REPORTABLE | |
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (CIVIL)No.23860 of 2010
BENARSI KRISHNA COMMITTEE & ORS. … PETITIONERS
Vs.
KARMYOGI SHELTERS PVT. LTD. … RESPONDENT
J U D G M E N T
ALTAMAS KABIR, J.
1. In this Special Leave Petition, a question has been raised as to
whether the service of an Arbitral Award on the agent of a party amounts to
service on the party itself, having regard to the provisions of Section
31(5) and Section 34(3) of the Arbitration and Conciliation Act, 1996,
hereinafter referred to as “the 1996 Act”.
2. The Petitioner is a Committee of Managing Landlords, who are co-
owners of the Benarsi Krishna Estate at the Moti Cinema compound, Chandni
Chowk, Delhi. The property apparently belongs to the Khanna family and the
Seth family. The Respondent No.1 is a Private Limited Company
incorporated under the Companies Act, 1956, and is an estate developer and
builder of both residential and commercial properties. The Petitioner
Committee entered into a Collaboration Agreement dated 16th November, 1990,
by which the Respondent agreed to convert the Moti Cinema compound into a
commercial complex. Subsequently, the agreement was amended on 2nd May,
1991, by which certain changes were introduced with regard to the scheme of
payment. Inasmuch as disputes arose between the parties over the working of
the agreement, the Respondent filed an application under Section 11 of the
1996 Act for appointment of an Arbitrator and by an order dated 14th May,
2001, the Delhi High Court appointed Justice K. Ramamoorthy, a retired
Judge of the said Court, as the Sole Arbitrator. After considering the
materials brought on record, the learned Arbitrator passed his Award upon
holding that the Respondent had committed breach of the terms of the
Collaboration Agreement and directed the Petitioner to refund the sum of
Rs.41 lakhs which had been received from the Respondent, within three
months from the date of the Award and in default of payment within the said
period, the amount would carry interest @ 12% per annum from the date of
the Award till the date of payment.
3. As will appear from the records, copies of the Award, duly signed by
the learned Arbitrator, were received by the counsel for the respective
parties. As far as the Respondent is concerned, the endorsement shows that
the copy of the Award was received by its counsel on 13th May, 2004.
However, no application for setting aside the Award was filed by the
Respondent within the period of three months from the date of receipt of
the Award, as provided under Section 34(3) of the 1996 Act.
4. On 3rd February, 2005, the Respondent filed a Petition, being O.M.P.
No.51 of 2005, under Section 34 of the 1996 Act, to set aside the Award of
the learned Arbitrator. According to the Petitioner, the said petition was
filed after a delay of more than 9 months from the date of the receipt of
the Award. The said objection of the Petitioner was considered by the
learned Single Judge of the High Court who by his order dated 28th August,
2009, dismissed the Respondent’s petition on the ground that the same was
time barred. The learned Single Judge accepted the contention of the
Petitioner that the expression “party” used in Section 31(5) of the 1996
Act, would also include the agent of the party.
5. The matter was carried to the Division Bench of the High Court by the
Respondent on 5th October, 2009, by way of F.A.O. (OS) No.578 of 2009.
Accepting the case of the Respondent that service of the Award had not been
properly effected, the Division Bench remanded the matter to the Single
Judge to decide the objections on the Award on merits, upon holding that
for compliance with the provisions of Section 31(5) of the 1996 Act, a copy
of the Award had to be delivered to the party itself and service on its
counsel did not amount to service within the meaning of Section 31(5) of
the aforesaid Act. The Special Leave Petition has been filed against the
said judgment and order of the Division Bench of the Delhi High Court.
6. In arriving at its decision which has been impugned in these
proceedings, the Division Bench of the Delhi High Court referred to its own
judgment in National Projects Constructions Corporation Limited Vs. Bundela
Bandhu Constgructions Company [AIR 2007 Delhi 202] and a decision of this
Court in Union of India Vs. Tecco Trechy Engineers & Contractors [(2005) 4
SCC 239], which had considered the decision of the Delhi High Court in
Bundela Bandhu’s case (supra). The Division Bench also referred to the
decision of the Privy Council in the celebrated case of Nazir Ahmed Vs.
King Emperor [(AIR 1936 PC 253], wherein it was categorically laid down
that if an action is required to be taken in a particular manner, it had to
be taken in that manner only or not at all. While observing that all the
aforesaid controversies could have been avoided if the Award had been
served on the party directly, the Division Bench also observed that in view
of Section 2(h) of the 1996 Act, there was no justifiable reason to depart
from the precise definition of the expression “party” which means a party
to the arbitration agreement.
