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G.A. Mani Vs. Food Corporation of India - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 309A of 1979
Judge
Reported inILR1980Delhi490
ActsArbitration Act, 1940 - Sections 14; Code of Civil Procedure (CPC), 1908 - Sections 20; Limitation Act, 1963 - Article 119
AppellantG.A. Mani
RespondentFood Corporation of India
Advocates: R.K. Lakhanpal and; S.K. Puri, Advs
Cases ReferredIn Parasrarnka Commercial Co. Ltd. v. Union of India
Excerpt:
.....20 of the civil procedure code, 1908 - - 50,000 there was lack of pecuniary jurisdiction as well. 2106 of 1979) contending that the award stood vitiated by misconduct on the part of the arbitrator as well as misconduct of..........sachar j. held that no provision of the limitation act was applicable to such a situation and the award filed by the arbitrator could not be said to be barred by time. this has been the consistent view and i may refer to robarts v. harrison 1881 (7) cal 333(4) wherein it was held way back that no award can be filed without a written application which the court deals with judicially but it was a very different thing to say that the filing of an award by an arbitrator under section 516 of the limitation act, 1887 was an application. wilson j. observed : 'thelimitation act is a disabling act, and no court, i think, is justified in straining its language beyond its natural meaning in order to take away from any one the rights which but for it he would possess. ........... ....... the.....
Judgment:

O.N. Vohra, J.

(1) Shri G. A. Mani, sole proprietor of Messrs. G.A. Mani Sex-79, filed this application under Sections 14 and 17 of the Arbitration Act, 1940, hereinafter called 'the Act', stating that disputes having arisen out of the contract for the execution of the work of 'Construction of Asphalt Roads, Culverts & Storm Wafer Drains for Bulk Fertilizer Unloading and Handling Project at Kandla Port', reference was made to the managing director. Food. Coporation of India, vide letter dated September 8, 1977 and that Shri. B. N. Lokur, Arbitrator, had made and published the award on June 8, 1978, copy whereof was received by the petitioner on June Ii, 1978. Notice was issued to the Food Corporation of India. Simultaneously the arbitrator was also called upon to file the award which he did on July 9, 1979. Thereupon, notices in regard to the filing of the award were also issued to the patties. Food Corporation of India, hereinafter referred to as the respondent resisted the application contending that it had been made beyond time, and that this Court lacked territorial jurisdiction as the contract was made at Bombay and was to be performed at Kandla and the fact that the respondent had its Head Office at New Delhi was if no consequence. It was further pleaded that the amount awarded being less than Rs. 50,000 there was lack of pecuniary jurisdiction as well.

(2) Objections under Sections 30 and 33 of the Act were separately filed (I.A. No. 2106 of 1979) contending that the award stood vitiated by misconduct on the part of the arbitrator as well as misconduct of proceedings. G. A. Mani, petitioner, conceded in his rejoinder that the application had been made beyond time but contended that inasmuch as award stood filed in Court and. objections thereto had been filed the matter had to be proceeded with and objection on the point of limitation was left with no merits. It was, however, maintained that this Court had territorial jurisdiction in view of Clause (a) of Section 20 of the Code of Civil Procedure and had also pecuniary jurisdiction inasmuch as claims preferred before the arbitrator were of the value of Rs. 1.77 lacks. As regards the allegations of misconduct those were stoutly denied. Both the matters were taken up together and the following issues were framed :

1.Has this Court territorial jurisdiction to entertain and decide the matter? 2. Has this Court no pecuniary jurisdiction to entertain and decide the matter? 3. Is the application under Sections 14 and 17 of the Arbitration Act within limitation If not, to what effect 4. Is the award liable to be set aside on account of objections raised in the objections petition of respondent No. 1 ?

The first three issues were treated as preliminary issues and were fixed for hearing inasmuch as it was agreed that no evidence was required to be produced.

