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State of West Bengal Vs. A. Mondal - Court Judgment

LegalCrystal Citation
SubjectArbitration;Limitation
CourtKolkata High Court
Decided On
Case NumberAppeal No. 81 of 1984 and Award Case No. 243 of 1983
Judge
Reported inAIR1985Cal12,89CWN82
ActsLimitation Act, 1963 - Schedule - Article 119; ;Arbitration Act, 1940 - Sections 8, 13 and 14(2)
AppellantState of West Bengal
RespondentA. Mondal
Appellant AdvocateA.P. Chatterjee and ;Prabir Roy Chowdhury, Advs.
Respondent AdvocateP.K. Das, ;B.S. Sinha Roy and ;B.B. Sarkar, Advs.
DispositionAppeal allowed
Cases ReferredUnion of India v. Harcharan Singh
Excerpt:
- .....of the letter. after the expiry of the said period, the respondent filed an application before a learned judge of this court under section 8, arbitration act praying for the appointment of an arbitrator. the appellant opposed the said application on the ground that the claim of the respondent was barred by limitation. the learned judge, however, by her order d/-march 12, 1982 appointed sri d. m. mukherjee, a retired chief engineer of the government of west bengal, the arbitrator.5. as per the direction of the arbitrator, the parties submitted their respective written statements. the appellant in its counter statement specifically took the plea that the claim of the respondent was barred by limitation. it appears from the minutes of the proceedings of the 7th hearing before the.....
Judgment:

M.M. Dutt, J.

1. This appeal has been preferred by the appellant, the State of West Bengal, against the judgment and order D/- March 1, 1984 of a learned single Judge of this Court dismissing the application of the appellant under Sections 10 and 33, Arbitration Act, 1940.

2. The appellant invited tenders for the construction of a Primary Health Centre at Madhab Nagar, P. S. Pathar Pratima, District 24 Parganas. The appellant accepted the tender of the respondent and entered into a contract with it for the construction of the said Primary Health Centre at the rate mentioned in the contract. The contract also contained an arbitration clause.

3. According to the appellant, the construction work was completed by the respondent on 8-11-1974, but according to the respondent the work was completed before June 15, 1976.

4. The respondent by its letter D/-August 21, 1981 raised a dispute claiming, inter alia, the enhancement of the rate by 30% in respect of the work done by the respondent during the extended period. By the said letter the respondent also claimed the appointment of an arbitrator within a period of fifteen days of the date of the letter. After the expiry of the said period, the respondent filed an application before a learned Judge of this Court under Section 8, Arbitration Act praying for the appointment of an arbitrator. The appellant opposed the said application on the ground that the claim of the respondent was barred by limitation. The learned Judge, however, by her order D/-March 12, 1982 appointed Sri D. M. Mukherjee, a retired Chief Engineer of the Government of West Bengal, the arbitrator.

5. As per the direction of the arbitrator, the parties submitted their respective written statements. The appellant in its counter statement specifically took the plea that the claim of the respondent was barred by limitation. It appears from the minutes of the proceedings of the 7th hearing before the arbitrator that the arbitrator took the view that the Court's order appointing him as arbitrator implied that the appellant's plea that the respondent's claim was barred by limitation was turned down. Accordingly, the arbitrator directed that the arbitration proceedings would continue in terms of the order of the Court. There is no dispute that the arbitrator did not entertain and decide the appellant's plea that the claim of the respondent was barred by limitation.

6. On 22-9-1983, the arbitrator made an award whereby he directed the appellant the State of West Bengal, to pay to the respondent contractor a sum of Rs. 1,98,483/- with interest at the rate of 10% per annum with effect from March 12, 1982, the date of reference to arbitration, till the dale of payment of the amount under the award or the date of the decree whichever is earlier.

7. The award was filed in Court by the arbitrator on 29-9-1983. It appears that the respondent by its letter D/- 29-9-1983 informed the Executive Engineer, 24 Parganas, South Division, Construction Board Directorate, Government of West Bengal, of the filing of the award in this Court by the arbitrator on 29-9-1983. It is the case of the appellant that after receipt, of the said letter of the respondent, the appellant had taken steps in regard to the filing of an application for setting aside the award. On October 28, 1983, the appellant, however, received a letter from its Advocate, Mr. R. C. Deb that an application for setting aside the award could be made within thirty days of the date of receipt of the notice under Section 14(2). Arbitration Act.

8. It is the specific case of the appellant that on 27-10-1983, the appellant had received the notice under Section 14(2), Arbitration Act issued by the Registrar. Original Side of this Court. It is alleged that the entry in the Receipt Register of the appellant showing that the said notice under Section 14(2) was received on 12-10-1983 and not on October 27, 1983, is wrong and has been so entered by the employee concerned in collusion with the respondent contractor. Be that as it may, the application for setting aside the award was filed on November 21, 1983. It may be stated that this Court closed for the long Pujah Vacation on 12-10-1983 and reopened on November 8, 1983.

