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CASE NO.: Appeal (civil)  1134 of 2007

PETITIONER: Jatinder Nath

RESPONDENT: M/s Chopra Land Developers Pvt. Ltd. & Anr

DATE OF JUDGMENT: 02/03/2007

BENCH: S. H. Kapadia & B. Sudershan Reddy

JUDGMENT: J U D G M E N T Arising out of SLP (C) No. 11815/06

KAPADIA, J.         Leave granted.         This civil appeal arises from the final order dated 19.4.2006 passed by  the High Court of Punjab and Haryana at Chandigarh allowing Civil  Revision No. 4877/96.         The short question which arises for determination in this civil appeal  is whether the Additional Civil Judge (Senior Division), Faridabad was right  in dismissing the application filed under section 14 of the Arbitration Act,  1940 (for short "the Act") filed by M/s Chopra Land Developers Pvt. Ltd.  ("the Developer") on the basis of Award dated 29.3.1994 given by the  Arbitrator in the above court for want of jurisdiction.         The Developer is a private limited company having its registered  office at Saket, New Delhi. On 16.3.1990 an Agreement was entered into by  the Developer with one Jatinder Nath (appellant herein). At that time, the  appellant was residing at Faridabad. Under the above agreement, the  Developer agreed to construct a housing complex on a plot bearing No.        G-13, Saket, New Delhi. Under the said Agreement, the Developer agreed to  finance the construction from its own resources. Clauses 11, 20 and 21 of the  said agreement read as follows: "11.    In case of any dispute arising between the parties  in this respect, the matter shall be referred to the  Sole Arbitrator for his valuable decision and his  decision shall be final and binding on both the  parties.

20.     That in case of any dispute arising between the  parties in respect of these presents, the same shall  be referred for arbitration to the sole Arbitrator.  Shri Damodar Sharma, 5-N/35, NIT Faridabad  shall be the sole Arbitrator and the decision shall  be binding on both the parties.

21.     The agreement has been entered into between the  parties at Faridabad and the Faridabad Courts  only shall have the jurisdiction in case of any  dispute between the parties to the said  agreement."

                In terms of the said agreement, when the dispute arose between the  parties, the appellant herein requested for a reference to the named  Arbitrator. This was vide letter dated 20.8.1992. The Arbitrator entered upon  the reference on 24.8.1992. He fixed the hearing on 5.9.1992 on which date  the appellant remained present at the venue of arbitration. However, neither  the arbitrator nor the Developer was present. Suddenly after fourteen  months, the arbitrator purported to act. He fixed the matter for hearing on

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20.2.1994. Since the entire matter was pending before the Delhi High Court  which was moved by the appellant herein under section 20, the arbitrator  was requested not to proceed. Despite the request, the arbitrator proceeded to  give his Award (ex parte). This was on 29.3.1994.

To complete the chronology of events, it may be pointed out that the  Developer (first respondent herein) filed an application under section 14 of  the Act for filing the Award in the court of Additional Civil Judge (Sr. Div.),  Faridabad (for short "the trial court"). Notice of the said application  was   also  given  to the  appellant herein.  The appellant herein appeared and filed  his objections. He objected to the jurisdiction of the trial court. According to  the appellant, the suit land stood located in Saket, New Delhi and, therefore,  the trial court had no jurisdiction to pass the decree in terms of the said  Award. This was the basic objection raised by the appellant before us. Apart  from his objection on territorial jurisdiction, the appellant also submitted  before the trial court that the Arbitrator had issued notice dated 24.8.1992  fixing the date of hearing on 5.9.1992. However, when his advocate reached  the residence of the Arbitrator on the date fixed, neither the Arbitrator nor  the Developer had turned up. The appellant also contended before the trial  court that the Award was not made within the period of four months from  entering upon the reference and, therefore, the Arbitrator had become  functus officio. He further pointed out to the trial court that an application  under section 20 of the Act has also been filed in the High Court by him for  filing the arbitration agreement in court. The appellant submitted that despite  raising the above objections before the Artbitrator, the Arbitrator proceeded  to pass an ex parte Award dated 29.3.1994. The appellant further pointed out  that the Developer had filed a suit for permanent injunction in the Court of  Senior Sub-Judge, Delhi and that the Developer had sought intervention of  the civil court for adjudication of the dispute and, in the circumstances, the  Arbitrator could not have made an ex parte Award dated 29.3.1994.  According to the appellant, the said ex parte Award passed by the Arbitrator  was in violation of the provisions of the Act; that it was non est, and,  therefore, the same could not be made rule of the Court.  

