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PETITIONER: STATE OF PUNJAB

       Vs.

RESPONDENT: SRI HARDYAL

DATE OF JUDGMENT10/04/1985

BENCH: MISRA, R.B. (J) BENCH: MISRA, R.B. (J) REDDY, O. CHINNAPPA (J)

CITATION:  1985 AIR  920            1985 SCR  (3) 649  1985 SCC  (2) 629        1985 SCALE  (1)675

ACT:      Arbitration Act  1940 sections 3 and 28 (1) and (2) and clause 3  of the First Schedule-Written agreement-Containing arbitration  clause-No   period  fixed   for  giving  award- Statutory period-Applicability  of-Parties participating  in the proceedings  after  the  expiry  of  prescribed  period- whether amounts  to extension  of  time  for  making  award- Extension  of   time  for   making   award-Jurisdiction   of arbitrator-Court’s exercise  of discretion  in extension  of time-Doctrine of waiver and estoppel whether applicable.

HEADNOTE:      By a  written agreement  ,   the respondent  agreed  to construct bridges  and culverts  for State  Government.  The agreement contained  an arbitration clause ,  the Arbitrator being the  Superannuation intending  Engineer. However ,  no period was  fixed for  giving the   And  . therefore  ,  the statutory  period  of  four  months  for  giving  the  award prescribed  in  clause  3  of  the  First  Schedule  to  the Arbitration Act was applicable.      A dispute  arose between  the parties.  The  respondent sent a notice to the Arbitrator requesting him to accept his claim  and   give  his   award.   The   respondent   claimed compensation on  two counts  ,   namely ,  (I) that the Sub- Divisional Officer  got certain bridges demolished which had been construed strictly in terms of the agreement ,  and (2) that the respondent had also been directed to stop the work.      The Arbitrator  gave his  award against  the respondent after the  expiry of the prescribed period ,  the respondent having participated  period ,  in the proceedings before the Arbitrator even  after the  expiry of  the statutory period. The respondent  challenged the  award but  the  trial  Court overruled the objection and upheld the award.      On appeal  to the High Court ,  a Single Judge referred two points  for decision  by a Division Bench ,  (l) Whether the award  given after  the expiry  of the prescribed period without extension of time by the Court was invalid ? and (2) Whether the  participation in  the  arbitration  proceedings even after the 650 expiry of  the period  of  limitation  prescribed  would  by necessary implication  amount to extending the time under s.

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28 of the Arbitration Act by the Court ?      The  Division   Bench  allowed  the  objection  of  the respondent regarding  delay in  giving the  award ,  holding that a  party to  an arbitration  agreement is  not estopped from challenging  the ’award  of the  ground of delay merely because it  had participated  in the arbitration proceedings even after  the expiry  of the prescribed period without any demur ,   that  mere dismissal  of the  objection  regarding delay in  the award  does not amount an extension of time by the Court under s. 28 (l) of the Arbitration Act ,  and that time can  be extended  by the court by the exercise of sound judicial discretion.  The appeal  was allowed  and the  case remanded to  the trial  Court for  deciding whether it was a fit case  for condoning the delay in giving the award by the Arbitrator.      Allowing the Appeal of the State in part, ^          HELD: l. The provisions of ss. 3 and 28 (1) and (2) and clause  3 of  First Schedule to the Act indicate that it is open  to the  parties to  an arbitration agreement to fix the time  within   which the Arbitrator must give his award, but it  has to  be so stated in the agreement itself. If per chance no  time has  been specified  by the  parties in  the arbitration agreement  ,  then by virtue of operation of s.3 with read  clause 3  of the First Schedule the award must be given within  four months  of the arbitrator entering on the reference or  after having been called upon to act by notice in writing  from any  party to  the arbitration agreement or within such extended time as the Court may allow. [654A-B]      2. Sub-section  (t) of  s.28 is  very wide  and confers full discretion  on the  Court to enlarge time for the award at any  time ,   which  should ,   however  ,   be exercised judiciously. Sub-section  (2) of s. 28 makes it evident that the Court  alone has  the power  to extend  time. It further provides that  a clause  in the arbitration agreement giving the Arbitrator power to enlarge time shall be void and of no effect  except   when  all   the  parties  consent  to  such enlargement. It  is not  open to  Arbitrators at  their  own pleasure without  the consent of parties to the agreement to enlarge the for making the award.[655 A-B]      H.K Wattal v V.N. Pandya [1974] 1 SCR 259 ,  followed.          3 Once the law precedes parties from extending time after the  matter has  been referred to the Arbitrator ,  it will be  contradiction to  hold that  the same result can be brought about by the conduct of the parties. There can be no estoppel against  a statute. The time to be fixed for making the award was initially one of agreement between the parties but it  does not  follow ,   that  in the  face of  a  clear prohibition by law that the time fixed under clause 3 of the said Schedule  can only be extended by the Court and not b y the parties  at any  stage. It  still remains  a  matter  of agreement and  the rule  of estoppel  operates. The  Act has injuncted the  Arbitrator to  give  an  award  with  in  the prescribed 651 period of  four months  unless the  same is  extended by the Court. The  Arbitrator has  no jurisdiction to make an award after the  fixed time.  If the award made beyond the time is invalid the  parties are  not estopped by their conduct from challenging the  award on the ground that it was made beyond time merely  because of  their having  participated  in  the proceedings before  the Arbitrator  after the  expiry of the prescribed period. [656H; 657 A-C]      Shambbu Nath v Surja Devi ,  AIR 1961 All. 180; Shivlal v. Union  of India  AIR 1975  M.P.40; and  Ganesh Chandra v.

