REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.2283   OF 2010

(@ SPECIAL LEAVE PETITION (C) NO.23262 OF 2007)  

Union of India & Ors.  .. Appellants Vs.

M/s Neelam Engineering  & Construction Company .. Respondent

J U D G M E N T

ALTAMAS KABIR, J.

1. Leave granted.   

2. An  Agreement  No.GE/CHD-61/88-89  was  entered  

into between the Appellant, Union of India, and the  

Respondent, M/s Neelam Engineering & Construction  

Company, for providing additional security lighting  

arrangement  in  various  zones  at  TBRL  Range,

Ramgarh,  near  Chandigarh.  Certain  disputes  arose  

between  the  Appellants  and  the  Respondent  which  

were  referred  to  the  arbitration  of  Col.  T.S.  

Plaha,  appointed  as  the  sole  Arbitrator  for  

adjudication  of  the  said  disputes  between  the  

parties.  The sole Arbitrator made his Award on 27th  

January, 1996, for a sum of Rs.1,70,020/-, together  

with interest at the rate of 18% per annum from 31st  

December, 1991, till the date of decree or payment,  

whichever was earlier, in favour of the Respondent.  

On  27th February,  1996,  the  Respondent  filed  a  

petition in the Civil Court under Sections 14(2),  

17 and 29 of the Arbitration Act, 1940, for making  

the Award dated 27th January, 1996, a Rule of Court.  

3. After an interval of about two years, on 3rd  

January, 1998, the Appellants filed an objection  

petition  under  Sections  30  and  33  of  the  

Arbitration Act, 1940, for setting aside the Award  

published  by  the  sole  Arbitrator,  on  the  ground  

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that the Arbitrator had misconducted himself while  

giving his finding on the claims of the parties.   

4. On 18th February, 1998, the Court directed the  

Arbitrator to file the Award in Court.   When the  

matter was listed for hearing on 27th May, 1998, the  

Court recorded that reply had been received to the  

objection petition which had been filed and that  

the  original  arbitration  file  had  been  received  

from  the  Arbitrator.  The  case  was,  therefore,  

adjourned  till  27th July,  1998,  for  filing  

rejoinder. After considering the application made  

by the Respondent under Sections 14(2), 17 and 29  

of  the  Arbitration  Act,  1940,  and  the  objection  

filed by the Appellant, the Civil Court rejected  

the  said  objection  by  holding  that  since  the  

objection had been filed prior to filing of the  

Award,  the  same  was  premature  and  could  not  be  

taken note of and further that the objection had  

been  filed  beyond  the  period  of  limitation  as  

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prescribed  under  Article  119   of  the  Limitation  

Act.  The  Civil  Court  accordingly  allowed  the  

Appellants’  application  under  Sections  14(2),  17  

and 29 of the Arbitration Act, 1940, and ordered  

that the Award dated 27th January, 1996, be made a  

Rule of Court, and granted interest at the rate of  

18% per annum thereupon from the date of order till  

realization.   

5. Aggrieved  by  the  said  order  of  the  learned  

Civil  Judge,  Junior  Division,  Chandigarh,  the  

Appellants herein filed an appeal against the same  

before  the  learned  Additional  District  Judge,  

Chandigarh, being C.R. No.52 dated 8th August, 2003,  

under Section 39 of the aforesaid Act.   

6. The submissions which had been made before the  

learned Civil Judge, Junior Division, Chandigarh,  

were  reiterated in the Appeal.   It was contended  

that while the Award was passed by the Arbitrator  

on 22nd January, 1996, the petition under Sections  

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14(2), 17 and 29 of the Arbitration Act, 1940, was  

filed by the Respondent Company on 27th February,  

1996.  Directions  were,  thereafter,  given  by  the  

Trial Court to the Arbitrator to produce the Award  

in Court and the same appears to have been sent by  

the learned Arbitrator by post and was received by  

the  Trial  Court  on  18th February,  1998.  It  also  

appears that notice was issued to both the parties,  

but  ultimately  on  account  of  inadvertence,  on  

subsequent dates it was recorded that the Award had  

not been received. Ultimately, on 27th May, 1998,  

the  Trial  Court  recorded  that  the  original  

arbitration file had been received and the case was  

adjourned  till  27th July,  1998,  for  filing  

rejoinder.  The Appeal Court, therefore, held that  

legally and technically both the parties came to  

know about the filing of the Award in Court for the  

first time on 27th May, 1998, although, the Award  

had been received through the post in the Court on  

18th February, 1998.  Having regard to the above,  

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27th May, 1998, was held to be the date when the  

parties had notice of filing of the Award.  It was  

also  observed  that  under  Article  119  of  the  

Limitation  Act,  1963,  a  party  to  an  Arbitration  

Award could file objection, with a prayer to set  

aside or modify the Award, within 30 days from the  

date of notice of filing of the Award in Court.  

