting aside the arbitral award may not be made after three months have elapsed from the date on which the party making the application had received the arbitral award. However, this period of three months can be extended by a further period of thirty days, but not thereafter provided the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months. In other words, no application for setting aside the arbitral award under sub-section (3) of Section 34 can be entertained beyond three months and a further period of thirty days. The power to condone the delay in filing the application beyond the stipulated period of three months for setting aside the arbitral award is contained in sub-section (3) of Section 34 of the Act. The application can be entertained beyond the period of three months from the date on which the party making that application had received the arbitral award within a further period of thirty days but not beyond that. 6. It is keeping in mind the aforesaid provisions contained in sub-section (3) of Section 34 that the contents of the affidavit filed in support of the application that was purportedly filed under Section 5 of the Limitation Act has to be examined. 7. 6. It is keeping in mind the aforesaid provisions contained in sub-section (3) of Section 34 that the contents of the affidavit filed in support of the application that was purportedly filed under Section 5 of the Limitation Act has to be examined. 7. It needs to be stated that the parties to the Arbitration are as follows : “In the matter of arbitration between: M/s Satya Prakash & Bros. Pvt. Ltd. A-1, C.C. Colony, Opposite Rana Pratap Bagh, Delhi-110 007 Versus 1) State of Uttar Pradesh, through its Chief Engineer, National Highway U.P. P.W.D., 96, Mahatma Gandhi Marg, Lucknow, U.P. 2) The Superintendent Engineer, National Highway Circle, P.W.D. Kanpur, Uttar Pradesh 3) The Executive Engineer, National Highway Division, U.P.P.W.D., Etawah, Uttar Pradesh” 8. The award was made by the sole arbitrator on 18 July 2015 and the application under Section 34 of the Act with the application under Section 5 of the Limitation Act was filed on 13 January 2016. 9. The award was made by the sole arbitrator on 18 July 2015 and the application under Section 34 of the Act with the application under Section 5 of the Limitation Act was filed on 13 January 2016. 9. The main facts stated in the affidavit filed in support of the application to condone the delay are as follows : (i) the award was made by the sole arbitrator on 18 July 2015; (ii) in connection with the aforesaid award, a letter dated 21 July 2015 was sent by the Executive Engineer, National Highways Division, Public Works Department, Etawah (the Executive Engineer) to the Superintending Engineer, National Highways Circle, Public Works Department, Kanpur (the Superintending Engineer) for further action; (iii) the Superintending Engineer, taking cognizance of the aforesaid letter dated 21 July 2015 of the Executive Engineer, sent a letter dated 29 July 2015 to the Chief Engineer (National Highways), Public Works Department for sending it to the National Highways Authority for necessary action; (iv) in connection with the award dated 18 July 2015, the Executive Engineer again wrote letters dated 1 October 2015, 8 October 2015 and 15 October 2015 to the Chief Engineer (National Highways) Public Works Department, Lucknow for further action; (v) in connection with the award dated 18 July 2015 a letter dated 15 October 2015 was sent by the Chief Engineer (National Highways) to the General Manager, National Highways Authority, Lucknow for filing an appeal and a communication dated 1 December 2015 was also sent to the Superintending Engineer for consideration of further steps to be taken in the matter; (vi) in connection with the aforesaid dispute, communications dated 16 November 2015 and 30 November 2015 were also sent by the Superintending Engineer (Litigation), Public Works Department, Lucknow and Chief Engineer, Kanpur Division were also received through the Superintending Engineer; (vii) that the letter 1 December 2015 of the opposite party that was received on 1 December 2015 was also sent on 16 December 2015 by the Executive Engineer to the Superintending Engineer for seeking instructions regarding steps to be taken; (viii) the Chief Engineer (National Highways) sent a communication dated 21 December 2015 to the Superintending Engineer for seeking advice from the District Government Counsel for further steps to be taken against the award dated 18 July 2015; (ix) pursuant to the aforesaid direction, instructions were received by the Executive Engineer on 28 December 2015, whereafter he sent a communication dated 28 December 2015 to the District Government Counsel and after receiving the certified copy of the award, objections have been filed under Section 34 of the Act; (x) the application under Section 34 of the Act had to be presented upto 17 October 2015 but delay was caused because the work was entrusted in 2009-10 to the National Highways Authority and since a portion of the bye-pass was transferred to the Public Works Department, Aligarh Unit, delay was caused because of the jurisdiction. The delay should, therefore, be condoned. 10. It clearly transpires from the application filed under Section 5 of the Limitation Act that even according to the appellants, the application under Section 34 of the Act was required to be filed by 17 October 2015. This is for the reason that the appellants had received a copy of the award on 18 July 2015 on which date the award was made and three months would expire on 17 October 2015. Under the proviso to sub-section (3) of Section 34 of the Act, thirty days further time is given for filing the application, provided the appellants are able to satisfy the Court that it was prevented by sufficient cause from making the application within the said period of three months. The application under Section 34 of the Act was admittedly filed on 13 January 2016 much beyond thirty days from 17 October 2015. 11. It has, therefore, to be seen whether the delay beyond thirty days from 17 October 2015 can be condoned. There is no manner of doubt from a bare perusal of the provisions of sub-section (3) of Section 34 of the Act that any delay beyond thirty days from the date of expiry of three months from the date on which the party making the application had received the arbitral award, cannot be condoned. Sub-section (3) of Section 34 of the Act provides that an application for setting aside the award may not be made after three months have elapsed. The proviso, however, also clearly stipulates that the application can be entertained even after a period of three months, if it is filed within a further period of thirty days but not thereafter. 