Delhi District Court
Union Of India vs M/S Bansal Construction Co on 30 July, 2021
In the Court of Shri Sanjiv Jain, District Judge,
(Commercial CourtÂ03), Patiala House Courts New Delhi
OMP Number. 93/2020
Union of India
DRM Office Complex,
New Delhi
... Petitioner/objector
versus
M/s Bansal Construction Co
45, Sudarshan Appt. I.P. Extn,
Patparganj, Delhi.
... Respondent/claimant
Date of institution : 10.11.2020 Date of reserving judgment : 23.07.2021 Date of decision : 30.07.2021 JUDGME NT
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended upto date) hereinafter called the 'Act' challenges the award dated 27.09.2019 passed by the Arbitrator Sh. Mohd. Isha, whereby, the respondent was awarded a sum of Rs. 17,04,261/- with interest @ 8% per annum on the amount of claim no. 1 i.e. Rs. 9,25,807/- w.e.f. 26.10.2010 to 27.09.2016 in respect of the claims / counter claims arising out of the disputes between the parties. The OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.1 of 27 respondent was also awarded interest @ 12% per annum till the payment of the arbitral award.
Brief facts:
2. The facts leading to this petition are that the petitioner had awarded the work of "track renewal for length of 5.0 km on various loop lines under ADEN/ROHTAK" to the respondent vide letter dated 23.08.2006. It was subject to the applicability of the Special Conditions of Contract and General Conditions of Contract (GCC) 1999. The work was to be completed within six months i.e. upto 01.02.2007. The respondent entered into an agreement with the petitioner on 19.09.2006. The value of the contract was Rs. 25,25,400/-. The respondent mobilized the resources i.e. men & machinery but the petitioner could not provide the requisite P.way materials and pre stressed concrete sleepers. The respondent wrote number of letters to the petitioner to arrange P.way materials and sleepers and also requested to prepare addendum / corrigendum since some of the items executed were more than the agreement quantity and some were less than the agreement quantity. It vide letter dated
27.03.2008 wrote to the petitioner that due to non availability of rails, the agreement quantity could not be completed and labour has been sitting idle. It requested the petitioner to finalize / foreclose the work. Number of extensions were granted by the petitioner without levy of penalty since the delay was solely attributable to the petitioner. Though, the extended date of OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.2 of 27 completion expired on 28.02.2010 but the petitioner could not make the required P.way material available at site. On 24.03.2014, ADEN/Rohtak wrote to the respondent that about 75% work has been completed so far and he asked the respondent to restart the work with sufficient labour, though, as per the entry made in the measurement book, more than 100% work had been executed by the respondent. The respondent then requested the petitioner to process the final addendum / corrigendum by making the entries but the petitioner did not make the payment, which made the respondent invoke the arbitration clause. It wrote to the General Manager (Engg.) Northern Railway on 17.03.2015 to constitute an Arbitral Tribunal. The petitioner then vide letter dated 06.05.2015 served a seven days notice on the respondent, which was followed by 48 hours notice on 14.05.2015. Thereafter, it terminated the contract on 20.05.2015. The General Manager (Engg.) vide order dated 03.07.2015 appointed an Arbitrator to adjudicate the dispute but the respondent did not waive of the applicability of Section 12 (5) of the Act. It requested for the appointment of an independent Arbitrator. The petitioner then appointed the present Arbitrator vide letter dated 18.04.2018. The respondent sought permission to submit supplementary claims and the Dy. CE/G for GM allowed it to amend or supplement its claims as per Section 23 of the Act and clause 64 (1) (iii) of GCC 1999 before the Arbitrator. The respondent vide letter dated 14.05.2018 supplemented its claims already OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.3 of 27 referred to the Tribunal, which he modified vide dated 15.11.2018. The petitioner filed its statement of defense to which respondent filed the rejoinder. The Arbitrator framed the following issues vide orders dated 09.05.2019 & 23.08.2019:
(i) Whether the claimant / respondent is entitled for relief of claims as per claim statement?
(ii) Whether the claims of the claimant / respondent are barred by limitation?
(iii) Whether termination of contract is valid?
(iv) Whether the claims fall under the category of excepted matters? If yes, whether the tribunal has inherent jurisdiction to try and decide the claims?
(v) Whether the petitioner is entitled to recover Rs.
2,25,540/- as counter claim?
