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PETITIONER: SECRETARY TO GOVT. OF KARNATAKA& ANR.

       Vs.

RESPONDENT: V. HARISHBABU

DATE OF JUDGMENT:       09/07/1996

BENCH: ANAND, A.S. (J) BENCH: ANAND, A.S. (J) MAJMUDAR S.B. (J)

CITATION:  JT 1996 (6)   489        1996 SCALE  (5)345

ACT:

HEADNOTE:

JUDGMENT:                          THE 9TH DAY OF JULY, 1996 Present:           Hon’ble Dr. Justice A.S. Anand           Hon’ble Mr. Justice S.B. Majmudar Altaf Ahmed, Additional Solicitor General, and K.R.Nagaraja, Adv. With him for the appellants S.Ravindra Bhat,  G.Subba Rao,  N.R.  Nath  and  Mrs.  Kiran Bhardwaj, Advs. with him for the Respondent                       J U D G M E N T The following Judgment of the Court was delivered: Secretary to Govt. of Karnataka & Anr. Vs. V. Harishbabu                       J U D G M E N T DR. ANAND, J.      Leave granted.      When does  the period of limitation commence for filing objections seeking  setting aside of an arbitration award is the only  question which  requires our consideration in this appeal.      The question arises in the following circumstances :      The respondent  was entrusted with contract work by the appellant for  construction of  a canal   and cross drainage work from channel 0.8 km of Ravathanalla- Irrigation Project in Kanakpura  Taluk. The  cost of  the project  was Rs. 4.22 lakhs and  the work  was required  to be  completed within a period of  nine months  commencing from  4.5.87, the date on which the  work order  was issued.  During execution  of the contract. certain,  disputes arose between the parties which were referred  to an  arbitrator in  terms of an arbitration agreement  entered   into  between  the  parties.  Sh.  K.N. Venkatesh, Superintending  Engineer PWD was appointed as the arbitrator who  entered upon the reference and made an award on 22.4.93. The respondent filed a petition under Section 14 read  with   Section  17   of  the  Indian  Arbitration  Act (hereinafter the  Act) before  Civil  Judge,  Ramanagram  on

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23.4.93 praying  for making  the Award  a rule  of the court According to the respondent a signed copy of the award which had been given to him by the arbitrator was also filed along with petition.  Notice of  that petition  was issued  by the Court to  the appellant and other respondents on 24.4.93 and was made  returnable by  22.6.1993 the service of notice was directed to  ’await’ till  13.7.93. On  24.6.93, the learned Arbitrator himself  filed the original award in the court of learned Civil Judge, Ramanagram along with certain connected documents.  Before  filing  the  award  in  the  court,  the arbitrator had  procured an  endorsement from the Government Pleader to  the effect  "Seen, subject  to objections".  The Court directed  the award  and the  documents filed  by  the arbitrator to  be taken  on record. On 13.7.1993 a memo  was filed  on behalf  of the  respondent  for  final disposal of his petition   filed under  section 14/17 of the Act on  the ground   that the  appellant had  not  filed  any objections to   the award  within the  prescribed period  and therefore the   award be  made a rule of the court. Notice of the said memo was  issued to the appellant and the case was adjourned till    31.7.93  for    abjections,  if    any.  The  A.G.P. representing the  appellant was  present in the court of the learned Civil  Judge on 13.7.93. The appellant, however, did not file  any  objections  to  the  memo  till  31.7.93.  On 31.7.93, the  trial court accepted the plea raised on behalf of the respondent in his memo that since the appellant State had not filed any objections to the award within a period of 30 days  as prescribed  under the Act read with the relevant provisions of  the Limitation  Act read  with  the  relevant provisions of  the court. A decree in terms of the award was directed to  follow. The appellant, thereupon, filed a Misc. First  Appeal   was  not   maintainable  but  permitted  the appellant, to  convert the said appeal into a Civil Revision Petition which  was accordingly done. By an order dated 12th July 1995,  the High  Court, after  hearing  submissions  on behalf of the parties, dismissed the Civil Revision Petition observing   that    the   Additional    Government   Pleader representing respondent  1 and  2 before the court below had taken notice of the filing of the filing of the award by the Arbitrator on  24.6.1993. In  the light  of these  facts  it cannot be   stated  the Government   had  no   knowledge  of filing of  the award  into court  prior to 13.7.1993. Notice under Sec.  14(2) contemplates  either notice to the parties or to the counsel of such filing of the copy of the award by any one  of the  parties or  by the  Arbitrator himself" and dismissed  the   revision  petition  filed  this  appellant. Aggrieved, the  appellant has  filed this  appeal by special leave against the order of the High Court dated 12.7.1995.      According  to  Shri  Altaf  Ahmed,  the  learned  Addl. Solicitor General, a notice was required to be issued by the Court under Section 14(2) of the Act to the appellant, after the filing  of the  original award  by the arbitrator in the court and  since the  court had  not issued any such notice, both the trial court as well as the High Court fell in error in assuming  that the  appellant had  been "served" with the "notice" and  that period  of limitation  had commenced with effect from  24.6.93 when  the learned  arbitrator filed the original  award   together  with  documents  in  the  court. According to  Shri Altaf  Ahmed, the appellant could, at the best, be  said to  have become  "aware" of the filing of the Award on  13.7.93, when  the Addl.  Government  Pleader  was present on  behalf of  the appellants  in the  court and was directed to  file his  objections to  the memo  filed by the respondent seeking  final disposal  of  his  petition  filed under Section  14/17 of  the Act for making the award a rule