The trial court on the basis of the above pleadings framed several  issues. Two of the six issues were, whether Award dated 29.3.1994 was     non est as the Arbitrator had become functus officio and whether the trial  court had no territorial jurisdiction to entertain the matter since the suit lands  are located in Saket, New Delhi.

By impugned judgment dated 24.9.1996, the trial court held that in  view of section 31(4) of the Act, since the land in question stood located in  Saket, New Delhi and since the appellant herein is the resident of Delhi and  since the Developer was carrying on business in Delhi the trial court had no  territorial jurisdiction to pass the decree in terms of the Award. The trial  court rejected the contention of the Developer that the subject matter of the  reference was the contract between the parties; that under the contract, the  dispute, if any, was to be referred for arbitration in Faridabad; that under the  contract, the dispute was referable to the sole arbitrator whose decision was  to bind both the parties. The trial court also rejected the contention of the  Developer that the agreement was entered into between the parties at  Faridabad and that the Faridabad court alone had the jurisdiction to decide  the above dispute. The trial court also rejected the contention of the  Developer that on the date of execution of the agreement, the appellant  herein was residing in Faridabad. On the merits of the case, the trial court  found that the appellant herein had moved a petition under section 20 of the  Act on 14.10.1993 in the Delhi High Court which was registered as Suit No.  2482/93 wherein it was prayed that an independent arbitrator be appointed  and the matter be referred for arbitration. On 14.10.1993 the Arbitrator had  not made the award. On 14.10.1993 the period of four months had expired.  The trial court found that after the institution of petition under section 20 of  the Act on 14.10.1993, the arbitrator, suddenly, after a lapse of almost   fourteen months from the date of his entering upon the reference, made an    ex parte Award against the appellant on 29.3.1994. According to the trial  court, though the agreement (Ex. P-1) stood executed at Faridabad, the

