IN THE HIGH COURT OF DELHI AT NEW DELHI FAO(OS) No.47/2005 NATIONAL PROJECTS CONSTRUCTIONS CORPORATON LIMITED .... APPELLANT Through Mr. Santosh Kumar, Adv. versus M/S. BUNDELA BANDHU CONSTRUCTIONS COMPANY ..... RESPONDENT Through Ms. Seema Bengani with Ms. Anshul Singh, Advs. WITH EFA(OS) No.9/2005 NATIONAL PROJECTS CONSTRUCTIONS CORPORATON LIMITED .... APPELLANT Through Mr. Santosh Kumar, Adv. versus M/S. BUNDELA BANDHU CONSTRUCTIONS COMPANY ..... RESPONDENT Through Ms. Seema Bengani with Ms. Anshul Singh, Advs. Date of Hearing : 02nd April, 2007 Date of Decision: 18th April, 2007 EFA(OS) No.9/2005 Page 1 of 26 CORAM: * HON'BLE MR. JUSTICE VIKRAMAJIT SEN HON'BLE MR. JUSTICE J.P. SINGH 1. Whether reporters of local papers may be allowed to see the Judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes : VIKRAMAJIT SEN, J. 1. This Appeal assails the Order of the learned Single Judge passed on 9.12.2004 dismissing the Appellant's Objections under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'A & C Act') on the grounds that they had been filed beyond the period stipulated by the statute. The Application for condoning the delay in filing these Objections has been dismissed holding that the Court did not possess any power to condone the delay. The learned Single Judge has applied the Judgment of the Supreme Court in Union of India -vs- Popular Construction Co., (2001) 8 SCC 470 = 2001(6) Scale 657, and in particular paragraph 12 thereof. Having dismissed the Objections the learned Single Judge had also directed that the Bank Guarantees retained by the Respondent/Judgment Debtor should also be returned on or before 15.1.2005. EFA(OS) No.9/2005 Page 2 of 26 2. The assailed Award purports to have been signed on 20.1.1997. Execution Proceedings have inexplicably been initiated by the Respondent after the passage of seven years thereafter. The Appellant/Objector categorically contends that a copy of the Award was not delivered to it at any time, even though this was statutorily required to be done. Section 31(5) of the A & C Act states that – “After the arbitral award is made, a signed copy shall be delivered to each party”. The further argument on behalf of the Appellant is that it learnt of the passing of this Award only on 23.3.2004 when it received notice in the Execution Proceedings (Ex. P. 4/2004). The Appellant thereafter states that “files of the Execution Case were subsequently inspected, a copy of the award obtained from the Respondent/Claimant and now the objections under section 34 of the Arbitration and Conciliation Act, 1996 are being filed”. The Objections under Section 34 of the A & C Act challenging the Award are dated 31.7.2004 of which the supporting Affidavit is dated 30.7.2004. They came to be eventually filed in the Registry of this Court on 7.8.2004. An application under Section 34 of the A & C Act read with Section 5 of the Limitation Act for condonation of delay, which ought to have accompanied the Objections, appears to have been filed on 4.10.2004. It is obvious, EFA(OS) No.9/2005 Page 3 of 26 therefore, that even though the Award visited the Appellant with a liability running into several lacs of rupees which after interest would run into crores of rupees, the conduct of the Appellant manifests repeated and reckless carelessness. Even in such cases the request that is repeatedly made to the Court is that the delay and inept handling by Government organisations should at the most be looked upon askance, and the Court should bail out and rescue a slothful party from the legal grave that it has dug for itself. We should not overlook the fact that Parliament has made no distinction between Government and private persons so far as the law of limitation is concerned. Experience has shown that latitude given by the Courts has only come to be misused; delay of some days of yore, has been replaced by delay of months and years. 3. It is in these circumstances that we have to decide whether the application seeking condonation of delay in filing Objections to an Award is maintainable and could be granted by the Court. The learned Single Judge has applied paragraph 12 of Popular Construction, which reads as follows: 12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub-section (3). In our opinion, this EFA(OS) No.9/2005 Page 4 of 26 phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso,would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result. 4. The regime of the repealed Arbitration Act, 1940, was that an Award had to metamorphose itself into being the 'rule of Court' before it attained executable efficacy. In the scheme of the A & C Act an Award can be enforced subject to the disposal of any Objections that may be filed. Civil Courts have a limited role to play. Even in the comparatively fluid format of the repealed statute, Courts had ruled that there was no scope for enlarging time or condoning delay in approaching the Court by way of Objections to an Award, which position would a fortiori continue in the prevailing statutory scheme. The conclusion reached in M/s. Enkay Construction Company-vs- The Vice Chairman, DDA, 2000(86) DLT 748 = 2000(6) AD (Delhi) 530 was that the uniform view is that if Objections are filed beyond the period of 30 days as laid down in