The Appeal Court also recorded the fact that in  

this case without waiting for the filing of the  

Award in Court, the Appellants herein filed their  

objections to the Award on 3rd January, 1998, before  

the Award had been received in the Court and the  

parties had notice thereof. It was accordingly held  

that it could not be said that the objections were  

barred by limitation, but they were in fact pre-

mature and could not, therefore, be taken note of.  

In fact, during the course of arguments, it was  

also the case of the Respondent Company that the  

objection filed on behalf of the Appellants could  

not be held to be barred by limitation, but was  

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pre-mature and the Appellants were not competent to  

file  the  said  objection  before  the  Award  was  

received in the Court.   

7. Aggrieved by the order of the Appeal Court, the  

Appellants  filed  a  Civil  Revision  in  the  High  

Court.   However,  the  said  Civil  Revision  was  

dismissed  by  the  High  Court  as  per  the  order  

impugned in this appeal.   

8. Learned  Additional  Solicitor  General,  Ms.  

Indira Jaising, submitted that both the Trial Court  

and  the  High  Court  erred  in  holding  that  the  

objection filed on behalf of the Appellants under  

Sections 30 and 33 of the Arbitration Act, 1940,  

could not be taken note of, having been filed even  

before  notice  of  filing  of  the  Award  had  been  

issued.   Ms.  Jaising  contended  that  since  the  

objection was already on record, the same ought to  

have  been  taken  into  consideration  while  

considering  the  respondent’s  application  under  

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Section 14(2) of the above Act for making the Award  

a Rule of Court, instead of holding the same to be  

pre-mature and disregarding the same.  Ms. Jaising  

submitted that in order to do complete justice to  

the parties, the Trial Court should not have relied  

upon technicalities, which only served to defeat  

the very purpose of Sections 30 and 33 of the above  

Act.  Ms. Jaising submitted that this was not a  

case of negligence on the part of the Appellants,  

but  that  the  Appellants  had  acted  promptly  on  

receiving a copy of the Award.

9. Ms. Jaising submitted that the consequence of  

the order passed by the learned Trial Judge, as  

endorsed by the Appeal Court and the High Court,  

will have far reaching consequences since under the  

Award the Appellants are to pay the awarded amount  

to  the  Respondent  together  with  interest  at  the  

rate of 18% per annum from 31st December, 1991 upto  

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the  date  of  decree  or  payment,  whichever  was  

earlier.   

10. Ms. Jaising submitted that since notice had not  

been issued to the parties upon filing of the Award  

in Court and Article 119 of the Limitation Act,  

1963, provided for a period of 30 days from the  

date of service of notice to file an application  

for  setting  aside  an  Award,  it  could  not  be  

contended  that  the  objection  was  barred  since  

notice had not at all been issued to the parties  

after filing of the Award.  Ms. Jaising submitted  

that the finding of the Trial Court as also that of  

the High Court that the object of notice was merely  

to make parties aware of the filing of the Award  

and that the said object had been satisfied, since  

on 27th May, 1998, the parties had knowledge of the  

filing of the Award in Court, was contrary to the  

aforesaid provisions of the Limitation Act and was  

liable to be set aside.   Ms. Jaising submitted  

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that the notice contemplated under Article 119 of  

the  Limitation  Act  was  not  meant  to  be  oral,  

particularly when Section 14(2) of the Arbitration  

Act, 1940, made it absolutely clear that upon the  

Arbitration Award being filed in Court, the Court  

is required to give notice to the parties of the  

filing of the Award.  Ms. Jaising submitted that  

the  language  of  Section  14(2)  was  mandatory  and  

cast a duty upon the Court to give notice to the  

parties regarding the filing of the Award so that  

objection,  if  any,  thereto  could  be  taken  as  

provided under the Act. Ms. Jaising submitted that  

not having done so, the High Court could not have  

held that the objection filed under Section 30 and  

33  of  the  Arbitration  Act,  1940,  was  barred  by  

limitation.   