7. Appearing in support of the Special Leave Petition, Mr. Ranjit Kumar,
learned Senior Advocate, reiterated the submissions which had been made
before the High Court. Learned senior counsel reiterated that after the
Award had been passed on 12th May, 2004, a copy of the same, duly signed by
the Arbitrator, was received by counsel for the Respondent on 13th May,
2004, while the Petition under Section 34 was filed only on 3rd February,
2005, well beyond the period of 3 months prescribed in Section 34(3) of the
1996 Act and also beyond the further period of 3 months as indicated in the
proviso thereto. Since the question for decision in the Special Leave
Petition largely depends on the interpretation of Sub-section (3) of
Section 34 and the proviso thereto, the same is extracted hereinbelow for
purposes of reference :-
“34. Application for setting aside arbitral award. -
(1) ……………………………………………………………………
(2) ………………………………………………………………………
(3) An application for setting aside may not be made after three
months have elapsed from the date on which the party making that
application had received the arbitral award or, if a request had been
made under section 33, from the date on which that request had been
disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was
prevented by sufficient cause from making the application within the
said period of three months it may entertain the application within a
further period of thirty days, but not thereafter. “
8. Mr. Ranjit Kumar urged that service of the Award on the Advocate for
the party was sufficient compliance of the provisions of Section 34(3) of
the 1996 Act, as had been held by a Four-Judge Bench of this Court in
Nilakantha Sidramappa Ningshetti vs. Kashinath Somanna Ningashetti [1962
(2) SCR 551], which was later followed in East India Hotels Ltd. Vs. Agra
Development Authority [(2001) 4 SCC 175]. Mr. Ranjit Kumar submitted that
in Nilakantha Sidramappa Ningshetti’s case (supra) this Court held that
intimation to the pleaders of the parties amounted to service of the notice
on the parties about the filing of the Award.
9. Mr. Ranjit Kumar also referred to the decision of this Court in State
of Maharashtra Vs. ARK Builders Pvt. Ltd.[(2011) 4 SCC 616], in which this
Court, following its earlier decision in Tecco Trechy Engineers’s case
(supra), held that Section 31(5) of the 1996 Act contemplates not merely
the delivery of any kind of copy of the Award, but a copy of the Award
which had been duly signed by the Members of the Arbitral Tribunal.
Learned counsel pointed out that in the said decision, the Hon’ble Judges
had taken note of the fact that an attempt was being made to derive undue
advantage of an omission on the part of the learned Arbitrator to supply
them with a signed copy of the Award, but ultimately held that the same
would not change the legal position and it would be wrong to tailor the law
according to the facts of a particular case.
10. As an additional ground, Mr. Ranjit Kumar referred to the use of the
words “signed by parties” under Order 23 Rule 3 read with Order 3 Rule 1 of
the Code of Civil Procedure, which provide that any appearance, application
or act in or to any Court, required or authorized by law to be made or done
by a party in such Court, may, except where otherwise expressly provided by
any law for the time being in force, be made or done by the party in
person, or by his recognized agent, or by a pleader appearing, applying or
acting, as the case may be, on his behalf. Mr. Ranjit Kumar contended that
on the strength of the Vakalatnama executed by the party in favour of his
Advocate/agent, service of notice effected on the Advocate holding such
Vakalatnama amounted to service of the notice on the party himself, as was
held in the case of Pushpa Devi Bhagat Vs. Rajinder Singh & Ors. [(2006) 5
SCC 566].
11. A similar view had been expressed by this Court in Byram Pestonji
Gariwala Vs. Union Bank of India & Ors.[(1992) 1 SCC 31], whereby this
Court held that the expression “signed by parties” would include “signed by
his pleader”. Mr. Ranjit Kumar submitted that once a Vakalatnama had been
executed by a party in favour of his Advocate, the said Advocate was
competent to do such acts as could be done by the party himself.
Accordingly, the Division Bench of the Delhi High Court had in the teeth of
the aforesaid decisions erred in holding that service of the signed copy of
the Award by the learned Arbitrator on the Respondent’s counsel, did not
amount to compliance of the provisions of Section 31(5) of the 1996 Act,
which specifically enjoined that the copy was to be delivered to each
party.
