Delhi District Court
Hindon CoOperative Group Housing vs M/S Buildwell Construction on 16 January, 2012
1
IN THE COURT OF SHRI MAN MOHAN SHARMA
ADDITIONAL DISTRICT JUDGE12(CENTRAL)
TIS HAZARI COURTS, DELHI.
Civil Suit No.: 485/09
Unique ID no. 02401C1153742005
Hindon Cooperative Group Housing
Society Ltd. having its registered
office at I1743, Chitranjan Park,
New Delhi through its Secretary at
present plot no. 25, Vasundhara Enclave,
Delhi96 .....Petitioner
Versus
1. M/s Buildwell Construction
E1/1, Model TownII, Delhi
through its Proprietor B. R. Goel
(Contractor)
2. Sh. Pramod Adlakha
at present B201, Pritam Pura
Delhi .....Respondents
Date of institution of the suit: 13.12.2005
Reserved for judgment on: 02.01.2012
Date of pronouncement of judgment: 16.01.2012
JUDGMENT
1. The objections under section 34 of the Arbitration & CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 1 of 52 2 Conciliation Act, 1996 (hereinafter 'the Act') have been preferred by the petitioner, Hindon Cooperative Group Housing Society Ltd, for setting aside the award dated 09.08.2005 passed by Sh. Promod Adhlakha, Sole Arbitrator (who is respondent no. 2 in the instant petition).
2. The notice of the petition has been sent to the respondent no. 1 who has contested the petition. Sh. Promod Adhlakha, Sole Arbitrator (who is respondent no. 2 in the instant petition) has transmitted the record of arbitration proceedings to this Court.
3. The impugned award by the Sole Arbitrator has directed the petitioner (who was the respondent in the said arbitration proceedings) to pay a sum of Rs. 6,00,000/ to the respondent no. 1 (who was the claimant in the Arbitration proceedings) with interest @ 12% per annum.
4. I have heard Shri N. M. Popli Ld. Counsel for the petitioner and Shri Vinod Gaur, ld. counsel for the respondent no. 1.
5. The petitioner has assailed the award on various counts.
Arguments of Petitioner
6. Shri N. M. Popli, ld. counsel for the petitioner has argued that CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 2 of 52 3 notwithstanding that the proceedings are exparte, the award should satisfy the requirements of law. At least the Arbitration Tribunal must apply its mind and give reasons for its judgment and the same must be manifest on the face of the record. An arbitration award whether exparte or otherwise could be challenged on the grounds mentioned u/s 34 of the Act, or, if the same is contrary to the terms and condition of Arbitration agreement or contrary to any other provision of the aforesaid Act.
7. Section 16(1) of the Act empowers the Arbitral Tribunal to decide the question of its jurisdiction. Section 16(2) contemplates that point of jurisdiction should be raised not later then statement of defense is filed that is to say it should be raised either in the statement of defense or prior to that by any other means, though, the same can be done at a later stage despite the fact the party has participated in the proceedings of appointment of arbitrator or he has been otherwise appointed. Section 16(2) further contemplates that such party is not precluded from raising such a plea merely because he had CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 3 of 52 4 participated at the initial stage.
8. The Arbitrator, Sh. Promod Adhlakha, fully knew that he is not a qualified Architect but despite such plea is being raised in writing, had not decided the same. This objection was taken by the petitioner through a letter of its Advocate. The aforesaid provision of law puts no embargo that such a plea could not be raised by the party through lawyer.
9. The specific clause in the agreement between petitioner and the respondent no. 1 is as under: "The term "The Architect" in the said condition shall mean M/s, Adlakha & Associate, 35 Rani Jhansi Road, New Delhi 110055 pr in the event of ceasing to be the Architect for the purpose of this contract, such other person firm as the employer shall nominate for that purpose, not being a person to whom the Contractor shall object for reasons considered to be sufficient by an arbitrator appointed jointly mutually. Provided under this contract, no one shall be or decision or approval or instruction given of expressed by the Architect for the time being."
10. It was well within the knowledge of Shri Promod Adhlakha that the accounts of Adhlakha Associates were settled on CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 4 of 52 5 22.11.2001, while admittedly the reference was made on 06.04.2003, when he ceased to be the working for the petitioner. The reference by the respondent is in these words: "That you have not made the payment to my client of Rs.6 lac i.e. Rs. 4.5 lacs deposited by my client as earnest money inspite of service of legal notice dated 20.1.2003.
That now a dispute has arisen between you and my client regarding the aforesaid payment. In view of clauses 45 and other clauses of the agreement dated 20.11.95 the aforesaid dispute of payment is being referred to Architects namely M/s Adalakha And Associates, 36 Rani Jhansi Road, 117 Gurunank Market, Jhandewalan, Delhi 55 for his decision as an arbitrator.