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of the  court and  therefore the  award could  not have been made a  rule of  the court  on 31.7.93, before the expiry of the period  of 30 days from 13.7.1993 and no decree in terms of the  award could  be made.  The Learned  Addl.  Solicitor General invited us to examine the merits of the award to see the great  ’injustice’ done  to the  appellant but  we  have declined the  invitation in view of the limited issue before us and  have refrained  from going  into the  merits of  the claims made by the parties or the correctness of the award.      Learned counsel  for the  respondent in reply submitted that since  a signed copy of the award had been filed by the respondent along  with the  petition under  Section 14/17 of the Act  and notice  of the said petition had been issued to the appellant by the Court on 24.4.1993, the State could not be heard to say, after the Addl. Government Pleader appeared in the  court on 22.6.93, that it did not have any notice of the filing  of the  award. It  was argued  that there  is no requirement in  law for any second notice being given by the court after  the original award is filed in the Court by the arbitrator himself.  Learned counsel  urged that  since  the appellants had  "knowledge" of the filing of the copy of the award by  the respondent  as well  as of  the filing  of the original award  by the Arbitrator on 24.6.93, in view of the endorsement made  by the  Additional Government Pleader, the appellants were  obliged to  file objections, if any, within 30 days  from the  said date and on account of their failure to file  the objections  within the  prescribed period,  the trail court  was justified in making the award a rule of the Court and passing a decree in terms of the award and as such the impugned  order of  the  High  Court  suffered  from  no infirmity requiring any interference by this court.      Before we answer the question posed in the earlier part of this  judgment and  examine the  arguments raised  at the bar, we  consider it  appropriate to  refer to  some of  the relevant statutory provisions.      Section 14 (1) of the Act provides:      "When  the  arbitrators  or  umpire      have made  their award,  they 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."      Section 14(2) of the Act reads :      "The arbitrators  or umpire  shall,      at the  request of any party to the      arbitration agreement or any person      claiming under  such party or if so      directed  by  the  Court  and  upon      payment of the fees and charges due      in respect  of the  arbitration and      award and  of the costs and charges      of  filing  the  award,  cause  the      award  or  a  signed  copy  of  it,      together with  any depositions  and      documents which may have been taken      and proved before them, to be filed      in  Court,   and  the  Court  shall      thereupon  give   notice   to   the      parties  of   the  filing   of  the      award."      Section 17 provides :      "Judgment in terms of award - Where      the Court  sees no  cause to  remit

