Union Of India & Anr vs M/S. Deepak Electric & Trading Co. & Anr

Union of India & Anr. ... Appellants

Versus

M/s Deepak Electric & Trading Company

& Anr. ... Respondents

J U D G M E N T

A. K. PATNAIK, J.

This is an appeal against the order dated 03.01.2003 of

the Division Bench of the High Court of Delhi in FAO(OS) No.

551 of 2001 (for short `the impugned order').

2. The facts very briefly are that the appellants and the

respondent No.1 entered into a contract for construction of

PMT Complex for NSG at Manesar. The contract contained an

arbitration clause for resolving disputes between the parties.

As disputes arose between the parties, the respondent No.1

invoked the arbitration clause and an arbitrator was

appointed. The arbitrator published his award on 17.06.1996

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and on 08.07.1996, the respondents filed a petition in the

High Court of Delhi under Sections 14 and 17 of the

Arbitration Act, 1940 (for short `the Act') for filing the award

and for making the award a rule of the court and for passing a

decree in terms of the award. The petition was registered as

Suit No.1673-A/1996. After the award was filed, notice of the

filing of the award was directed to be issued to the parties on

13.01.1997. Notice was served on the Union of India, but

notice could not be served on the Executive Engineer,

C.P.W.D. A letter dated 21.03.1997 was addressed by the

Executive Engineer to the Registrar of the Delhi High Court

saying that he had not received a formal notice from the court.

On 17.07.1997, fresh notice was again directed to be issued to

the Executive Engineer.

3. While service of notice on the Executive Engineer was

awaited, Union of India filed objections to the award of the

arbitrator numbered as IA 9423 of 1997. The respondent No.1

contended that the objections filed by the Union of India to the

award of the arbitrator were not within the period of limitation,

i.e. 30 days from the date of service of the notice of filing of the

award. The appellants, on the other hand, contended that the

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Executive Engineer had not been served with the notice of

filing of award and, therefore, limitation had not been begun to

run. The learned Single Judge of the High Court held that

under Section 79 of the Code of Civil Procedure (for short `the

CPC') when suits are filed against the Central Government,

only the Union of India has to be arrayed as a party and the

Executive Engineer by no stretch of imagination can be taken

to be a party in such proceedings. The learned Single Judge

further held that as the Union of India had filed objections, the

Court was only considering the objections of the Union of

India and the Union of India had been served with a notice of

filing of the award in November, 1996. The learned Single

Judge, therefore, held that the objections of the Union of India

to the award were time barred and made the award a rule of

the court.

4. Aggrieved, the appellants filed FAO(OS) No. 551 of 2001

before the Division Bench of the High Court. After hearing

learned counsel for the parties, the Division Bench held in the

impugned order that in Union of India vs. Surinder Kumar [61

(1996) DLT 42 (D.B.)], the Delhi High Court has already taken

a view that it was necessary that a notice of filing of the award

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has to be served on the Executive Engineer as it was the

Executive Engineer who on behalf of the Union of India was

looking after the proceedings before the arbitrator. The

Division Bench, however, held that as the learned counsel on

behalf of the Executive Engineer had inspected the record of

the case in the court on 21.05.1997, the Executive Engineer

will be deemed to have acquired knowledge of the filing of the

award on 21.05.1997 and the period of 30 days counted from

21.05.1997 had expired by the time objections were filed by

the Union of India and the objections to the award were time

barred. Accordingly, the Division Bench of the High Court

dismissed the appeal of the appellants by the impugned order.

5. We have heard Mr. A.S. Chandhiok, learned Additional

Solicitor General for the appellants. No one has appeared for

the respondents despite notice.

6. The only question, which we have to decide in this case,

is whether the Division Bench of the High Court has taken a

correct view in the impugned order that the objections to the

award were time barred. Article 119 of the Schedule to the

Limitation Act, 1963, which prescribes the period of limitation

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for filing applications under the Arbitration Act, 1940, is

quoted hereinbelow:

"

Description of of Period of of Time from which

application limitation period begins to run

119. Under the Arbitration

Act, 1940 (10 of

1940)-

(a) for the filing in Thirty The date of service

court of an award. days of the notice of the

making of the

award.

(b) for setting aside

an award or getting an Thirty The date of service

award remitted for days of the notice of the

reconsideration filing of the award."

It will be clear from clause (b) of article 119 of the Schedule to

the Limitation Act, 1963 that an application for setting aside of

an award has to be filed within 30 days from "the date of

service of the notice of the filing of the award". Thus, the

starting point of limitation is the date of service of the notice of

the filing of the award and not the date of knowledge of the

filing of the award.

7. In support of this view that the starting point of

limitation for filing objections to an award under the Act is the

date of service of notice of the filing of the award, we may cite

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an authority. In Deo Narain Choudhury vs. Shree Narain

Choudhaury [(2008) 8 SCC 626], the facts were that on

16.07.1996 the Court sent a notice to the parties about filing

of the award and the notice was received by the respondent on

25.07.1996 and the respondent filed his objections to the

award on 21.08.1996. The appellant contended that the

objections had been filed beyond the period of limitation as the

respondent had received the notice from the arbitrator that the

award had been filed and the respondent had also filed a

caveat on 11.06.1996. This Court held that mere filing of the

caveat did not start the period of limitation and as the notice

was received by the respondent on 25.07.1996, the period of

limitation started running from that date and, therefore, the

objections filed on 21.08.1996 were within the period of 30

days as provided by article 119 of the Limitation Act, 1963.

8. The Division Bench of the High Court has taken a view in

the impugned order that as the Executive Engineer was

looking after the arbitration proceedings, he was the one who

could have filed the objections to the award on behalf of the

Union of India and thus notice of the filing of the award on the

Executive Engineer was mandatory and the starting point of

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limitation for filing the application for setting aside the award

would be the date of service of notice on the Executive

Engineer as provided in article 119(b) of the Schedule to the

Limitation Act, 1963. The High Court, therefore, was not right

in coming to the conclusion that as the Executive Engineer

had knowledge of the filing of the award on 21.05.1997 and as

the objections were filed beyond the period of 30 days counted

from 21.05.1997, the objections to the award were barred by

time.

9. We, accordingly, set aside the order of the learned Single

Judge as well as the impugned order of the Division Bench of

the High Court and remand the matter to the Single Judge of

the High Court for fresh decision in accordance with law. The

appeal is allowed with no order as to costs.

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

(P. Sathasivam)

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

(A. K. Patnaik)

New Delhi,

October 20, 2011.