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Mulchand Laxmichand Shah, a Partnership Firm Vs. Sheth Bhikhchand Trilokchand and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration;Limitation
CourtGujarat High Court
Decided On
Judge
Reported in(1975)16GLR283
AppellantMulchand Laxmichand Shah, a Partnership Firm
RespondentSheth Bhikhchand Trilokchand and ors.
Cases ReferredIn Champalal v. Mst. Samarthbai
Excerpt:
- - 461 of 1968, that it being barred by law of limitation, it must fail, and has been consequently dismissed, directing each party to bear its own costs. to the extent that the language of a sections clear the court must give effect to it and especially in a statute like the limitation act which deprives a party of valuable rights. this decision of the supreme court thus clearly indicates that article 178 of the limitation act, 1908, applies only to the applications made by the parties and not to the filing of the award by the arbitrators......article 178 applies to an application under the arbitration act 'for the filing in court of an award. limitation for filing such an application is 90 days from the date of service of the notice of the making of the award. now, such an application must be by a party to the award and not by the arbitrator. section 14 runs as follows:(1) when the arbitrators or umpires 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 andthe 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.....
Judgment:

J.M. Sheth, J.

1. This is a revision petition filed by the petitioner, a partnership firm, against the order passed by the learned Civil Judge, Senior Division, Broach, dated 29th July, 1971, in Regular Civil Suit No. 461 of 1968, that it being barred by law of limitation, it must fail, and has been consequently dismissed, directing each party to bear its own costs.

2. Material facts leading rise to this revision petition, briefly stated, are as under:

Opponent No. 1 Sheth Bhikhchand Trilokchand, according to the petitioner, was a registered non-member of the Association, named 'The Southern Gujarat Oil Seeds Merchants' Association Ltd.' at Palej, and the petitioner is a member of it. Opponent No. 1 had business dealings with the petitioner and according to the petitioner, opponent No. 1, in relation to it, was indebted to it to the extent of Rs. 9,078.62 paise. As per the rules of the Association, dispute was referred to arbitrators. Opponents Nos. 2 to 5 were the arbitrators. Opponent No. 2 was the Chairman and opponent No. 6 was the umpire. Before the arbitrators, opponent No. 1 did not appear and proceedings continued ex parte and award was given by the arbitrators on 30-10-1968, vide Ex. 47. They made the award and signed it on 30-10-1968, and they informed the parties by post about their making and signing the award on 30th October, 1968. On 1st November, 1968, by Ex. 70, present petitioner called upon the arbitrators to take steps for filing of the award in the Court as laid down in Section 14(2) of the Arbitration Act, 1940 (which will be hereinafter referred to as 'the Act'). The arbitrators thereupon filed the award on 18-12-1968 and their request by the aforesaid intimation was registered and numbered as a regular suit.

3. The trial Court, relying upon the provisions of Article 119 of the Limitation Act, 1963, Schedule falling in third division, reached the conclusion that the period of thirty days would govern the period of limitation and that period would commence from the date of the notice of the making of the award. The petitioner himself having made the application, Ex. 70, on 1-11-1968, it could be said that he had the knowledge of the award from that date and the arbitrators having moved the Court on 18-12-1968, i.e. 30 days thereafter, there was bar of law of limitation, and passed the impugned order.

4. Mr. R.M. Vin, appearing for the petitioner, has contended that this was not an application made by any of the parties interested in the award or the party to an award which had moved the Court for directing the arbitrators to file the award in the Court as contemplated under Section 14(2) of the Act. It was the arbitrators who moved the Court and filed the award in performance of their statutory duties cast upon them under Section 14(2) of the Act. No application was necessary in law for them to move the Court for this purpose. In the instant case, submitted Mr. Vin, it was the petitioner who had moved the arbitrators on 1-11-1968 to file the award in the Court and the arbitrators themselves, accepting his request, moved the Court and filed the award in question. To such an act of riling of an award done by the arbitrators in the performance of their statutory duties, Article 119 of the Limitation Act, 1963, could have no application. That article will apply only in case the party to an arbitrator's award or any person interested in the award moves the Court for directing the arbitrators to file such an award in the Court. Article 119 reads as under:

Description of Period of Time from which periodApplication limitation begins to run.119. Under the Arbitration Act1940-(a) for the filing in Court of Thirty days The date of service of thean award; notice of the making ofthe award.(b) for setting aside an award Thirty days The date of service ofor getting an award remitted the notice of the filingfor reconsideration. of the award.

