vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [1].***** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CR No.5042 of 2003 (O&M) Date of decision:10.07.2014 Union of India and another ...Petitioners Versus M/s Sanjeev Builders and another ...Respondents CORAM: Hon'ble Mr.Justice Rakesh Kumar Jain Present: Mr.Ashwinie Kumar Bansal, Advocate, for the petitioneRs.None for the respondents.
***** RAKESH KUMAR JAIN, J.
(Oral) This revision petition is filed for setting aside the orders dated 18.03.1996 and 26.07.2003 passed by the Courts below making award dated 10.05.1991 as rule of the Court.
In brief, there was a contract between the parties for construction of some accommodation in the year 1982-83.
The work could not be completed due to the sickness of the Contractor and the time was extended up to 23.08.1985 and the work was completed on that date.
Although, as per the petitioneRs.the final bill submitted by the Contractor was paid, but some dispute arose between the parties and the Contractor submitted 17 claims which were referred to the Arbitrator by the Competent Authority in the year 1989 who commenced his proceedings, but due to change of Arbitrator, the proceedings could not be completed.
In the meantime, the Contractor got an order from the Civil Court for reference to vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [2].***** the Arbitrator of 28 more claims in the same agreement though initially only 17 claims were asked for reference.
The petitioner-UOI submitted objections against the claims submitted by the Contractor and led documentary evidence in its support, but the Arbitrator published his award, i.e.interim award on 17 claims of the Contractor and 4 claims of Union of India, on 10.05.1991.
The respondent-Contractor then filed an application under Sections 14 and 17 of the Arbitration Act, 1940 (here-in-after referred to as the “Act”.) for making the award rule of the Court.
The petitioners also filed objection.
The learned Civil Court, on the pleadings of the parties, framed the following two issues:- “1.
Whether the award dated 10.05.1991 is liable to be set aside on the grounds, mentioned in the objection-petition?.
OP Objection-petitioner.
2.
Whether the objection-petition, filed by the Objector-petitioner is barred by time?.OPR.”
.
As regards issue no.1, the petitioners had objected that the award is illegal insofar as claim nos.3, 4, 6, 9, 13, 16 and 17 are concerned, but the Trial Court did not accept the objection of the petitioners on the ground that the Civil Court cannot go into the facts of claims made before the Arbitrator.
Insofar as issue no.2 is concerned, it pertains to the objections having been filed within limitation.
In this regard, the Trial Court has observed that in the order dated 27.10.1993, the Court had alleged that the award was filed by respondent no.3 on the previous date of hearing and respondent no.1 and 2 were proceeded against ex-parte.
Earlier to vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [3].***** 27.10.1993, the case was fixed for 20.08.1993, which means that the award was filed on that date.
On 11.11.1993, the Government Pleader put in appearance on behalf of respondents no.1 and 2 and it was observed that the Government Pleader was made known about the filing of the award by the Court on 11.11.1993.
According to the learned Trial Court, the objections could have been filed on 11.12.1993, but were in fact filed on 13.01.1994 which is evident from the order of the Senior Sub Judge, Jalandhar.
In view thereof, it was held that since the objections were not filed within 30 days, as envisaged under Clause (b) of Article 119 of the Indian Limitation Act, 1963, therefore, the same were dismissed on both the accounts.
Aggrieved against the order of the Trial Court dated 18.03.1996, the petitioners filed two appeals because there were two awards, i.e.fiRs.award pertaining to the 17 claims and the second award pertaining to 28 claiMs.Both the appeals were taken up together because a common order was passed by the Trial Court regarding both the claims when the objections were dismissed on 18.03.1996.
The lower Appellate Court also dismissed the appeal on the ground that the Civil Court had no jurisdiction to interfere in the award of the Arbitrator and the objections filed by the petitioners were beyond limitation.
During the pendency of the revision petition, the petitioners filed two applications bearing CM Nos.23648-49-CII-2013 which were ordered to be heard along with main case on 06.12.2013.
The fiRs.application bearing CM No.23648-CII-2013 is filed under Section 151 CPC for seeking exemption from filing certified copy of the Annexures P-3 to vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [4].***** P-5 and original copy of Annexures P-1 and P-2.
The said application is allowed, as prayed for.
The second application bearing CM No.23649-CII- 2013 is for placing on record the Annexures P-1 to P-5.
The said application is also supported by an affidavit.
