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2021 DIGILAW 391 (CAL)

Executive Engineer v. Manickam Enterprises

2021-09-09

HARISH TANDON, SHIVAKANT PRASAD

body2021
JUDGMENT : 1. The stale claim is sought to be resuscitated by filing an application under section 34 of the Arbitration and Conciliation Act along with an application for condonation of delay of more than 800 days. The court below rejected the said application for condonation of delay in view of the provisions contained under section 34 of the said Act which does not permit the condonation of delay beyond the maximum cap provided thereunder. 2. Before we embark upon the facts adumbrated in the appeal, it would be apposite and profitable to quote section 34 of the said Act which runs thus:- “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). — (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) the party making the application [establishes on the basis of the record of the arbitral tribunal 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 1. — For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] [(2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.] (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 sub-section (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. [(5) An application under this section shall be filed by a party only after issuing a prior to notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. (6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in subsection (5) is served upon the other party.]” 3. Sub-section (3) of section 34 postulates for an application to set aside the award to be made within three months from the date of the receipt of the arbitral award. Sub-section (3) of section 34 postulates for an application to set aside the award to be made within three months from the date of the receipt of the arbitral award. However, the proviso inserted thereto bestowed power upon the Court to extend the aforesaid period of three months for a further period of 30 days provided the Court is satisfied that the applicant was prevented by sufficient cause in not making the application within the stipulated period provided in the enabling provision. 4. Indubitably the application under section 34 of the Act was taken out by the petitioner after the expiration of a maximum period provided under the aforesaid provision along with an application for condonation of delay. 5. The fact which emerges from the instant appeal is that an agreement was entered into with the petitioner for providing and installing the reverse osmosis plant along with the distribution of pipeline at Dhanikari village under Zilla Parisad. It is undisputed that the said agreement contains an agreement clause that in the event of any difference arising out of a contract, touching the contract or flowing from the contract, the same will be decided by an arbitrator. The dispute cropped up between the parties and the arbitration agreement was invoked and the matter rolled in this Court under section 11 of the said Act. The Chief Justice or his designate appointed the arbitrator and the parties submitted to the jurisdiction of the arbitrator and participated in the proceeding. The nomenclature of the respondent in an arbitral proceeding is the seminal issue raised by the appellant before us, as according to him, the agreement was entered into between an Executive Engineer of the Zilla Parisad and the respondent and the Executive Engineer having not made party therein the award is nonest and does not bind the appellant. 6. One has to look not only to the nomenclature of the agreement but also the contents thereof in order to find out the real intend of the parties executing the agreement. The contract was awarded by the Zilla Parisad and since the said Zilla Parisad is a juristic person has to be represented by the natural person in whatever capacity it has. The party to an agreement is the Zilla Parisad who awarded the contract and is represented by its officer. The contract was awarded by the Zilla Parisad and since the said Zilla Parisad is a juristic person has to be represented by the natural person in whatever capacity it has. The party to an agreement is the Zilla Parisad who awarded the contract and is represented by its officer. Our attention is drawn to the award wherein the Executive Engineer participated in the arbitral proceedings presenting himself and represented by the counsel. The award is passed and it is not a case made out herein that the award was not served on the Zilla Parisad. After the expiration of the period provided in sub-section (3) of section 34 of the Act, the respondent put the arbitral award in execution under section 36 thereof. We are told that the appellant herein applied under section 47 of the Code of Civil Procedure challenging the executability of the arbitral award and having failed to achieve the desired result recourse was taken under section 34 of the Act for setting aside the arbitral award. 7. The aforesaid facts have been recorded for the purpose of understanding the actual dispute and should not be treated to have been made on merit of the award., the moment the Court finds that the application under section 34 of the Act is not maintainable. As indicated hereinabove section 34 is explicit, clear and vividly reflect the intention of the legislature at the time of its incorporation and making the award as final with an intend to avoid unnecessarily protraction of the litigation by challenging the same in the corridors of the Court. The statute has provided a timeline within which the application can be made by a party and the moment the outer cap has been given therein without reserving any power in the Court to extend beyond the said maximum period, it necessarily excludes the operation of section 5 of the Limitation Act. The aforesaid observation is fortified by a judgment of the Apex Court rendered in case of Union of India Vs. M/s Popular Construction Company reported in (2001) 8 SCC 470 . The seminal point which cropped up before the Supreme Court was on the applicability of section 5 of the Limitation Act to an application under section 34 of the Arbitration and Conciliation Act. It is thus observed:- “15. M/s Popular Construction Company reported in (2001) 8 SCC 470 . The seminal point which cropped up before the Supreme Court was on the applicability of section 5 of the Limitation Act to an application under section 34 of the Arbitration and Conciliation Act. It is thus observed:- “15. 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 law” 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. 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 emphasized 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 and the Code of Civil Procedure 1908 in the same manner as it it ware a decree of a 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 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”. 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 Courts powers by the exclusion of the operation of Section 5 of the Limitation Act.” 8. In view of the exposition of law enunciated in the aforesaid judgment of the Supreme Court, it is beyond cavil of doubt that when a special statute provides the period of limitation with the outer cap, it impliedly and necessarily excludes the operation of sections 4 to 28 of the Limitation Act. In view of the exposition of law enunciated in the aforesaid judgment of the Supreme Court, it is beyond cavil of doubt that when a special statute provides the period of limitation with the outer cap, it impliedly and necessarily excludes the operation of sections 4 to 28 of the Limitation Act. The application for condonation of delay beyond the outer cap provided in proviso to sub-section (3) of section 34 of the Act, is impliedly excluded and the application under section 34 of the Act is not maintainable. 9. The Limitation Act does not destroy the right of the party but debars the party for a remedy before the Court. Since the remedy has been foreclosed because of the inordinate delay in filing the application for condonation of delay, we do not find any illegality and/or infirmity in the impugned judgment. 10. The appeal is thus dismissed.