The corresponding article in the Old Limitation Act, 1908, was Article 178. It was in the First Schedule in Third Division. That Article indicated hat the applications under the Act, for the filing in Court of an award, the period of limitation was 90 days, and that period commenced to run from the date of service of the notice of the making of the award. Now the period of limitation under the new Limitation Act, instead of 90 days, it is 30 days. That is only the difference between those two articles so far as the application to be made for the filing of the award in the Court is concerned.

5. In support of his submission, Mr. Vin has relied upon the decisions of the Calcutta High Court, Bombay High Court, Allahabad High Court and Mysore High Court. I will first refer to the decision of the Bombay High Court in Jayantilal Jamnadas v. Chhaganlal Nathoobhai A.I.R. 1945 Bombay 417. Chagla, J. (as he then was), has observed:

Under Article 178 it must be an application made to Court for the filing in Court of an award which can come under that article. When the arbitrator files the award under Section 14(2) at the request of a party to the arbitration agreement he does not, in view of the provisions of Rules 373 and 375, Bombay High Court Rules, framed under the Arbitration Act, make an application to the Court but does an act which the statute requires him to perform and intimates to the Court by his letter of request that he has made an award and that it should be taken on file. Therefore, Article 178 does not apply to the filing of the award by the arbitrator at the request of one of the parties to the arbitration agreement. It is only when a party to the arbitration agreement applies to the Court to direct the arbitrator to file the award and the arbitrator in pursuance of the order of the Court files the award that Article 178 applies; and if the application to the Court is beyond 90 days of the service of the notice on the party then the application would be barred by limitation.

He has followed the decision of the Calcutta High Court to which I will make reference at a little later stage. At page 418, the argument advanced by Mr. Taraporewalla, viz. 'whereas a party's application would be barred ninety days after the notice had been served upon him, an arbitrator would be at liberty to file the award at any time if so requested by one of the parties', has been answered in the following terms:.I realise the force of this argument; but the answer to it is two-fold; firstly, it is not likely that an arbitrator would be permitted to allow a considerable period of time to lapse without his being called upon to file the award because the award is bound to be in favour of one or other of the parties and that party would be interested in seeing that the award was filed with due despatch. The second answer is that inconsistencies in a statute are for the legislature. To the extent that the language of a Sections clear the Court must give effect to it and especially in a statute like the Limitation Act which deprives a party of valuable rights. Column 3 of Article 178 which lays down the period from which limitation begins to run, namely the date of service of the notice of the making of the award, seems that it is only when a party to a reference applies that the article would come to operation as the notice could only be served on one or other of the Parties to the reference. It could not have been contemplated that this article should apply when the arbitrator files the award. Further there is considerable force in Mr. Desai's argument that the Limitation Act applies to applications made by parties to proceedings. It cannot apply to any act done by one who is not a party to the proceedings and who is not interested in the result of the proceedings and, therefore, h could not have been intended that any act on the part of the arbitrator should be controlled by an article of the Limitation Act In my opinion, therefore, when an arbitrator files his award he is not making any application to the Court and, therefore Article 178 does not apply to the filing of the award by the arbitrator.

In my opinion, that decision lays down the correct ratio and I am in respectful agreement with it. Moreover, that decision being the decision of the Bombay High Court given prior to the date of bifurcation of the bigger Bilingual Bombay State, is binding on this Court.

6. In Keshrimull v. Meghraj Basdeo : AIR1942Cal542 Gentle, has observed:

The amendment of Article 178 has made no difference in its effect. The limitation provided by Article 178 and all other articles in the third division, is in respect of applications for the acts to be done in respect of which the articles provide and is not a period of limitation in respect of the act itself. The limitation period under Article 178 applies to applications under the Arbitration Act for obtaining the filing of an award and not for filing of the award itself. Article 178 does not prevent the actual act of filing the award more than 90 days after notice of it having been.