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Artatrana AIR 1965 Orissa 17 over ruled.      4. The  policy of  law seems to be that the arbitration proceedings should  not be unduly prolonged. The Arbitrator, therefore ,   has  to give the award within time  prescribed or such  extended time  as the ,  Court concerned may in its discretion extend  and the  Court alone  has been  given the power to extend time for giving the award. The Court has got the power  to extended  time even  after the  award has been given or  after the  expiry of the period prescribed for the award. But  the Court  has to  exercise its  discretion in a judicial manner.  In the  instant case ,  the High Court was justified in  taking the view that it did. This power can be exercised even  by the  appellants court.  In  view  of  the policy of  law and in view of the fact that the parties have been taking  willing part  in  the  proceedings  before  the Arbitrator without  a demur  ,   this will be a fit case for the extension  of time.  the time  for giving  the award  is extended and  the award will be deemed to have been given in time The  case is  however ,  remanded to the High Court for decision on the other issued involved. [657 E-G; 658]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1980 of 1970.      From the  Judgment and order dated 16.11.69 of the High Court of Punjab & Haryana in F.A.O. No. 120/62.      Mrs. Urmila Kapur and S.K. Bagga for the Appellant.      The Judgment of the Court was delivered by      MISRA ,  J. Hardyal ,  the respondent ,  entered into a contract with the State of Punjab ,  Public Works Department (Buildings and Roads Branch) for the construction of certain bridges and  culverts on  the Mukerian-Naushehra  Road.  The agreement between  the parties  was evidenced  by a writing. The written  agreement contained an arbitration clause which provided that dispute ,  if any ,  between the parties would be referred  to the  Superintending Engineer,  Public  Works Department (Buildings  and Roads) ,  Jullundur Circle. It 11 appears that  no  period  was  fixed  in  the  agreement  of reference for  giving the award and therefore Period of four months as prescribed 652 in  clause   3  of   the  First  Schedule  attached  to  the Arbitration Act would be the statutory period for giving the award.      Some  dispute   did  arise  between  the  parties.  The respondent ,   therefore  ,   sent a  notice on  January  7, 1960 to the Superintending Engineer requesting him to accept his claim  to the  tune of  Rs. 7,568  and  give  his  award accordingly.  The   respondent  claimed   this   amount   of compensation broadly  on  two  counts:  (1)  that  the  sub- Divisional Officer  had got certain bridges demolished which according to the respondent had been constructed strictly in terms of   the  agreement ,  and (2) that the respondent had also been directed to stop the work.      The arbitrator gave his award against the respondent on April 28  ,   1961 ,  but after the expiry of the prescribed period. It is ,  how ever admitted by the respondent that he participated in  the proceedings  before the arbitrator even after the  expiry of  the statutory  period. The  respondent challenged the  award by  filing an objection under s. 30 of the Arbitration  Act on  a number  of grounds.  On the pleas taken by  the respondent  the Senior  Sub-Judge  framed  the following four  issues:  (I)  whether  the  objections  were