(3) Issue NO. 1. It is submitted by Shri S. K. Puri, learned counsel for the respondent that the contract between the parties related to a project at Kandia and the disputes were referred to arbitration at Bombay where the award was made and, thereforee, the Court at Bombay alone has jurisdiction to entertain this petition. I find no merit in this contention. It is an undisputed fact that the head office of the respondent is at New Delhi and, according to clause (a) of Section 20 of the Code of Civil Procedure, the suit can be instituted in a Court within the local limit of whose jurisdiction the defendant carries on business or works for gain. This point came up directly in Ram Ratan Bharti v. Food Corporation of India, 1978 Rajdhani Law Reporter 177(1) and a Full Bench of this Court held that an application under Section 20 of the Act may be made in any Court where cause of action arises or the defendant resided works for gain. While coming to this conclusion, the Full Bench relied upon Makarn Singh v. M/s. Gammon (India) Ltd., : [1971]3SCR314 . Therein, it was held that the Code of Civil Procedure in its entirety applies to proceedings under the Act and that the jurisdiction o the Court under the Act to entertain a proceeding for filing an award is, accordingly, governed by the provisions of the Code of Civil Procedure. The matter stands concluded and I need not dilate.

(4) Issue NO. 2 It is not denied that the total claim before the arbitrator was in excess of Rs. 50,000. No objection as to the pecuniary jurisdiction is, thereforee, available in view of the fact that the jurisdiction turns on the aggregate value of the claims before the arbitrator. The issue is decided, accordingly.

(5) Issue NO. 5. It is an admitted fact that notice of the making of the award was received by the petitioner on June 11, 1978. According to Article 119 of the Limitation Act, 1963, the period for making application under Section 14 of the Act is 30 days reckoned from the date of service of notice of the making of the award. Th& application under Section 14 of the Act was filed on February 9, 1979, that is to say, a long time after the expiry of the period of limitation. There is no traverse in this behalf. All that is contended is that the award has since been filed in Court and notices of the filing of the award have been served on the parties and objections have actually been filed and, thereforee, it is of no moment whether the application under Section 14 of the Act was filed within time or not. The argument proceeds that this Court is bound to go ahead and determine the objections and make the award the rule of the Court or set it aside, as the case may be. It is difficult to agree with this approach. Section 14, in so far as it is relevant for the determination of the point, says :

'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 eharges of filing the ward, cause the award or a ..signed copy of it, together with any deposition and documents which may have been taken and proved before them, to be filed in the Court, and the Court shall thereupon give notice to the parties of the filing of the award.'

(6) It would be seen that the arbitrator is under legal obligation to give notice in writing to the parties of the making of the award. After he has discharged this obligation, the party to the award be- comes entitled to move an application under Section 14 of the Act. If resort is so had. Article 119 of the Limitation Act would be attracted. According to this Article, the period is 30 days reckoned from the date of the service of notice of the making of the award. In case the application under Section 14 is filed after the expiry of the period of limitation, the application would be liable to dismissal in view of the provision of Section 3 of the Limitation Act which says that every suit instituted, appeal preferred and application made after the prescribed period shall be dismissed although limitation has not been set up as a defense. It would also be seen that according to sub-section (2) the arbitrator can himself file the award in Court at the request of any party to the arbitration agreement. If he does so, it would be a ministerial act and the Court would have to proceed according to law on the filing of the award. Notices of the filing of the award would issue to the parties and objections under Sections 30 and 33 of the Act, if filed, would be decided and the award woull be made a rule of the Court or set aside or remitted, as the case may be. There is ample authority for the view that Article 119 would have no application to such a case. This Court held so in G Moti Ram v. Mangal Singh and others, 2nd 1971 (2) Del 451(3). On review of a number of authorities which were cited, Rajindar Sachar J. held that no provision of the Limitation Act was applicable to such a situation and the award filed by the arbitrator could not be said to be barred by time. This has been the consistent view and I may refer to Robarts v. Harrison 1881 (7) Cal 333(4) wherein it was held way back that no award can be filed without a written application which the Court deals with judicially but it was a very different thing to say that the filing of an award by an arbitrator under Section 516 of the Limitation Act, 1887 was an application. Wilson J. observed :

'THELimitation Act is a disabling Act, and no Court, I think, is justified in straining its language beyond its natural meaning in order to take away from any one the rights which but for it he would possess. ........... ....... The preamble deals only with 'application to Court', and I think the Act is limited accordingly. . .............. ....I think I should have to do great violence to the ordinaty meaning of words, and to disregard all the indications afforded by the Act itself, if I were to hold that the act of an arbitrator, in handing an award to the proper officer to be filed, was an application within the meaning of the Limitation Act.'

(7) These appear to be the only two situations in which the Court would be called upon to initiate proceedings In regard to awards made by arbitrators. In one case where the application is made. Article 119 of the Limitation Act would be attracted but .in the other case, no such consideration would arise.