12. Countering the submissions made by Mr. Ranjit Kumar, Mr. K.V.
Viswanathan, learned Senior Advocate, firstly urged that once hearing
before the learned Arbitrator had been concluded and an Award had been
passed by him, the power given to an Advocate by the Vakalatnama executed
in his favour, came to an end and the learned Advocate was no longer
entitled to act on the strength thereof. Accordingly, service on the said
Advocate would not amount to service even on an agent of the party, even if
Mr. Ranjit Kumar’s submissions were to be accepted. Mr. Viswanathan,
however, contended that service on the learned Advocate of the party cannot
be treated as service of the Award on the party itself, as had been very
clearly held in the very same decision referred to by Mr. Ranjit Kumar in
Pushpa Devi Bhagat’s case (supra).
13. Referring to the decision of the Three-Judge Bench of this Court in
Tecco Trechy Engineers’s case (supra), Mr. Viswanathan submitted that the
decision rendered therein completely covered the issue raised in this
Special Leave Petition. Learned counsel submitted that on a construction
of Sub-Section (3) of Section 34 of the 1996 Act, the learned Judges had
held that “service on a party” as defined in Section 2(h) read with Section
34(3) of the 1996 Act, had to be construed to be a person directly
connected with and involved in the proceedings and who is in control of the
proceedings before the Arbitrator, as he would be the best person to
understand and appreciate the Arbitral Award and to take a decision as to
whether an application under Section 34 was required to be moved.
14. As to the decision in Pushpa Devi Bhagat’s case (supra), Mr.
Viswanathan submitted that the same was rendered on a completely different
set of facts which could have no application to the facts of this case.
Mr. Viswanathan submitted that no interference was called for with the
decision of the Division Bench of the High Court impugned in the Special
Leave Petition, which was liable to be dismissed.
15. Having taken note of the submissions advanced on behalf of the
respective parties and having particular regard to the expression “party”
as defined in Section 2(h) of the 1996 Act read with the provisions of
Sections 31(5) and 34(3) of the 1996 Act, we are not inclined to interfere
with the decision of the Division Bench of the Delhi High Court impugned in
these proceedings. The expression “party” has been amply dealt with in
Tecco Trechy Engineers’s case (supra) and also in ARK Builders Pvt.
Ltd.’s case (supra), referred to hereinabove. It is one thing for an
Advocate to act and plead on behalf of a party in a proceeding and it is
another for an Advocate to act as the party himself. The expression
“party”, as defined in Section 2(h) of the 1996 Act, clearly indicates a
person who is a party to an arbitration agreement. The said definition is
not qualified in any way so as to include the agent of the party to such
agreement. Any reference, therefore, made in Section 31(5) and Section
34(2) of the 1996 Act can only mean the party himself and not his or her
agent, or Advocate empowered to act on the basis of a Vakalatnama. In such
circumstances, proper compliance with Section 31(5) would mean delivery of
a signed copy of the Arbitral Award on the party himself and not on his
Advocate, which gives the party concerned the right to proceed under
Section 34(3) of the aforesaid Act.
16. The view taken in Pushpa Devi Bhagat’s case (supra) is in relation to
the authority given to an Advocate to act on behalf of a party to a
proceeding in the proceedings itself, which cannot stand satisfied where a
provision such as Section 31(5) of the 1996 Act is concerned. The said
provision clearly indicates that a signed copy of the Award has to be
delivered to the party. Accordingly, when a copy of the signed Award is
not delivered to the party himself, it would not amount to compliance with
the provisions of Section 31(5) of the Act. The other decision cited by
Mr. Ranjit Kumar in Nilakantha Sidramappa Ningshetti’s case (supra) was
rendered under the provisions of the Arbitration Act, 1940, which did not
have a provision similar to the provisions of Section 31(5) of the 1996
Act. The said decision would, therefore, not be applicable to the facts of
this case also.
17. In the instant case, since a signed copy of the Award had not been
delivered to the party itself and the party obtained the same on 15th
December, 2004, and the Petition under Section 34 of the Act was filed on
3rd February, 2005, it has to be held that the said petition was filed
within the stipulated period of three months as contemplated under Section
34(3) of the aforesaid Act. Consequently, the objection taken on behalf of
the Petitioner herein cannot be sustained and, in our view, was rightly
rejected by the Division Bench of the Delhi High Court.
18. Consequently, the Special Leave Petition must fail and is dismissed.
19. There will, however, be no order as to costs.
………………………………………………………J.
(ALTAMAS KABIR)
………………………………………………………J.
(J. CHELAMESWAR)
New Delhi
Dated: 21.09.2012.