3. The Arbitrator held that the claims are not barred by limitation. He held that the contract was terminated by the petitioner on 20.05.2015 when the contract was not alive. The termination was bad in law since the action was taken after more than five years of the last extension. Administration was not having clear planning for the execution of work. It could have arranged the P.way material before awarding the work. It was the petitioner, who was solely responsible for the delay but it unfairly terminated the contract, which is invalid and not binding on the respondent. He held that the petitioner is not entitled to any counter claim. He discussed the clauses of GCC 1999 related to 'excepted matters' and held that the claims raised by the respondent do not fall in the category of 'excepted matters'. He observed that though, the final measurement was recorded in the measurement book on 25.10.2020 but it was not OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.4 of 27 processed for payment. The respondent many a times had requested the petitioner to process the final addendum / corrigendum so that final payment could be made but neither the final addendum / corrigendum was sent for approval nor the final payment was made. He awarded Rs. 9,25,807/- towards claim no. 1 i.e. for non payment of final bill submitted to the petitioner in respect of the work done. He held that it was nothing but the highhandedness of the petitioner. It not only caused harassment to the respondent but also caused loss to the respondent by committing breach of contract. In respect of claim no. 2 i.e. claim towards earnest money deposit / security deposit, he awarded Rs. 98,454/- i.e. the money deposited by the respondent towards the earnest money and the amount deducted from the running account bills during the execution of work. He held that since the termination was illegal, petitioner is not entitled to forfeiture of earnest money / security deposit.
4. In respect of claim no. 3 i.e. extra expenditure incurred on maintaining staff, machinery due to prolongation of work, he awarded Rs. 5,80,000/-. He referred clause 36 (2), 36 (3) and 51
(a) of GCC 1999 and the case of Metro Electric Co. Vs. DDA, AIR 1980 DEL 266 and held that it was the petitioner who had extended the time for completion without penalty since the delay was solely attributable to it. He held that while extending the time, it never imposed the condition that the respondent would not be entitled for the losses, which it could suffer on OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.5 of 27 account of abandonment / suspension of work. It deserves to be compensated for the salaries / wages paid by it to the employees during the intermittent suspension period. He therefore awarded Rs. 1,60,000/- towards the wages and Rs. 4,20,000/- towards the machinery, total amounting to Rs. 5,80,000/-.
5. In respect of claim no. 4 i.e. loss of profit, he awarded NIL amount holding that the claim is not maintainable. For claim no. 5 i.e. claim towards litigation charges, he awarded Rs. 1,00,000/- as arbitration cost holding that the claim is genuine. As to the interest against claim no. 6, he awarded the interest @ 8% on claim no. 1 i.e. on Rs. 9,25,807/- w.e.f. 26.10.2010 to 27.09.2019. He considered Section 31 (7) of the Act and the judgments in the case of UOI Vs. M/s Ambica Construction, 2016 (3) RAJ 1 SC, Executive Engineer Dhenkenal Minor irrigation Division Vs. N. C. Budhraj, AIR 2001 SC 626, UOI Vs. Crafters Engineering & Leasing Pvt Ltd , VI (2011) SLT 101 and Sh. Kamachi Aman Construction Vs. Divisional Railway Manager, VI (2010) SLT 131 and held that the above rulings do not have bearing on the facts of the case. Under Section 31 (7) of Act, reasonable rate of interest is permissible from the date of cause of action till the date of award. Future interest @ 2% higher than the current rate of interest prevalent on the date of award is permissible. Clause 16 (1) GCC 1999 relates to earnest money and security deposit, so this clause is not applicable. Regarding applicability of clause OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.6 of 27 64 (3) & 64 (5) of GCC 1999, he held that in the case of Raveechee & Co. Vs. UOI, AIR 2018 SC 3109 and UOI Vs. M/s Pradeep Vinod Construction Co., MANU/SCOR/30509/2017, above rulings were considered and it was held that a claimant becomes entitled to interest not as compensation for any damages done, but for being kept out of money due to him. In a case of unascertained damages, question of interest would arise. Such damages would attract interest pendente lite for the period from the commencement of the arbitration till the date of award. Thus, the liability towards interest pendente lite does not arise from any terms of the contract but in the course of determination of losses / damages due to the claimant by the Arbitrator. It was held that such a power must be considered inherent in an Arbitrator, who also exercises the power to do equity unless the agreement expressly bars an Arbitrator from awarding the interest pendente lite. The arbitrator held that this Tribunal is competent to award a reasonable pendente lite interest as well as future interest.
6. As to the counter claim raised by the Railway i.e. 10% penalty for the non execution of work, he observed that the last extension got expired on 28.02.2010 but the work was terminated on 20.05.2015 i.e. after more than five years. He held that the unilateral termination of contract by the petitioner is arbitrary and unreasonable. He awarded the NIL amount.
OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.7 of 27 Grounds:
7. The petitioner challenged the award on the following grounds:
A. That the impugned award is in complete contradiction and non adherence of clause 24, 61 (2) and 63 of GCC 1999. It is illegal and is liable to be set aside being opposed to the public policy. It is stated that the work was awarded subject to the applicability of Special Tender Conditions and GCC 1999, which is a statutory document and binding on the parties. It was the respondent, who was responsible for the delay as it could not achieve the required progress within the stipulated / extended time. Upon failure to resume work on seven days notice, 48 hours notice under clause 62 of GCC was served on the respondent calling upon to make good the progress, failing which, work would be carried out independently and the security deposit would be forfeited but the respondent instead sent a request for the appointment of the Arbitrator. The contract was then terminated untimely vide letter dated 25.05.2015 since, the respondent did not turn up to start the work.
B. That the Arbitrator passed the award without applying his mind. He did not consider the issue of limitation and 'excepted matters' in correct perspective. He failed to give reason how the claim was sustainable. Initially, an amount of Rs. 6,10,000/- was claimed, which the respondent enhanced to Rs. 14,15,000/- without seeking permission from the Arbitrator, which he again enhanced to Rs. 27,06,708/- without any permission and / or condonation of limitation period. It is stated that under Section 43 & 21 of the Act, limitation will start from the date, the reference is received by the petitioner, which in this case was 17.03.2015. As per law, the claim was required to be filed within three years but in this case, the claims were filed after a gap of three years, one month & seven days, which were clearly barred by time. As per Section 43 of the Act, Limitation Act is applicable to the arbitration proceedings. As per Section 9 of Limitation Act, once the time has begun to run, no subsequent inability to substitute a suit or make an application stops it. It is stated that the cause of action first accrued on 17.03.2015. As per Article 137 of Limitation Act, the claim was supposed to be filed within three years, but in this case, the initial claim was revised on 14.05.2018 i.e. after three years & one month, which was again revised on 15.11.2018 i.e. after three years OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.8 of 27 & seven months. It is stated that as per Section 3 of the Limitation Act, every suit instituted, appeal preferred and application made after the prescribed period shall be dismissed. Reference is made of the case Minerals & Metals Trading Corporation of India Vs. Ocean Knight Maritime Company Ltd & Ors, (2012) 5 SCC 420, foreshore Co- operative Housing Society Limited Vs. Praveen D Desai, 2015 Law Suiit (SC) 323, Steel Authority of India Limited Vs. J. C. Buddhraja, Govt. 7 Mining Contractor, (1999) 8 SCC 122, Satender Kumar Vs. MCD & Anr, 168 (2010) DLT 15, Sukhbiri Devi & Ors Vs. UOI, 162 (2009) DLT 720, Khatri Hotels Vs. UOI, 182 (2011) DLT 597 SC, L.C. Hanumanthappa (since deceased) Vs. H. B. Shivakumar, 2015 Law Suit (SC) 791 to contend that limitation will begin to run from the date when the right to sue first accrued. In this case, right to sue first accrued on 17.03.2015, when the respondent invoked the arbitration clause but it slept over. Thereafter, the Sole Arbitrator was appointed, before whom, respondent submitted its supplemented claims only on 14.05.2018 & 15.11.2018. It is stated that the time barred claims cannot be adjudicated.
C. That the Arbitrator ignored clause 16 (3) and 64 (5) of GCC 1999 and allowed the interest without considering the dictum of the Supreme Court in the case of Chittaranjan Maiety Vs. UOI, 2017 (6) RAJ. 1 (SC) rendering the impugned award patently illegal and against the public policy.
D. That the impugned award is non speaking and in conflict with the substantive provisions of law. It is stated that the issue of 'excepted matter' could be decided by the Railway only and the Arbitrator had no jurisdiction to decide the issue, which was also held in the case of GMNR Vs. Sarvesh Chopra, (2002) 4 SCC 45 and Harsha Construction Vs. UOI, AIR 2015 SC 270 but the Arbitrator exceeded his jurisdiction and decided the claims falling in the category of 'excepted matters'. He passed the award which is beyond the terms of the contract and reference made to him, though, he being the creature of the contract, was bound to act within the terms of the contract. He without going into the merits and details allowed the claims by a non speaking order, which is not justifiable in law as held in the case of BHEL Vs. TATA Projects Ltd, (2015) 5 SCC 682 and Bharat Coking Coal Ltd Vs. Annpurna Construction, AIR 2003 SC 3660.
OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.9 of 27 E. That the Arbitrator did not deal the issues in detail with reference to the pleadings and passed the award, which is patently illegal. He failed to give any finding with regard to the objection raised by the petitioner in reference to Section 23 of the Act.
8. Notice of the petition was given to the respondent and the arbitral record was summoned.
Arguments & contentions:
9. I have heard the arguments advanced by Sh. Om Prakash, Ld. Counsel for the petitioner and Sh. S. W. Haider, Ld. Counsel for the respondent.
10. Ld. Counsel for the respondent vehemently argued that the petition is barred by limitation. As per Section 34 (3) of the Arbitration & Conciliation Act and its proviso, the objections could have been filed within three months, which time could be extended further by 30 days provided sufficient cause is shown by the petitioner but not thereafter. Ld. Counsel stated that the impunged award was passed on 27.09.2019. This petition under Section 34 of the Act has been filed on 09.11.2020 i.e. after 409 days. Administrative grounds leading to delay in filing the petition are not the sufficient cause within the meaning of this Act. Ld. Counsel referred the letter written by the Arbitrator to Sr. DEN IV/DRM Office/ND dated 27.09.2019, whereby, he had informed the petitioner that he has made the award in the OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.10 of 27 aforesaid case and signed it on 27.09.2019. He also requested the parties to pay the fee of the Arbitrator and other charges . Ld. Counsel stated that the said letter bears the seal of Northern Railways Headquarters and the date 27.09.2019. Ld. Counsel stated that along with the letter the arbitrator had also sent the copy of the award. He had also sent the copy of the letter to the Secy.to AGM/N.Rly, CPO, N.Rly and Dy. CE/G/N.Rly.
11. Ld. Counsel referred page 23 of the petition and contended that this petition was drafted in July 2020 but it was filed on 09.11.2020. He also referred page 261 of the petition i.e. vakalatnama in favour of the counsel for the petitioner, which bears the date of 05.05.2020. Ld. Counsel stated that the letter dated 07.08.2020 at page 25 of the petition addressed to Sr. DEN IV/DRM Office/ New Delhi by the Assistant Executive Engineer (G) for General Manager (Engg.) has been manipulated / created by the petitioner to avail the limitation. Ld. Counsel placed on record a letter dated 03.10.2019 written by the Dy. Chief Engineer/Genl. for General Manager (Engg.) addressed to Sr. DEN-IV, Northern Railway, DRM Office wherein he had enclosed the copy of the award given by the arbitrator which was received in his office on 27.09.2019. He had also asked him to furnish clear cut objection/no objection against the award vetted by CLA/ Sr. DFM and approval of DRM/DLI for further action. Ld. Counsel contended that Section 31 (5) of the Act directs that a copy of the award is to OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.11 of 27 be delivered to each party and receipt of signed copy of the award is the requirement of the Act. The seal and the date bearing on the letter dated 27.09.2019 show that the award was delivered in the office of Sr. DEN IV/DRM Office/New Delhi on 27.09.2019 itself. The copy of award was also received in the office of Dy. Chief Engineer on 27.09.2019. Ld. Counsel stated that the copy of the letter was addressed to the Secy, AGEM, CPO and Dy. CE/G, which also bears the date of acknowledgment as 27.09.2019. Ld. Counsel stated that the limitation would start from the day the copy of the award is delivered to the party, which in this case is 27.09.2019. So the objections, if any under Section 34 of the Act against the impugned award could have been filed within three months and in exceptional circumstances supported with reasons, three months & thirty days but in this case, the petition was filed on 09.11.2020 which is hopelessly barred by limitation and is liable to be dismissed.
12. Ld. Counsel for the petitioner per contra argued that the impugned award was received in the Headquarters, Northern Railways on 27.09.2019. Railway is a big organization having numbers of departments and offices. The award did not go to the concerned office directly but through the Asstt. Executive Engineer (for GM / Engg.), which was received in the office of Sr. DEN IV, Northern Railways on 07.08.2020. Ld. Counsel referred the judgment in the case of Union Of India vs Tecco OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.12 of 27 Trichy Engineers & Ors, CA No. 1784/2005, decided on 16.03.2015 to contend that the limitation would start from the day, when the award was received in the concerned office not in the Headquarters. Ld. Counsel stated that since the award was received in the office of Sr. DEN IV/ Northern Railways on 07.08.2020, the limitation would start from 07.08.2020. Therefore, the petition filed by petitioner is within limitation.