the Arbitration Act, 1940, they cannot be looked into EFA(OS) No.9/2005 Page 5 of 26 since the Court does not possess power to entertain Applications under Section 5 of the Limitation Act. The opinion of various High Courts had been considered. Reliance had been garnered from these paragraphs of Madan Lal v. Sunder Lal, AIR 1967 SC 1233:- (7) This analysis of the relevant provisions of the Act contained in Chap. II which apply mutatis mutandis to arbitrations of the other two types shows that the Court has to pronounce judgment in accordance with the award if it sees no cause to remit the award or any of the matters referred to arbitration for reconsideration, or if it sees no cause to set aside the award. The Court has to wait for the time given to a party to make an application for setting aside the award and where such an application has been made the Court has to decide it first and if it rejects it the Court proceeds to pronounce judgment according to the award. It is clear, therefore, from S.17 that an application to set aside the award is contemplated therein and it is only when no such application has been made within the time allowed or if such an application has been filed and has been rejected that the Court proceeds to pronounce judgment in terms of the award. The Act, therefore, contemplates the making of an application to set aside an award and the grounds on which such an application can be made are to be found in S.30. The grounds on which an application can be made for setting EFA(OS) No.9/2005 Page 6 of 26 aside the award are-(a) that an arbitrator or umpire has misconducted himself or the proceedings, (b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under S.35, or (c) that an award has been improperly procured or is otherwise invalid. These are the only grounds on which an award can be set aside under S.30 and it will be seen that if a party wants an award to be set aside on any of these grounds it has to make an application. Thus any party wishing to have an award set aside on the ground that it was improperly procured or otherwise invalid has to make an application. We may also refer to S.32 which lays down that "notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act. (8) It is clear, therefore, from the scheme of the Act that if a party wants an award to be set aside on any of the grounds mentioned in S.30 it must apply within 30 days of the date of service of notice of filing of the award as provided in Art.158 of the Limitation Act. If no such application is made the award cannot be set aside on any of the grounds specified in S.30 of the Act. It may be conceded that there is no special form prescribed for EFA(OS) No.9/2005 Page 7 of 26 making such an application and in an appropriate case an objection of the type made in this case may be treated as such an application, if it is filed within the period of limitation. But if an objection like this has been filed after the period of limitation it cannot be treated as an application to set aside the award, for if it is so treated it will be barred by limitation. (9) It is not in dispute in the present case that the objections raised by the appellant were covered by S.30 of the Act, and though the appellant did not pray for setting aside the award in his objection that was what he really wanted the Court to do after hearing his objection. As in the present case the objection was filed more than 30 days after the notice it could not be treated as an application for setting the award, for it would then be barred by limitation. The position thus is that in the present case there was no application to set aside the award on grounds mentioned in S.30 within the period of limitation and, therefore, the Court could not set aside the award on those grounds. There can be no doubt on the scheme of the Act that any objection even in the nature of a written-statement which falls under S.30 cannot be considered by the Court unless such an objection is made within the period of limitation (namely, 30 days), though if such an objection is made within limitation that objection may in appropriate cases be treated as an application for setting aside the award. EFA(OS) No.9/2005 Page 8 of 26 (10) Learned counsel for the appellant, however, urges that S.17 gives power to the Court to set aside the award and that such power can be exercised even where an objection in the form of a written-statement has been made more than 30 days after the service of the notice of the filing of the award as the Court can do so suo motu. He relies in this connection on Hastimal Dalichand V. Hiralal Motichand, AIR 1954 Bom 243 and Saha and Co. V. Isharsingh Kripalsingh, AIR 1956 Cal 321 (FB). Assuming that the Court has power to set aside the award suo motu, we are of opinion that that power cannot be exercised to set aside an award on grounds which fall under S.30 of the Act, if taken in an objection petition filed more than 30 days after service of notice of filing of the award, for if that were so the limitation provided under Art.158 of the Limitation Act would be completely negatived. The two cases on which the appellant relies do not in our opinion support him. In Hastimal's case, AIR 1954 Bom 243, it was observed that "if the award directs a party