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validity of that agreement and the dispute arising therefrom have to be  decided in the civil court at Delhi since the property in question stood  located in Saket, New Delhi. According to the trial court, the Developer had  moved an application under section 14 of the Act on 12.4.1994, by that  application, the Developer sought a decree from the trial court at Faridabad  in terms of the ex parte Award. On 12.4.1994, according to the trial court,  the appellant herein was residing in Delhi, he was served with the summons  at his residential address in Delhi coupled with the fact that the suit property  was in Delhi and, therefore, the trial court at Faridabad had no territorial  jurisdiction to entertain and try the Developer’s application under section 14  of the Act. According to the trial court, there was one more reason for saying  that it had no territorial jurisdiction. According to the trial court the  agreement (Ex. P-1), pertained to immovable property at Saket and when a  dispute arose between the parties, the appellant herein had moved the Delhi  High Court under section 20 of the Act in which the address of the appellant  was shown as G-13, Saket, New Delhi. The trial court also look into account  one more circumstance, namely, that the Developer had instituted Civil Suit  No. 945/92 against the appellant herein. In that suit, the Developer had asked  for a decree for permanent injunction. In that suit the appellant herein was  the defendant. In that suit, the address of the appellant as defendant was also  shown as G-13, Saket, New Delhi. In the circumstances, the trial court held  that the Developer had invoked the territorial jurisdiction of the Delhi High  Court much prior to his application under section 14 of the Act to the trial  court herein on 12.4.1994. In the circumstances, the trial court held that the  proviso to section 16 CPC was not applicable and that the application filed  by the Developer under section 14 of the Act dated 12.4.1994 should have  been instituted in the Delhi Court within the local limits of whose  jurisdiction the suit property stood located. In the circumstances, it was held  by the trial court that clause 21 of the agreement conferring jurisdiction to  the Faridabad court cannot be implemented. The trial court observed that  since the appellant had moved the Delhi High Court under section 20 of the  Act for appointment of a new arbitrator in the year 1993 and since that  application was prior to 12.4.1994 and since that application was anterior to  the reference, the appellant’s application under section 20 of the Act fell  within the purview of section 31(4) of the Act. According to the trial court,  since a petition under section 20 of the Act was pending prior to 12.4.1994  in the Delhi High Court, the Developer should have moved his application  under section 14 also before the Delhi High Court. In this connection  reliance was placed on the judgment of this court in the case of Union of  India  v.  Surjeet Singh Atwal reported in AIR 1970 SC 189. Aggrieved by  decision of the trial court dated 24.9.1996, the Developer moved the Delhi  High Court by way of the CRA. In the CRA the Developer contended that  under the agreement (Ex. P-1) vide clause 21 it was agreed between the  parties that the Faridabad courts alone shall have the jurisdiction in case of  any dispute between the parties and, therefore, the trial court had territorial  jurisdiction to entertain and try application dated 12.4.1994 under section 14  of the Act. It was contended, in the alternative, that where two courts have  concurrent jurisdiction, the parties by agreement can choose the jurisdiction  of one of them and such a choice was not against the public policy. It was  contended that an agreement whereby jurisdiction of the court stood  specified was not contrary to section 28 of the Contract Act and to the public  policy. It was further contended that where two courts had territorial  jurisdiction to try a case, it is open to the parties to enter into an agreement  whereby jurisdiction of the court stood specified. On behalf of the Developer  it was further contended that, at the time of execution of the agreement (Ex.  P-1) the appellant herein resided at Faridabad and his subsequent change of  address cannot change clause 21 of the agreement. It was further urged on  behalf of the Developer that an application under section 20 of the Act was  filed by the appellant herein in the Delhi High Court and it had no relevance  with clause 21 of Ex. P-1. According to the Developer, filing of such suit  under section 20 of the Act before the Delhi High Court cannot alter the  terms of Ex. P-1. It was further urged on behalf of the Developer that it had  instituted the above suit for permanent injunction in the Delhi High Court.  That suit was Suit No. 945/92 for permanent injunction which was for a  relief which had no correlation with the arbitration matter. Moreover, that

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suit was for permanent injunction. Such a suit could have been filed in Delhi  courts alone as in that suit it was alleged that the appellant herein was  attempting to interfere with the Developer’s possession. Such a suit did not  constitute a waiver. On behalf of the Developer, it was further urged that the  trial court had erred in coming to the conclusion that Ex. P-1 cannot be given  effect as the suit property was located at Saket,  NewDelhi and that the  parties were residing at Delhi.

On behalf of the appellant herein, it was sought to be argued before  the High Court that although Ex. P-1 was executed at Faridabad and  although at the relevant time the appellant resided in Faridabad, the dispute  was in connection with recovery of possession and, therefore, the civil court  at Faridabad had no jurisdiction to entertain, try and dispose of the  Developer’s application under section 14 of the Act. It was also urged that  subsequently the appellant had shifted his residence from Faridabad to Saket  in New Delhi and, therefore, the trial court was right in refusing to entertain  the Developer’s application dated 12.4.1994 under section 14 of the Act.  Accordingly, on behalf of the appellant herein it was urged that no  interference is called for in the CRA. By the impugned judgment, the High Court held that Delhi High  Court was not a competent court as the parties had chosen to confer  exclusive jurisdiction upon the Faridabad court. In the circumstances,  section 31(4) of the Act was not applicable. The High Court further held that  there was no waiver on the part of the Developer by invocation of the  jurisdiction of the Delhi court when the respondent instituted Suit No.  945/92 for permanent injunction. The High Court held that Suit No. 945/92  had no correlation  with the arbitration matter. The High Court further held,  that on the facts and circumstances of the present case, section 20 CPC was  applicable; that section 20 CPC refers to institution of suits other than those  covered by section 16 CPC on the basis of residence of  defendant or cause  of action. In the circumstances, the High Court allowed the Revision Petition  holding, that the trial court at Faridabad had jurisdiction to entertain and try  application dated 12.4.1994 under section 14 of the Act; that section 31(4) of  the Act was not attracted; that the arbitrator had entered upon reference on  the application of appellant herein and, therefore, there was no occasion for  the appellant moving the Delhi High Court under section 20 CPC seeking  reference. Hence this civil appeal.

