http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: SATWANT SINGH SODHI

       Vs.

RESPONDENT: STATE OF PUNJAB & ORS.

DATE OF JUDGMENT:       26/03/1999

BENCH: S.R.Babu

JUDGMENT:

     RAJENDRA BABU, J.  :

     Leave granted.

     In  relation to the construction of High Level  Bridge over  river Ghaggar on Pehawa Road at Devigarh, an agreement was  entered into between the appellant and the respondents. The disputes between them arose in respect of certain claims made  by  the  appellant  and the  matter  was  referred  to arbitration  (respondent No.3) pursuant to an order made  by Sub-Judge (1st Class), Patiala.  The appellant submitted his claim  before the Arbitrator and sought for an interim award in  respect  of  Item  No.1 with a claim  for  18%  compound interest  from  1.2.1981 to 15.3.1992.  The  Arbitrator,  by award  made  on November 26, 1992, awarded a sum of  Rs.7.45 lacs  in  respect of Item No.1 with interest @ 18%  compound yearly from 1.2.1981 to 15.3.1992.  On January 28, 1994, the Arbitrator  made  another award inclusive of Item  No.1  and awarded  a sum of Rs.3,75 lacs and interest @ 12% per  annum with  effect  from 1.2.1981 to 15.3.1992 on the  amount  and also  in  respect  of other claims.  The appellant  made  an application  under  Section 14 of the Arbitration Act,  1940 (hereinafter referred to as the Act) for making the awards dated  November 26, 1992 and January 28, 1994 as the rule of the  court.   The trial court made the award as the rule  of the  court holding that the interim award in regard to  Item No.1  should  be made the rule of the court and  that  award having  covered Item No.1 should not be taken note of in the award  made  on January 28, 1994.  Thereby the  trial  court took  the view that interim award made on November 26,  1992 is  liable  to be made the rule of the court with regard  to Item  No.1  and that Item No.1 of the award made on  January 28,  1994 will merge in the same deciding that aspect of the matter  against  the  respondents  and   in  favour  of  the appellant.   The award dated January 28, 1994 was ordered to be made the rule of the court except for Item No.1 for which interim award has already been granted.

     Respondent  Nos.1 and 2 preferred an appeal before the High Court which was allowed by holding that the trial court fell  in  error in making the interim award the rule of  the court  which  was  superseded  by the final  award  made  on January 28, 1994.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

     In  these  appeals  by special  leave,  the  appellant contended  that  on the award being made by  the  Arbitrator insofar  as Item No.1 was concerned it became final but  the High  Court  lost sight of the fact that it was not open  to the Arbitrator to revise the Award made by him earlier as he had  become functus officio.  It is submitted that the  High Court  erred in holding that the award made on November  26, 1992 was not pronounced though it was made and signed by the Arbitrator  and,  therefore,  was   open  to  be  corrected. Assailing  this  conclusion,  it   was  contended  that  the Arbitrator has to make and sign the award and it is valid in law  if  he  does so and merely because no notice  has  been given  to  the parties it cannot be held to be  invalid  and notice  to the parties could be postponed.  The  requirement of making and signing the award simultaneously is sufficient to  result in binding award.  It was next contended that the view  of  the  High  Court   that  the  Arbitrator   himself superseded  the award made on November 26, 1992 by  treating it to be an interim award was erroneous and it was submitted that  the interim award having been made and being final  in character  it  was not open for modification  or  alteration except in terms as provided in Section 13(d) of the Act.

     The  trial court adverted to the facts leading to  the award  being  made on Item No.1.  The appellant claimed  for interim  award in respect of Item No.1 for Rs.   10,05,422/- with  compound  interest @ 18% with effect from 1.2.1981  to 15.3.1992.  The Arbitrator made an award on Item No.1 to the tune  of Rs.7.45 lacs with interest @ 18% compound per annum from  1.2.1981  to  15.3.1992 after examining the  oral  and documentary evidence and after considering the arguments and counter  arguments.  It is necessary to notice the manner in which the Arbitrator dealt with this aspect of the matter in the award made on January 28, 1994.  At page 3 of the award, the Arbitrator has mentioned as under :

     The Executive Engineer, Provincial Division No.2, PWD B&R  Branch, Patiala informed during the hearing on December 2,  1992  that  the  Honble High Court heard  the  case  on November  23, 1992 and subsequently on December 2, 1992  and stayed  the  operation of the arbitration  proceedings.   In view  of the order of the learned court dated September  23, 1992,  the  proceedings  were  taken  up  and  both  parties appeared on various dates.  After hearing the parties and as per the directions regarding the finalisation of the interim award  as the case in respect of Item No.1 was heard and was considered to announce interim award but in view of the stay granted  on  December  2,  1992 which was  informed  by  the Executive  Engineer,  Provincial Division No.2,  Patiala  on December  2,  1992 during the hearing the award as such  was not  announced,  which has been incorporated in the  present award as given hereinbelow.

