State Of Maharashtra & Ors vs M/S. Ark Builders Pvt.Ltd

(Arising out of S.L.P. (Civil) No. 14308 of 2010)

The State of Maharashtra & Ors. ....Appellants

Versus

M/s. Ark Builders Pvt. Ltd. ....Respondent

J U D G M E N T

AFTAB ALAM, J.

1. Leave granted.

2. Whether the period of limitation for making an application under

section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter `the

Act') for setting aside an arbitral award is to be reckoned from the date a

copy of the award is received by the objector by any means and from any

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source, or it would start running from the date a signed copy of the award is

delivered to him by the arbitrator? This is the short question that arises for

consideration in this appeal.

3. The material facts of the case are brief and admitted by both sides.

These may be stated thus. On March 20, 2003 the arbitrator gave a copy of

the award, signed by him, to the claimant (the respondent) in whose favour

the award was made. No copy of the award was, however, given to the

appellant, the other party to the proceedings, apparently because the

appellant had failed to pay the costs of arbitration. The respondent submitted

a copy of the award in the office of the Executive Engineer (appellant no.4)

on March 29, 2003, claiming payment in terms of the award. On April 16,

2003, the Executive Engineer submitted a proposal to challenge the award

before the Chief Engineer, and the Financial Advisor and Joint Secretary.

The respondent sent a reminder to the Chief Engineer on June 13, 2003, for

payment of the money awarded to him by the arbitrator and a second

reminder to the Secretary and Special Commissioner on January 8, 2004.

The Executive Engineer by his letter dated January 15, 2004, acknowledged

all the three letters of the claimant and informed him that the government

had decided to challenge the award before the appropriate forum.

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4. According to the appellants, the decision to make an application for

setting aside the award was taken on December 16, 2003, but no application

could be made for want of a copy of the award from the arbitrator. Hence, on

January 17, 2004, a messenger was sent to the arbitrator with a letter asking

for a copy of the award. The arbitrator made an endorsement on the letter

sent to him stating that on the request of the claimant the original award was

given to him and the Xerox copy of the award (sent to him along with the

letter), was being certified by him as true copy of the award. The

endorsement from the arbitrator along with the Xerox/certified copy of the

award was received from the arbitrator on January 19, 2004 and on January

28, 2004, the appellants filed the application under section 34 of the Act.

5. The respondent raised an objection regarding the maintainability of

the petition contending that it was hopelessly barred by limitation. The

Principal District Judge, Latur, by order dated February 15, 2007 passed in

Civil Application No.84 of 2005 (previously Suit No.1 of 2004) upheld the

respondent's contention and dismissed the appellants' application as barred

by limitation.

6. Against the order of the Principal District Judge, the appellants

preferred an appeal (Arbitration Appeal No.2 of 2008) before the Bombay

High Court.

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7. Before the High Court, the appellants contended that they were able to

obtain a copy of the award duly signed by the arbitrator only on January 19,

2004 and the period of limitation prescribed under section 34 (3) of the Act

would, therefore, commence from that date. The application for setting aside

the award was filed on January 20, 2004 and hence, there was no question of

the application being barred by limitation. In support of the contention, the

appellants relied upon the last order passed in the arbitral proceedings on

February 22, 2003 in which it was stated that the case was closed and the

arbitrator would proceed with the framing of the award which would be

declared and copies sent to both parties in due course. On behalf of the

appellants it was stated that contrary to the order passed on February 22,

2003, the arbitrator did not send them a copy of the award even though a

Xerox copy of the award was sent to them by the claimant-respondent to

whom the arbitrator had given a copy of the award duly signed by him. In

support of the submission that the period of limitation prescribed under

section 34(3) of the Act would start running from the date they received a

copy of the award duly signed by the arbitrator, they also relied upon section

31(5) read with section 34(3) of the Act. They also relied upon a decision of

this Court in Union of India v. Tecco Trichy Engineers & Contractors,

(2005) 4 SCC 239.

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8. On behalf the claimant-respondent it was pointed out that a copy of

the award was undeniably received in the office of the Executive Engineer

on March 29, 2003 and as a matter of fact the receipt of the copy of the

award on that date was expressly acknowledged in the letter of the Executive

Engineer dated January 15, 2004 in which he told him that the appellants

had decided to challenge the award. The respondent further pointed out that

it was only on the basis of the copy of the award received from him that the

office communications and deliberations were made and finally on

December 16, 2003 the decision was taken to challenge the award when the

matter had already become barred by limitation. It was submitted on behalf

of the respondent that the appellants undertook the exercise of sending the

Xerox copy of the award to the arbitrator for obtaining his signature on it

(when the period for making an application to set it aside was long over) just

to make out a case to overcome the bar of limitation prescribed by section 34

(3) of the Act. In the admitted facts of the case there should be no question

of there being any other date for the computation of limitation than March

29, 2003, the date on which he supplied a copy of the award to the Executive

Engineer.