Delhi Dated 7.4.2003 Sd/ (VINOD
GAUR)"
11. The petitioner raised the objections to the appointment of Shri Promod Adhlakha as Arbitrator on 30 July 2003 through lawyer that is prior to 02.08.03 as under: "That firstly there is no arbitration agreement in arbitration clause in the construction agreement empowering you to act as arbitrator. Hence, you are not competent to act as an arbitrator. Secondly, you are not even the registered Architect; you are CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 5 of 52 6 simply an engineer. In your personal capacity, you cannot even act as Architect under the contract. Thirdly, the accounts of Adlakha & Associates have fully and finally been settled and cleared by my clients. As the said firm is no more the Architects of the society. Even the said firm has also thus no locus standi or any more role to play under the contract, Lastly, you are even otherwise incompetent to act as an arbitrator on account of your partiality and bias."
12. The aforesaid facts being within the personal knowledge of Sh.
Promod Adhlakha, being signatory to the settlement deed dated 22.11.2001, it was incumbent upon him to refuse to be an arbitrator in the proceedings. Therefore the arbitrator lacked in jurisdiction to adjudicate upon the case.
13. Reliance is placed upon the law laid down in Konkan Railway Corpn. Ltd. vs. Mehul Construction Co. reported in 2000 (7) SCC 201. The relevant portion reads as under: "Under SS. 13 and 16 of the Act even questions as to qualifications, impartiality and jurisdiction of the arbitrator can be raised before the arbitrator, so no party would be left with a grievance."
"Under the new law the grounds on which an CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 6 of 52 7 award of an arbitrator could be challenged before the court have been severely cut down and such challenge is now permitted on the basis of invalidity of the agreement, want of jurisdiction on the part of the arbitrator or want of proper notice to a party of the appointment of the arbitrator or of arbitral proceedings."
" A bare reading of section 13 and 16 of the Act make it crystal clear that question with regard to the qualifications, independence and impartiality of the arbitrator, and in respect of the jurisdiction of the arbitrator could be raised before the arbitrator who would decide the same. "
14. Reliance is also placed upon SBP & Co. vs. Patel Engineering Ltd. reported in 2005 8 SCC 618 wherein it has been held that: "Per majority In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act."
"Per minority (C.K.Thakkar, J.) The Arbitral Tribunal has power and jurisdiction to rule "on its own jurisdiction" under Section 16(1) of the Act, Section 16(1) incorporates the well known doctrine of kompetenz or competence de ta CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 7 of 52 8 competence. It recognize and enshrines an important principle that initially and primarily it is for the Arbitral Tribunal itself to determine where it has jurisdiction in the matter including ruling on any objections with respect to the existence or validity of the arbitration agreement, subject to final review by a competent court of law i.e. subject to Section 34 or Section 37 of the Act. It is thus a rule of chronological priority."
"Normally, any tribunal or authority conferred with a power to act under a statue, has the jurisdiction to satisfy itself that the conditions for the exercise of that power existed and that the case calls for the exercise of that power."
"In a case where an Arbitral Tribunal has been constituted by the parties without having recourse to Section 11 (6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act."
"Now, let us consider Section 16 of the Act. This section is new and did not find place in the old Act of 1940. Subsection (1) of that section enables the Arbitral Tribunal to rule on its own jurisdiction. "
"............It is for the Arbitral Tribunal itself to determine whether it has jurisdiction in the matter, subject of course, to ultimate court-control "
"So far, so good and I am in respectful agreement with these observations. The matter, however, does not rest there. Over and above subsection (1), CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 8 of 52 9 Section 16 contains other subsections and in particular, subsections (5) and (6). The former requires the Tribunal to continue the proceedings in case it decides that the Tribunal has jurisdiction in the matter and the latter provides remedy to the aggrieved party."
15. Further reliance is placed upon Yashwith Construction (P) Ltd. vs. Simplex Concrete Pipes India Ltd. 2006 Vol.6 SCC 204 wherein it has been held that: "The term rules in Section 15 (2) obviously referred to the provision for appointment contained in the arbitration agreement or any rules of any institution under which the disputes were referred to arbitration 2003 (5 SCC 705) at 708 Section 34 read co jointly with other provisions of the act indicates that the legislative intent could not be that if the award is in contravention of the provision of act, still however, it could not be set aside by the court. Holding otherwise would be contrary to the basic concept of justice. If the arbitral tribunal has not followed the mandatory procedure prescribed under the act, it would me that it has acted beyond its jurisdiction and thereby the award would be patently illegal which could be set aside under section 34."
.......The result is ...if the award is contrary to CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 9 of 52 10 substantive provision of law or provision of the act or against the term of the contract, it would be patently illegal which could be interfered u/s 34."