9. The respondent opposed the application and its contention was that the application was barred by limitation. The learned Judge placed reliance upon her own judgment in the case of State of West Bengal v. Mondal & Co. , where it was held that the starting point of limitation would be the date of receipt of the informal notice, that is, in the instant case, the letter dated 29-9-1983 of the respondent intimating the appellant that the award had been filed in Court by the arbitrator on the said date. Accordingly, the learned Judge held that the application should have been filed on November 8, 1983 when this Court reopened after the long Punjah vacation. The learned Judge also did not accept the explanation of the appellant in regard to the delay, if any, in filing the application on 21-11-1983. Accordingly, by the impugned judgment and order the learned Judge dismissed the application on the ground that the application was barred by limitation. Hence this appeal.

10. The first question that falls for our consideration is whether the said letter dated 29-9-1983 of the respondent can be treated as a notice referred to in Article 119, Limitation Act, 1983, under Section 14(2), after the arbitrator files the award in Court, 'the Court shall thereupon give notice to the parties of the filing of the award'. For setting aside an award, Article 119, Limitation Act, 1963 corresponding to Article 158, old Limitation Act, prescribes a period of thirty days to be computed from the date of service of the notice of the filing of the award. Article 119 does not give any indication as to the authority or person who will issue the notice, but it is clear from Section 14(2), Arbitration Act, that such notice shall be given by the Court. There can be no doubt that the notice referred to in Article 119. Limitation Act, is a notice under Section 14(2), Arbitration Act, to be given by the Court.

11. In a case before the Supreme Court in Nilkantha v. Kashinath : [1962]2SCR551 , there was a reference to arbitration in a pending suit for partition. The arbitrator filed the award in Court on 18-2-1948. On 21-2-1948, the Civil Judge adjourned the matter 'for parties' say (stay?) to the arbitrator's report' to March 22, 1948 in the presence of the pleaders of the parties. On November 9, 1948, an application was filed on behalf of defendant 12 praying that the award might be declared null and void. In holding that the application was barred by limitation, the Supreme Court held that the intimation to the pleaders of the parties on 21-2-1948 amounted to service of the notice on the parties about the filing of the award. Further, it was observed by the Supreme Court as follows (at pp. 668-669) :-

'Sub-section (1) of Section 14, Arbitration Act, 1940 (Act X of 1940) requires the arbitrators or umpire to give notice in writing to the parties of the making and signing of the award. Sub-section (2) of that section requires the Court, after the filing of the award, to give notice to the parties of the filing of the award. The difference in the provision of the two sub-sections with respect to the giving of notice is, significant and indicates clearly that the notice which the Court is to give to the parties of the filing of the award need not be a notice in writing. The notice can be given orally. No question of the service of the notice in the formal way of delivering the notice or tendering it to the party can arise in the case of a notice given orally. The communication of the information that an award has been filed is sufficient compliance with the requirements of Sub-section (2) of Section 14 with respect to giving of the notice to the parties concerned about the filing of the award.... We are of the opinion that the expression . 'give notice' in Sub-section (2) of Section 14, simply means giving intimation of the filing of the award, which certainly was given to the parties through their pleaders on 21-2-1948.

*****We see no ground to construe the expression 'date of notice' in Col. 3 of Article 158, Limitation Act, to mean only a notice in writing served in a formal manner. When the Legislature used the word 'notice' it must be presumed to have borne in mind that it means not only a formal intimation but also an informal one. Similarly, it must be deemed to have in mind the fact that service of a notice would include constructive or informal notice. If its intention were to exclude the latter sense of words 'notice' and 'service' it would have said so explicitly. It has not done so here. Moreover, to construe the expression as meaning only a written notice served formally on the party to-be affected, will leave the door open to that party, even though with full knowledge of the filing of the award he has taken part in the subsequent proceedings, to challenge the decree based upon th' award at any time upon the ground that for want of a proper notice his right to object to the filing of the award had not even accrued. Such a result would stultify the whole object which underlies the process of arbitration -- the speedy decision of a dispute by a tribunal chosen by the parties.'

12. It is manifestly clear from the above observations that upon an interpretation of the provisions of Sub-sections (1) and (2) of Section 14, Arbitration Act, the Supreme Court held that the notice of the filing of the award to be given by the Court under Sub-section (2) of Section 14 need not be a formal notice in writing. It may be an oral notice as was given by the learned Civil Judge in the case before the Supreme Court to the pleaders of the parties.

