Himachal Pradesh High Court
Union Of India (Uoi) vs Punjab Communications Ltd. And Ors. on 1 November, 2002
Equivalent citations: 2003(2)ARBLR604(HP)
Author: M.R. Verma
Bench: M.R. Verma
JUDGMENT M.R. Verma, J.
1. By this application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter referred to as 'the Act') the applicant has prayed for setting aside the award dated 30.11.1999 made by respondent No. 2 (hereafter referred to as 'the Arbitrator').
2. Brief facts leading to the presentation of this application are that C.G.M.T. H.P. on 24.04.1996 entered into an agreement with respondent No. 1 (hereafter referred to as 'the respondent') for the maintenance of various types and makes of radio transmission systems in H.P. Circle. The agreement was to be effective from 10.05.1996 for a period of two years. The other conditions governing the contract between the parties were provided in the agreement including the arbitration clause providing for referring any question, dispute or difference arising between the parties under or in connection with the agreement to sole arbitration of the Arbitrator. The dispute arose between the parties and was referred to the Arbitrator who made his award dated 30.11.1999.
3. Aggrieved by the said award, the applicant has preferred the present application for setting aside the award on the grounds :
(1) that the award is based on some agreement for maintenance in U.P. Circle and not for H.P. Circle indicating non-application of mind by the Arbitrator ;
(2) that the award is beyond the scope of agreement and regarding disputes not falling with the terms of the submissions to the Arbitrator ;
(3) that the Arbitrator has fixed 60 days time for implementation of the award which he has no power to do;
(4) that Schedules (2) and (3) attached to the agreement having not been signed by the parties could not form part of the agreement ; and (5) that the award is mala fide and full of errors on the face of it.
4. The respondent resisted the application and in its reply raised the preliminary objection that this Court has no jurisdiction to entertain the present objection petition, that the objection petition is beyond the scope of Section 34 of the Act, that the petition is hopelessly time barred and that the respondent has not been sued through its Managing Director, therefore, the objection petition deserves to be dismissed. On merits, the grounds of objection against the award has been denied and the award in question has been supported as a whole.
5. Petitioner filed rejoinder wherein the grounds of defence, as taken in the reply, were denied and it was further averred that the Arbitrator has miserably failed to give reasons for passing the award in question and the same is against the public policy of India.
6. On the pleadings and with the consent of the parties, following issues were framed :
(1) Whether the award in question is beyond the scope of agreement and submissions, as alleged ? OPO (2) Whether the award in question is not a reasoned award ? OPO (3) Whether the award in question is against the public policy of India ? OPO (4) Whether the objection petition is within the period of limitation ? OPO (5) Whether this Court has no jurisdiction to entertain the objections ? OPR (6) Whether the objections are liable to be dismissed for want of arraying the respondent No. 1 as party through its Managing Director ? OPR (7) Relief.
7. Parties led evidence by way of affidavits.
8. Arguments were heard.
9. My issuewise findings are as follows :
ISSUE NO. 110. It was contended by the learned counsel for the objector that on the face of it the award is based on an alleged agreement for maintenance of various types and makes of radio transmission systems in U.P. Circle whereas the objector has never entered into such an agreement with the respondent for any work in U.P. Circle.
11. It appears that "U.P. Circle" as used in Para 2 of the award, is a clerical error and "U.P." appears to have been typed instead of "H.P." The agreement, basis of the dispute between the parties, copy whereof is available on Volume I of the file of the Arbitrator makes it clear that the contract in which dispute arose and was referred to the Arbitrator, was concerning the work in H.P. Circle and the parties were aware of it. Thus, the objection raised on the basis of such typographical error is not tenable.
12. It may be pointed out that vide Para 7 of the award the Arbitrator himself had noticed that it was clear from the various provisions of the agreement that the parties failed to take note of the glaring discrepancies and inadequacies in the provisions of the agreement while signing the same and also to a large extent during the contract period. Be it stated that if there are such discrepancies and inadequacies in the agreement the omission cannot be supplied by the Arbitrator who is a creature of an agreement between the parties and whose jurisdiction is governed by the terms of the contract.