11. Appearing  on  behalf  of  the  respondent,  Mr.  

Mahabir Singh, learned Senior Advocate, submitted  

that  service  of  notice  is  only  to  inform  the  

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parties regarding filing of the Award in Court and  

it was not mandatory that the same would have to be  

in writing.  In the absence of any prescribed mode  

of service of notice, even oral notice would be  

sufficient.   In  support  of  his  submission,  Mr.  

Singh referred to the judgment of this Court in  

East  India  Hotels  Ltd. vs.  Agra  Development  

Authority [(2001) 4 SCC 175], wherein it was held  

that service of notice was an essential requirement  

under Section 14(2) of the aforesaid Act and that  

mere recording of the presence of the parties in  

Court would not amount to service of notice.   This  

Court, in fact, observed that when the Trial Court  

had recorded that the Award had been filed by the  

Umpire and directed that the counsel for parties be  

informed and counsel for both the parties had in  

due  course  taken  note  of  the  said  order  by  

endorsing the proceeding sheet, in such case the  

provisions of Section 14(2) would have been held to  

be  duly  complied  with.   It  was  also  held  that  

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notice need not be issued in writing, but could  

also be oral, but that the fact of filing of the  

Award  by  the  Umpire  had  to  be  informed  to  the  

learned counsel for the parties and was to be noted  

by them. In such a situation, it was held that the  

essential requirement of Sub-section (2) of Section  

14 had been complied with, inasmuch as, intimation  

of  filing  of  the  Award  had  been  given  to  the  

parties.  

12. Mr. Mahabir Singh then referred to the decision  

of this Court in Nilkantha Shidramappa Ningashetti  

vs.  Kashinath  Somanna  Ningashetti  and  others  

[(1962) 2 SCR 551], wherein the question of notice  

under  Section  14(2)  of  the  1940  Act  fell  for  

consideration  together  with  Article  158  of  the  

Indian Limitation Act, 1908, relating to filing of  

objections  against  the  Award  of  the  Arbitrator.  

While dealing with the said question, a Bench of  

four Judges of this Court held that communication  

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by the Court to the parties or through counsel of  

the information that an Award had been filed was  

sufficient compliance with the requirements of Sub-

Section (2) of Section 14 of the 1940 Act with  

respect  to  the  giving  of  notice  to  the  parties  

concerned  about  the  filing  of  the  Award.   This  

Court  went  on  to  say  that  notice  did  not  

necessarily  contemplate  communication  in  writing.  

The expression “give notice” in Sub-Section (2) of  

Section  14  of  the  1940  Act  simply  means  giving  

intimation  of  the  filing  of  the  Award.   Such  

intimation need not be given in writing and could  

be  communicated  orally  and  that  the  same  would  

amount to service of notice when no particular mode  

of service was prescribed.   

13. Mr. Mahabir Singh also referred to the decision  

of  this  Court  in  Secretary  to  Government  of  

Karnataka & Anr. vs.  V. Harishbabu [(1996) 5 SCC  

400], wherein also it was emphasized that in the  

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absence of any formal mode of service, notice need  

not be in writing and may also be given orally.  

What was essential was that notice or intimation or  

a communication of filing of the Award would have  

to be issued by the Court to the parties and served  

upon them.  It was also held that the period of  

limitation  for  filing  objections  seeking  the  

setting  aside  of  an  arbitration  Award  commenced  

from the date of service of notice issued by the  

Court upon the parties regarding the fling of the  

Award under Section 14(2) of the Act.  The issuance  

of  such  notice  by  the  Court  is  a  mandatory  

requirement and limitation would begin only after  

notice of the filing of the Award is given by the  

Court.

14. Mr. Mahabir Singh, learned counsel, referred to  

a  decision  of  the  Bombay  High  Court  in  Ratanji  

Virpal & Co. vs. Dhirajlal Manilal [AIR 1942 Bom.  