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    the award  or any  of  the  matters      referred   to    arbitration    for      reconsideration or to set aside the      award, the  court shall,  after the      time for  making an  application to      set aside the award has expired, or      such application  having been made,      after  refusing   it,  proceed   to      pronounce judgment according to the      award, and  upon  the  judgment  so      pronounced a  decree shall  follow,      and no  appeal shall  lie from such      decree except on the ground that it      is in  excess of,  or not otherwise      in accordance with the award."      Article 119  of the  Limitation Act  1963 provides  the period of limitation :      "(b) for  setting aside an award or      getting  an   award  remitted   for      reconsideration  thirty  days  from      the date  of service  of the notice      of the filing of the award."      An analysis of Sub-section (2) of Section 14 shows that it mandates  the Court,  after the  filing of the award duly signed by  the arbitrator  or the umpire as the case may be, to give  notice to  the parties  of the filing of the award. Sub-section (1)  of Section  14, requires  the arbitrator or umpire to  give a  notice in  writing to  the parties of the making and  signing of the award. The two provisions operate under different  set of  circumstances. The  issuance  of  a notice under  section 14(2)  of the  Act by  the Court  is a mandatory requirement  though the section does not prescribe any formal  mode for  the service  of the  notice.  What  is essential under  the said  provision is  that there  must be service of  notice or  intimation or  communication  of  the filing of the award by the Court to the parties, the mode of service of  such  a  notice  being  immaterial.  it  is  the substance and  not the  form of the notice which is relevant and once it is established that a notice or communication or information of  the filing  of the  award has been issued by the court  and served  on the party concerned, the statutory requirements  of  section  14(2)  of  the  Act  would  stand satisfied. Keeping in view the difference in the phraseology of Section  14(1) and  14(2) of the Act, it follows that the notice from  the Court  under Section  14(2) of the Act need not be in writing. It can be oral also but what is necessary is that a notice, communication or information to the effect that an  award has  been filed in the Court must be given by the Court  to the  parties concerned. Notice to the pleaders of the  parties, who are representing the parties before the court, would  be course  be sufficient  compliance with  the requirements of  sub-section (2) of section 14 of the Act. A notice by the arbitrator under Sub-section (1) of the Act is not a  substitute for the notice which the court is enjoined upon to  issue under  Sub-section (2)  of Section  14 of the Act. Where  the arbitrator  himself files  an award  in  the court, the court is bound to give notice to the parties that the award  has been filed and the court cannot pass a decree in terms of the award, unless such notice has been served on the party concerned and till after the expiry of a period of 30 days  from the  date of  service  of  such  a  notice  as contemplated by Article 119 (b) of the Limitation Act, 1963. In a  case where a party has knowledge aliunde of the filing of the award and seeks time to file objections to the award, absence of  a formal notice from the court would be rendered