16. In Kiran Singh vs. Chaman Paswan 1955 SCR 117, it has been held that a decree without jurisdiction is nullity. It has been held as under: "It is a fundamental principle wellestablished that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction whether it is pecuniary or territorial, or whether it is in respect of the subjectmatter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties. "
17. Shri Promod Adhlakha acted as an arbitrator was not competent to do so in view of terms no 45 (general rules) applicable between the parties which reads as under:
"All disputes and differences of any kind whether arising out of or in connection with the contract or the carrying out of the work (whether during the progress of the works or after their completion, and whether before or after the determination settled by CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 10 of 52 11 the Architects who shall state their decision writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architects with respect to all matters shall be final and without appeal as stated in clause no. 37. "
18. As per the aforesaid term only the architect could have aced as an arbitrator. The aforesaid term is being specifically relied upon in the award, the agreement between the applicant and respondent no, 1 reads as under
The term "The Architect' in the said conditions shall mean M/s. Adlakha & Associates, 35 Rani Jhansi Road, New Delhi 110055, or in the event of ceasing to be Architect for the purpose of this contract, such other person / firm as the employer shall nominate for that purpose not being a person to whom the contractor shall object for reasons considered to be sufficient by an Arbitrator appointed jointly and mutually."
19. The moot question is what is the meaning of Adhlakha Associates? Adhlakha Associates is an association of various persons including Engineers, architects and others. Therefore any person from the said association who is qualified Architect could have decided issue raised between the parties. Admittedly Pramod Adhlakha is not an architect within the meaning of the CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 11 of 52 12 Architects Act, 1972. Reliance is placed upon section 2a, 2e, 23 (3), 23 (3b), 24 (7), 25 (1), 35(1) of the Architects Act, 1972. Under this Act "architect" means a person whose name is for the time being entered in the register;"register" means the register of architects maintained under section 23. The register shall include the following particulars namely;his qualification for registration, and the date on which he obtained that qualification and the authority which conferred it. Vide section 24(7) of the Architects Act, 1972 'every person whose name is entered in the register shall be issued a certificate of registration in such form as may be prescribed by rules.' Vide section 25(1) A of the Architects Act, 1972 such person shall be entitled on payment of such fee as may be prescribed by rules to have his name entered in the register, if he resides or carries on the profession of architect in India and (a). holds a recognized qualification; or (b). does not hold such qualification but, being a citizen of India, has been engaged in practice as an architect for a period of not less than five years prior to the date appointed under sub section (2) of section 24. Under section 35 (1) of the Architects Act, 1972 'any reference in any law for CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 12 of 52 13 the time being in force to an architect shall be deemed to be a reference to an architect registered under this Act.'
20. Vires of the Architects Act, 1972 were challenged in the similar circumstances before the Hon'ble High Court of Delhi. The Division Bench upheld the vires in the case of........... Quote (running page 8 volume 2 Para 4 Para 5para 7 Para 11 Para 12).
"The petitioner passed the examination conducted by All India Council of Technical Education and was awarded national certificated in Civil Engineering in 1961. In 1967, he got the national diploma inCivil Engineering from the same institute. This diploma is held to be equivalent to Bachelor in engineering examination. He got this diploma when he was serving as a junior engineer in C.P.W.D. He worked in C.P.W.D. as a junior engineer from Sept. 27, 1963 till May 12, 1972. He was enrolled as a member by the Institute of Engineers (MIE) thereafter. In 1973 he was issued a licence by the Municipal Corporation of Delhi to practice as an engineer. He was also included in the list of approved architects and valuers under "Own Your Home" scheme of the Life Insurance Corporation of India He was permitted by the urban estate office Faridabad to act as an architect and was registered as such. ...... He had applied for registration u/s 24 and the registration tribunal CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 13 of 52 14 has rejected his application..... On the scrutiny of the application, the Registrar rejected the application for registration u/s 25(b) after considering the particulars stated in the application and the other relevant documents filed by the petitioner. ...........Article 19(6) empowers state to make law relating to the professional or technical qualifications necessary for practicing any profession. Laying down professional qualification for the profession of architecture as done by the act and prohibiting persons who do not fulfill the said qualifications from posing themselves as architects, is constitutionally permissible The restriction if at all is reasonable restriction. ...........The restriction imposed by s. 37 does not violate Art.14 of the constitution. Challenge to the validity of S.35 of the Act is also without any merit."
21. This fact was also in the personal knowledge of arbitrator.
Despite that he acted as an arbitrator.
22. The arbitration agreement vide clause 45 specifically refers that any dispute if referred be decided by more than one Arbitrators. Therefore the aforesaid award is patently contrary to the terms of the agreement. Thus hit by section 34 of the Act. The clause reads as under: CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 14 of 52 15 "All disputes and differences of any kind whether arising out of or in connection with the contract or the carrying out of the work (whether during the progress of the works or after their completion, and whether before or after the determination abandonment or breach of the contract) shall be referred to and settled by the Architects who shall state their decision in writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architects with respect to all matters shall be final and without appeal as stated in clause no. 37."