13. I have my thoughtful consideration to the rival contentions and perused the proceedings and the award.
14. The statutory period for filing an application / petition for setting-aside the award is provided in sub Section (3) of Section 34 of the Act, which reads as under:
(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."
15. Reading of Section 34 (3) of the Act, leaves no manner of doubt that the period of limitation is three months. If the objections are filed beyond three months, then the delay in filing can be condoned upto a maximum period of 30 days and no more. Condonation of delay in the extended period of 30 days, is at the discretion of the court, provided the party OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.13 of 27 satisfies the court that there was 'sufficient cause' for the delay. Delay in initial filing, beyond 30 days cannot be condoned, even for one day.
16. The Supreme Court in the case of Union of India Vs. Popular Construction Co., 2001 (7) SCC 354 held that Section 5 of the Limitation Act is not applicable to Section 34 (3) of the Arbitration & Conciliation Act, 1996 in view of the express inclusion within the meaning of Section 29 (2) of the Limitation Act, 1963. It was held that the court cannot condone delay beyond a period of 30 days and that also only if sufficient cause is shown as to how the applicant/petitioner was prevented from making application within the period of three months and not thereafter. It was held that the history and the scheme of 1996 Act support the conclusion that the time-limit prescribed under Section 34 to challenge the award is absolute and unextendable by the court under Section 5 of the Limitation Act. This objective has found expression in Section 5 of the Act, which prescribes the extent of judicial intervention in no uncertain terms. It provides that in the matters governed by this part, no judicial authority shall intervene except where so provided in this part.
17. It was held in the case of Oil and Natural Gas Corporation Ltd Vs. Joint Ventures of Sai Rama Engineering Enterprises, 2019 SCC Online Del 10456 that a reading of OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.14 of 27 these judgments is a pointer to the fact that while in condonation of delay, the courts have been generally liberal but when it comes to Section 34 (3) of the Act, the limitation period is inelastic and meant to be strictly followed.
18. In the instant case, impugned award was passed on 27.09.2019. Letter of the Arbitrator bearing no. 65-W/5/1089- WA/Arb reveals that it was received on the same day in the office of Sr. DEN IV/ DRM /New Delhi. The copy of the letter was also sent to the Secy, AGM, CPO and Dy. CE/G, Northern Railways, Baroda House, New Delhi. The office of Sr. DEN IV is also situated at Baroda House, New Delhi. Letter of Dy. Chief Engineer (General) for GM (Engg.) dated 03.10.2019 shows that he had also sent the copy of the award given by the arbitrator received in his office on 27.09.2019 for filing objections if any to the Sr. DEN-IV, Northern Railway, DRM Office and it was received in his office on 04.10.2019. In the case of Delhi Urban Shelter Improvement Board v/s Lakhvinder Singh, FAO (OS) (Comm) 149/2017 decided on 10.08.2017 it was held that copy of the award sent to the arbitrator suffices the requirement of Section 31 (5) of the Act. The contention that the Sr. DEN IV/DRM did not receive the award on 27.09.2019 or on 03.10.2019 and had only received on 07.08.2020 from the office of Asst. Executive Engineer (for GM /Engg) cannot be sustained. It is not the case that Sr. DEN IV was not aware of the award as in the instant case, he was OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.15 of 27 duly represented by the Advocate during the proceedings before the Arbitrator. For the sake of arguments, if it is assumed that he did not receive the award then how he signed the vakalatnama in favour of Sh. Om Prakash, Railway Advocate on 05.05.2020 as seen from the vakalatnama at page 261 of the petition. Further, page 23 of the petition shows that this petition was drafted in July 2020. Question arises, when the award was not received in the office of Sr. DEN IV, Northern Railways in July 2020, how the petition was drafted in July 2020. It shows that the petitioner was very well aware of the award but to avail the benefit of limitation, it manipulated the letter dated 07.08.2020 addressed by the Asst. Executive Engineer (for GM/ Engg) in its favour.
19. The case of UOI Vs. Tecco Trichi supra referred by the counsel is distinguishable on facts and does not benefit the petitioner. In the case (supra), the question was which is the effective date on which the appellant was delivered with and received the arbitral award as that would be the date where from the limitation within the meaning of sub- Section (3) of Section 34 of the Act shall be calculated. It was held:
" Form and contents of arbitral award are provided by Section 31 of the Act. The arbitral award drawn up in the manner prescribed by Section 31 of the Act has to be signed and dated. According to sub-Section (5), "after the arbitral award is made, a signed copy shall be delivered to each party". The term "party" is defined by clause (h) of Section 2 of the Act as meaning 'a party to an arbitration agreement'.
OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.16 of 27 The definition is to be read as given unless the context otherwise requires. Under sub-Section (3) of Section 34 the limitation of 3 months commences from the date on which "the party making that application" had received the arbitral award. We have to see what is the meaning to be assigned to the term "party" and "party making the application" for setting aside the award in the context of the State or a department of the Government, more so a large organization like the Railways.
It is well-known that the Ministry of Railways has very large area of operation covering several Divisions, having different Divisional Heads and various departments within the Division, having their own Departmental Heads. The General Manager of Railways is at the very apex of the Division with a responsibility of taking strategic decisions, laying down policies of the Organisation, giving administrative instructions and issuing guidelines in the organisation. He is from elite managerial cadre which runs entire Organisation of his Division with different Departments, having different Departmental Heads. The day to day management and operations of different departments rests with different Departmental Heads. Departmental Head is directly connected and concerned with the departmental functioning and is alone expected to know the progress of the matter pending before the arbitral Tribunal concerning his department. He is the person who knows exactly where the shoe pinches, whether the arbitral award is adverse to Department's interest. Departmental Head would naturally be in a position to know whether the Arbitrator has committed a mistake in understanding Departmental's line of submissions and the grounds available to challenge the award. He is aware of the factual aspect of the case and also the factual and legal aspects of the questions involved in the arbitration proceedings. It is also a known fact and Court can take judicial notice of it that there are several arbitration proceedings pending consideration concerning affairs of the Railways before arbitration. The General Manager, with executive work load of entire Division cannot be expected to know all the niceties of the case pending before the arbitral tribunal or for that matter the arbitral award itself and to take a OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.17 of 27 decision as to whether the arbitral award deserves challenge, without proper assistance of the Departmental Head. General Manager, being the head of the Division, at best is only expected to take final decision whether the arbitral award is to be challenged or not on the basis of the advise and the material placed before him by the person concerned with arbitration proceedings. Taking a final decision would be possible only if the subject matter of challenge namely, the arbitral award is known to the Departmental Head, who is directly concerned with the subject matter as well as arbitral proceedings. In the large organizations like Railways, "party" as referred to in Section 2(h) read with Section 34(3) of the Act has 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. The delivery of an arbitral award under sub-Section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of arbitral award to the party, to be effective, has to be "received" by the party. This delivery by the arbitral tribunal and receipt by the party of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award within 30 days under Section 33(1), an application for making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings.
In the context of a huge organization like Railways, the copy of the award has to be received by the person who has knowledge of the proceedings and who would be the best person to understand and appreciate the arbitral award and OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.18 of 27 also to take a decision in the matter of moving an application under sub- Section (1) or (5) of Section 33 or under sub-Section (1) of Section 34.
In the present case, the Chief Engineer had signed the agreement on behalf of Union of India entered into with the respondent. In the arbitral proceedings the Chief Engineer represented the Union of India and the notices, during the proceedings of the Arbitration, were served on the Chief Engineer. Even the arbitral award clearly mentions that the Union of India is represented by Deputy Chief Engineer/Gauge Conversion, Chennai. The Chief Engineer is directly concerned with the Arbitration, as the subject matter of Arbitration relates to the department of the Chief Engineer and he has direct knowledge of the arbitral proceedings and the question involved before the arbitrator. The General Manager of the Railways has only referred the matter for arbitration as required under the contract. He cannot be said to be aware of the question involved in the arbitration nor the factual aspect in detail, on the basis of which the arbitral tribunal had decided the issue before it unless they are all brought to his notice by the officer dealing with that arbitration and who is in-charge of those proceedings. Therefore, in our opinion, service of arbitral award on the General Manager by way of receipt in his inwards office cannot be taken to be sufficient notice so as to activate the Department to take appropriate steps in respect of and in regard to the award passed by the arbitrators to constitute starting point of limitation for the purposes of Section 34(3) of the Act. The service of notice on the Chief Engineer on 19.3.2001 would be the starting point of limitation to challenge the award in the Court.
We cannot be oblivious of the fact of impersonal approach in the Government departments and organizations like Railways. In the very nature of the working of Government departments a decision is not taken unless the papers have reached the person concerned and then an approval, if required, of the competent authority or official above has been obtained. All this could not have taken place unless the Chief Engineer had received the copy of OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.19 of 27 the award when only the delivery of the award within the meaning of sub-Section (5) of Section 31 shall be deemed to have taken place.