For the reasons mentioned therein, the said application is also allowed and the Annexures P-1 to P-5 are taken on record.
Learned counsel for the petitioners has submitted that the finding recorded by the Trial Court on both the issues are patently illegal and liable to be set aside.
He is primarily concerned with the award on items no.6, 9 and 16, which are reproduced as under:- Sr.No.Claim in brief Amount of AWARD in Rupees claim/Amended claim in Rupees Damages suffered on account of delay in issue of stores under Sch.
80,000 6 `B', delay in giving decisions, 81320 transfer of work from GE/AGE(I).81,320 GE(P) etc.Addl.
Expenditure for watch and 9 20000 22500 ward of buildings Addl.
Expenditure due to 16 disturbed conditions in Punjab 2,00,000 15068.82 amounting to accepted risk.
It is submitted that the amount awarded in item no.6 is contrary to Condition 11-C of the General Conditions of Contracts (Annexure P-4).which reads as under:- “(C) No claim in respect of compensation or otherwise, howsoever arising, as a result of extensions granted under Conditions (A) and (B) above shall be admitted.”
.
According to Condition 11-C, the respondent-contractor is not entitled to any compensation arising, as a result of extensions granted under vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [5].***** Conditions (A) and (B).Not only that, it is submitted that as per the Time Extension Order Sheet, the respondent-contractor is not entitled to ask for any financial compensation on account of extension.
The Supreme Court, in the case of Ramnath International Construction (P) Ltd.v.Union of India, (2007) 2 Supreme Court Cases 453, has held as under:- “Clause (C) provides that where extensions have been granted by reason of the delays enumerated in Clause (A) which were beyond the control of the contractor, or on account of the delays on the part of the employer specified in Clause (B).the contractor is not entitled to make any claim either for compensation or otherwise, arising in whatsoever manner, as a result of such extensions.
After enumerating certain delays, sub-clause (viii) of Clause (A) specifically mentions delay on account of any other cause beyond the control of the contractor.
The causes for delays specified in clause (A).thus, encompass all delays over which the contractor has no control.
This will necessarily include any delays attributable to the employer or any delay for which both the employer and the contractor are responsible.
The contract thus provides that if there is any delay, attributable either to the contractor or the employer or to both, and the contractor seeks and obtains extension of time for execution on that account, he will not be entitled vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [6].***** to claim compensation of any nature, on the ground of such delay, in addition to the extension of time obtained by him.
Therefore, the claims for compensation as a consequence of delays, that is claim 24 of Hangar Contract and claims 13 to 16 of Road Contract are barred by clause 11(C)”.This judgment has been followed by this Court in CR No.2796 of 2000 titled as “M/s Manohar Lal & Sons v.
Union of India and others”.
decided on 03.08.2010, with the following observations:- “However, in the present case, the Arbitrator has given Award claim wise.
Claim No.11 as reproduced above primarily falls within the scope of Clause (B) or Clause (A)(vii) of condition No.11 of the contract agreement.
Claim No.11 is specifically in respect of compensation on account of delay in handing over site and other ancillary matter.
Such delay in handing over site falls within clause 11 (C) of the contract which contemplates that no compensation shall be admissible to the contractor.”
.
In view of the law laid down by the Supreme Court, followed by this Court in respect of Clause 11-C of the General Conditions of Contracts, I am of the considered opinion that the respondent-contractor is not entitled to any award on item no.6 which has been illegally awarded by the Arbitrator.
vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [7].***** Insofar as the award pertaining to item nos.9 and 16 are concerned, learned counsel for the petitioners has submitted that it offends Condition 36 of the General Conditions of Contracts, which reads as under:- “36.
Precautions against Risks.-- The Contractor shall be responsible at his own expense, for precautions to prevent loss or damage from any and all risks other than for Accepted Risks and to minimise the amount of any such loss or damage and for the provision of all protective works, casings, coverings, etc., required for the purpose, until the Works have been handed over complete to the Engineer-in-Charge.
All Government buildings rented to the Contractor for workshops or stores shall be insured by the Contractor in favour of Government to their full value against risk of loss or damage from whatsoever cause arising other than the accepted risk, and the policy of insurance and receipts for premiums shall be produced when required by the G.E.: provided always that where part only of a building is rented to the Contractor he will be required to insure the building only if used by him for the purpose of storing or using materials of a combustible nature, as to which the decision of the G.E.shall be final and binding.