9. The High Court upheld the submissions made on behalf of the

claimant-respondent, affirmed the view taken by the Principal District Judge

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and by judgment and order dated October 6, 2009 dismissed the appeal filed

by the appellants. It took note of section 31(5) and section 34(3) of the Act

and the decision of this Court in Tecco Trichy Engineers & Contractors but

rejected the appellant's contention highlighting that the word used in section

31(5) is `delivered' and not `dispatched'. The High Court held and observed

as follows:

"17. It is to be noted that sub-section (5) of Section 31

prescribes that after arbitral award is made, a signed copy shall

be `delivered' to each party. The word `delivered' appearing in

Section 31(5) cannot be equated with `dispatched'. A

distinction has to be made between these two words. The

`Shorter Oxford English Dictionary' gives meaning of the word

`delivered' as, "to bring and handover a letter, a parcel to the

proper recipient or address". "Deliver" means: (i) bring and

handover (a letter or goods) to the proper recipient; formally

hand over (someone); and (iii) provide (something promised or

expected). Thus, what is important is that the copy of the award

should be handed over to the proper recipient or addressee. In

this view of the matter, sub-section (5) of Section 31 does not

require that a copy of the arbitral award should be sent off by

the Arbitrator to the concerned party, but it is required that copy

of the arbitral award be handed over to the proper parties.

18. In the instant matter, admittedly the copy of award was

received by the Executive Engineer in the month of April 2003.

However, appellants did not act till January 2004 for about nine

months. Thus, for their inaction, appellants have to blame only

themselves. In the instant matter, it cannot be said that there is

non compliance of sub-section (5) of Section 31 of the Act of

1996. There is sufficient compliance of the provisions of

Section 31(5), as admittedly, appellants received copy of the

award in the month of April, 2003. Appellants thereafter did not

take steps in respect of raising challenge to the award and

allowed the matter to remain in cold storage. The delay

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occasioned in presenting the application is essentially because

of the lapses committed by the appellants only."

10. The appellants are now before this court by grant of special leave.

The two provisions of the Arbitration and Conciliation Act, 1996, relevant to

answer the question raised in the case are sections 31 and 34. Section 31

deals with `form and contents of arbitral award; and in so far as relevant for

the present provides as follows:

"31. Form and contents of arbitral award.- (1) An arbitral award

shall be made in writing and shall be signed by the members of

the arbitral tribunal.

(2) xxxxxxxxxxx

(3) xxxxxxxxxxx

(4) xxxxxxxxxxx

(5) After the arbitral award is made, a signed copy shall be

delivered to each party.

(6), (7), (8) xxxxxxxxxxx

(emphasis added)

Section 31(1) obliges the members of the arbitral tribunal/arbitrator to make

the award in writing and to sign it and sub-section (5) then mandates that a

signed copy of the award would be delivered to each party. A signed copy of

the award would normally be delivered to the party by the arbitrator himself.

The High Court clearly overlooked that what was required by law was the

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delivery of a copy of the award signed by the members of the arbitral

tribunal/ arbitrator and not any copy of the award.

11. Section 34 of the Act then provides for filing an application for setting

aside an arbitral award, and sub-section (3) of that section lays down the

period of limitation for making the application in the following terms:

"34. Application for setting aside arbitral award.-(1) Recourse

to a Court against an arbitral award may be made only by an

application for setting aside such award in accordance with sub-

section (2) and sub-section (3).

(2) xxxxxxx

(3) An application for setting aside may not be made after three

months have elapsed from the date on which the party making

that application had received the arbitral award or, if a request

had been made under section 33, from the date on which that

request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was

prevented by sufficient cause from making the application

within the said period of three months it may entertain the

application within a further period of thirty days, but not

thereafter.

(4) xxxxxxx"

The expression "..party making that application had received the

arbitral award.." can not be read in isolation and it must be understood

in light of what is said earlier in section 31(5) that requires a signed

copy of the award to be delivered to each party. Reading the two

provisions together it is quite clear that the limitation prescribed under

section 34 (3) would commence only from the date a signed copy of

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the award is delivered to the party making the application for setting it

aside.