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premature ,   (2)  whether the  arbitrator had  misconducted himself or  the proceedings  ,   (3) whether  the award  was against natural  justice ,   and  (4) whether  the award was made after inordinate delay.      The learned  Judge overruled  all  the  objections  and upheld the  award. Issue  No. l  Was not pressed before him. The contention of the respondent that reasonable opportunity had not  been afforded  to him  to adduce evidence ,  by the arbitrator ,   was  also repelled  by the  learned Judge. He observed           "One of the grounds taken up for setting aside the      award  as  stated  in  the  application  was  that  the      petitioner was not afforded a reasonable opportunity to      adduce evidence.  But the  record  of  the  proceedings      dated 24th  of April ,  1961 shows that the parties did      not want  to say  any thing  further and the hearing of      the  case   was  ,     therefore,   closed  under  such      circumstances."      The plea  regarding  misconduct  on  the  part  of  the arbitrator was  also overruled  and dealing  with this point the learned Judge observed: 653             "Nothing has been POINTED out to me in the court during the  course of the arguments as to how the arbitrator has misconducted himself and the proceedings."      The plea  regarding  delay  in  giving  the  award  was rejected  on   the  ground  that  the  respondent  had  been participating in  the proceedings before the arbitrator even after the expiry of the prescribed period of limitation.      The respondent  took the  matter in  appeal to the High Court. When the matter came up before a learned Single Judge he referred  the following  two points  for  decision  by  a Division Bench  on account of the importance of the question involved in  the case  and also  on account  of conflict  of judicial opinion on the point:      1.   Whether the  award given  after the  expiry of the      prescribed period  without extension  of  time  by  the      court was invalid ?      2.   Whether the  rejection of  the objection regarding      delay in  giving the  award  on  the  ground  that  the      objector   had    participated   in   the   arbitration      proceedings even  after the  expiry of  the  period  of      limitation prescribed  would by  necessary  implication      amount to  extending  the  time  under  s.  28  of  the      Arbitration Act by the Court ?      The  Division   Bench  allowed  the  objection  of  the respondent regarding  delay in giving the award holding that a party  to an  arbitration agreement  is not  estopped from challenging the  award on the ground of delay merely because it has  participated in  the  arbitration  proceedings  even after the expiry of the prescribed period without any demur. On the  second point the High Court held that mere dismissal of the  objection regarding  delay in  the  award  does  not amount to  extension of  time by the court under s. 28(1) of the Arbitration  Act and  indeed time can be extended by the Court  by   the  exercise   of  sound  judicial  discretion. Accordingly the  appeal was  allowed ,   the  order  of  the Senior Sub-Judge was set aside and the case was sent back to the trial  court for  deciding afresh  whether it  was a fit case for  condoning the  delay in  giving the  award by  the arbitrator after  affording opportunity  to the  parties  to adduce evidence, 654      The State  has now  come up  in appeal on a certificate granted by  the High  Court  under  Art.  133(1)(c)  of  the