As stated above, the short point which arises for determination in this  civil appeal is whether application dated 12.4.1994 filed by the Developer in  the trial court at Faridabad was maintainable.

At this stage, it may be mentioned that the trial court at Faridabad  following the impugned judgment of the High Court had dismissed the  objections of the appellant herein and it has made said Award dated  29.3.1994 the rule of the court. This was on 31.5.2006. On 23.1.2007 the  Developer’s Suit No. 945/92 for permanent injunction stood dismissed in  default.

The basic point which needs to be decided by us is whether clause 21  of Agreement dated 16.3.1990 (Ex. P-1) conferring jurisdiction on the  Faridabad court was ineffective and whether the appellant is right in his  contention that the application made by the Developer under section 14 of  the Act was not maintainable in the Faridabad court on the ground of lack of  territorial jurisdiction.

Mr. Sunil Gupta, learned senior counsel appearing on behalf of the  appellant submitted that the Award made by the arbitrator dated 29.3.1994  being an ex parte Award was non est as it was passed after expiry of four  months from the date when the arbitrator entered upon the reference. He  contended that on 20.8.1992 the appellant had referred the dispute to the  arbitrator. On 24.8.1992 the arbitrator entered upon the reference and fixed  the date of hearing on 5.9.1992 on which date the appellant was present. On  that date neither the arbitrator nor the Developer was present. On that date,  the appellant herein sought the next date of hearing. Despite the telegram

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seeking the next date of hearing, the arbitrator did not respond. During the  period October, 1992 and November, 1992 disputes arose when the MCD  had issued notices directing the appellant herein to show cause why the  building plan submitted by the Developer should not be revoked. Learned  counsel pointed out that on 15.10.1992 the Developer had in fact instituted  Suit No. 945/92 in the civil court at Delhi for permanent injunction. In that  suit, vide para 16, the Developer had invoked jurisdiction of the Delhi court.  In the circumstances, it was not open to the Developer to move the trial court  at Faridabad on 12.4.1994 under section 14 of the Act. Learned counsel  urged that both the parties were aware that the dispute was in respect of the  suit property located at Saket in New Delhi. The dispute, according to the  learned counsel, was for possession of the suit property. The appellant herein  had sought possession of the suit property even before the arbitrator. The  Award of the arbitrator, according to the learned counsel, itself indicates that  the arbitrator has given relief in favour of the Developer concerning  immovable property and, therefore, the trial court was right in coming to the  conclusion that the application made on 12.4.1994 under section 14 by the  Developer was not maintainable on the ground of territorial jurisdiction in  view of section 31(4) of the Act. The second contention advanced on behalf  of the appellant before us was that the impugned Award dated 29.3.1994  was non est. According to the learned counsel, four months time available to  the arbitrator under clause 3 of Schedule I read with section 3 of the Act  expired on 24.12.1992.After that date the arbitrator became functus officio.  In the circumstances, the appellant herein filed an application under section  20 of the Act on 14.10.1993 before the Delhi High Court for appointment of  an arbitrator for adjudication of the dispute with the Developer. This  application was converted into Suit No. 2482/93. It is only thereafter that the  arbitrator suddenly purported to act as an arbitrator by fixing the date of  hearing on 20.2.1994 when the appellant herein requested the arbitrator in  the light of the above facts not to proceed with the arbitration proceedings  since the entire matter was before Delhi High Court in Suit No. 2482/93.  Despite the request made by the appellant, the arbitrator proceeded to make  an Award dated 29.3.1994 being an ex parte Award. Learned counsel further  pointed out that in fact prior to his application under section 20, M.C.D. had  revoked the sanction for construction of the complex and it was the appellant  herein who had filed a writ petition in the Delhi High Court being Writ  Petition No. 5038/93 against the revocation by M.C.D..