     The  question  whether interim award is final  to  the extent  it  goes  or  has effect till  the  final  award  is delivered  will  depend upon the form of the award.  If  the interim award is intended to have effect only so long as the final  award is not delivered it will have the force of  the interim  award  and it will cease to have effect  after  the final  award  is made.  If, on the other hand,  the  interim award  is  intended to finally determine the rights  of  the parties  it will have the force of a complete award and will have  effect  even after the final award is delivered.   The terms  of the award dated November 26, 1992 do not  indicate that the same is of interim nature.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

     Section 14 of the provides that when the arbitrator or umpire  has made his award, he shall sign it and shall  give notice  in writing to the parties of the making and  signing thereof  and  of the amount of fees and charges  payable  in respect  of  the arbitration and award.  In the language  of the Section, an award will be complete as soon as it is made and  signed.  Thus mere writing of an award would not amount to  making  of  an award.  There can be no finality  in  the award  except when it is signed because signing of the award gives  legal effect to it and to give validity to an  award. It  is  not  necessary that it should also be  delivered  or pronounced  or  filed in the court.  Making and delivery  of the award are different stages of an arbitration proceeding. An  award is made when it is authenticated by the person who makes  it.   The word made suggests that the mind  of  the Arbitrator  as being declared and it is validly deemed to be pronounced  as soon as the Arbitrator has signed it and once an award has been given by the Arbitrator he becomes functus officio.   If  this  is  the position  in  law,  it  becomes difficult  to  support the view taken by the High  Court  in stating  that the interim award was not pronounced though it was  made and signed by the Arbitrator.  If he had made  the award  the question of superseding the same could not arise. Therefore,  the  view of the High Court appears to us to  be fallacious.   On  this aspect of the matter we may refer  to some  of  the  decisions on the aspect as to when  an  award becomes final.  In Janardhan Prasad vs.  Chandrashekhar, AIR 1951  Nagpur 198, after examining the scope of Section 14 of the Act, it was held as follows :

     the  award  becomes valid and final so far as  the arbitrators  or  umpire are concerned the moment it is  made and  signed  by  them.  The provision for giving  notice  in writing to the parties of the making and signing thereof and of  the amount of fees and charges payable in respect of the arbitration  and the award is for the purpose of  limitation under  Art.   178  of the Limitation Act,  entitling  either party  to apply to the Court for the filing in Court of  the award.

     No  time is fixed for the giving of such notice by the Arbitrator and it has been held in several cases that it may be  done within reasonable time either by the Arbitrator  or by  his  agent.  A notice may be given to one party and  may not  be given to another party for a much longer period.  It cannot  be  said that an award becomes final so far  as  the first  party  is  concerned  and no  as  against  the  other entitling  the  Arbitrators  to scrap the award and  make  a fresh one.

       There is thus a fundamental difference between the  making,  signing and delivery of a judgment and  making and  signing  and giving notice of an award.  In the  former case  all  three must be simultaneous acts and parts of  the same  transaction.  In the latter case the first two may  be simultaneous and the notice of the award can be postponed.

     That  award does not become invalid because notice  of the  making  of  it has not been given.   An  Arbitrator  is entitled  to  file  an  award in  Court  under  Section  14, sub-s.(2).  If he does so, the Court is bound to give notice to the parties of the filing of the award.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

     The circumstances in which these observations are made by the court are as follows :

     The  Arbitrators  had  made  and signed  an  award  on January  11, 1944 which was registered on January 13,  1944. Thereafter  the  Arbitrators made a second award on  January 26,  1944.  It was contended that as they did not  pronounce the  award by issuing a notice of having signed it, they had not  become  functus officio and could, therefore, make  and deliver  the  second  award  dated January  26,  1944.   The learned  Judges  of the High Court refused to hold that  the first  award  was not final and could be superseded  by  the second  award because no notice was given before January 26, 1944.   This  view was followed by the Andhra  Pradesh  High Court  in  Badarla  Ramakrishnamma & Ors.   vs.   Vattikonda Lakshmibayamma  & Ors., AIR 1958 Andhra Pradesh 503, at pare 2.   Again in Ram Bharosey vs.  Peary Lal, AIR 1957 All.265, it was observed as under :

     It  is true that in the present case the  Arbitrators did  not  give notice to the parties of the making  and  the signing  of the award.  But the arbitrators after making and the  signing the award filed it in the court.  The  validity of  the  award does not depend upon the notice of  the  same being  given  to the parties.  When an award is  duly  make, signed and filed in Court it is a valid document.

     This  position  was  reiterated   in  Asad-ul-lah  vs. Muhammad  Nur,  ILR 27 All.  459(A) and it was held  that  : for  the  making  of  an  award   it  is  enough  that  the Arbitrators act together and finally make up their minds and express  their  decision in writing.  This writing  must  be authenticated  by their signatures.  The award is thus  made and  signed  and  is  complete  and  final  so  far  as  the Arbitrators are concerned.

     This  Court in Rikhabdas vs.  Ballabhdas & Ors.,  1962 (1)  SCR  Supp.   475, held that once an award is  made  and signed  by  the  Arbitrator the Arbitrator  becomes  functus officio.   In  Juggilal Kamlapat vs.  General Fibre  Dealers Ltd.,  1962  (2)  SCR Supp.  101, this Court  held  that  an Arbitrator  having signed his award becomes functus  officio but  that did not mean that in no circumstances could  there by  further  arbitration proceedings where an award was  set aside  or that the same Arbitrator could never have anything to do with the award with respect to the same dispute.  Thus in  the  present case, it was not open to the Arbitrator  to re-determine  the  claim and make an award.  Therefore,  the view  taken  by the trial court that the earlier award  made and   written   though  signed   was  not   pronounced   but nevertheless  had  become  complete  and  final,  therefore, should  be  made the rule of the court appears to us  to  be correct  with  regard to Item No.1 inasmuch as the claim  in relation to Item No.1 could not have been adjudicated by the Arbitrator  again and it has been rightly excluded from  the second  award  made by the Arbitrator on January  28,  1994. Thus  the view taken by the trial court on this aspect  also appears to us to be correct.  Therefore, the trial court has rightly  ordered the award dated January 28, 1994 to be  the rule  of  the court except for Item No.1 and in  respect  of which  the  award dated November 26, 1992 was ordered to  be the rule of the court.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

     In the circumstances aforementioned, we have no option but  to reverse the view taken by the High Court and restore that  of  the  trial  court.    The  appeals  stand  allowed accordingly.