13. In sub paras (ii) and (iii) of Para 7 of the award, the Arbitrator held as under :
"(ii) PUNCOM have carried out various types of activities on the antennae and feeder cable systems during the contract period. Only the activity of antenna reorientation and nut bolt tightening among them can be categorised within the scope of agreement as a maintenance activity as different from repair and replacement, the latter having been excluded from the scape of contract through Clause No. 113. Hence, CGMT HP should pay to PUNCOM @ 8% p.a. of the cost (invoice value) of all antennae of the links for the period the each radio link was 'SUM'.
(iii) As far as other activities of the repair/maintenance specifically excluded from the scope of contract but actually carried out by M/s. PUNCOM are concerned, the same should not go "unpaid" to meet the ends of natural justice. The agreement takes care of this defining "NEW JOB" in Clause 7 and further strengthening it in Clause 11.4. Hence the following activities which can not be included in the MCV as claimed by PUNCOM.
repair of feeder cable/connector wave guide ;
removal of moisture from cable/connector/wave guide ;
removal of faults at channel level. This will include built up as well as terminated channels.
CGMT HP should pay to PUNCOM for the work carried to remove fault on the actual number of feeder cable/including connector/ wave guide and channels based on prevailing rate or mutual consent as provided in Clause 1.7 of the agreement."
14. In view of the above, the Arbitrator himself has concluded that only the activity of antenna reorientation and nut bolt tightening among them can be categorised within the scope of the agreement as a maintenance activity as different from repair and replacement, the latter having been excluded from the scope of the contract. Still he goes on to observe that as far as other activities of repair/maintenance specifically excluded from the scope of the contract but actually carried out by the respondent are concerned, the same should not go unpaid to meet the ends of natural justice. Once a certain part of the activity is found not covered under the contract the Arbitrator could not have extended his jurisdiction to entertain such claim which was not converted by the agreement between the parties on the ground "to meet the ends of natural justice."
15. The above view is fully fortified by the decision of the Hon'ble Supreme Court in New India Civil Erectors (P) Ltd. v. Oil & Natural Gas Corporation, (1997) 11 SCC 75=1997(1) Arb.LR 292 (SC), wherein it was held as under :
"(9) .....It is axiomatic that the Arbitrator being a creature of the agreement, must operate within the corners of the agreement and cannot travel beyond it. More particularly, he cannot award any amount which is ruled out or prohibited by the terms of the agreement. In this case, the agreement between the parties clearly says that in measuring the built up area, the balcony areas should be excluded. The Arbitrators could not have acted contrary to the said stipulation and awarded any amount to the appellant on that account."
16. No doubt, the Arbitrator clarifies that such repair/maintenance, which are excluded from the scope of contract, are taken care of by the definition of "new job". However, in view of Clause 7 read with Clauses 11.3, 11.43 and 115 of the agreement the activities for which the amount has been awarded could not be said to be 'new jobs'. The impugned award under sub para (iii) of Para 7 of the award is thus clearly beyond the scope of agreement between the parties and the jurisdiction of the Arbitrator. To this extent Issue No. 1 is decided in favour of the objector.
ISSUE NO 2
17. It was contended by the learned counsel for the objector that it is evident from the reference made to the Arbitrator that specific amount was claimed by the claimants and the reference was not to give a declaratory award whereas the Arbitrator has not awarded/denied the claims specifically as were made by the respondent. Therefore, it cannot be said to be a reasoned award and deserves to be set aside.
18. It is a fact that the claim of the respondent was for specific amounts under specified heads. The award, however, is silent as to what amount, as claimed by the respondent, has been awarded and which one of such amount has been denied partly or as a whole.