The Contractor shall provide all watchmen vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [8].***** necessary for the protection of the Site, the Works and of materials and plant and all things on the Site during the progress of the Works, and shall solely be responsible for and shall take all reasonable and proper steps for protecting securing, lighting and watching all places on or about the Works and the Site which may be dangerous to any person whomsoever.”
.
According to the aforesaid condition, since the watch and ward facility was to be provided by the contractor at the site, he cannot ask for compensation, therefore, the amount awarded on claim no.9 is unwarranted.
Insofar item no.16 for which the additional expenditure has been awarded due to disturbed conditions in Punjab amounting to accepted risk is concerned, it is submitted that the said item has wrongly been considered as the accepted risk which would be the Act of God and not the disturbed conditions, as stated in the award.
I am inclined to accept the argument raised by learned counsel for the petitioners and hold that the award of the Arbitrator on items no.9 and 16 is also contrary to the Condition 36 of the General Conditions of Contracts.
Now the question arises is as to whether the Civil Court can look into the award of the Arbitrator as the Courts below have held that even if it is found that there is any violation of the contract, it cannot be looked into by the Trial Court.
In this regard, learned counsel for the petitioners has relied vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [9].***** upon a judgment of the Supreme Court in the case of Delhi Development Authority v.
M/s R.S.Sharma & Co., New Delhi, 2008(4) R.C.R.(Civil) 165 in which the following principles have been culled out, which read as under:- “12) From the above decisions, the following principles emerge: (a) An Award, which is (i) contrary to substantive provisions of law ; or (ii) the provisions of the Arbitration and Conciliation Act, 1996; or (iii) against the terms of the respective contract ; or (iv) patently illegal, or (iv) prejudicial to the rights of the parties, is open to interference by the Court under Section 34(2) of the Act.
(b) Award could be set aside if it is contrary to : (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; (c) The Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court.
(d) It is open to the Court to consider whether the Award is against the specific terms of contract and vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [ 10 ].***** if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.”
.
The aforesaid proposition laid down by the Supreme Court clearly says that it is always open to the Court to set aside the award if it is unfair and unreasonable that it shocks the conscience of the Court.
In the present case, as I have held here-in-above that the award on items no.6, 9 and 16 is diametrically opposite to the Conditions 11-C and 36 of the General Condition of Contracts where the compensation could not have been granted.
Thus, the finding recorded on issue no.1 by the Courts below is hereby reversed.
Insofar as issue no.2 with regard to the limitation is concerned, counsel for the petitioners has submitted that mere presence of the counsel for the petitioners before the Court is not a “sufficient”.
notice.
He has referred to Section 14(2) of the Act, which reads as under:- “14.
Award to be signed and filed.-- (1) xxx xxx xxx (2) 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 vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [ 11 ].***** 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.”
.
According to the aforesaid provision, it is mandatory on the part of the Court to serve a notice upon the parties to the arbitration proceedings.
The question thus arises as to whether the presence of the counsel for the petitioners is a notice in terms of Section 14(2) of the Act nor not?.
Counsel for the petitioners has relied upon a Division Bench judgment in the case of Hari Chand v.
Lachhman Das and otheRs.AIR (35) 1948 East Punjab 11, wherein the following observations have been made by their Lordships:- “In order to put the matter beyond doubt Art.
158 was amended in 1919 and it was enacted that the date from which the period of ten days begins to run is when the award is filed in Court and notice of the filing has been given to the parties,` By this amendment the legislature made it clear that `filing' the award is not equivalent to its `submission' to the Court, and the terminus a quo is the date of service on the parties of the notice of the filing.
The notice, of course, need not necessarily be in writing, formally delivered to the parties: it might be given orally if the parties are present in Court personally or by authorized agent at the time of vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [ 12 ].***** the filing of the award.”
.
(The amendment of Art.
158 whereby the period of limitation was increased from ten days to thirty days was made after this case).I do not agree with the learned counsel that this ruling can help him in any way.
On the other hand, it goes against him to some extent, inasmuch as it lays down that the time for filing objection starts from the date of service on the parties of the notice of the filing of the award.
As regards the proposition that notice need not be in writing and may be oral, I respectfully accept it as correct, but the question is whether any oral notice was given to the parties by the Court on 29.11.1943 or whether such a notice can be implied from the orders recorded by the Court on that day.