23. Section 43 of the Act states that Limitation Act would apply therefore reference should have been made within a period of 3 years from the due date in view of Article 18 of Limitation Act which says that 3 years period would be counted from the date the work is done. As per the averment mentioned at page 6 para 4 the 25th bill dated 1.10.99 was the final bill for Rs.894720/ being bill no. B.C/10/99/1793 dt. 1.10.99. This has been confirmed by other documents filed alongwith rejoinder affidavit as annexure page 31. To avoid limitation period, the R 1 has filed additional documents by forging the date of annexure P12. Annexure P31 reads as under "para 1": CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 15 of 52 16 Reference no. B.C. 10/99/1793 1.10.99. To the Hony. Secretary ........... Sub: Submission of 25th final accounts bill.......... Dear Sir:
We are enclosing herewith our 25th account bill amounting to Rs.894720/ (8lacs ninety four thousand seven hundred twenty for the work ...... ...during the period at site.) ...." Annexure P31 "Dear Sir We have to inform you that the 25th Bill of M/s. Buitwell constructions (Ref. No. BC/10/99/1793 dt d01.10.1999 was recommended by us for adhoc payment of Rs. 5.00 lacs (vide our Ref AA/144/33980/99, dt Dec 6.1999).
"....As per the letter of M/s Builtwell Construction dt 15.1.2002(Ref. No.B.C./1/2002/793 (A). This 25th Bill was treated as the final Bill."
24. The reply given by Respondent no.1 is evasive. The petitioner relies upon contents of para 5(a) of the petition, the reply to which as given by Respondent no. 1 is as under: 5A.... "That on 12.6.2003 the defendant No.1 (as per date indicated in the claim petition) submitted a claim petition before the defendant No.2 mainly based upon 25th running bill and demanded a sum of Rs.6,00.000/. A true copy of claim petition is CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 16 of 52 17 marked herewith as Annexure P23."....
Reply to 5A.
"That the para no. 5A of the application is admitted."
25. A cojoint reading of the above makes it apparently clear that the dispute was regarding 25th bill which is the final bill. The document placed on page 46 is not being disputed the Respondent no.1. He has placed the very same document as additional documents by changing the date. The date 1.10.99 is being changed by 3.9.2000, and at the bottom also the date is accordingly changed to make the reference the limitation period. This bill was duly checked on 12.10.99. Para 1 of Annexure P31 reads as under:.
"Dear Sir We have to inform you that the 25th Bill of M/s. Buitwell constructions (Ref. No. BC/10/99/1793 dt d01.10.1999 was recommended by us for adhoc payment of Rs. 5.00 lacs (vide our Ref AA/144/33980/99, dt Dec 6.1999)."
26. Thus at any rate the final bill was of 1999. Now the question is what is the 'due date'. Page 33 of the documents/ terms of contract filed by Respondent no. 1, clause 23 reads as under: CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 17 of 52 18 "Measurement of works and certificates and payments ....."
The final measurements and valuation in respect of the Contract shall be completed within the period of final measurements stated in the Appendix (Page51)....." appendix herein before referred to .....
Period of Final Measurement and Valuation ...... 3months"
27. As per appendix the final measurement was to be done within a period of 3 months, which reads as above. In view of the above, since the bill was checked on 12.10.99 the certificate must have been issued within 3 month from 12.10.99 i.e.by 11.2.2000. Any claim petition should have been filed within 3 years i.e on or before 10.2.2003. Admittedly the claim petition was filed on 12.6.2003 as apparent from page 86 Annexure P27.
28. There are manipulations made in the additional document read with the date indicated in the claim petition corroborates that to make the claim within limitation period, the document has been forged, the reference was made on 7.4.2003. The limitation expired on 1.10.2002. Alternately, as per agreement between petitioner and the respondent no.1 specifically says that in case CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 18 of 52 19 Adlakha Associates ceased to be an Architect, the dispute should have been referred to any other Architect. This fact was known to Promod Adhlakha therefore on the date of reference, the architect should have appraised this position to Respondent no. 1, though petitioner's allegation further is that both were hand in glove. Even otherwise it is submitted that there was no occasion for Adhlakha Associates to issue a certificate in 2002 i.e. after 22.11.2001. For this reason also the award is without jurisdiction. Averment mentioned at page 7/8 para 4(a) is not being denied in the reply. The claim petition indicates date of certificate as dt 20.9.2002 while final bill was submitted on dt. 3.9.02 while the bunch of document submitted at a later stage indicates that the bill was submitted prior to 3.9.99.