19. To be valid an award inter alia must satisfy two conditions, viz., (i) it must be certain and (ii) it must contain the decision. To be certain the award of the Arbitrator must be clear from the award along with nature and extent of duties it imposes on the parties. It must be clear as to what is required to be done and by whom. To comprise the decision, the award must be a complete decision in itself without leaving matters to be dealt with subsequently and must be clear, unambiguous and final in relation to the issues and claims with which it deals. Evidently the award in hand which docs not specify the amount which according to it is payable by the objector to the respondent and the claim for the amount which has been denied by it is incomplete, ambiguous and incapable of being implemented/enforced. It is more so in view of the admitted situation that vide letter 24.01.2000 the Arbitrator instead of clarifying the omissions in the award asked the parties to sit together to finalise payments and in the event of there being no settlement to "come back" to him.
20. In these circumstances, the award though assigns reasons for its conclusions but is uncertain and does not contain the final decision capable of being enforced, and the reasons therefor. This issue is accordingly decided.
ISSUE NO. 321. It may be pointed out at the very outset that the objection that award is against the public policy of India has been taken for the first time by the objector in the rejoinder and the simple objection is that the award "is against the public policy of India". No ground has been given in the rejoinder on the basis of which the award may be held to be against the public policy of India. It was, however, argued by the learned counsel for the objector that the Arbitrator had directed that the impugned award be implemented within 60 days from the date on which it was made whereas the objector has a right to prefer objections against the award within three months of the making of the award or even within one more extended month if there is sufficient cause for so doing and by virtue of Section 36 of the Act and in view of the provisions of Section 36 of the Act, the award will be enforceable only after the time for making application for setting aside the award under Section 34 of the Act has expired. Thus, the said direction given by the Arbitrator is contrary to the letter and spirit of the provisions of Sections 34 and 36 of the Act and is illegal. It was further contended that whatever is illegal is against the public policy of India.
22. In view of the provisions of Section 34 of the Act, a party aggrieved by the award has a right to make an application for setting aside the award on the grounds as mentioned therein within three months of the date of receipt of the award and the said prescribed period of three months can be extended by the Court by one more month in case sufficient cause for not making the application within three months is shown. In view of the provisions of Section 36 of the Act an award can be enforced after the time for making the application to set aside the arbitral award under Section 34 of the Act has expired or in the event of such an application having been made on refusal thereof. Thus, in view of the provisions of Sections 34 and 36 of the Act, the direction given by the Arbitrator to implement the award within two months of the making of the award is contrary to the provisions of the law and is thus illegal and cannot be sustained and deserves to be set aside. However, this breach of law is not of the nature on the basis of which the award as a whole can be set aside. This issue is accordingly decided.
ISSUE NO. 423. It was contended by the learned counsel for the respondent that the copy of the award had been received by the objector immediately after publishing of the award as is clear from the letter dated 24.01.2000, therefore, the objection petition against the award dated 30.11.1999 having been preferred on 28.04.2000 is hopelessly time barred and deserves to be dismissed.
24. There is no dispute that the award was made on 30.11.1999. What is revealed by the admitted correspondence available on the record of file of the arbitration proceedings (main documents) is that the Arbitrator vide letter dated 30.11.1999 addressed to the parties allegedly sent the award duly signed on all pages consisting of 9 pages with two pages of Annexures 1 and 2 to each of the parties. However, office of the objector vide letter dated 22.12.1999 addressed to the Arbitrator intimated him that under the covering letter dated 30.11.1999 the original/certified copy of the award had not been received by it. In response to this the Arbitrator sent letter dated 03.01.2000 to the objector intimating that he was enclosing the attested copy of the award along with the letter as requested but it is further averred that original copy had already been sent under the covering letter dated 30.11.1999. Immediately thereafter vide letter dated 07.01.2000 office of the Arbitrator informed the parties that in the letter dated 03.01.2000 it was inadvertently mentioned that original copy of the award had been sent to the parties earlier and it was further clarified that the award was faxed to both the parties on 30.11.1999 and photo copies were sent by post. It was also claimed that the time for limitation of the award will be counted from 30.11.1999 when the copies were fixed to the parties. In a detailed letter dated 20.01.2000 the office of the objector informed the Arbitrator that it had not received a signed copy of the award and thus the requirement of law was not complete. It was pursuant to this letter that ink signed copy was sent by the Arbitrator under his covering letter dated 24.01.2000. This signed copy, as per the averments in the application, was received by the objector on 31.01.2000 and such an application is duly supported by the affidavit of Laxmi Narain Sharma, Assistant Manager of the objector. There is no counter to the averment that the signed copy for the first time was received by the objector on 31.01.2000.