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immaterial and in such a case the date when the party enters its appearance  and either through an application in writing or orally  seeks time to file objections to the award, shall be deemed to be the date of service of the notice within the meaning of  sub-section (b) of section 119 of the Limitation Act read  with Section  14(2) of the Act. However, where the order of  the court  merely  records  the  presence  of  the parties or  their counsel,  after an  award is  filed by the arbitrator in  the court,  but does  not indicate  that  the notice of  the filing  of the  award has  been given  to the parties, no  service of the can be presumed from that order. No formality  in the act of filing of the award in the court is required  but what  is required is that the filing of the award must  be by  or on  behalf of the arbitrator and after the same  has been  filed the  notice of  the filing  of the award must  be by  or on  behalf of the arbitrator and after the same  has been  filled the  notice of  the filing of the award must  follow from  the court  under subsection  (2) of section 14  of the  Act. If an award is filled by one of the parties  the  authority  of  the  arbitrator  to  the  party concerned to file the award must be established and the onus is   that   party   to   establish   that  he  had  been  so authorised by  the arbitrator  to file  the award  in the in court.  A   plea  to  that  effect  must  be  found  in  the application which  accompanies the  award. Such an authority has  to   be  specifically  alleged  and  positively  proved otherwise the  filing of  the award  in the  Court cannot be said to  be by  or under  the authority of the arbitrator or the umpire as the case may be.          Under Section 17 of the Act 17 of the Act where the court finds  no cause or justification to remit the award or any  of   the  matters   referred  to   arbitrator  for  re- consideration or  to set  aside the  award. The  court shall after the  time for  making an  application to set aside the award has  expired or  after rejecting the objections to the award it may proceed to pronounce a judgment in terms of the award and  upon the  judgment so  pronounced. a decree shall follow.        Section 119(b) of the limitation Act corresponding to Article 158   of  the   Limitation Act,  1908  prescribes  a period of  30   days for   seeking  the  setting aside of an award from  the date  of service  of the notice of the award issued by the Court under Section 14(2) of the Act.       In India Ravon Corporation Ltd. Vs. Raunag And Company Pvt. Ltd. (1988 4 SCC 31) while dealing with the question of limitation with  regard to  the  filing  of  the  objections seeking the  setting aside  of an  arbitration  award,  this Court opined:      The  fact  that  the  parties  have      notice of  the filing of the award,      is not  enough. The  notice must be      served by  the Court.  We reiterate      again that there must be (a) filing      of the  award in  the proper court:      (b) service  of the  notice by  the      court or  its office to the parties      concerned: and (c) such notice need      not necessarily  be in  writing. It      is upon the date of service of such      notice   that    the   period    of      limitation begins and as at present      under clause  (b) of Article 119 of      the Act.  the limitation expires on      the expiry  of the  30 days  of the      service  of   the  notice   for  an

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    application for  setting  aside  of      the award.  The importance  of  the      matter. which  need be  emphasised,      is the service of the notice by the      court."                      (Emphasis supplied)      A  four   Judges  Bench  of  this  court  in  Nilkantha Shidramappa Ningashetti  vs. Kashinath  Somanna  Ningashetti And Others  [1962  (2)  SCR,  551],  while  considering  the requirements of  service of  notice under  Section 14 of the Act opined:      Sub-section (1)  of Section  14  of      the Arbitration  Act,  1940  (x  of      1940) requires  the arbitrations or      umpire to give notice in writing to      the  parties   of  the  making  and      signing of  the award.  Sub-section      (2) of  that section  requires  the      court,  after  the  filing  of  the      award,  to   give  notice   to  the      parties of the filing of the award.      The difference in the provisions of      the two  sub-sections with  respect      to  the   giving   of   notice   is      significant and  indicates  clearly      that the  notice which the Court is      to  give  to  the  parties  of  the      filing of  the award  need not be a      notice in  writing. The  notice can      be given orally. No question of the      service of the notice in the formal      way of  delivering  the  notice  or      tendering it to the party can arise      in  the  case  of  a  notice  given      orally. The  communication  of  the      information that  an award has been      filed is sufficient compliance with      the requirements  of sub-s.  (2) of      s. 14 with respect to the giving of      the notice to the parties concerned      about  the  filing  of  the  award.      ’Notice’ does  not necessarily mean      ’communication in writing’."                         (Emphasis ours)      In view  of the  settled law  and our discussion above, our answer  to the question posed in the opening part of the judgment  is  that  the  period  of  limitation  for  filing objections seeking the setting aside of an arbitration award commences from  the date  of service of the notice issued by the Court upon the parties regarding the filing of the award under section 14(2) of the Act. Such a notice need not be in writing  but  what  is  essential  is  that  the  notice  or intimation or  communication of the filing of the award must be issued  by the  Court to  the parties and served upon the parties concerned. Date of service of a notice issued by the arbitrator under  of service  of  a  notice  issued  by  the arbitrator under  Section 14(1)  of the  Act or  the date of obtaining an endorsement on the award by the arbitrator from the  party  concerned  is  irrelevant  for  determining  the question of  Limitation for  filing objections under Article 119 (b) of the Limitation Act. 1963.      It is  in the  light of  the above answer that we shall now consider the facts of the present case.      The  arbitrator   made  his  award  on  22.4.1993.  The respondent on 23.4.1993 filed a petition under Section 14/17