29. The impugned award is contrary to mandate of section 31 (3) of the Act as being unreasoned award. The award contains no reasons. The applicant has raised this point in written objection on 31.7.03. The postal receipt is at page 92. The objections were duly acknowledged in letter dt. 10.10.03. Despite petitioner's objection no reason has been given in the award CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 19 of 52 20 which is contrary to the term 45 of the agreement.
30. Reliance is placed upon Oil & Natural Gas Corporation Ltd.
vs. Saw Pipes Ltd. 2003 Vol. 5 SCC 705 and also on Yashwith Construction (P) Ltd. vs. Simplex Concrete Pipes India Ltd. 2006 Vol. 6 SCC 204.
31. In its objections dated 30.7.2003 the petitioner requested the arbitrator to supply documents. The same was not complied with. This show that the principles of natural justice were not followed. The arbitrator was biased. Undisputedly the reference was made on 7.4.2003. The arbitrator issued a letter dated 10.7.2003 fixing a date for hearing on 19.7.2003 (Annexure P
28). On 19.7.2003 none has appeared on behalf of the petitioner as apparent from Annexure P29. The next dated was fixed for 02.08.2003. The petitioner sent its objections on 31.7.2003. The Award indicates at page 95 that at the initial stage the applicant had appeared but later on did not appear. The above fact proves the bias of the Arbitrator.
32. Admittedly the dispute pertains to 25th final bill submitted by the respondent no. 1 for Rs. 894720. The said bill was checked CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 20 of 52 21 for Rs. 512336.00 (dt 20.9.02) .As per the admission of the respondents, against the final bill Rs. 2.50 lakhs was released (reference letter dated 09.11.2002. Annexure P31). Therefore the dispute should have referred to it only for Rs.262336/.The claim petition is for Rs. 6 lacs.
33. What is the date of final bill is a moot question. Letter dated 1.10.99 indicates that 25th bill is the final bill. Letter dated 6.12.99 indicates bill dated 21.10.99 as final bill. Claim petition indicates bill dt. 3.9.2002 is the final bill. Letter dated 9.11.2002 indicates bill dated 1.10.99 is the final bill.
34. Reliance is also placed upon Panchu Gopal Bose vs. Board of Trustees of Port of Calcutta (1993) 4 SCC 338 to bring home the point that section 3 of the Limitation Act is applicable by analogy and the arbitration agreement is liable to be revoked. In the similar vein reliance is also placed upon State of Orissa vs. Damodar Das (1996) 2 SCC 216 on the aspect of limitation.
35. Reliance has also been placed upon Kailash Rani Dang vs. Rakesh Bala Aneja (2009) 1 SCC 732 as regards the service of award by post.
CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 21 of 52 22
Arguments of Respondent no. 1
36. Shri Vinod Gaur , ld. counsel for the respondent no. 1 has argued the objections u/s 34 of the Act are barred by limitation. Secondly, in the matter under reference section 12, 13 and 16 of the Act are applicable. There is waiver of the same as no objections have been filed by the petitioner and even if the objections sent by the Advocate are taken to be objections they are beyond the period of 15 days hence waiver as laid down under section 4 of the Act is applicable. The clock cannot be set back.
37. The agreements dated 28.10.1983 (Annexure P1) and the agreement dated 20.11.1995 (Annexure P2) shows that there is a named architect i.e. Adlkaha & Associates. Thus the plea of an Architect within the meaning of the Architects Act is unsustainable as no such intention appears in the agreement and argument is for the sake of argument only.
38. Under the agreement dated 20.11.1995 (Annexure P2) there is defect liability period of 6 months and rate of interest for delayed payment is 12% per annum. Clause 25 is regarding CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 22 of 52 23 interim payment. Clause 37 and clause 45 show that there is a named architect i.e. Adlkaha & Associates who would be the only arbitrator in the dispute between the parties.
39. Firstly the petitioner got the knowledge of arbitration vide letter dated 07.04.2003 sent by Vinod Gaur. Secondly it got the intimation of first date of hearing vide letter dated 10.07.2003 by the Arbitrator intimating date of hearing as 19.07.2003. The objections have been dated 30.07.2003 though the same have been posted on 31.07.2003. The same were beyond the period of 15 days as per section 13 of the Act. Even otherwise by no stretch of imagination this notice of an Advocate can be deemed as a written statement. It was just a letter from an Advocate demanding documents. It was not signed by the party.
40. Mr. Avinash Arora, representative of the petitioner appeared before the Arbitrator on 20.10.2003; 15.11.2003 and 05.03.2004 but he never pressed for the alleged objections. On 02.08.2003 he only asked for time for filing of reply. He has always been requesting for settlement and payment to the respondent no. 1. A notice was received by the arbitrator regarding the agenda of CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 23 of 52 24 the claim of respondent no. 1 in the General Body Meeting to be held on 10.10.2004. After the petitioner stopped attending the proceedings ultimately he was proceeded exparte on 25.06.2005 and thereafter recording the statement of respondent no. 1 an award was passed on 09.08.2005.
