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CASE NO.: Appeal (civil)  1099 of 2007

PETITIONER: State of  Arunachal Pradesh

RESPONDENT: M/s. Damani Construction

DATE OF JUDGMENT: 28/02/2007

BENCH: A.K.MATHUR & V.S. SIRPURKAR

JUDGMENT: J U D G M E N T ARISING OUT OF S.L.P.(C) NO.14804 OF 2005 With

CIVIL APPEAL NO. 1100 OF 2007 (Arising out of S.L.P.(c) No.12954 of 2005)

A.K.MATHUR,J.

               Leave granted in both the Special Leave Petitions.

               Since the question of law involved in both the  appeals is common, they are disposed of by this common  judgment. For the sake of convenience, the facts stated in Civil  Appeal arising out of S.L.P.(c) No.14804  of 2005 are taken  into consideration.                  This appeal is directed against the order passed by  learned Single Judge of the Gauhati High Court, Itanagar Bench  in Writ Petition No.408 of 2004 whereby learned Single Judge  set aside the order dated 15.9.2004  passed by the Deputy  Commissioner cum District Judge, Papum Pare, District, Yupia  in Miscellaneous Application No.10 of 2004 condoning the  delay in making application under Section 34 of the Arbitration  and Conciliation Act, 1996 (hereinafter to be referred to as ’the  Act’ ), being not maintainable. Hence, the order dated  15.9.2004 was set aside and the writ petition was allowed.  Aggrieved against this order passed by the High Court of  Gauhati, Itanagar Bench, State of Arunachal Pradesh has  preferred the present appeal.                  Brief facts which are necessary for disposal of this  appeal are that the respondent herein entered into a contract  agreement bearing No.DD/03 of 1992-93 with the State of  Arunachal Pradesh in  Public Works Department for executing  the contractual work of construction of road bridges. The value  of the work in question although was initially fixed at Rs.77.43  lakhs but on the basis of the post tender negotiation by and  between the parties, the price of the work was re-fixed at  Rs.1.15 crores.  The work was to be completed within two  calendar years from the date of commencement of the work.    The work commenced on 10.4.1993 and it was completed in  March, 1999.   According to the petitioner-respondent herein   the delay in execution of the work was due to deviation from  the original scope of work and several obstructions  and  difficulties including delay in approval of the design and  drawings and also in making payment  against running  accounts bills from time to time.  The respondent herein raised  bill for the contractual work which according to the respondent

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was refused to be paid due to certain arbitrary and untenable  reasons. Such refusal gave rise to a dispute and accordingly,  need arose for arbitration.  The respondent then approached   the Court under section 11(6) of the Act which was numbered  and registered as Arbitration Case No.21 of 2000 and the  same was disposed of by the High Court appointing an  arbitrator to adjudicate the dispute between the parties.  One  arbitrator was appointed on 18.10.2001 but subsequently that  arbitrator was changed by the present arbitrator. On  12.10.2003 the arbitrator passed an interim award awarding  Rs.65,52,878/-  with simple interest to be calculated if the  award amount was not paid within 60 days from the date of  the award.  However, the period of limitation prescribed under  Section 34 (3) of the Act for setting aside the award expired in  the meantime.  The appellant then wrote a letter to the  arbitrator for review of the award and also sought clarification  in respect of the award on 2.4.2004. On 10.4.2004 the  arbitrator by his letter stated that he had no jurisdiction to  entertain the request for review of the award and also informed  that the award dated 12.10.2003 was in fact  a final award  pertaining to the issues involved. On 21.6.2004 the  respondent- petitioner filed an application for execution of the  interim award dated 12.10.2003 before the Deputy  Commissioner. On 6.8.2004 the appellant filed an application  under Section 34 of the Act for setting aside the award dated  12.10.2003 together with an application under Section 5 of the  Limitation Act read with Section 34(3) of the Act for  condonation of delay in filing the application for setting aside  the award.  The said application was entertained and was fixed  for hearing on condonation of delay after 15 days. Aggrieved  against this order, a writ petition was filed by the respondent  herein  but the same was disposed of by the High Court with  the observation that as  the matter was pending before the  court below  it would not be appropriate to interfere at this  stage and left the Deputy Commissioner to decide the matter.  The Deputy Commissioner,  Papum Pare, Itanagar  by the  impugned order dated 15.9.2004 decided the application  condoning the delay in preferring the application under Section  34 of the Act by the appellant.  Aggrieved against this order,  the present writ petition was filed by the respondent herein.  It  is the legality of this order which was challenged before the  High Court. Learned Single Judge of the High Court after  hearing both the parties came to  the conclusion that the order  passed by the Deputy Commissioner in condoning the delay   was not correct and  it took the view that under section 34 of  the Act, there was a delay of seven months from the date of  first order and a delay of six months from the date of second  order.  