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Constitution ,  as it then stood.      The same points have been reiterated before this Court. Before  dealing   with  the   points  involved  it  will  be convenient to  refer  to  the  relevant  provisions  of  the Arbitration Act. Section 3 reads;           "3. An arbitration agreement ,  unless a different      intention is  expressed therein  ,   shall be deemed to      include the provisions set out in the First Schedule in      so far as they are applicable to the reference."          Section 28 reads:           "28. (1)  The court  may ,   if  it thinks  fit  ,      whether the  time for  making the  award has expired or      not and  whether the  award has  been  made  or  not  ,      enlarge from  time to  time the  time  for  making  the      award.           (2) Any  provision  in  an  arbitration  agreement      whereby the  arbitrators or  umpire may  ,  except with      the consent  of all  the parties  to  the  agreement  ,      enlarge the  time for making the award ,  shall be void      and of no effect."      Clause 3 of First schedule provides:           "3. The  arbitrators shall make their award within      four months  after entering  on the  reference or after      having been  called upon  to act  by notice  in writing      from any  party to  the arbitration agreement or within      such extended time as the court may allow."      A perusal of these provisions indicates that it is open to the  parties to  an arbitration agreement to fix the time within which the arbitrator must give award ,  but it has to be so  stated in the agreement itself. If per chance no time has  been  specified  by  the  parties  in  the  arbitration agreement. then by virtue of operation of s. 3 read with cl. 3 of  the First Schedule the award must be given within four months of  the arbitrator entering on the reference or after having been called upon to act by notice in writing from any party to  the arbitration  agreement or within such extended time as the court may allow. 655      Sub-section (I)  of s. 28 is very wide and confers full discretion on the court to enlarge time for making the award at any time. The discretion under sub-s. (I) of s. 28 should ,   however ,   be exercised judiciously. Sub-section (2) of s. 28  also makes  it evident  that the  court alone has the power to  extend time.  It further provides that a clause in the arbitration  agreement giving  the arbitrator  power  to enlarge time  shall be void and of no effect except when all the parties  consent to  such enlargement. It is not open to arbitrators at  their own  pleasure without  consent of  the parties to  the agreement  to enlarge  time for  making  the award.      In H.K.  Wattal v. V.N. Pandya(1) dealing with s. 28(1) of the Arbitration Act this Court observed:           "There is no doubt that the arbitrator is expected      to make his award within four months of his entering on      the reference  or on  his being  called upon  to act or      within such  extended time  as  the  court  may  allow.      Reading clause  3 of the Schedule along with section 28      one finds  that the power to enlarge the time is vested      in the  court and  not in  the arbitrator. Clause 3 and      section 28(1)  exclude  by  necessary  implication  the      power of  the arbitrator  to enlarge  the time. This is      emphasised by  section 28(2)  which provides  that even      when such  a provision  giving the  arbitrator power to      enlarge the  time is contained in the agreement ,  that      pro- vision  shall be  void and  of no  effect ,    The

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    headnote of  section 28  brings out  the force  of this      position in  law by  providing that the power is of the      court only to enlarge time for making the award.           Sub-section  (2)  of  section  28  ,    however  ,      indicates one  exception to  the above  rule  that  the      arbitrator cannot  enlarge the time ,  and that is when      the parties  agree to such an enlargement. The occasion      for the  arbitrator to  enlarge the  time  occurs  only      after he is called upon to proceed with the arbitration      or he enters upon the reference. Hence it is clear that      if the  parties agree  to the enlargement of time after      the arbitrator  has entered  on the  reference ,    the      arbitrator has  the power  to enlarge  it in accordance      with the  mutual agreement  or consent  of the parties.      That such  a consent must be a post-reference consent ,      is also clear from section 28(2) which renders null and      void a provision l. [1974] 1 SCR 259. 656      in the  original agreement  to that  effect. In a sense      where a  provision is  made in  the original  agreement      that the  arbitrator may  enlarge the  time ,   such  a      provision always implies mutual consent for enlargement      but such  mutual consent  initially  expressed  in  the      original agreement  does not  save the  provision  from      being  void.  It  is  ,    therefore,  clear  that  the      arbitrator gets  the jurisdiction  to enlarge  the time      for making  the  award  only  in  a  case  where  after      entering  on   then  arbitration  the  parties  to  the      arbitration agreement  consent to  such enlargement  of      time.            The next question that crops up for consideration is what  will be  the effect  if a  party to the arbitration took part  in the  proceedings before  the  arbitrator  even after the  expiry of  four months  ,   that is ,  the period prescribed for giving the award. Some High Courts have taken the view  that in  such a  situation the  condition of  four months period  will be  deemed to  have been  waived. Such a view has  been taken  by the Allahabad High Court in Shambhu Nath v.  Surja Devi.(1)  A learned Single Judge of that High Court observed:           "A  party   to  an   arbitration   agreement   who      voluntarily takes  part in  the arbitration proceedings      after the  expiry of  four months  will be  deem , d to      have waived the implied condition as to time."      A similar  view has  been taken  by the  Madhya Pradesh High Court  in Shivlal  v.  Union  of  India(2).  In  Ganesh Chandra v.  Artatrana(3) a  single Judge  of the Orissa High Court observed:           "If the  parties ,    after  the  expiry  of  four      months, submit  themselves to  the jurisdiction  of the      arbitrators and  take part  in the proceedings enabling      them to  pass an  award ,   it  cannot be said that the      arbitrators  acted  without  jurisdiction.  In  such  a      contingency ,   the  principle of  waiver and  estoppel      would have full application.      Once we  hold  that  the  law  precludes  parties  from extending time  after the  matter has  been referred  to the arbitrator ,  it will be (1) AIR 1961 All. 180. (2) AIR 1975 M.P. 40. (3) AIR 1965 Orissa 17. 657 contradiction in  terms to  hold that the same result can be brought about  by the  conduct of  the parties. The age long