13. In State of West Bengal v. Mondal & Co. : AIR1984Cal14 , it has been observed by the learned Judge that while propounding the theory of informal or constructive notice in Nilkantha v. Kashinath : [1962]2SCR551 (supra), the Supreme Court has not said that the same should emanate from Court and that the said decision of the Supreme Court will apply in full force when the petitioner had knowledge of the filing of the award informally or constructively from any other source as well. In other words, according to the learned Judge, if the notice of filing of the award, be it formal or informal, is given not by the Court but by any private individual having no connection with the Court, the limitation for setting aside the award would begin to run from the date of giving of such notice. We are afraid, we are unable to agree with the learned Judge. We have quoted in extenso the observations of the Supreme Court in Nilkantha v. Kashinath : [1962]2SCR551 (supra) and, in our opinion, the Supreme Court never meant to say that the notice of the filing of the award need not emanate from Court and could be given by anybody. If the decision of the Supreme Court is interpreted in the manner as has been interpreted by the learned Judge, it would be doing violence to Section 14(2), Arbitration Act, which clearly provides for the giving of the notice by the Court. In the case of Mondal & Co., it has been pointed out by the learned Judge, that Article 119, Limitation Act, does riot say that the notice has to be given by the Court and, accordingly, the learned Judge has expressed the view that knowledge of the petitioner of the filing of the award from any source would be tantamount to notice under Article 119 Limitation Act. We regret, we are unable to accept this view of the learned Judge. It is true that Article 119 does not provide that the notice has to be given by the Court, but that does not mean that the notice of the filing of the award need not emanate from Court but from any other source. If the proposition had been so simple because of the fact that Article 119 (corresponding to Article 158 of the old Act) does not mention Court, the Supreme Court would not have devoted itself to the interpretation of Section 14, Arbitration Act. In our opinion, the learned Judge has misinterpreted the said decision of the Supreme Court. What the Supreme Court has said is that the notice referred to in Section 14(2) need not be a formal notice in writing and it may be an informal or constructive notice. 'Notice' referred to in Article 119, Limitation Act, must be a notice under Section 14(2), Arbitration Act. Such a notice may be formal, informal or constructive, but it must emanate from Court for the purpose of limitation for setting aside the award.

14. The learned Judge has placed reliance on a Bench decision of this Court-in the State of West Bengal v. L.M. Das : AIR1976Cal406 . In that case, the Registrar, Original Side of this Court had written a letter informing the parties of the filing of the award. It was contended that the said letter could not be treated as a notice under Section 14(2), Arbitration Act, for the purpose of limitation for setting aside the award as it was not in accordance with the form prescribed by this Court under the Arbitration Act. This Court overruled the contention holding, inter alia, that in view of the decision of the Supreme Court in Nilkantha v. Kashinath : [1962]2SCR551 (supra) there is no distinction between a formal and informal notice. It was held that as the application for setting aside the award was filed beyond thirty days from the date of the receipt of the said letter of the Registrar, it was barred by limitation. The above Bench decision does not at all support the view expressed by the learned Judge in the case of Mondal & Co. : AIR1984Cal14 (supra); on the contrary, it is quite consistent with the view taken by us.

15. In Bahadur Singh v. Fuleswar Singh : AIR1969Pat114 , which has also been relied upon by the learned Judge, there is nothing to show from whom defendant 1 who filed the application for setting aside the award, came to know of the filing of the award in Court on June 12, 1963. It appears that defendant 1 appeared in Court on June 16, 1962, and the award was actually filed in Court on May 11, 1963. So the facts of that case are not very clear. Be that as it may, if in Bahadur Singh's case the Patna High Court sought to lay down the proposition that for the purpose of limitation of an application for setting aside an award, the notice of the filing of the award need not have any connection with the Court, we regret we are unable to accept the same.

16. In our opinion, the notice referred to in Article 119, Limitation Act. is a notice under Section 14(2), Arbitration Act. Such a notice may be formal, informal or constructive, but it must emanate from the Court. The view which we take finds support from an unreported Bench decision of this Court in Union of India v. Harcharan Singh, A. F. O. O. No. 105 of 1977. disposed of on May 27, 1982. In that case, it has been observed that the notice under Section 14(2), Arbitration Act, need not be in writing and it may be oral or constructive or even informal, but the notice must be such that it should emanate from or through the instrumentality of the Court. There must be some action taken by the Court or something done by the Court which resulted in the party befng put up with notice or imparting knowledge to the party that the award has been filed in Court. Most respectfully, we endorse the view expressed in the above unreported Bench decision.

17. The learned Judge was not right in holding that the period of limitation should be computed from 29-9-1983, that is, the date on which the appellant received the letter from the respondent informing the appellant of the filing of the award in Court.

