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Union of India Vs. K.L. Bhalla - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 183D of 1964
Judge
Reported inILR1973Delhi160
ActsArbitration Act, 1940 - Sections 14 and 16; Code of Civil Procedure (CPC), 1908 - Sections 105(1)
AppellantUnion of India
RespondentK.L. Bhalla
Advocates: R.L.Tandon and; Madan Bhatia, Advs
Cases ReferredLord v. Lee
Excerpt:
.....act to extend the time for the filing of the award by the arbitrator provided the court is satisfied that there were sufficient grounds for extending the time. (3) an award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed. sub-section (3) of section 16 of the act, on the other hand, is couched in different language and by virtue of this sub-section, an award which is remitted shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed. 16(3) clearly refers to the time fixed under s......on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.'(8) the contention of the learned counsel for the respondent is that the power given to the court under the proviso to sub-section (2) to extend the time within which the arbitrator or umpire shall submit his decision to the court has to be exercised before the expiry of the time originally fixed by the court under sub-section (2) and not thereafter, and further that if the time is not extended by the court before the expiry of the time originally fixed by the court, then under sub-section (3) the award automatically becomes void. at any rate, according to the learned counsel, the court has no power to extend the date for the filing of the decision of the arbitrator after the.....
Judgment:

M.R.A. Ansari, J.

(1) The appellant and the respondent herein entered into an agreement styled as Contract No. CWE/D-17 of 1955-56 for the improvement to the distribution system of water supply in Delhi Cantonment. This agreement contained an arbitration clause by which disputes arising between the parties to the agreement relating to the subject-matter of the agreement were to be referred to the sole arbitration of the arbitrator named in the said agreement. As a matter of fact, disputes did arise between the parties and, thereforee, these disputes were referred without the intervention of the Court to the arbitration of the sole arbitrator named in the agreement. The arbitrator made his award on 23.10.1958 and filed the same into Court. Notice of the filing of the award was issued to both the parties. Objections were filed by the appellant herein. It is not necessary for the purpose of this appeal to state the nature of the objections raised by the appellant at that stage. After hearing both the parties, the Court remitted the award back to the arbitrator for deciding the matters in dispute between the parties afresh after allowing the parties a reasonable opportunity to adduce whatever evidence they thought proper and necessary in support of their respective claims. The arbitrator was directed to file his award in Court by 31.8.1960. This time was extended subsequently to 30.11.1960. The respondent herein thereafter filed an application under sections 11 and 33 of the Arbitration Act, 1940 (hereinafter referred to as the Act) for the removal of the arbitrator. An ex parte interim injunction order was passed by the Court on 2.12.1960 prohibiting the arbitrator from proceeding with the arbitration proceedings pending the disposal of this application filed by the respondent. Ultimately, this application was dismissed by the Court by its order dated 19th August, 1961 and the interim injunction order vacated. The arbitrator thereupon proceeded with the arbitration proceedings and ultimately submitted his decision to the Court on 26.5.1962. Notices were again issued to the parties and this time the respondent herein filed objections to the decision filed by the arbitrator. One of the objections was that the arbitrator had not submitted his decision to the Court within the time by the Court and that, thereforee, the award of the arbitrator was void on that ground. These objections were filed on 9.10.1962. The appellant filed a reply to these objections on 10-12-1962. Subsequently, the appellant filed an application under sections 16 and 28 of the Act on 14.5.1964 praying that under the circumstances, the Court be pleased to extend the time for filing the award by the arbitrator to the date on which the arbitrator actually filed the award. This application was opposed by the respondent. No separate order was, however, passed on the application filed by the appellant under sections 16 and 28 of the Act. But in view of the objections raised by the respondent herein that the award filed by the arbitrator was barred by time, the learned Subordinate Judge framed the following issue:-

'WHETHER the award, the reference and the proceedings of the arbitrator are illegal, void and liable to be set aside as per objections in para 8 of the objection petition?'

(2) In the order dated 29.5.1964, the learned Subordinate held on this issue that the award being beyond the time allowed by the Court must be held to be void. He, thereforee, declared the award to be void and as such, he set aside the award. The present appeal has been filed by the appellant against the said order of the learned Subordinate Judge.

(3) A preliminary objection has been raised by the learned counsel for the respondent against the maintainability of this appeal on the ground that the order of the learned Subordinate Judge is in fact an order refusing extension of time for filing the award into Court and appeal can be. filed under section 39 of the Act against the said order.