12. Learned counsel for the appellants has, however, submitted that the time period within which the application under Section 34 of the Act could be filed should be calculated from 28 December 2015 when a certified copy of the arbitral award was received. This submission has been made on the basis of the averments made in paragraph-10 of the application filed under Section 5 of the Limitation Act. It has been stated in the said paragraph that after the advice was given by the District Government Counsel on 28 December 2015 and after the certified copy of the arbitral award was received that the application under Section 34 of the Act was filed. 13. It has been stated in the said paragraph that after the advice was given by the District Government Counsel on 28 December 2015 and after the certified copy of the arbitral award was received that the application under Section 34 of the Act was filed. 13. This contention of learned counsel for the appellants cannot be accepted. The application filed under Section 5 of the Limitation Act only mentions that after the advice was given by the District Government Counsel on 28 December 2015 and after a certified copy of the award was received, the application under Section 34 of the Act was filed. It does not mention when the copy of the award was received by the party. In fact as is clear from the averments made in paragraphs 3, 4, 5 and 6 of the application, the award had been received on 18 July 2015 or atleast on or before 21 July 2015 since the Executive Engineer had written a letter dated 21 July 2015 to the Superintending Engineer for further action in terms of the award dated 18 July 2015. The averments made in the application do not indicate that the Superintending Engineer or the Chief Engineer had sought a copy of the arbitral award. These averments, when read together with the averments made in paragraph-11 of the application, clearly denote that the arbitral award was actually received by the party on 18 October 2015 because the period of three months was sought to be calculated from that date. 14. Learned counsel for the appellants has placed reliance upon the decision of the Supreme Court in Union of India v. Tecco Trichy Engineers and Contractors, (2005) 4 SCC 239 , to contend that period of limitation prescribed under sub-section (3) of Section 34 of the Act should start to run from 28 December 2015. The Supreme Court observed that service of arbitral award on the General Manager by way of receipt in his inwards office cannot be taken to be sufficient notice so as to activate the department to take appropriate steps in respect of and in regard to the award passed by the arbitrators to constitute starting point of limitation for the purposes of Section 34(3) of the Act and service of notice on the Chief Engineer would be the starting point of limitation. Such observations were made because the Chief Engineer has signed an agreement on behalf of the Union of India. In the present case, it is clear from the affidavit filed by the Executive Engineer in support of the application filed under Section 5 of the Limitation Act that the agreement resulting in the arbitral award was executed by the Executive Engineer himself. In any case, the factual aspects for raising this plea are not contained in the application filed under Section 5 of the Limitation Act and on the contrary it has been categorically stated that the time period within which the application under Section 34 of the Act could be filed was upto 17 October 2015. It cannot, therefore, be urged by the appellants that the limitation would start to run from 28 December 2015. 15. The Supreme Court in Union of India v. Popular Constructions Company, (2001) 8 SCC 470 , examined whether the provisions of Section 5 of the Limitation Act are applicable to an application challenging the award under Section 34 of the Act. It was sought to be contended that in view of the provisions of Section 29(2) of the Limitation Act, which makes the provisions of Section 5 of the Limitation Act applicable to special laws, the delay could be condoned. The Supreme Court after noticing the crucial words in the proviso to sub-section (3) of Section 34 but not thereafter observed that Section 5 of the Limitation Act would not apply and the application under Section 34 of the Act had to be filed within the period prescribed. The observations are as follows: “12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would, therefore, bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result. ............................... 16. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result. ............................... 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” sub-section (2) and sub-section (3). Sub-section (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, sub-section (3) would not be an application “in accordance with” that sub-section. 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.” (emphasis supplied) 16. In Assam Urban Water Supply and Sewerage Board v. Subash Projects and Marketing Limited, (2012) 2 SCC 624 , the Supreme Court also observed that the Limitation Act is applicable to arbitration matters covered under the Act except as expressly provided for under Section 34(3) of the Act. The earlier decision of the Supreme Court in Popular Construction Company was reiterated. 17. The earlier decision of the Supreme Court in Popular Construction Company was reiterated. 17. In the instant case, the award was made by the sole arbitrator on 18 July 2015. There is no manner of doubt that the award was received by the party on 18 October 2015 because even in the application filed for condoning the delay, it was categorically stated that time within which the application under Section 34 of the Act could be filed, expired on 17 October 2015. The appellants, at best, could have filed objections beyond a further period of thirty-days from 18 October 2015 but not later. This extended period of thirty-days also stood expired on 29 November 2015. The application under Section 34 of the Act was actually filed by the appellants on 13 January 2016. Any delay beyond 29 November 2015 cannot be condoned. 18. Such being the position, the learned District Judge committed no illegality in rejecting the application by the appellants for condoning the delay and consequently the objections under Section 34 of the Act. 19. The First Appeal From Order is, accordingly, dismissed.