7. A Division Bench of the Allahabad High Court, consisting of Wanchoo and Agarwala, JJ. in Dwarka Das v. Pearay Lal : AIR1949All234 at page 236 in para 7, has observed:

As regards the applicability of Article 178, Limitation Act, to the proceedings initiated by the arbitrator, we may observe that Article 178 applies to an application under the Arbitration Act 'for the filing in Court of an award. Limitation for filing such an application is 90 days from the date of service of the notice of the making of the award. Now, such an application must be by a party to the award and not by the arbitrator. Section 14 runs as follows:

(1) When the arbitrators or umpires 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

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 deposition and documents which may have been taken and proved before them, to be filed in Court, and Court shall thereupon give notice to the parties of the filing of the award.

It is clear that a party may ask the arbitrator himself to file the award in Court. If the arbitrator agrees, he will file in the Court. In that case the arbitrator need not make any application to the Court. He may merely file the award in Court, and just intimate to the Court that he is doing so. Such an intimation will not be an application as contemplated under Article 178, Limitation Act for filing the award in Court. The arbitrator merely does a ministerial act in filing the award in Court. It, however, the arbitrator does not comply with the request of a party to rile the award in Court, the party then has to make an application to the Court asking the Court to order the arbitrator to file the award in Court. Such an application by the party to the Court is covered by Article 178, Limitation Act. This a party can do within 90 days of the service of the notice given by the arbitrator that he has made an award. If the party fails to make such an application within the period prescribed, his remedy is lost unless he can persuade the arbitrator to file the award in Court at his own instance.

8. Mr. Vin has also relied upon the decision of a Division Bench of the Mysore High Court in Ratnawa v. Gurushiddappa Gurushantappa Magavi A.I.R. 1962 Mysore 135. It is observed therein:

Before time begins to run under Article 178 of the Limitation Act, the parties concerned must have been notified by means of a notice in waiting as contemplated in Section 14(1) read with Section 42 of the Arbitration Act. The fact that the parties were aware of the making of the award is a wholly irrelevant circumstance for the purpose of computing the period of limitation under Article 178.

It was a case where the appellant as a plaintiff instituted Special Civil Suit No. 29 of 1954 in the Court of the learned Civil Judge, Senior Division, Dharwar, praying that the award made and signed by defendants Nos. 1 and 2 on 7-1-1950 or a signed copy of the same be caused to be filed in Court and judgment according to that award be pronounced. One of the questions raised in that suit was, whether the suit was in time? It is thus evident that it was a case where the party had moved the Court to direct the arbitrator to file the award and so, Article 178 of the Old Limitation Act would, undoubtedly, be applicable and the question that was raised for decision was, as to when the period of limitation would commence? That decision has no application.

9. Mr. H.M. Chinoy, appearing for opponent No. 1 has invited my attention to the decision of a Division Bench of the Patna High Court in Rambilas Mahto v. Babu Durga Bijai Prasad Singh : AIR1965Pat239 . In para 28, at page 249, the relevant observations made are:

Mr. Dasu Sinha next contended that the law imposes a time limit of ninety days for making an application by the parties to the arbitration agreement for calling upon the arbitrators or the umpire to cause the award to be filed in Court. But the law imposes no time limit for the arbitrators or the umpire for filing the award in Court suo motu and, therefore, it is open to the arbitrators or the umpire to file the award whenever they choose to do so, even several years after it has been made. It is, therefore, contended that an award does not cease to have effect or validity even though the parties to the arbitration agreement take no steps for filing the award and making it a rule of the Court. It is true that Article 178 of the Limitation Act, 1908 (and now Article 119 of the Limitation Act of 1963) does not, in terms, apply to the filing of the award by the arbitrators or the umpire on their own initiative. But that does not mean that it is open to the arbitrators to wait for an indefinite length of time and then to file their award in Court for the purpose of being made a rule of the Court. It is manifest that the arbitrators have no personal interest in filing the award in Court. If the arbitrators file the award in Court, they obviously do so at the instance of one of the parties or the other or both.