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of the Act with the following prayers:      (A)  that  this  Hon’ble  Court  be      pleased   to    direct   the    3rd      Respondent, Sole Arbitrator to file      the original  award  together  with      all the  documents obtained by him,      during the  Arbitration Proceedings      into  the   court  and   thereafter      pronounce judgment  in terms of the      award  dated  22.04.1993  and  make      award a Rule of this Court and also      issue decree in terms of the award.      (B)  To grant  interest at the rate      of 18% (eighteen percent) per annum      as awarded  by the Arbitrator to be      continued from  the date  of decree      to the date of actual payment.      (C)  For any  consequential  relief      or reliefs  including cost  of this      petition as  this Hon’ble Court may      deem  fit   to  grant   under   the      circumstances in  the  interest  of      justice and equity.      The respondent also filed alongwith the petition a copy of the award dated 22.4.1993 but there is no averment in the petition that  the arbitrator  had authorised the respondent to file  the copy  of the  award in the Court. Notice of the petition filed  by the respondent was issued by the Court to the appellant  and other  respondent on 24.4.1993 returnable by 22.6.1993.  A perusal  of the notice shows that let alone attaching  a  copy  of  the  award  there  is  not  even  an indication therein  that a  copy of  the award had also been filed with  the petition.  No objections were invited by the Court in  the said notice to the award as such. On 22.6.1993 the additional government pleader appeared for the appellant in response to the above notice. Since, respondent No. 3 the sole arbitrator,  to the  petition had  not been  served the case  was   adjourned  to   13.7.1993  without  any  further proceedings after  recording the  presence  of  the  parties present before the Court.      The arbitrator  himself filed  the original award along with various  documents  in  the  court  on  24.6.93,  after securing an  endorsement from  the Government Pleader to the effect "seen,  subject to  objections". It  is not  disputed that after  the learned  arbitrator filed the original award in the  court on  24.6.93, no  notice of  the filing of that award was issued by the court for service upon the appellant or the other respondents.      As already  noticed, on the matter coming up before the Court on 13.7.1993 the respondent filed a memo seeking final disposal of  the petition  filed under  Section 14/17 of the Act and notice of the said memo was served on the additional government pleader,  who was  present in the Court on behalf of the  State (appellant herein) and he was directed to file objections. If  any, by 31st July, 1993. There is nothing on the record  to show  that on  22.6.1993 when  the additional government pleader filed his memo of appearance on behalf of the appellant  herein, the Court either orally or in writing informed or  communicated to  him that  a signed copy of the award  had  been  filed  by  the  respondent  alongwith  his petition under  section 14/17  of the  Act. The  record also shows that  no such  communication or information was at any other point  of  time  except  on  13.7.1993  given  to  the Additional Government  Pleader by  the Court  regarding  the filing of the award by the arbitrator.