(4) As already stated the learned Subordinate Judge did not pass any separate order on the application filed by the appellant under sections 16 and 28 of the Act either extending or refusing to extend the time for filing the award by the arbitrator. In his order dated 29.5.1964 which dealt with all the objections filed by the respondent herein against the award filed by the arbitrator, the learned Subordinate held that he had no power to enlarge the time after the making of the award and that the award remitted to the arbitrator had thus become void and had ceased to exist in law. Even if this order may be interpreted as an order by which the learned Subordinate Judge had declined to extend the time for filing the award by the arbitrator, the question is whether the appellant is precluded from challenging this order at this stage. Section 41 of the Act makes the provisions of the Civil Procedure Code applicable to proceedings under the Act. Section 105(1) of the Code of Civil Procedure provides that where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case,may be set forth as a ground of objection in the memorandum of appeal. There is a direct decision of the Allahabad High Court on this point in Suraj Prasad v. Mama Lal reported in 1957 A.L.J. 51 in which it was held that:-

'Its open to the appellate Court, hearing an appeal from an order, setting aside or refusing to set aside an award, to consider the legality, propriety and correctness of non-appealable orders passed by the trial court, which affect the decision of the case.'

(5) thereforee, in spite of the fact that no appeal is provided under section 39 of the Act against an order of the Court refusing to grant extension of time for filing the award of the arbitrator, the correctness of the order of the Court refusing to extend the time can be challenged in the appeal against the final decree. It is, thereforee open to the appellant in the present appeal to challenge the finding of the learned Subordinate Judge that he had no power to extend the time for the filing of the award by the arbitrator.

(6) If the learned lower Court had the power to extend the time for the filing of the award by the arbitrator, then this Court also has power under section 39 of the Act to extend the time for the filing of the award by the arbitrator provided the Court is satisfied that there were sufficient grounds for extending the time. thereforee, the first question to be considered is whether the learned lower Court had the power to extend the time for the filing of the award by the arbitrator. The relevant provisions of the Act which confer power upon the Court to extend the time for making an award or filing an award are sections 16 and 28 of the Act. These two sections apply to two different stages of the arbitration proceedings. While section 28 applies to the stage when the arbitrator makes his award, section 16 applies to the subsequent stage, i.e., after the arbitrator has made his award and it is remitted under sub-section (1) of section 16 to the arbitrator and he is required to re-consider the award and submit his decision to the Court. Making of an award is not the same thing as the re-consideration of the award and the submission of the arbitrator's decision on the award which is remitted for reconsideration. The expression 'making the award' has got a special meaning under the Act and this meaning is brought out by section 14 of the Act which reads as follows:-

'14.(1)When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award. (2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them. to be filed in Court, and the Court shall thereupon give notice to the parties to the filing of the award.'

(7) SUB-SECTION (3) of section 14 is not relevant. After an award is thus made and signed by the arbitrators and notice is given to the parties of the making and signing thereof and if the same is filed into Court. then the Court itself under section 15 of the Act may modify or correct the award. But instead of modifying or correcting the award, the Court may under section 16 remit the award to the arbitrators or umpire for reconsideration and for submission of their or his decision to the Court. There is, thereforee, a clear distinction between the making of an award and the decision of the arbitrators after reconsideration of the award after it is remitted by the Court under section 16 of the Act. Section 28 of the Act, thereforee,cannot apply to the decision of the arbitrator submitted to the Court under section 16 of the Act. thereforee, one has to look to section 16 itself for determining the scope of the powers of the Court to extend the time for submitting the decision of the arbitrator. The relevant provisions of section 16 of the Act are sub-sections (2) and (3) which are reproduced below:-

'(2)Where an award is remitted under sub-section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court: Provided that any time so fixed may be extended by subsequent order of the Court. (3) An award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.'

(8) The contention of the learned counsel for the respondent is that the power given to the Court under the proviso to sub-section (2) to extend the time within which the arbitrator or umpire shall submit his decision to the Court has to be exercised before the expiry of the time originally fixed by the Court under sub-section (2) and not thereafter, and further that if the time is not extended by the Court before the expiry of the time originally fixed by the Court, then under sub-section (3) the award automatically becomes void. At any rate, according to the learned counsel, the Court has no power to extend the date for the filing of the decision of the arbitrator after the arbitrator has actually filed his decision after the expiry of the time originally fixed by the Court. In support of this contention, the learned counsel refers to the difference in the language of section 16 and section 28 of the Act and points cut that the words 'whether the time for making the award has expired or not and whether the award has been made or not' appearing in section 28 of the Act are conspicuous by their absence in section 16 of the Act.

(9) The necessity for using these words in section 28 is obvious. An arbitrator may be appointed by the parties themselves or by the Court itself under chapter Ii of the Act or under section 20 of the Act. The parties are not authorised to fix any time within which the arbitrator should make his award. The time limit is, fixed by the First Schedule to the Act. namely, that the arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow. thereforee, a specific provision, namely, section 28 is made in the Act to enable the Court to extend the time for making the award. It may also be noticed that even if the award is made after the expiry of the time fixed by the Court, the award does not automatically become void, but it is liable to be set aside by the Court on that ground. Sub-section (3) of section 16 of the Act, on the other hand, is couched in different language and by virtue of this sub-section, an award which is remitted shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed. The significance of section 16(3) has, thereforee, to be examined.