On the first question on the lack of territorial jurisdiction, we do not  find any merit in the contentions advanced on behalf of the appellant. We  have examined Ex. P-1 between the appellant and the builder (Developer)  dated 16.3.1990. The agreement describes the appellant as the owner. It  describes M/s Chopra Land Development Pvt. Ltd. as the builder. Under the  agreement, the appellant remains the owner. Under the agreement, the  appellant applies to D.D.A. for time to construct a housing complex on a  plot of land at Saket owned by the appellant. Under the agreement, the  Developer agrees to construct a housing complex on the plot bearing No.     G-13, Saket, New Delhi. Under the agreement, the entire construction cost is  financed by the Developer. Under the agreement, the housing complex  consisted of basement, ground floor, mezzanine first floor, second floor and  third floor. Under the agreement, the Developer agreed to construct the  housing complex without prejudice to the owner’s right. Under the  agreement, the owner was required to give permission to the builder to  construct the housing complex. Under the agreement, the entire cost of  construction was to be borne by the Developer. Under the agreement, the  building plan, the completion certificate etc. were to be signed by the  appellant-owner. Under the agreement, vide clause 15, the Developer agreed  to pay to the appellant-owner a sum of Rs. 5 lacs in consideration of his  seeking permission to construct the housing complex. This was in addition  to the construction cost to be incurred by the Developer. Clause 16 of the  agreement stated that in consideration of the Developer’s services to  construct the housing complex, the appellant agrees to allow the ownership  of the basement, ground floor and mezzanine along with proportionate  interest in the land to be transferred in the name of the Developer. At this  stage, it may be noted that under the ex parte Award dated 29.3.1994 the

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arbitrator has passed his Award in terms of para 16 and, therefore, it was  contended before us on behalf of the appellant that the dispute related to  possession of the property; that the dispute was comparable to a suit for land  and that the submission was made specifically in view of the Award being  passed in terms of para 16 of the agreement (Ex. P-1). It was urged that since  the arbitrator has passed the Award directing the appellant to transfer the  ownership of basement, ground floor, mezzanine along with the  proportionate interest in the land in favour of the Developer, the present  dispute related to recovery of possession and since the lands were located in  Saket the trial court had no jurisdiction to make the Award rule of the court  under section 14 of the Act. As stated above, we do not find merit in the  contention advanced on behalf of the appellant. We have examined Ex. P-1  in entirety. Apart from the above clauses of Ex. P-1, we have already quoted  clauses 11, 20, and 21 by which the parties agreed that in case of dispute  between the parties the same shall be referred for arbitration to the sole  arbitrator at Faridabad and his decision shall be binding on both the parties.  Under clause 21, the parties agreed that the Faridabad court alone shall have  the jurisdiction in case of any dispute between the parties. On our examining  the terms and conditions of Ex. P-1 along with the surrounding  circumstances thereto, we are of the view that Ex. P-1 was a pure  Development Agreement. The agreement is merely an agreement whereby a  party agrees to develop certain property for a certain consideration. Under  the agreement, the appellant herein continues to remain the owner. He has to  apply for permission to construct the building to the D.D.A.. The Developer  agrees to construct on the land. The Developer agrees to finance the entire  construction cost and in lieu of the Developer’s services in the matter of  construction of housing complex the owner (appellant herein) agrees to  permit transfer of the ownership a part of the complex to the Developer. It is  for this reason, as indicated by the events enumerated above, that M.C.D.  had issued notice to the appellant on 21.9.1992 to show cause why the  building plan submitted should not be revoked. It is for the above reasons,  that M.C.D. ultimately revoked the sanction for the construction of the  housing complex on 18.5.1993 and it is the appellant herein as owner who  had sought to challenge the revocation vide Writ Petition No. 5038/93. On  the facts of this case, therefore, it cannot be said that the trial court at  Faridabad had no jurisdiction to make the Award the rule of the court under  section 14 of the Act. Section 31(1) of the Act provides that an Award may  be filed in any court having jurisdiction in the matter to which the reference  relates. Under that section, the Award can be filed in the court within whose  jurisdiction the property in dispute lies. Parties cannot give jurisdiction to a  court under section 14 by consent if that court does not has jurisdiction. If an  award refers to an immovable property, the court having jurisdiction in  respect of the same will entertain an application under section 14. In order to  decide as to which court has jurisdiction to entertain a petition under section  14,  reference has to be made to section 2(c) read with section 31(1) of the  Act. Merely because the arbitrator chooses to hold the proceedings in a place  where no suit could be instituted, and chooses to make an award at that  place, it would not give the court of that place territorial jurisdiction to  decide the matter under the Act. Section 30 refers to ground for setting aside  an award. Section 30 is to be read with section 33. The idea behind the entire  scheme of the Arbitration Act appears to be that an application by a party  challenging the validity of correctness of the award on whatever ground has  to be made under section 33. Section 33 is the only section under which a  party is given the right to apply to the court to challenge either the  agreement or the award. Under the Act, therefore, after the Award has been  filed a party is permitted to make an application under section 33 to bring all  kinds of defects to the notice of the court and the court will give reliefs  either under section 15 or section 16 or even under section 30 of the Act. In  an arbitration without the intervention of the court, an award can be filed in  any court having jurisdiction in the matter to which the reference relates.   The award can be filed only in the court which would have jurisdiction in  respect of the subject matter of the dispute. In order to decide the jurisdiction  of the court, it is necessary to decide whether the court would have  jurisdiction to try a regular suit between the parties in which the relief is  claimed. Section 33 does not prescribe the court before which an application