41. The arbitration agreement/clause stands admitted by the petitioner in his petition at page 5(a). Thus the objection of petitioner holds no water.
42. The second objection that arbitrator does not come within the purview of the Architect's Act does not carry any substance as there is a named architect i.e. Adlkaha & Associates who would be the only arbitrator in the dispute between the parties. No other architect or arbitrator was appointed by the petitioner. The allegations of bias and partiality on the part of the arbitrator are groundless and without substance.
43. The scope of challenge to the Arbitration award is very limited.
Reliance is placed upon M. M. T. C. Ltd. vs. Belecom J. V. 2010 (6) R.A.J. 124 (Delhi) in which it has been held that the scope of inference by a Court under section 34(2) of the Act is CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 24 of 52 25 only when the award is contrary to either the substantive provisions of law or contractual provisions and/or opposed to public policy.
44. Reliance is also placed on A. P. Nirman vs. Sindhu Trade Links 2010 (5) R.A.J. 185 (Delhi) in which it has been held that in case an award is exparte, where a person after admitted service does not appear, the scope of challenge to award becomes restricted.
45. Reliance is placed upon Orissa Oil Industries Limited vs. Tribal Cooperative Marketing Development Federation of India Ltd. 2002 (3) R.A.J. 587 (Delhi) wherein it has been held that an award be set aside under section 12, 13 and 16 of the Act provided such a challenge is made at the first instance before the Arbitral Tribunal.
46. In sum and substance the respondent no. 1 has opposed all the grounds raised by the petitioner.
47. Written arguments by the parties are also on record.
48. No other point has been argued or urged. No other case law has been cited.
CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 25 of 52 26
Conclusions & Reasons
49. I have considered the rival submissions, the statutory and case law cited and my findings are as under:
50. The scope and ambit of the objections that can be taken by a party against an award have been laid down under section 34 of the Act reads as under:
"34.Application for setting aside arbitral award . (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and subsection (3). (2) An arbitral award may be set aside by the Court only if
(a) the party making the application furnishes proof that
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 26 of 52 27
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matter beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Past; or
(b) the Court finds that
(i) the subjectmatter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation.Without prejudice to the generality of subclause (ii), it is hereby declared , for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 27 of 52 28 induced of affected by fraud or corruption or was in violation of section 75 or section 81. (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 if may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award."
51. The settled position of law is that the scope and arena of the interference by the Courts with an arbitral award under Section CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 28 of 52 29 34(2) of Act, 1996 is limited.
52. As held in Oil and Natural Gas Corporation Limited vs. SAW Pipes Limited (2003) 5 SCC 705 the jurisdiction or the power of the Arbitral Tribunal is prescribed under the Act and if the award is dehors the said provisions, it would be, on the face of it, illegal. The decision of the Tribunal must be within the bounds of its jurisdiction conferred under the Act or the contract. In exercising jurisdiction, the Arbitral Tribunal cannot act in breach of some provision of substantive law or the provisions of the Act. It has further been held that if the award is contrary to the substantive provisions of law or the provisions of the Act or against the terms of the contract, it would be patently illegal, which could be interfered under S. 34. However, such failure of procedure should be patent affecting the rights of the parties.
53. Hon'ble the Supreme Court of India in Delhi Development Authority Vs. R.S. Sharma and Company, New Delhi reported in (2008) 13 SCC 80 after referring to a catena of case law has held that an arbitration award is open to interference by CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 29 of 52 30 a court under Section 34(2) of the Act, 1996 if it is contrary to either the substantive provisions of law or the contractual provisions and/or is opposed to the public policy. The case law cited by respondent no. 1 i.e. M. M. T. C. Ltd. vs. Belecom J. V. 2010 (6) R.A.J. 124 (Delhi) also lays down the same.
54. It is also the settled law that under section 34 of the Act, the Court does not sit as an Appellate court to reappreciate the entire findings of the Arbitrator. Once the view which is taken by the Arbitrator is a plausible view, the court will not interfere with the findings and conclusions merely because a different view is possible as is sought to be propounded by the petitioner/objector. Once the Arbitrator arrives at a plausible finding of fact by reference to the documents and interpreting the same, such conclusion cannot in any manner be contended to be either illegal or perverse so as to entitle this Court to interfere with such finding under Section 34 of the Act. It is therefore axiomatic to say that if two views are possible from a situation an Arbitrator is fully entitled to take one plausible view.
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55. On the touchstone of above law, I will discuss the objections in view of the pointscounterpoints made under broad heads as under: Whether the objections are time barred?
56. The respondent no. 1 has taken the objection that the petition/objections u/s 34 of the Act are time barred. It is submitted by the respondent no. 1 that the award was received by the petitioner on 16.09.2005 and the objections filed in December 2005 are hopelessly barred by time.