18. In our opinion, the period of limitation should be computed from the date of receipt by the appellant of the notice D/-4-10-1983 under Section 14(2), Arbitration Act, issued by the Registrar, Original Side of this Court. Now, the question is as to the date on which the appellant received the notice. According to the respondent, the notice was received by the appellant on 12-10-1983 and the application for setting aside the award having been filed on 21-11-1983, it was barred by limitation. On the other hand, it is the case of the appellant that the said notice was served on the appellant on 27-10-1983, but it was entered in other Receipt Register under 12-10-1983, but it was the last working day before the Puja Vacation. It is alleged that such entry has been caused to have been made by the respondent in coHusion with a dishonest departmental employee.

19. Mr, Arun Prokash Chatterjee, learned Senior Standing Counsel has produced before us the said Receipt Register. It appears that in the Receipt Register, after the date 12-10-1983 is the date 28-10-1983. Between these two dates, there is no other date. Further, under 12-10-1983, there is only one entry and, thereafter, the date '28-10-83' has been written. A part of the disputed entry about the said notice under Section 14(2), has been squeezed into the small space under 12-10-1983 and the remaining part of the entry has been made against the date 28-10-1983. The manner in which the disputed entry has been made leaves no room for doubt that it has been made after 28-10-1983. The most significant fact is that on the notice itself which was served on the appellant the date of receipt has been written as 27-10-1983. The respondent has however, placed reliance upon the affidavit affirmed by the bailiff in which it has been alleged that the notice was served on 12-10-1983. In view of the facts stated above, we are unable to accept that the notice under Section 14(2), Arbitration Act was served on the appellant on 12-10-1983. We hold that the said notice was served on the appellant on 27-10-1983 and the application for setting aside the award having been made on 21-11-1983, that is, within thirty days from 27-10-1983, it was quite within time and not barred by limitation.

20. Assuming that the period of thirty days was to be computed from 29-9-1983, the date of the receipt by the appellant of the respondent's letter, and that the appellant not having filed the application for setting aside the award on the reopening of this Court on 8-11-1983 after the long Puja Vacation, it was barred by limitation, let us consider on such assumption whether the appellant has been able to satisfactorily explain the delay of thirteen days from 8-11-1983 to 21-11-1981.

21. It is the case of the appellant that its Advocate on record Mr. R. C. Deb advised the appellant that the application for setting aside the award could be made within thirty days of the receipt of the notice under Section 14(2). Arbitration Act, even though the appellant informed the learned advocate of the receipt of the respondent's letter D/- 29-9-1983. The application was drafted by Mr. A. C. Moitra, Advocate and it was handed over to Mr. R. C. Deb on 8-11-1983. As Mr. Deb was of the opinion that the petition was not in form, Mr. P. Roy Chowdhury, Advocate, was instructed to redraft the application: Mr. Roy Chowdhury also expressed the opinion that the application could be filed within thirty days from the date of receipt of the notice under Section 14(2) Arbitration Act. The appellant acted with a bona fide belief that the time to file the application would expire on 27-11-1983. Accordingly, the application was filed by the appellant on 21-11-1983, that is within thirty days of the receipt of the said notice under Section 14(2), Arbitration Act. So, even assuming that the application was filed thirteen days out of time, in our opinion, the appellant has satisfactorily explained the delay.

22. For the reasons as aforesaid, the learned Judge was not right in dismissing the application on the ground that it was barred by limitation. The learned Judge should have disposed of the application on merits.

23. The question that now arises is whether the application should be sent back to the learned Judge for disposal on merits. It has been stated already that the arbitrator took the view that the Court's order appointing him the arbitrator implied that the appellant's plea that the respondent's claim was barred by limitation was turned down by the Court. Accordingly, the arbitrator without deciding the said plea of the appellant on merits made the award. In our opinion, this finding of the arbitrator is perverse. The question whether the respondent's 1985 Cal./2 I G-18 claim was barred by limitation or not was not decided by the learned Judge, and the arbitrator had no reason to assume that as the Court had made the reference consequently, the said plea must have been overruled. The said plea of the appellant should be treated as one of the matters referred to arbitration. The arbitrator acted illegally in not deciding the said contention of the appellant that the respondent's claim was barred by limitation. It may be pointed out once more that the plea was specifically taken by the appellant in the written statement. In the circumstances stated above, no useful purpose will be served by remanding the application to the learned Judge. Instead, it is a case where we should remit the award to the arbitrator for determination of the said contention of the appellant.

24. For the reasons aforesaid, the appeal is allowed and the judgment of the learned Judge is set aside. The award is remitted to the arbitrator with a direction to reconsider the award after deciding on merits the plea of the appellant that the claim of the respondent was barred by limitation. Such reconsideration shall be made by the arbitrator and the award that shall be made on such reconsideration shall be submitted to the learned trial Judge within four months from the date of receipt of the records from this Court. The respondent shall pay costs of this Court as also of the trial Court to the appellant.

C.K. Banerji, J.

25. I agree.


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