(8) The argument of Shri R. K. Lakhanpal, learned counsel for the petitioner, is that inasmuch as the award was actually filed by the arbitrator and that notices in regard to the filing of the award were issued, this Court should not look back to decide whether the application under Section 14 of the Act had been filed within time or not and should proceed on with the objections. This argument appears to be fallacious. The arbitrator did not file the award in this case of his own nor he did so at the request of any party to the arbitration agreement. He did so in compliance to the notice directing him to file the award in Court. That direction was issued on account of the application under Section 14 of the Act. Now there being an objection in regard to the application being barred by time, if this objection is to prevail, the obvious result would be that the application would have to be dismissed and that would be the end of the matter and the award which was called from the arbitrator would have to go back. To hold otherwise, would not only be illogical but also against the provisions of law.

(9) Learned counsel have frankly conceded that there is no authority having direct bearing on the point. There are, however, observations here and there which lend support to the view that an application under Section 14 has to be dismissed if it is barred by time and that award summoned by notice issued by the Court would go back. In Jayantilal Jamnadas v. Chhaganlal Nathoobhai, Air (32) 1945 Bombay 417(5). Chagia J. (as he then was) observed :

'THEposition is very different when an arbitrator does not file the award and a party applies to the Court to direct him 3 HCD/80 9 to file the award. Then a formal application has got to be made by the party and on that application the Court makes the order. In my opinion, it is only when such an application is made by a' party to the reference that the application of Article 178, Limitation Act is attracted. If such an application is beyond ninety days of the service of the notice on the party, then the Court would not entertain such an application as being barred.'

(10) In Parasrarnka Commercial Co. Ltd. v. Union of India, : [1970]2SCR136 , the facts were that the arbitrator made and signed the award on April 26, 1950 and notified the same by forwarding copy thereof to the parties. This fact was acknowledged in two letters dated May 5 and May 16, 1950. Application under Section 14(1) of the Act was filed on March 30, 1951, that is to say, after the expiry of period of limitation of 90 days prescribed under Article 178 of the Indian Limitation Act. The subordinate Judge dismissed the application a's barred by time. The dismissal was up- held by the High Court. Thereafter, the matter was taken to the Supreme Court in appeal which was also dismissed. In para 7, Hidayatullah C.J., who spoke for the Court, made the following observations :

'BUTwe make it clear that the other part of the case, namely, what is to happen to the award sent by the Arbitrator himself to the Court has yet to be determined and what we say here will not effect the determination of that question. Obviously enough that matter arises under the second sub-section of Section 14 and will have to be considered quite apart from the application made by the company to have the award made into rule of Court.'

(11) On the basis of these observations it is submitted by Shri R. K. Lakhanpal that their Lordships left open the question as to what would happen where the arbitrator forwards the award to the Court of his own. It is so but this consideration is of no moment inasmuch as it is not the case here that the arbitrator was moved by either of the parties to forward the award to the Court and he acted at request nor it is the case that the arbitrator forwarded the award to the Court of his own. What happened was that on the filing of the application under Section 14 of the Act, notices were issued and direction was given to the arbitrator to file the award along with record of proceedings in Court and he filed the award and the proceedings pursuant to that direction. Inasmuch as the direction was issued on account of the filing of the application under Section 14, the entire proceedings must fall through once application under Section 14 is dismissed, and it has to be dismissed being barred by time as in this case. The following observations made by their Lordships are highly pertinent :

'ITwas represented to us by Dr. Syed Mohammad that objections had been taken to the validity of the award and they remain still for decision. These of course must fall to the ground with the application which we have found to be out of time. As to whether similar objections can be raised in answer to the award filed at the instance of the arbitrator is a question which we cannot go into in the present appeal and no expression of opinion must be attributed to us on that point.' (emphasis applied).

(12) For the foregoing reasons, it is held that the application is barred by time and the effect of this finding would be that the application must be dismissed and the award which was sent by the arbitrator in compliance with the direction issued by the Court be returned to the arbitrator for achieving status quo.

(13) In view of the finding under issue No. 3 above, the application fails and is hereby dismissed. The award and the record of proceedings shall be returned to the arbitrator.

(14) In the peculiar circumstances of the case, it is directed that the parties will bear their own costs.


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