to do an act which is prohibited by law or if it is otherwise patently illegal or void it would be open to the Court to consider this patent defect in the award suo motu, and when the Court acts suo motu no question of limitation prescribed by Art.158 can arise." These observations only show that the Court can act suo motu in certain circumstances which do not fall within S.30 of the Act. Saha and Co.'s case, AIR 1956 Cal 321(FB), was EFA(OS) No.9/2005 Page 9 of 26 a decision of five Judges by a majority of 3:2 and the majority judgment is against the appellant. The minority judgment certainly takes the view that the non-existence or invalidity of an arbitration agreement and an order of reference to arbitration may be raised after the period of limitation for the purpose of setting aside an award because they are not grounds for setting aside the award under S.30. It is not necessary in the present case to resolve the conflict between the majority and the minority Judges in Saha and Co.'s case, AIR 1956 Cal 321 (FB), for even the minority judgment shows that it is only where the grounds are not those falling within S.30, that the award may be set aside on an objection made beyond the period of limitation, even though no application has been made for setting aside the award within the period of limitation. Clearly, therefore, where an objection as in the present case raises grounds which fall squarely within S.30 of the Act that objection cannot be heard by the Court and cannot be treated as an application for setting aside the award unless it is made within the period of limitation. Saha and Co.'s case, AIR 1956 Cal 321 (FB), therefore, also does not help the appellant. 5. Reliance has been placed by Mr. Santosh Kumar, learned counsel for the Appellant, on Union of India -vs- Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239 which has been decided without reference to Popular Construction. Their EFA(OS) No.9/2005 Page 10 of 26 Lordships observed as follows:- 8. The delivery of an arbitral award under sub-section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of arbitral award to the party, to be effective, has to be “received” by the party. This delivery by the Arbitral Tribunal and receipt by the party of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award within 30 days under Section 33(1), an application for making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings. 9. ... 10. In the present case, the Chief Engineer had signed the agreement on behalf of the Union of India entered into with the respondent. In the arbitral proceedings the Chief Engineer represented the Union of India and the notices, during proceedings of the arbitration, were served on the Chief Engineer. Even the arbitral award EFA(OS) No.9/2005 Page 11 of 26 clearly mentions that the Union of India is represented by the Deputy Chief Engineer/Gauge Conversion, Chennai. The Chief Engineer is directly concerned with the arbitration, as the subject-matter of arbitration relates to the department of the Chief Engineer and he has direct knowledge of the arbitral proceedings and the question involved before the arbitrator. The General Manager of the Railways has only referred the matter for arbitration as required under the contract. He cannot be said to be aware of the question involved in the arbitration nor the factual aspect in detail, on the basis of which the Arbitral Tribunal had decided the issue before it, unless they are all brought to his notice by the officer dealing with that arbitration and who is in charge of those proceedings. Therefore, in our opinion, service of the arbitral award on the General Manager by way of receipt in his inwards office cannot be taken to be sufficient notice so as to activate the department to take appropriate steps in respect of and in regard to the award passed by the arbitrators to constitute the starting point of limitation for the purposes of Section 34(3) of the Act. The service of notice on the Chief Engineer on 19-3- 2001 would be the starting point of limitation to challenge the award in the Court. 11. We cannot be oblivious of the fact of impersonal approach in the government departments and organisations like Railways. In the very nature of the working of government departments a decision is not taken unless the papers have reached the person EFA(OS) No.9/2005 Page 12 of 26 concerned and then an approval, if required, of the competent authority or official above has been obtained. All this could not have taken place unless the Chief Engineer had received the copy of the award when only the delivery of the award within the meaning of sub- section (5) of Section 31 shall be deemed to have taken place. 12. The learned Single Judge of the High Court as also the Division Bench have erred in holding the application under Section 34 filed on behalf of the appellant as having been filed beyond a period of 3 months and 30 days within the meaning of sub-section (3) of Section 34. There was a delay of 27days only and not of 34 days as held by the High Court. In the facts and circumstances of the case, the delay in filing the application deserves to be condoned and the application under sub-section (1) of Section 34 of the Act filed on behalf of the appellant deserves to be heard and decided on merits. 