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    From the  aforesaid facts  it unmistakably follows that no notice,  whether in writing or orally, was ever issued by the court to the appellant regarding the filing of the award in the  court so  as to enable it to file objections, if any seeking the  setting aside  of  the  award.  Notice  of  the petition filed  by the respondent under Section 14/17 of the Act with  the prayers  as noticed above, cannot be construed as a  notice of  the filing  of the  award. We are unable to agree with  the learned  counsel for the respondent that the filing of  the  copy  of  the  signed  award  alongwith  the petition should  be deemed  to be by an implied authority of the arbitrator  and notice of the petition be deemed to be a notice issued  by the  court under Section 14(2) of the Act. Neither there  is a  factual foundation for such an argument nor is  it even  otherwise tenable in law in the established facts of  this case  when the notice of the petition did not even indicate that a signed copy of the award had been filed in the court and in the petition also there is not a whisper that a  copy of  the award  was being  filed  alongwith  the petition let  alone under  the authority  of the arbitrator. Keeping in  view the  nature of  the  prayers  made  in  the petition (supra),  it is  futile to argue that the notice of the petition  be deemed to be a notice from the court to the effect that the award had been filed in the court.      The  maximum   that  can  be  said  in  favour  of  the respondent is  that on  13.7.1993, after  the original award had been  filed by  the arbitrator on 24.6.1993 in the Court and the  additional government  pleader who  was present  on behalf of  the appellant was directed to file his objections to the  memo filed by the respondent seeking the award to be made a rule of the court, that a notice of the filing of the award would  be deemed  to have  been issued  to him  by the court on  that date. Therefore, the date of communication of the information about the filing of the award from the court could only  be 13.7.1993  and no earlier date. The appellant was directed,  through the additional government pleader, to file his  objections to  the memo filed by the respondent by 31.7.1993 but  the appellant  did not file any objections by the  due  date.  The  omission  of  the  appellant  to  file objections to the memo, however, could not justify the order of the  trial court making the award a rule of the court and directing a  decree to  be drawn  up in  terms of the award, when admittedly  the period  of  30  days  as  envisaged  by Article 119(b) of the Limitation Act, which had commenced on 13.7.1993 had  not expired on 31.7.1993. We also do not find any merit  in the  submission of the learned counsel for the respondent that  the  endorsement  made  by  the  government pleader on  24.6.1993 on  the award  which was then filed by the arbitrator  in the  court would amount to a notice under Section 14(2)  of the  Act.  The  endorsement  made  by  the additional government  pleader on  24.6.1993 can  at best be construed as a notice issued by the arbitrator under Section 14(1) of  the Act  and such  a notice,  as we  have  already observed,  is  not  a  substitute  for  a  notice  which  is mandatorily required  to be  issued by  the court and served upon the  parties regarding  the filing  of the  award under Section 14(2)  of the  Act. The trial court, therefore, fell in error  in opining  that "admittedly  he has not filed any objections within  30 days  from the  date of  the filing of award by  the respondent  No. 3  before this court and there are no  other impediments  as such to deny the relief sought for by the petitioner." The period of limitation, for filing objections to the award as we have already noticed. does not commence from  the date  of  filing  of  the  award  by  the arbitrator in  the court and that period would only commence

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from the  date of  service of the notice issued by the court under Section  14(2) of the Act. The High Court also fell in error in  observing that the appellant could not be heard to say that  he had  no knowledge of the filing of the award in the Court  prior  to  13.7.1993  on  the  ground  that  "the additional government pleader representing respondents 1 and 2 before  the court  below had taken notice of the filing of the award  by the arbitrator on 24.6.1993." There is nothing on the record to show that any such notice was issued by the Court regarding  the filing  of the  award. The  endorsement made by the additional government pleader on the award which was lateron  filed by  the arbitrator  in the court, did not relieve the  court of  its mandatory obligation to issue the notice, orally  or in  writing,  to  the  appellant  or  its counsel to  file the  objections, if  any, to the award. The endorsement made  by the additional government pleader is of no consequence  in so  far as  the issuance of notice by the Court under  Section 14  (2)  is  concerned.  Computing  the period of  30 days  with effect from 13.7.93, no award could be made  a rule of the Court before the expiry of the period of 30  days from  that date. Not filing of any objections to the memo by 31.7.93, could not take away the statutory right of the  appellants to  file objections to the award within a period of  30 days  commencing from  13.7.1993. Under  these circumstances, the  order of  the trial court as well as the impugned order  dated 12.7.1995  of the learned Single Judge of the  High Court  cannot be  sustained and  the  same  are hereby set  aside. This  appeal consequently succeeds and is allowed. The case is remanded to the trial court for a fresh disposal  in   accordance  with   law  after   taking   into consideration the  objections to  be filed  by the appellant herein seeking  the setting  aside of  the award. Since, the matter has  been pending  for a  sufficient  long  time,  we consider it  appropriate  to  grant  30  days  time  to  the appellant to  file its  objections to  the award  before the trial court  and direct  the trial  court to  dispose of the matter after  granting an  opportunity of  hearing  to  both sides expeditiously  and as  far as possible within a period of six  months from  the date  of communication of a copy of this order.  The appellant  shall file the objections to the award in  the trial court within 30 days from today, without waiting for  any formal  notice from the trial court in that behalf.      The parties are left to bear their own costs.