20. In the present case, the award was directly received in the office of the concerned person i.e. Sr. DEN IV/DRM Office/New Delhi on the same day of the award i.e. on 27.09.2019. He had also received the copy of award from the office of Dy. Chief Engineer (Genl.) for GM (Engg.) on 04.10.2019 as evident from the letter of DYCE dated 03.10.2019. He had signed the vakalatnama in favour of the Advocate Sh. Om Prakash on 05.05.2020. The petition was drafted in July 2020 itself. It is not the case that the petition was drafted without any instructions from the office of Sr. DEN IV/ DRM Office / New Delhi or his office had not consulted the senior officers before taking a decision to file the objection under Section 34 of the Act. The conduct of the petitioner shows that the office sat over the matter and did not take any prompt action. It woke up when the limitation period to file the petition had already expired. It then manipulated / created a letter dated 27.08.2020 allegedly written by the Asstt. Executive Engineer (for GM/Engg.), sending an original copy of award to the office of Sr. DEN IV. It is not understood how and when this original copy came in the office of Asst. Executive Engineer. For the sake of arguments, even if, it is assumed that the copy was received in the office of Asstt. Executive Engineer, then why he kept the copy of the award OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.20 of 27 with him and did not send it to the office Sr. DEN/IV and at whose instructions, he sent the award on 07.08.2020.
21. In the case of Tecco Trichi supra, the arbitral award was served on the General Manager by way of receipt in his inwards office. The agreement was signed by the Chief Engineer on behalf of Union of India with the respondent. In the arbitral proceedings, Chief Engineer had represented Union of India. All the notices of the proceedings were served on the Chief Engineer. The arbitral award clearly mentioned that Union of India is represented by Dy. Chief Engineer. Chief Engineer was directly concerned with the arbitration and had direct knowledge of the proceedings and the questions involved before the Arbitrator. General Manager had only referred the matter for arbitration as required under the contract. He was not aware of the questions involved in the arbitration nor the factual aspect in detail on the basis of which the Arbitral Tribunal had decided the issue before it.
In the instant case, service of arbitral award was effected on Sr. DEN/IV. He was the person who was participating in the proceedings and was directly concerned with the arbitration having knowledge of the arbitral proceedings. He was aware of the question involved in the arbitration and the factual aspect. He was the person to understand and appreciate the arbitral award and also to take a decision in the matter of moving an application under Section 34 of the Act. So, service of notice / OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.21 of 27 award on Sr. DEN IV on 27.09.2019 or on 03.10.2019 would be the starting point of limitation to challenge the award in the Court as the party in the instant case as per Section 2 (h) of the Act is the Sr. DEN IV. The petition under Section 34 of the Act has been filed on 09.11.2020 so by virtue of Clause 34 (3) of the Act, the petition is barred by limitation.
22. It was also contended on behalf of the petitioner that the petitioner is a government body and holding public money in its kitty and is responsible and accountable for each and every penny and the court must safeguard the interest of such body, even though, their officials failed to do so.
I find this contention sans merit.
23. In the case of Postmaster General & Ors vs. Living Media India Limited & Anr, (2012) 2 SCC 563, reference was made of the case Pundlik Jalam Patil Vs. Jalgaon Medium Project, (2008) 17 SCC 448, wherein, it was observed:
30. Public interest undoubtedly is a paramount consideration in exercising the Court's discretion wherever conferred upon it by the relevant statutes. Pursuing stale claims and multiplicity of proceedings in no manner subserves public interest. Prompt and timely payment of compensation to the landlosers facilitating their rehabilitation / resettlement is equally and integral part of public policy. Public interest demands that the State or the beneficiary of acquisition, as the case may be, should not be allowed to indulge in any act to unsettle the settled legal rights accrued in law by resorting to avoidable litigation unless the claimants are guilty of deriving benefit to which they are otherwise not entitled, in any fraudulent manner. One should not forget the basic fact OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.22 of 27 that what is acquired is not the land but the livelihood of the landlosers. These public interest parameters ought to be kept in mind by the courts while exercising the discretion dealing with the application filed under Section 5 of the Limitation Act. Dragging the landlosers to courts of law years after the termination of legal proceedings would not serve any public interest. Settled rights cannot be lightly interfered with by condoning inordinate delay without there being any proper explanation of such delay on the ground of involvement of public revenue. It serves no public interest."
24. It was held in the case of Postmaster General (supra)
28...... The Department cannot take advantage of various earlier decisions. The claim on account of impersonal machinery and inherited bureaucratic methodology of making several notes cannot be accepted in view of the modern technologies being used and available. The law of limitation undoubtedly binds everybody, including the Government.