               The plea of the appellant- State before the court  below was that the award was passed on 12.10.2003 and a  copy was received on 23.10.2003. As such, the period of  limitation started from 23.10.2003. Since the letter was sent  by the appellant to the arbitrator on 2.4.20043 for review of  the award and a reply thereof was received on 10.4.2004  whereby the matter was clarified by the arbitrator, therefore,  the cause of action accrued in favour of the appellant on  10.4.2004 and application under Section 34 of the Act was  filed on 6.8.2004 i.e. within three months and  the extended  period of one month, therefore, it was within limitation.    Though this contention prevailed before the trial court but the  same failed before the High Court on the ground that the  cause of action accrued to the appellant on 23.10.2003 when  the appellant received the copy of the award and  the letter  which was written on 2.4.2004 was totally misconceived.  The

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interim award was final with regard to the claims raised  therein, therefore, the whole exercise undertaken by the  appellant was totally misconceived.  Hence, learned Single  Judge allowed the writ petition and set aside the order of the  trial court. Aggrieved against this order passed by the learned  Single Judge, the present appeal was filed.                 We have heard learned counsel for the parties and  perused the record.  Learned counsel for the appellant  tried to  persuade us that in fact the cause of action has arisen to the  appellant on 10.4.2004  when  the letter was received from the  arbitrator and therefore, the appellant was entitled to count  the period of limitation from the date of receipt of the letter  from the arbitrator and if the limitation was to start from  10.4.2004 then the appellant has a right to move an  application for setting aside of the award under section 34 of  the Act within three months and the extended period of one  month and  the appellant having filed the application on  6.8.2004, therefore, it was within time.  The submission of  learned counsel for the appellant is totally misconceived and it  cannot be accepted. A perusal of the  interim award passed by  the arbitrator clearly shows  that  it was final to the extent  of  the claims decided therein and it may be relevant to refer to  the concluding portion of the award which reads as under :

               "  I further direct that the awarded  amount is indicated above along with the  interest, wherever shown till the date of interim  award amounting to Rs.65,52,878.00 (Rupees  Sixty five lakhs fifty two thousand  Eight  hundred seventy eight only),  shall be paid by  the Respondents to the Claimant within 60 days  from the date of the award, failing which a  simple interest on the unpaid amount @ 18%  (Eighteen percent) per annum shall be payable  to the Claimant by the respondents after 60  days of this interim award."

Therefore, this interim award which did not mince  any word  and determined the amount after discussing the claims in  detail and finally calculated the amount under each of the  claims. Therefore, there was no confusion in this award.   It  was absolutely thoughtlessness  on the part of the appellant to  have written a letter after six months i.e. on 2.4.2004 seeking  review of the interim award  to the following effect:

               " While submitting the request for  review the case, it is also requested that your  honour may kindly consider (sic.) the following  points regarding  mode of payments, if at all,  the payment is to be made, as the award given  by your honour is for the interim payment.                 (a)             Whether payment is to be  made directly to  M/s. Damani Construction  Co. or through honourable court.                 (b)             In case, the payment  is to  be made  directly to M/s.Damani  Construction Co., an equivalent Bank  Guarantee Bond from any Nationalized Bank  shall be required from the Contractor since  it will be an interim payment and final  verdict awaited.                 Submitted for your kind consideration please." Firstly,  the letter had been designed not strictly under section  33 of the Act because under  Section 33 of the Act a party can  seek certain correction in computation of errors, or clerical or

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typographical errors or any other errors of a similar nature  occurring in the award with notice to the other party or if  agreed between the parties, a party may request  the arbitral  tribunal to give an interpretation of a specific point  or part of  the award.  This application which was moved by the appellant  does not come within any of the criteria falling under Section  33(1) of the Act. It was designed as if the appellant was  seeking review of the award.  Since the Tribunal had  no power  of review on merit, therefore, the application moved by the  appellant was wholly misconceived. Secondly, it was prayed  whether  the payment was to be made directly  to the  respondent  or  through the Court or that the respondent  might be asked to furnish Bank guarantee  from a nationalized  Bank  as it was an interim award,  till final verdict was awaited.   Both these prayers in this case were not within the scope of  Section 33.  Neither review was maintainable  nor the prayer  which had been made in the application had anything to do  with Section 33 of the  Act.  The prayer was with regard to the  mode of payment. When this application does not come within  the purview of Section 33 of the Act, the application was totally  misconceived and accordingly the arbitrator by communication  dated 10.4.2004 replied to the following effect.                 "  However, for your benefit I may  mention here that as per the scheme of the Act  of 1996, the issues/ claims that have been  adjudicated by the interim award dated  12.10.2003 are final and the same issues  cannot be gone into once again at the time of  passing the final award."

Therefore,  the reply given by the arbitrator does not give any  fresh cause of action to the appellant  so as to move an  application under Section 34 (3) of the Act. In fact,  when the  award dated 12.10.2003 was passed the only option with the  appellant was either to have moved an application under  Section 34 within  three months as required under sub-section  (3) of Section 34 or within the extended period of another 30  days. But in stead of that a totally misconceived application  was filed and there too   the prayer was for review and with  regard to mode of payment. The question of review was totally  misconceived as there is no such provision in the Act for  review of the award by the arbitrator and the clarification   sought for as to the mode of payment is not contemplated  under Section 33 of the Act.  Therefore, in this background,  the application was totally misconceived and the reply sent by  the arbitrator does not entitle the appellant a fresh cause of  action so as to file an application under Section 34(3) of the  Act, taking it as  the starting point of limitation from the date  of reply given by the arbitrator i.e. 10.4.2004.

               Thus, in this background, the view taken  by learned  Single Judge appears to be justified and there is no ground to  interfere in this appeal. Consequently, there is no merit in both  the appeals and the same are  dismissed with no order as to  costs.