I have no hesitation in holding that the answer to the question must be in the negative.
The orders no doubt record the presence of the parties but they do not say that any notice of the filing of the award was given to them.”
.
He has also referred to the latest judgments of the Supreme Court in the case of Oil & Natural Gas Corporation Ltd.v.M/s Nippon Steel Corporation Ltd., 2007(1) R.C.R.(Civil) 73 in which the following observations have been made:- “24.
Mr.Gopal Subramanium, learned Additional vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [ 13 ].***** Solicitor General, submitted that Article 119 recognizes the date of service of notice as the relevant date for computation of the period of limitation.
This Article unlike other Articles does not refer to the date of knowledge of filing of the award and hence the period of limitation cannot be computed from the date of knowledge of filing of the award as contemplated by Article 119 of the Limitation Act.
In view of the specific expression used in Article 119, limitation cannot be computed from the date of knowledge of the award.
Further, at the time of filing of the award, the appellant did not have knowledge of the filing of the award as the award was filed by M/s Little & Co.at the instance of the Arbitrator.”
.
“37.
This Court has expressly laid down that notice regarding filing of Award must be given to the Court by some act of court.
The letter of Prothonotary and Senior Master cannot be regarded as an act of court.
This Court also conclusively laid down in the aforesaid case that mere intimation from one party to the other of the filing of the Award cannot be construed as notice in terms of Section 14(2) of the Act.
Hence, in our view, the intimation from the Prothonotary seeking address of the parties for the purpose of issuance of notice cannot be vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [ 14 ].***** characterized as notice in terms of Section 14(2).”
.
In the case of Anant Raj Agencies v.
Delhi Development Authority, 1997(69) DLT396 the Single Bench of the Delhi High Court has made the following observations:- “(6) Statutory summonses and notices issued by the Courts are never an eye wash.
The underlying idea is to make it known to the party intended to be served as to why and in what connection and for what purpose he is being called to the Court.
(7) It is true that notice of the filing of the award need not be accompanied by a copy of the award but it must give to the person noticed a clear indication of the subject matter of the arbitration and the award made.
Unless such particulars are given in the notice, in my opinion, the same would not meet the requirement of the notice of the filing of the award as contemplated in Section 14(2) of the Act.”
.
In the case of Dewan Singh v.
Champat Singh and otheRs.1969(3) SCC447 the following observations have been made by the Supreme Court:- “There is no basis for the finding of the appellate court that the objection taken by the defendants to the award was barred by time.
As seen earlier, the suit to make the award a rule of the court was brought by one of the vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [ 15 ].***** parties to the arbitration agreement and not by any arbitrator.
The plaint filed does not disclose that the award given had been produced along with it.
There was some controveRs.as _to whether that award was produced along with the plaint.
There is no need to go into that question as we shall presently see.
It is not said that along with the plaint copy, a copy of the award had been sent to the defendants.
Nor is it said that notice of the suit sent to the defendants mentioned the fact that the award had been filed into court along with the plaint.
Article 158 of the Limitation Act, 1908 gives to party 30 days time for applying to set aside an award or get an award remitted for reconsideration from the date of the service of the notice of filing of the award.
There is absolutely no proof in this case that a notice of the filing of the award into court had ever been given to the defendants.”
.
The sum and substance of the law laid down is that a notice has to be given by the Court to the opposite party about the filing of the award.
The mere presence of the counsel at the time of hearing would not be a notice until and unless it is so recorded by the Court in its order that the counsel present on behalf of the petitioners has been apprised of the filing of the award.
Had it been done in the manner mentioned above, then of course, it would have been a notice to the petitioners and the objections vinod kumar 2014.07.16 12:58 I attest to the accuracy and integrity of this document Chandigarh CR No.5042 of 2003 (O&M) [ 16 ].***** filed by them beyond a period of 30 days, as prescribed in Clause (b) of Article 119 of the Indian Limitation Act, 1963, would have been barred by limitation, but until and unless it is so recorded in the order by the Court that the notice of the filing of the award is given either to the party or to their pleader, the fact of notice having been served cannot be presumed.
Thus, in my considered opinion, the objections filed by the petitioners are not beyond limitation.
In view of the aforesaid discussion, the present revision petition is hereby allowed and the impugned orders passed by the both the Courts below are set aside being patently illegal.
July 10, 2014 (RAKESH KUMAR JAIN) vinod* JUDGE