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established principle  is that  there  can  be  no  estoppel against a  statute. It is true that the time to be fixed for making the  award was initially one of agreement between the parties but  it does  not follow that in the face of a clear prohibition by  law that  the time  fixed under cl. 3 of the Schedule can  only be extended by the court and not by the 1 parties at  any stage  ,   it  still  remains  a  matter  of agreement and  the rule  of estoppel  operates. It  need  be hardly emphasized  that the Act has injuncted the arbitrator to give an award within the prescribed period of four months unless the same is extended by the court. The arbitrator has no jurisdiction  to make  an award  after the fixed time. If the award  made beyond  the time is invalid the  parties are not estopped  by their conduct from challenging the award on the ground  that it  was made  beyond time merely because of their having  participated in  the  proceedings  before  the arbitrator after the expiry of the prescribed period.      The policy  of law  seems to  be that  the  arbitration proceedings should  not be  unduly prolonged. The arbitrator therefore has  to give  the award within the time prescribed or such  extended time  as the  court concerned  may in  its discretion extend  and the  court along  has been  given the power to  extend time  for giving  the award. As II observed earlier ,   the  court has got the power to extend time even after the  award has  been-given or  after the expiry of the period prescribed  for the  award.  But  the  court  has  to exercise its discretion in a judicial manner. The High Court in our opinion was justified in taking the view that it did. This power  ,   however ,   can  be exercised  even  by  the appellate court.  The present appeal has remained pending in this Court  since 1970.  No useful purpose will be served in remanding the  case to  the trial court for deciding whether the time  should be  enlarged in  the circumstances  of this case. In  view of  the policy  of law  that the  arbitration proceedings should  not be  unduly prolonged  and in view of the fact  that the  parties have been taking willing part in the proceedings  before  the  arbitrator  without  a  demur, this will  be a  fit case  ,   in our  opinion ,    for  the extension of time. We accordingly extend the time for giving the award and the award will be deemed to have been given in time.      The other  questions involved  in the  case. however  , have not  been dealt  with by  the High  Court and  it  rest content by making a 658 bald observation  that there is no other point to be decided in this  appeal. The objector-respondent had raised a number of pleas  fore challenge  the  award  giving  rise  to  four issues. It was ,  therefore ,  obligatory for the High Court to consider  those points  unless they  had been given up by the objector-respondent.  There is  nothing on the record to suggest that  the respondent had given up those grounds. The case will  ,   therefore ,  have to be sent back to the High Court for deciding the other issues involved in this case.      We accordingly  allow the  appeal in part and set aside that part  of the order by which the High Court remanded the case to  the trial court for deciding whether time should be extended. The  case is  sent back  to  the  High  Court  for deciding other  issues involved. In the circumstances of the case the parties shall bear their own costs. A.P.J.                                       Appeal allowed. 659