57. The date of award is 09.08.2005. The petitioner has stated in its petition that it received the copy of the award on 16.09.2005. The objections have been filed by the petitioner before the Ld. District Judge, Delhi on 13.12.2005. As per the copy of the envelope (on page no. 539) the cover containing the award was put into postal transmission on 13.09.2005 as per the postal endorsement appearing on the face of it. The AD cards in the record of Arbitrator also bear postal stamps of 13.09.2005. The same is ostensibly date of posting. The date of service does not appear on the face of the AD Card. In the ordinary course of CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 31 of 52 32 postal business a local letter is likely to have been received by the addressee within three days of posting and thus the statement of petitioner that it received the copy of the award on 16.09.2005 can be taken at face value.
58. As prescribed in section 34 (3) of the Act such an application can be made not later than three months from the date on which the party making that application had received the arbitral award. Thus the objections/petitioner u/s 34 of the Act are within the prescribed period of limitation.
Challenge to the jurisdiction of the Arbitrator
59. Section 12 of the Act reads as under: "12. Grounds for challenge.(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.
(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in subsection (1) unless they have already been informed of them by him. (3) An arbitrator may be challenged only if CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 32 of 52 33
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made."
60. The challenge procedure has been laid in section 13 of the Act as under: "13.Challenge procedure. (1) Subject to sub section (4), the parties are free to agree on a procedure for challenging an arbitrator. (2) Failing any agreement referred to in sub section (1), a party who intends to challenge an arbitrator shall, within fifteen days of becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in subsection (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 33 of 52 34 by the parties or under the procedure under sub section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under sub section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34. (6) Where an arbitral award is set aside on an application made under subsection (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees."
61. Some minutes of proceedings may be relevant in the case, hence they are being discussed. The Arbitral Tribunal vide its first minutes of proceedings dated 10.07.2003, on which date none of the parties were present, fixed the date of first meeting on 19.07.2003 and directed notice to petitioner herein. In fact the minutes of are in the form of a letter or viceversa. In the minutes of proceedings dated 19.07.2003, which is also in epistolary form it is stated that none is present on behalf of the petitioner herein and the hearing is adjourned for 02.08.2003. On that day i.e. 02.08.2003 case is adjourned suomotu by the Arbitrator, for a date to be notified. The next minutes of CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 34 of 52 35 proceedings are of 101.10.2003 in letter form taking note of receipt of a letter from Shri Girish Aggarwal, Advocate. Some documents submitted by the respondent no. 2 herein have been directed to be sent to the petitioner herein. On the next hearing i.e. 20.10.2003, the Treasurer namely Shri Avinash Arora has been present on behalf of the petitioner herein i.e. Hindon CGHS. He seeks an adjournment. Case is adjourned to 15.11.2003 on which date again adjournment is prayed by the petitioner herein and the case is adjourned to 29.11.2003. After few hearings the petitioner herein did not join further proceedings before the Arbitral Tribunal.
62. The above dates are material/relevant in the context of objections of the petitioner as to the jurisdiction of the Arbitrator.
63. Section 12 of the Act casts an obligation upon the Arbitrator to disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence, impartiality or lack of qualification to act as an Arbitrator. The onus has been placed upon the Arbitrator himself. The plea taken by the respondent CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 35 of 52 36 no. 2 is that the Arbitrator, Shri Promod Adlakha, is the named Arbitrator of the petitioner. Be that as it may be, as I will discuss this aspect later. At this stage I am dealing with the aspect of objections to independence, impartiality etc.
64. An Arbitrator may attract a disqualification in the respect of his independence or impartiality or qualification even after his appointment. It may be that the parties have sought that the arbitrator must be a Chartered Accountant by profession and a person so appointed loses his licence before taking up the arbitration or during the course of arbitration, then he may attract a disqualification.
65. Section 12 of the Act casts a running obligation upon the Arbitrator throughout the arbitral proceedings to disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. 'Ceaser's wife must be above suspicion' goes the saying. The Legislature has created this obligation to inculcate faith of the parties in the institution of arbitration and its efficacy.
66. The above disclosure has to be made if the Arbitrator has any CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 36 of 52 37 justifiable doubts as to his independence and impartiality. The law does not makes it obligatory on the part of the Arbitrator to state the negative i.e. there are no circumstances against his independence or impartiality. Thus when the Arbitrator, Shri Promod Adlakha, was approached by way of invocation of arbitration clause and he did not make any such statement as envisaged under section 12 of the Act, no fault can found as it can be presumed that he did not harbour any justifiable doubts as to his independence and impartiality. However the position is different when a challange is put to his capacity to act. Thus the moot question is whether it was not incumbent upon him to deal with the objections raised by the petitioner as contained in letter dated 30.07.2003 of Shri Girish Aggarwal, Advocate, purported to be on behalf of the petitioner?