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under this section may be filed, but section 31 makes such provision. Section  31(2) provides that all questions regarding the validity, effect or existence of  an award or an arbitration agreement shall be decided by the court in which  the award has been filed or may be filed. Section 2(c) lays down the forum.  The application has to be moved in the court within whose jurisdiction the  opposite party resides or carries on business or within whose jurisdiction any  part of the cause of action arises. Residence or carrying on business of a  party, apart from the place of accrual of a cause of action is relevant for  determining the territorial jurisdiction of the court in arbitration cases, if the  question so arises in connection with the subject matter of the dispute.  

Applying the above tests to the facts of the present case, we are of the  view that at the relevant time the appellant resided at Faridabad. He resided  at Faridabad when the contract was made. Under the contract, the parties  agreed to refer all disputes to the Faridabad court. Apart from the residence,  we are also concerned with the place of accrual of the cause of action. In the  present case, a bare reading of the agreement indicates that it is an  agreement to develop. The appellant remains the owner, the Developer  remains the contractor. The Developer is the financer. The appellant is the  owner of an asset. The contractor/ Developer agrees to exploit that asset on  behalf of the owner. The Developer funds the scheme. The building plans  remained in the name of the owner. The D.D.A. informs the owner regarding  revocation of the building plan. The owner files the writ petition challenging  the revocation. The contractor is paid consideration in terms of a part of the  property. In the circumstances, it cannot be said that this case is similar to a  suit for land. One cannot look at para 16 alone in isolation. On the other  hand, with open eyes, the parties had entered into the contract, they had  agreed to refer all disputes to an arbitrator at Faridabad and they had agreed  that the Faridabad court alone shall have jurisdiction. In a matter of this  kind, it cannot be said that the claim is similar to a suit for land. A housing  complex has to be constructed at the site. When dispute arises, it will not be  confined only to immovable property. Such disputes also require accounts to  be maintained. The disputes also involve rendition of accounts. In the  circumstances, in our view, section 20 CPC alone is attracted. Therefore, in  our view, the High Court was right in holding that the Faridabad court had  jurisdiction to make the Award the rule of the court.

As stated above, one of the points raised on behalf of the appellant  herein is that ex parte Award dated 29.3.1994 was non est since it was made  beyond four months from the date when the arbitrator entered upon the  reference. We do not find any merit in this contention. Chapter II of the  Arbitration Act covers references, in which the parties may proceed, if  nothing goes wrong, up to the stage of delivery of the award, without the  intervention of the court. This does not mean that the court has no authority  to intervene at an early stage, should it become necessary. In the present  case, as stated above, the arbitrator entered upon a reference pursuant to the  notice given by the appellant on 24.8.1992. The notice was given on  20.8.1992. Therefore, section 8 of the Act has no application. Section 8  applies only  where the parties do not concur in the appointment. Section 8  and section 20 operate in different provinces. Section 20 confers power on  the court to order the agreement to be filed and to make an order of reference  to the arbitrator appointed by the parties or where they do not agree, the  court can appoint any other person of its choice as an arbitrator. This  discussion is important. This difference between section 8 and section 20  shows that the reference flows from an agreement between the parties in the  cases falling under section 8. The reference flows from the agreement in  cases falling under Chapter II of the Arbitration Act and as long as the  agreement stands, the reference remains valid unless it is superseded by an  order of the court under section 19. Under that section, where award  becomes void under section 16(3) or where an award is set aside, the court  may by an order supersede the reference and shall thereupon order that the  arbitration agreement shall cease to have effect. Therefore, till such time as  the order is passed by the court under section 19 superseding the reference,  the same shall remain valid till the agreement is superseded. This is the  scope of section 8 read with section 19 of the Act. On the other hand, in