12. We are supported in our view by the decision of this Court in Union

of India v. Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239; in

paragraph 8 of the decision it was held and 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."

( emphasis added )

13. The highlighted portion of the judgment extracted above, leaves no

room for doubt that the period of limitation prescribed under section 34(3) of

the Act would start running only from the date a signed copy of the award is

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delivered to/received by the party making the application for setting it aside

under section 34(1) of the Act. The legal position on the issue may be stated

thus. If the law prescribes that a copy of the order/award is to be

communicated, delivered, dispatched, forwarded, rendered or sent to the

parties concerned in a particular way and in case the law also sets a period of

limitation for challenging the order/award in question by the aggrieved

party, then the period of limitation can only commence from the date on

which the order/award was received by the party concerned in the manner

prescribed by the law.

14. We may here refer to a decision of the Patna High Court in Dr. Sheo

Shankar Sahay v. Commissioner, Patna Division and Ors., 1965 BLJR 78.

Section 18(1) of the Bihar Building (Lease, Rent and Eviction) Control Act,

1947 prescribed a period of limitation of 15 days for filing an appeal against

an order of the House Controller and provided as follows:

"any person aggrieved by an order passed by the Controller

may, within fifteen days from the date of receipt of such order

by him, prefer an appeal in writing to the appellate authority"

It was contended on behalf of the petitioner before the High Court that the

order-sheet of the House Controller was shown to the lawyer of the

respondent on June 10, 1959 and therefore, that would be the starting point

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of limitation under section 18(1) of the Bihar Building (Lease, Rent and

Eviction) Control Act, 1947. A division bench of the High Court consisting

of Chief Justice V. Ramaswami (as his Lordship then was) and Justice N.L.

Untwalia (as his Lordship then was) rejected the submission observing as

follows:

"2. ... But we shall assume that the petitioner is right in

alleging that the order was shown to the lawyer on the 10th June,

1959. Even so, we are of opinion that the appeal preferred by

respondent no.4 before the Collector of Shahabad was not

barred by limitation. The reason is that Sec. 18(1) provides

limitation of fifteen days "from the date of receipt of the order"

and not from the date of communication of the order. It is

significant that Sec. 14 of the Bihar House Rent Control Order,

1942, had provided that "any person aggrieved by an order of

the Controller may, within fifteen days from the date on which

the order is communicated to him, present an appeal in writing

to the Commissioner of the division". Sec. 18(1) of Bihar Act

III of 1949 is couched in different language. In our opinion,

Sec. 18(1) implies that the Controller is bound, as a matter

of law, to send a written copy of his order to the person

aggrieved, and limitation for filing an appeal does not start

unless and until the copy of the order is sent. In the present

case it is not disputed that no copy of the order was sent to

respondent no.4. It is true that the respondent himself applied

for a copy of the order on the 11th December, 1959, and

obtained a copy on the 14th December, 1959. In any event,

therefore, limitation will not start running against respondent

no.4 under Sec. 18(1) of the Act till the 14th December, 1959,

and as the appeal was filed on the 26th December, 1959, there is

no bar of limitation in this case...."

(emphasis added)

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15. We are in respectful agreement with the view taken by the Patna High

Court in the case of Dr. Sheo Shankar Sahay.

16. In light of the discussions made above we find the impugned order of

the Bombay High Court unsustainable. The High Court was clearly in error

not correctly following the decision of this Court in Tecco Trichy Engineers

& Contractors and in taking a contrary view. The High Court overlooked

that what section 31(5) contemplates is not merely the delivery of any kind

of a copy of the award but a copy of the award that is duly signed by the

members of the arbitral tribunal.

17. In the facts of the case the appellants would appear to be deriving

undue advantage due to the omission of the arbitrator to give them a signed

copy of the award coupled with the supply of a copy of the award to them by

the claimant-respondent but that would not change the legal position and it

would be wrong to tailor the law according to the facts of a particular case.

18. In the light of the discussion made above this appeal must succeed.

We, accordingly, set aside the judgments and orders passed by the Bombay

High Court and the Principal District Judge, Latur. The application made by

the appellants under section 34 of the Act is restored before the Principal

District Judge, Latur, who shall now proceed to hear the parties on merits

and pass an order on the application in accordance with law. Since the

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matter is quite old, it is hoped and expected that the Principal District Judge

will dispose this matter preferably within 6 months from the date of receipt

of this order.

..........................................J.

[AFTAB ALAM]

..........................................J.

[R.M. LODHA]

New Delhi,

February 28 , 2011.