101],  where  a  similar  question  had  fallen  for  

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consideration  of  the  learned  Judge.  While  

considering the provisions of Sections 14 and 31 of  

the Arbitration Act, 1940, the Court held that till  

an Award was filed in Court, no application could  

be filed for setting aside the same.  While holding  

as above, the High Court took into consideration  

the amendment in Schedule I of the Limitation Act,  

1908, where Article 158 was substituted with a new  

Article which provided that under the 1940 Act, to  

set aside an Award or to get an Award remitted for  

reconsideration,  the  period  of  limitation  is  30  

days from the date of service of notice of filing  

of the Award.  The Bombay High Court held that in  

amending  the  Limitation  Act,  the  legislature  

contemplated that an application for setting aside  

the Award could only be made after the date of  

service  of  notice  of  filing  of  the  Award  and,  

therefore, the limitation of 30 days is fixed after  

that particular date.  The Court ultimately held  

that  it  was  not  competent  for  a  party  to  the  

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arbitration Award to file a petition for setting  

aside the Award till the Award had been filed.  Mr.  

Singh  submitted  that  having  regard  to  the  views  

expressed  in  the  aforesaid  judgment  and  having  

particular regard to the provisions of Article 119  

of the Limitation Act, 1963, where limitation for  

making  an  application  under  the  1940  Act  for  

setting aside an Award has been fixed as 30 days  

from the date of service of notice of the filing of  

the  Award,  the  question  of  filing  an  objection  

under Sections 30 and 33 of the said Act prior to  

the filing of the Award, did not arise.   Mr. Singh  

submitted that the appeal was without merit and was  

liable to be dismissed.

15. We  have  carefully  considered  the  submissions  

made on behalf of the Appellants and though they  

appear to be attractive, we are unable to accept  

the same.  

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16. In view of Section 19 of the Limitation Act,  

1963,  the  period  of  limitation  for  filing  an  

application  commences  only  after  the  date  of  

service of the notice of the making of the Award.  

The  raison  d’etre for  filing  objection  under  

Sections 30 and 33 of the Arbitration Act, 1940, is  

the Award which has to be filed in Court either by  

the Arbitrator or at the instance of any of the  

parties requiring the Arbitrator to do so.  Even  

the Court may direct the Arbitrator to file his  

Award on the application made by any of the parties  

thereto.  Filing  an  objection  against  something  

which did not exist on the date when the objection  

was filed is unacceptable and must be rejected. All  

the decisions cited by Mr. Mahabir Singh take a  

similar view.  The objections filed under Sections  

30 and 33 of the Arbitration Act, 1940, by the  

Appellants  herein,  therefore,  have  been  rightly  

held to be pre-mature and could not be treated to  

be  an  objection  filed  after  the  filing  of  the  

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Award.  While the original Award was filed in Court  

on  27th May,  1998,  the  objections  filed  under  

Sections 30 and 33 of the Arbitration Act, 1940,  

for  setting  aside  the  Award  was  filed  on  3rd  

January, 1998.  There was, therefore, no occasion  

for  such  an  objection  to  be  filed  in  terms  of  

Article 119 of the Limitation Act, 1963.   

17. The  objection  filed  by  the  Appellant  under  

Sections 30 and 33 of the Arbitration Act, 1940,  

for setting aside the Award on 3rd January, 1998,  

was  obviously  on  account  of  the  fact  that  the  

Respondent had filed a petition in the Civil Court  

on 27th February, 1996, for making the Award a Rule  

of  Court.   At  the  time  when  the  objection  was  

filed, it was noted on 18th February, 1998, that the  

Award had not been received in Court and notice was  

issued to the Arbitrator to file the original Award  

in pursuance whereof the original Award was filed  

in Court on 27th May, 1998.    

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18. It is unfortunate that although the Appellants  

filed their objection under Sections 30 and 33 of  

the  Arbitration  Act,  1940,  the  same  was  done  

prematurely even before the filing of the Award and  

such  objection  could  not  be  treated  as  a  valid  

objection under Sections 30 and 33 of the Act in  

view  of  the  provisions  of  Article  119  of  the  

Limitation Act, 1963.   

19. We, therefore, have no option, but to dismiss  

the appeal.  The appeal is, accordingly, dismissed,  

but without any order as to costs.

_____________J. (ALTAMAS KABIR)

_____________J. (CYRIAC JOSEPH)

New Delhi Dated:10.03.2010

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