If, therefore, the arbitrators file the award in Court long after the period of limitation prescribed by Article 178 of the Limitation Act, 1908, the implication obviously is that one or the other party has moved the arbitrators or the umpire for filing the award in Court after the expiry of the period of limitation. It seems to me, therefore, that the act of filing the award in Court after the expiry of the period of limitation, though ostensibly the act of the arbitrators or the umpire, is in reality the act of one, the other or both parties to the arbitration agreement or any person claiming under such party that is to say, that the award has been filed on behalf of the one or both the parties. Therefore, the award cannot remain effective or binding upon the parties if no steps are taken to file it in Court within the time allowed for the purpose by the law and the right of the parties cannot be affected by an award which has not been filed by the arbitrators in Court for several years after it has been made and notice has been given by the arbitrators to the parties of making and signing thereof. If this view were not accepted, the arbitrators would be competent to file even after an indefinitely long lapse of time since the pronouncement of the award.

In the instant case, we are not concerned with any such case. It is significant to note that the petitioner moved the arbitrators for filing of an award in Court on 1-11-1968 and the award in question was made and signed only on 30-10-1968 and the arbitrators also filed the award in the Court accepting the request on 18-12-1968. It is not a case where long after the period of expiry of limitation after years, at the instance of the parties, arbitrators moved the Court to make the award the rule of the Court. It is not necessary to express any opinion as to the correctness of the view expressed by the Division Bench of the Patna High Court in the aforesaid case.

10. In Champalal v. Mst. Samarthbai : [1960]2SCR810 , the Supreme Court has, at page 631, in para 4, made the following pertinent observations:

The award was made on October 18, 1946, and the arbitrators filed it in the Court of the First Additional District Judge and they also gave notice to the parties by registered post informing them of the making of the award. It has not been shown as to how the filing of the award is barred by limitation. Article 178 of the Limitation Act which was relied upon by the appellant applies to applications made by the parties and not to the filing of the award by the arbitrators.

This decision of the Supreme Court thus clearly indicates that Article 178 of the Limitation Act, 1908, applies only to the applications made by the parties and not to the filing of the award by the arbitrators.

11. In exercise of the powers conferred by Section 44 of the Act, there are Rules in this behalf framed by the Bombay High Court (Appellate Side Rules). Rule 4 of it reads:

4. (a) Arbitrator or umpire or any of the parties to the arbitration may cause the award or a signed copy thereof to be filed in Court in the manner prescribed in Rule No. 2.

(b) When the award is filed by the arbitrator or umpire he shall, together with the award, send to the Court, any depositions and documents which have been taken and proved before him, and the opinion pronounced by the Court on the special case submitted by him, if any, in accordance with Section 14 of the Act, by forwarding the same under a sealed cover addressed to the Court. He shall also send together with the award a copy of the notice given to the parties concerned and affidavit of service of such notice and of attestation of his signature on the award.

(c) When the award is filed by any of the parties to the arbitration under Clause (a), the party may move the Court to direct the arbitrator to produce in original such of the documents as were produced before him together, with the Record of the Arbitration.

12. It is thus evident that there is distinction in the party moving the Court for directing the arbitrator to file an award and the arbitrator himself filing an award in the Court in the performance of his statutory duty.

13. The learned trial Judge has not kept this distinction in mind and that is why he has committed an error in reaching the conclusion that this act of filing of the award was barred by the law of limitation. It will be significant to note that so far as this aspect of the case is concerned, there is no distinction in the relevant provisions of the old and new Limitation Acts, except that under the old Limitation Act, the article was Article 178 and the period prescribed for making an application for filing of the award was 90 days, and under the new Limitation Act, the period is 30 days. As said by me earlier, such period of limitation will have application only if the party to an award makes an application to the Court for directing the arbitrator to file an award in the Court and in that event that article will apply. It will not apply to the act of filing of an award by the arbitrator himself in the Court. The revision petition, therefore, succeeds.

14. Revision petition is allowed. The order passed by the trial Court regarding issue No. 3 and dismissal of the suit is set aside and the matter is remanded to the trial Court for deciding other issues which remained undecided. Looking to the circumstances of the case, each party is ordered to bear its own costs in this revision petition. Rule is made absolute.


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