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cases falling under section 20 of the Act, power is conferred on the court to  make an order of reference to the arbitrator. That power is conferred on the  court which orders the agreement to be filed before it. In a proceeding under  section 8, disputes are presented by the parties before the arbitrator. Whereas  in proceedings under section 20, the disputes are referred by the court. It is  for this reason that it has been repeatedly held that merely because an  arbitrator does not make an award within the specified period of four months  the court has the power to extend the period. The award given by an  arbitrator after four months is not binding on the parties. Such an award is  vitiated as the arbitrator has no power to make an award after four months.  However, a bare failure of an arbitrator to make an award within the time  allowed by law will not involve the consequences of it being set aside only  on that ground. The court has ample powers in a given case to extend the  time and give life to the vitiated award by exercising judicial discretion  under section 28 of the Act. An application to have the award set aside on  the ground that it was made beyond time prescribed has to be moved under  the Act. No separate suit would lie for that purpose. Section 28 is not limited  only to references to arbitration made in a suit pending before the court.  Further, the  power given to the court under section 28 is so wide that it can  extend the time even if the award is made beyond four months from the date  of the arbitrator entering upon the reference. The only restriction is that it  must be exercised with judicial discretion. In the present case, as state above,  the Developer moved an application for making the award the rule of the  court on 12.4.1994. Unfortunately, the appellant chose not to appear before  the trial court. In the circumstances, an ex parte decree came to be passed on  31.5.2006. We have used the word unfortunately because the appellant  herein had filed his objections before the trial court. Those objections were  dismissed as he chose to remain absent. The appellant chose to remain  absent as he had moved or decided to move this Court in special leave  petition against the impugned judgment of the High Court on the point of  territorial jurisdiction. The judgment of the High Court is dated 19.4.2006.  The Award is made the rule of the court by the trial court on 31.5.2006 in  view of the impugned judgment of the High Court. We have also gone  through the Award. We do not wish to express any opinion on the merits,  however, the fact remains that the arbitrator entered upon the reference on  24.8.1992. He fixed the date of hearing on 5.9.1992. On 5.9.1992 the  appellant appeared before him. The arbitrator was absent. The Award has  been given almost after fourteen months and that too after 14.10.1993 when  the appellant herein moved an application under section 20 of the Act for  appointment of a new arbitrator. Taking into account the above  circumstances, we set aside the ex parte Order dated 31.5.2006 passed by the  trial court at Faridabad making Award dated 29.3.1994 the rule of the court.  Consequently, we direct restoration of the matter to the file of the Court of  Additional Civil Judge (Senior Division), Faridabad in Case No. 7 instituted  on 12.4.1994 titled M/s Chopra Land Developers Pvt. Ltd.  v.  Jatinder  Nath and anr.. We may clarify that the trial court will proceed on the basis  that it has territorial jurisdiction to decide the application made by the  Developer under sections 14 to 17 of the Act. The said application will be  decided on merits alone in accordance with law. In other words, the trial  court will re-examine the question on merits as to whether the Award given  by the arbitrator on 29.3.1994 should or should not be made the rule of the  court. The trial court will have to decide whether to extend the period for  making the Award or not, whether to supercede the reference or not. The  trial court will proceed in accordance with law. Any observation on the  merits of the case mentioned hereinabove shall not be treated as opinion of  this Court. Further, the trial court will proceed on the basis that it has  territorial jurisdiction to decide the above matter.

Subject to above, the civil appeal is dismissed with no order as to  costs.