Case: Benarsi Krishna Commit Vs. Karmyogi Shelters P.Ltd

2. The Petitioner is a Committee of Managing Landlords, who are co- owners of the Benarsi Krishna Estate at the Moti Cinema compound, Chandni Chowk, Delhi. The property apparently belongs to the Khanna family and the Seth family. The Respondent No.1 is a Private Limited Company incorporated under the Companies Act, 1956, and is an estate developer and builder of both residential and commercial properties. The Petitioner Committee entered into a Collaboration Agreement dated 16th November, 1990, by which the Respondent agreed to convert the Moti Cinema compound into a commercial complex. Subsequently, the agreement was amended on 2nd May, 1991, by which certain changes were introduced with regard to the scheme of payment. Inasmuch as disputes arose between the parties over the working of the agreement, the Respondent filed an application under Section 11 of the 1996 Act for appointment of an Arbitrator and by an order dated 14th May, 2001, the Delhi High Court appointed Justice K. Ramamoorthy, a retired Judge of the said Court, as the Sole Arbitrator. After considering the materials brought on record, the learned Arbitrator passed his Award upon holding that the Respondent had committed breach of the terms of the Collaboration Agreement and directed the Petitioner to refund the sum of Rs.41 lakhs which had been received from the Respondent, within three months from the date of the Award and in default of payment within the said period, the amount would carry interest @ 12% per annum from the date of the Award till the date of payment3. As will appear from the records, copies of the Award, duly signed by the learned Arbitrator, were received by the counsel for the respective parties. As far as the Respondent is concerned, the endorsement shows that the copy of the Award was received by its counsel on 13th May, 2004. However, no application for setting aside the Award was filed by the Respondent within the period of three months from the date of receipt of the Award, as provided under Section 34(3) of the 1996 Act4. On 3rd February, 2005, the Respondent filed a Petition, being O.M.P. No.51 of 2005, under Section 34 of the 1996 Act, to set aside the Award of the learned Arbitrator. According to the Petitioner, the said petition was filed after a delay of more than 9 months from the date of the receipt of the Award. The said objection of the Petitioner was considered by the learned Single Judge of the High Court who by his order dated 28th August, 2009, dismissed the Respondents petition on the ground that the same was time barred. The learned Single Judge accepted the contention of the Petitioner that the expression party used in Section 31(5) of the 1996 Act, would also include the agent of the party5. The matter was carried to the Division Bench of the High Court by the Respondent on 5th October, 2009, by way of F.A.O. (OS) No.578 of 2009. Accepting the case of the Respondent that service of the Award had not been properly effected, the Division Bench remanded the matter to the Single Judge to decide the objections on the Award on merits, upon holding that for compliance with the provisions of Section 31(5) of the 1996 Act, a copy of the Award had to be delivered to the party itself and service on its counsel did not amount to service within the meaning of Section 31(5) of the aforesaid Act. The Special Leave Petition has been filed against the said judgment and order of the Division Bench of the Delhi High Court6. In arriving at its decision which has been impugned in these proceedings, the Division Bench of the Delhi High Court referred to its own judgment in National Projects Constructions Corporation Limited Vs. Bundela Bandhu Constgructions Company [AIR 2007 Delhi 202] and a decision of this Court in Union of India Vs. Tecco Trechy Engineers & Contractors [(2005) 4 SCC 239] , which had considered the decision of the Delhi High Court in Bundela Bandhus case (supra). The Division Bench also referred to the decision of the Privy Council in the celebrated case of Nazir Ahmed Vs. King Emperor [(AIR 1936 PC 253 ], wherein it was categorically laid down that if an action is required to be taken in a particular manner, it had to be taken in that manner only or not at all. While observing that all the aforesaid controversies could have been avoided if the Award had been served on the party directly, the Division Bench also observed that in view of Section 2(h) of the 1996 Act, there was no justifiable reason to depart from the precise definition of the expression party which means a party to the arbitration agreement

Court's reasoning:
17. In the instant case, since a signed copy of the Award had not been delivered to the party itself and the party obtained the same on 15th December, 2004, and the Petition under Section 34 of the Act was filed on 3rd February, 2005, it has to be held that the said petition was filed within the stipulated period of three months as contemplated under Section 34(3) of the aforesaid Act. Consequently, the objection taken on behalf of the Petitioner herein cannot be sustained and, in our view, was rightly rejected by the Division Bench of the Delhi High Court