25. It is evident from a bare reading of the provisions of Sub-section (3) of Section 34 of the Act that the period provided therein for making the application for setting aside the award will be computed from the date when Arbitrator's award had been received by the party intending to file objections. Sub-section (5) of Section 31 of the Act makes it obligatory on the part of the Arbitrator to deliver a signed copy of the award to each party. The time shall start running against a party for the purpose of Sub-section (3) of Section 34 of the Act from the date of receipt of such copy. In the case in hand, it is evident from the contents of the correspondence already referred to hereinabove that a copy of the award was faxed by the Arbitrator to the parties and a photocopy was sent through post on the date of making of the award. Thus, the Arbitrator had supplied unauthenticated copy of the award to the parties and for the purpose of filing the application the time shall not run from the date of delivery of such copy. Since the signed copy was received by the objector on 31.01.2000, therefore, the limitation will start running from 31.01.2000. Counted from this date the objection petition has been filed within the prescribed period.
26. In view of the above discussion, I hold that the objection petition is within limitation and this issue is accordingly held in favour of the objector.
ISSUE NO. 527. It was contended by the learned counsel for the respondent that in view of Section 2(i)(e) of the Act it is the principle Court of original jurisdiction in the District which could entertain the present objection petition. Thus, according to learned counsel, the objection petition should have been filed before the District Judge who had original jurisdiction in the matter.
28. Be it stated that the District Judges in the State of Himachal Pradesh have original jurisdiction upto the value of Rs. 10,00,000 (Rupees ten lakhs) only and in the civil suits of the value of more than Rs. 10,00,000 (Rupees ten lakhs) such Courts have no pecuniary jurisdiction and such jurisdiction vests only in this Court. Even in view of the expression 'Court' as defined in Section 2(i)(e) of the Act the High Court in exercise of its ordinary civil jurisdiction is "Court" for the purpose of the Act. Thus, keeping in view the pecuniary jurisdiction of different Courts in the State this Court is the only Court having the jurisdiction to entertain the dispute wherein the claim of Rs. 99,91,922 is involved. It is therefore held that the respondent has failed to prove that this Court has jurisdiction to entertain the objection petition. This issue is accordingly held against the respondent.
ISSUE NO. 629. It was contended by the learned counsel for the respondent that the respondent ought to have been made a party through its Managing Director in view of the provisions of Order 29, Rule 1, CPC.
30. Rule 1 of Order 29 of the Code of Civil Procedure deals with the subscription and verification of the pleadings in suits by or against corporations and is not relevant about frame of the cause title of the plaint. It is, thus, not necessary that when a body corporate which is a juristic person is sued, in the cause title apart from its name, the names and description of the person who purports to or who may verify and sign the pleadings on its behalf or who may be its Director, must also be mentioned. It is not the case of the respondent that it is not a juristic person. Therefore, it was not required under the law to sue it through its General Manager but can be sued in its own name. This issue is accordingly decided against the respondent.
ISSUE NO. 7 (RELIEF)
31. In view of the findings given on the aforesaid issue, the impugned award is liable to be set aside and is accordingly set aside.
32. Parties, however, are left to bear their own costs.