(10) The learned counsel for the appellant contends that the proviso to sub-section (2) of section 16 enables the Court to extend the time for the filing of the decision of the arbitrator even after the expiry of the time originally fixed by the Court and that it is not necessary that such time should be extended before the expiry of the time originally fixed. It is his further contention that it is only where the Court does not grant any extension of time and the arbitrator submits his decision beyond the time either originally fixed or subsequently extended by the Court that the award becomes void by virtue of sub-section (3) of section 16 of the Act. In support of his contention, he seeks to rely upon a decision of the Calcutta High Court in Ganpatrai and Sons v. Ramgopal Nanda Kishore, : AIR1955Cal302 where the scope of the proviso to sub-section (2) was examined with reference to sub-section (3) of section 16 of the Act. Bachawat, J., who decided that case, expressed the following view:-

'SECTION 16 requires the Court to fix a time within which a remitted award is reconsidered and within which the reconsidered award has to be submitted and empowers the Court to extend the time so fixed. In my opinion S. 16 in itself contains an exhaustive and complete provision with regard to such time. The Court can enlarge this time in exercise of its powers under S. 16 and not by recourse to S. 28. Section 28 enables the Court to enlarge the time fixed for the making of the award and not the time fixed for filing a new award on reconsideration of an award which has already been made. The provisions of S. 16(2) and (3) require careful consideration. Under the proviso to S. 16(2) the Court may extend the time fixed by the order of remission by a subsequent order. The proviso does not require that the subsequent order must be made before the expiry of the time so fixed. The discretion of the Court is unfettered and may be exercised both before and after the expiry of the time according to the necessities of the case.'

(11) An argument similar to the argument advanced by the learned counsel for the respondent was also advanced before the learned Judge and he repelled it with the following observations:-

'THE expression 'time fixed' in S. 16(3) clearly refers to the time fixed under S. 10(2) whether by order of the remission or by a subsequent order for extension and the award does not become void before the expiry of the extended time. Section 19 shows that even when this time has expired and the award has become void in the absence of any further order the arbitration agreement subsists and the reference is not superseded. Though the time has expired the reference is still pending and the Court has the power to extend the time. The effect of the subsequent order of extension is as if the extended time was originally inserted in the order or remission. The extended time should be read as having been originally inserted in the order of remission in the same manner as the time of making the award extended under the Common Law Procedure Act, 1854 was read into the submission in Lord v. Lee (1868) 3 Q.B. 404 In my opinion S. 16(3) does not put a fetter upon the power of enlargement of time conferred by S. 16(2). A review of the previous legislation will support this conclusion.'

(12) I am in respectful agreement with the view expressed by the learned Judge.

(13) I have, thereforee, to hold that the learned Subordinate Judge had the power to consider the question of extending the time for filing the decision of the arbitrator notwithstanding the fact that the decision had been filed after the expiry of the time previously fixed by the court.

(14) The question now for consideration is whether there are valid grounds to extend the time under the proviso to sub-section (2) of section 16 of the Act till the date of the actual filing of the award by the arbitrator, namely, 26.5.1962. As already stated, the time originally fixed by the Court for reconsidering the award and filing the decision of the arbitrator was 31.8.1960. It appears from the record that this time was extended to 30.11.1960. At that stage, the respondent appears to have adopted dilatory tactics. He filed an application under sections 11 and 33 of the Act for the removal of the arbitrator. The date when this application was filed is not clear from the record. But it would appear that an interim injunction order was passed on 2.12.1960 prohibiting the arbitrator from further proceeding with the arbitration proceedings. This interim injunction order was vacated only on 9.8.1961. After the interim injunction order was vacated on 9.8. 1961 the arbitrator continued his proceedings and both the parties participated in these proceedings. The decision of the arbitrator after reconsideration of the remitted award was filed into Court on 26.5.1962. Taking all these circumstances into consideration, I am of the view that there are sufficient grounds for extending the time for the filing of the award till 26.5.1962, i.e., the date on which it was actually filed into Court.

(15) All the other objections raised by the respondent before the learned Subordinate Judge against the decision of the arbitrator have been rejected by the learned Subordinate Judge and no attempt was made before me by the learned counsel for the respondent to challenge these findings. The only question argued before me was the question whether time could be extended for the filing of the decision by the arbitrator. This question I have decided in favor of the appellant. thereforee, the order of the learned Subordinate Judge is set aside and the award filed by the arbitrator is made the rule of the Court.

(16) In the result, the appeal is allowed. There shall be no order as to costs.


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