29...... In our view, it is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red tape in the process. The government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for the government departments. The law shelters everyone under the same light and should not be swirled for the benefit of a few.
25. In the case of Simplex Infrastructure Limited v/s Union of India (2019) 2 SCC 455, the application / petition under Section 34 of the Act was filed with an application for condonation of delay of 514 days. In that case, the arbitrator had made an award on 27.10.2014. The respondent had received the copy on 31.10.2014. The respondent had filed the OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.23 of 27 application under Section 34 on 30.01.2015 before the District Judge. On 12.02.2016, the District Judge had dismissed the petition for want of jurisdiction. On 28.03.2016, the respondent filed the petition before the High Court of Calcutta along with an application for condonation of delay of 514 days on the ground that there was a bonafide mistake in filing the petition before the wrong forum. On 27.04.2016, the High Court allowed the application and condoned the delay of 514 days. Matter went to the Supreme Court. The Supreme Court referred Section 34 of the Act and Section 5, 14 of the Limitation Act and the case of Union of India Vs. Popular Construction Co, 7 (2001) 8 SCC 470, Consolidated Engineer Enterprises VS. Principal Secretary, Irrigation Department, Union of India Vs. Trichy Engineers & Contractors, 2009 (5005) 4 SCC 239 and held that Section 14 of the Limitation Act deals with the exclusion of time of proceeding bonafide in a court without jurisdiction subject to satisfaction of certain conditions. The question whether Section 14 of the Limitation Act would be applicable to an application submitted under Section 34 of the Act has been answered in Consolidated Engineering Enterprises (supra) where it was held that from the scheme and language of Section 34 of the Act, the intention of the legislature to exclude the applicability of Section 14 of the Limitation Act is not manifest. It is well to remember that Section 14 of the Limitation Act does not provide for a fresh period of limitation but only provides for the exclusion of a OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.24 of 27 certain period. It is an admitted position that on 27.10.2014, the Arbitrator made an award in favour of the appellant and on 31.10.2014, Union of India received a copy of the award. One of the reasons stated by the respondent for delay in filing an application under Order 34 of the 1996 Act was that the departmental office was located at Port Blair, Andaman and it was a time consuming process for obtaining permission from the circle office at Chennai. It was held that the administrative difficulties would not be a valid reason to condone a delay above and beyond the statutory prescribed period under Section 34 of the 1996 Act. It was held that in view of the period of limitation prescribed in Section 34(3), the learned Single Judge of the High Court was not justified in condoning the respondent's delay of 514 days in filing the application.
26. It was held that the use of the words 'but not thereafter' in the proviso makes it clear that the extension cannot be beyond 30 days. Even if the benefit of Section 14 of the Limitation Act is given to the respondent, there will still be a delay of 131 days in filing the application, i.e. beyond the strict timelines prescribed in sub section (3) read along with the proviso to Section 34 of the 1996 Act. The delay of 131 days cannot be condoned. To do so, as the High Court did, is to breach a clear statutory mandate. It was held that after the order of dismissal of the application by the District Judge, the respondent took almost 44 days (excluding the date of dismissal of the application by OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.25 of 27 the District Judge and the date of filing of application before the High Court) in filing the application before the High Court. Hence, even if the respondent is given the benefit of the provision of Section 14 of the Limitation Act in respect of the period spent in pursuing the proceedings before the District Judge, Port Blair, the petition under Section 34 was filed much beyond the outer period of ninety days. In the case of National Highway Authority of India (supra), the petitioner was notified by the Registry to file it in the correct category which was under
Section 34 of the Act, the petition having been filed on November 06, 2019 was beyond the period of limitation. The High Court relied on the judgment in the case of Union of India v/s Popular Construction Company (supra) and held that the petition being hit by limitation is not maintainable.
27. Having examined the entire gamut of facts in the present case, I am of the opinion that there is delay in filing the petition, which is beyond a period of 120 days as prescribed under Section 34 (3) and proviso to the said section of the Act. This court has no power to condone the delay beyond the period of 120 days as held by the Apex Court in the case of Union of India Vs. Popular Construction Co. (supra) and Simplex Infrastructure Limited (supra).
28. The present petition being hit by limitation is not maintainable and the same is dismissed without going into the OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.26 of 27 merits on the challenge to the impugned award dated 27.09.2019. No order as to costs.
29. File be consigned to record room.
Announced in open court today i.e. 30th July 2021 (Sanjiv Jain) District Judge (Commercial) - 03 Patiala House Courts, New Delhi OMP Comm No. 93/20 UOI Vs. M/s Bansal Construction Co. Page No.27 of 27