13. The appeal is allowed. The application under Section 34(1) filed on behalf of the appellant shall stand restored in the High Court, to be heard and decided in accordance with law by the learned Single Judge. No order as to costs. 6. A proper perusal of this Judgment will disclose that their Lordships were primarily influenced by the fact that a copy of the Award had not been served on the officer concerned with the dispute. The question of there being 24 days delay only was EFA(OS) No.9/2005 Page 13 of 26 obviously made en passant since otherwise it may have become irreconcilable with the Popular Construction. The ratio of Tecco Trichy is that Award should be delivered to the officer concerned and to this extent it is of invaluable assistance to the Appellant. 7. Learned counsel for the Appellant has next drawn our attention to the decision of the Apex Court in State of Goa -vs- M/s. Western Builders, (2006) (6) Scale 574, which has also been relied upon by learned counsel for the Respondent. Popular Construction was brought to their Lordships notice along with National Aluminum Co. Ltd. -vs- Pressteel and Fabrication (P) Ltd., [(2004) 1 SCC 540 = 2003(10) Scale 1062]. Tecco Trichy, however, was not cited and hence not considered. Their Lordships took note of the fact that Section 43 of the A & C Act envisaged the application of the Limitation Act, 1963 but in view of Section 34 of the A & C Act read with Section 29(2) of the Limitation Act, “the applicability of Section 5 of Limitation will stand excluded and the application for condonation of delay upto a period of 30 days can be made to the Court and not beyond that”. Their Lordships thereafter took note of the fact that there was no provision in the A & C Act dealing with the EFA(OS) No.9/2005 Page 14 of 26 bonafide filing of an action in a wrong forum. In our view, in this context it is certainly arguable that principles of prescription may have no role to play if Objections have been filed within the prescribed period regardless of the fact that the filing is in a Court not properly possessing jurisdiction. In such cases principles analogous to Rules 10 and 10-A of Order VII of the Code of Civil Procedure would require the return of the Objections with liberty granted to the Objector to file them in the proper forum within the period granted by the Court. In these circumstances either of the Courts would not actually have to condone the delay in filing the Objections. On the contrary, the return would facilitate and ensure that the Objections are dealt with and decided by the competent Court of jurisdiction. It was on that reasoning that their Lordships pronounced in Tecco Trichy that Section 14 of the Limitation Act, 1963 is applicable to the A & C Act, 1996. This Judgment, therefore, is not a precedent for the proposition that delay in filing Objections even beyond the period of 120 days from the date on which the Award had been delivered/served on the concerned party can be condoned. 8. Mr. Santosh Kumar, learned counsel for the Appellant, has sought to rely on M/s. Transparent Packers -vs- The Arbitrator- EFA(OS) No.9/2005 Page 15 of 26 cum-Managing Director, JT 2000(7) SC 574, in our understanding which has scarce relevancy. All that was observed was that a deponent need not invariably enter the witness box for his affidavit to attract evidentiary value. The dismissal of the application seeking condonation of delay only on this ground was reversed. Thereafter reference has been made to State of Haryana -vs- Chandra Mani, (1996) 3 SCC 132 placing special emphasis on the observations to the effect that the State cannot be put on the same footing as an individual. Their Lordships had condoned a delay of 109 days in filing of the LPA before the High Court. This decision is of no assistance to the Appellant since the proviso to Section 34(3) of the A & C Act vests power and discretion in the Court to entertain application for setting aside an Award filed after three months of the delivery of the arbitral Award on the concerned party, only for another thirty days but not thereafter. While condoning delay may be possible in Appeals, discretion so far as Objections to an Award is concerned, stands extinguished after thirty days post three months of delivery of the Award. 9. In this analysis we are of the opinion that there is no scope to submit that the Court possesses powers to condone delay EFA(OS) No.9/2005 Page 16 of 26 beyond thirty days reckoned from the expiry of three months from the date on which a signed copy of the Award is delivered to the parties. Learned counsel for the Respondent has drawn attention to the observations found in Indian Rayon Corporation Ltd. -vs- Raunaq and Company Pvt. Ltd., (1988) 4 SCC 31, made in the context of the Arbitration Act, 1940. The Court was called upon to rule on Section 14(2) of the erstwhile Arbitration Act, the provisions of which are materially different. Briefly, the observations to the effect that it is the service of the notice and not the mode or method of the service that is important would stand appreciably diluted in view of the statutory obligation contained in Section 32(5) of the A & C Act. 10. We have already mentioned that liability in terms of the