C.R. No.741 of 1999 (O&M) -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.R. No.741 of 1999 Date of Decision: 20.10.2009 2. C.R. No.742 of 1999 M/s J.P. Constructions .....Petitioner Versus Haryana Power Generation Corporation Limited etc. ...Respondents Present: Mr. Ashwani Talwar, Advocate for the petitioner. None for the respondents. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? Yes. 2. To be referred to the Reporters or not ? Yes. 3. Whether the judgment should be reported in the Digest? Yes. -.- K. KANNAN J.(ORAL) 1. The civil revision petitions are against two independent awards passed by the same Arbitrator in relation to disputes raised by the same petitioner against the same respondents. They involved same questions of law and fact and therefore, heard and disposed of by a common judgment. 2. The civil revisions are directed against the order of the Additional District Judge, Yamuna Nagar allowing the appeal filed by the Electricity Board and three others and setting aside the order of the Civil Judge, Senior Division, Jagadhari making the award passed by the Arbitrator decree of Court. The arbitral C.R. No.741 of 1999 (O&M) -2- proceedings before the Arbitrator were to adjudicate on a dispute raised by the petitioner for certain works done on behalf of the respondents on a contract. Admittedly, the Arbitrator was appointed on 22.02.1983 and as was the requirement under Schedule I (3), the award ought to have been passed within a period of four months from the date of Arbitrator entering reference. The period had been extended by the Sub Judge upto 17.01.1988 and thereafter, the Arbitrator had stated that he had the consent of both parties for extension from time to time. In the award that ultimately got to be passed by the Arbitrator, he had made extensive reference to the conduct of the respondents in not cooperating for an immediate conclusion of the hearing. The Arbitrator had also observed in his award that on a hearing held on 18.08.1986, he had directed the parties to get on with the case on a day-to-day basis and to avoid frequent application for enlargement of time for awarding the judgment. The Arbitrator had observed that the Executive Engineer, Hydel Project did not choose to attend the hearings for the reasons best known to him and on 03.09.1986, the respondents themselves had sought for an adjournment of the case due to some personal difficulties of ailment of their counsel. The award records the fact that parties jointly requested for enlargement of time upto 17.01.1987, which had been accepted. On every one of the dates, the respondents had been taking time and when the respondents did not avail to C.R. No.741 of 1999 (O&M) -3- themselves the opportunities given to produce their evidence, the evidence was closed and at the time of arguments again several opportunities had been taken by the respondents offering to produce authorities through the Hon'ble Supreme Court judgments impinging on the power of the Arbitrator to pass an order beyond the period originally stipulated. No such authorities as offered to be produced were given by the respondents and ultimately the Arbitrator passed an award on 01.02.1988. 3. The petitioner had moved an application under Section 14(2) of the Arbitration Act, 1940 for summoning the original award from the Arbitrator and for making it the rule of Court. The Civil Judge (Senior Division) again dealt with the conduct of the respondents and the case had been adjourned on the request of the respondents. He, while dealing with the issue relating to the power of the Arbitrator to extend the time made reference to mutual consent of parties seeking for periodical extensions of time and he had taken that to be justification enough for enlarging the time and proceeded to make the order the rule of Court and passed a decree in terms of the award. This was challenged before the District Judge who set aside the decree passed by the Civil Judge (Senior Division) and held that the award was void ab initio, having been passed beyond a period of four months from the time when the period had expired for passing of the award. The learned Judge held that even the periodical extensions sought C.R. No.741 of 1999 (O&M) -4- by the parties will not vest in the Arbitrator to extend the time for, such a power existed only with the Court under Section 8 of the Arbitration Act, 1940. 4. Learned counsel appearing for the petitioner, Sh. Ashwani Talwar contended that the periodical extensions before the Arbitrator were only by mutual consent of parties and that in any event the inability of the Arbitrator to conclude the proceedings within a period of four months arose on account of the conduct of the respondents themselves. The respondents, who were guilty of prolonging the matter, were barred from raising the plea of the validity of the award that it was not rendered within four months' period. The matter relating to the validity of award passed beyond the period of four months in a case where parties have themselves agreed for such extension and the power of the Court to grant such time post award are no longer res integra. There are decisions of the Hon'ble Supreme Court that squarely govern the issue. The decision in State of Punjab Vs. Hardyal AIR 1985 SC 920 laid down that if the person, who was objecting to the validity of the award had been shown to have participated in the proceedings long after a period of four months, it was still immaterial for, there could not be estoppel against a statute. At the same time, the Hon'ble Supreme Court also held that a Court would have a power to exercise its discretion in a judicial manner. Such power could be exercised not merely by the Court before C.R. No.741 of 1999 (O&M) -5- which an application is moved for making it an order of Court but even by the Appellate Court. The law that the parties cannot merely concur for an extension of time suffered a slight dent in a subsequent decision of the Hon'ble Supreme Court itself in Nagar Palika, Mirzapur Vs. The Mirzapur Elect. Supply Co. Ltd. AIR 1990 SC 2273 where the Hon'ble Supreme Court held that if an award was passed after the expiry of time for arbitration, the conduct of the parties would be seen as a major factor to waive the extension given by the Court. The Hon'ble Supreme Court dealt with the case where the time for arbitration had expired on 03.12.1970 and the award had been made by the Arbitrator 27 days later without any formal extension of time. There the Court held that the conduct of the parties was a major factor to waive the extension given by the Court. In yet another ruling in M/s Hindustan Steel Works Construction Ltd. Vs. C. Rajasekhar Rao (1987) 4 SCC 93, the object and scope of the Court's power under the Arbitration Act of 1940 was considered. It held, with reference to Section 28 and in the light of Section 3 of the First Schedule that the Arbitrator would get a jurisdiction to enlarge the time for making the award where the parties to the arbitration agreement consented to such enlargement of time. In view of the fact that the parties had taken part in the proceedings before the Arbitrator without demur and all along been willing to extend C.R. No.741 of 1999 (O&M) -6- time, the Court found that it would be a fit case to extend the time. 5. In this case, there had been periodical extensions given beyond the period of four months with the concurrence of both parties, at a time when the respondents dragged their feet and made an issue on the power of the Arbitrator to extend the time. The respondents themselves had been responsible for prolonging the matter and seeking for adjournments innumerable times. By their conduct of periodical requests for extension of time, the respondents could be said to have waived their right to urge against the validity of the award and deliberately using their own delaying tactics to defeat the terms of the award. If the Arbitrator did not have the power as under law, such a power exists only with the Court, such discretion had been lawfully exercised by the Court of first instance by referring to the conduct of the respondents and how the situation warranted an extension of time and to feed validity to the award passed by the Arbitrator and the imperatives for making it a rule of Court. The order of the Appellate Court setting aside the decree of first instance Court on the only ground that there had been delay and that the Arbitrator had misconducted himself is untenable and contrary to law. The Appellate Court had merely left the petitioner in the lurch giving to him no relief although the fault could not be placed at the feet of the petitioner. The Appellate Court had omitted to note that C.R. No.741 of 1999 (O&M) -7- the respondents, who by the contumacious conduct prevented the Arbitrator from concluding the proceedings were not justified in urging a point that did not lie in their mouth to contend. 5. The order of the Appellate Court is set aside and the order passed making the award of the arbitrator the rule of the Court and granting a decree therefor are restored. The civil revision petitions are allowed with costs assessed at Rs.3500/- for each case. (K. KANNAN) JUDGE October 20, 2009 Pankaj*