67. The Arbitrator has acknowledged the receipt of the letter dated 30.07.2003 of Shri Girish Aggarwal, Advocate in the minutes of proceedings dated 10.10.2003. The Arbitrator has nowhere disclosed/endorsed the actual date of receipt of the same. The petitioner has placed on record (at page 523) copies of the Postal receipt of regd. A.D. and UPC to show date of posting as CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 37 of 52 38 31.07.2003. In this context it has been argued by the respondent no. 1 that the objections of the petitioner are beyond 15 days of becoming aware of the constitution of the arbitral tribunal send a written statement of the reasons for the challenge to the arbitral tribunal as envisaged under section 13(2) of the Act.
68. There is no material on record to disclose on which date the letter dated 10.07.2003 of the Arbitral Tribunal was posted. From 10.10.2003 till 31.07.2003 there is a period of 21 days. For want of the record as to on which date the letter dated 10.07.2003 was posted by the Arbitral Tribunal and when the letter dated 30.07.2003 of Shri Girish Aggarwal, Advocate, was received by the Arbitral Tribunal, the question whether the objections have been made within the limitation prescribed under section 13(2) of the Act cannot be determined with certainty. As the petitioner is likely to be affected by the same, the doubt must be resolved in his favour. The respondent has argued that the petitioner was aware of the constitution of Arbitral Tribunal as far back as 0n 07.04.2003. In my view this argument is not valid as mere reference of dispute to arbitration CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 38 of 52 39 does not amount to constitution of Arbitral Tribunal within the meaning of the aforesaid provisions.
69. The receipt of the letter dated 30.07.2003 of Shri Girish Aggarwal, Advocate has been taken note of by the Arbitral Tribunal in the minutes of proceedings dated 10.10.2003. There are averments of bias etc. against the Arbitrator by petitioner in the letter of its Advocate and these averments can be ansereed only by the Arbitrator. Court has no mechanism to peep into the mind of Arbitrator and therefore in all fairness it was incumbent upon the Arbitral Tribunal to deal with the objections of petitioner as to the doubts raised visavis independece/impartiality. The Arbitral Tribunal has neither rejected nor accepted the objections. The Arbitral Tribunal has also not given a finding that the manner in which the objections have been made were not within the four corners of the section 12 or 13 of the Act or that they were barred by time and hence constituted waiver of right to object as per section 4 of the Act. The Arbitrator could, in his wisdom, had either overruled or sustained the objections of the petitioner or could have even held the objections filed by an Advocate as not validly CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 39 of 52 40 presented. This was within his prerogative. In the present objections, as already discussed, this court is not to act as a court of appeal. This court cannot assume the jurisdiction of the arbitrator and decided those objections. The jurisdiction necessarily vest in the Arbitrator and it he must deal with the aspect. Thus passing no order on the objections is an infirmity which goes to the root of the matter.
Architect or Named Arbitrator?
70. Lot of arguments have been done on the aspect of in what sense the word 'Architect' has been used in the Arbitration Agreement. The petitioner propounds that it must be interpreted in the strict sense of law as appearing in the Architects Act. On the contrary, the stand of the respondent no. 1 is that the word has been loosely used to refer to the named Arbitrator namely Shri Promod Adlakha. Petitioner has relied that in terms of the letter of Council of Architecture dated 08.11.2005 (page 541) it has been reported that Shri Promod Adlakha is not registered as an Architect with it.
71. In the agreement dated 28.10.1983 (pages 347 to 355) between the petitioner and M/S Adlakha & Associates after giving the CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 40 of 52 41 description of M/S Adlakha & Associates, their professional reference and office address the phrase used are "hereinafter called the 'Architects" has been used. Thus in the said agreement the term 'Architects' has been used to refer to M/S Adlakha & Associates and not in the strict sense of the term architect as used in the Architects Act.
72. In the agreement dated 20.11.1995 (pages 231 to 345) between the petitioner and the respondent no. 1 it has been stated in clause 3 that term 'Architects' shall mean M/S Adlakha & Associates. It also stipulates that in the event of M/S Adlakha & Associates ceasing to be the Architect for the purpose of the contract in question such other person as may be nominated by the petitioner ('the employer'). Clause 45 of the said agreement reads as under: "All disputes or differences of any kind whether arising out of or in connection with the contract or the carrying out of the work (whether during the progress of the works or after their completion; or whether before or after their completion, and whether before or after their determination, abandonment or breach of contract) shall be referred to or CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 41 of 52 42 settled by the Architects who shall state their decisions writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architect with respect to all matters shall be final and without appeal as stated in clause 37."
73. Reliance has also been placed upon clause 28, 37 of the agreement dated 20.11.1995 in addition to clause 45 and as per the respondent no. 1 these constitute arbitration agreement in sum and substance. The petitioner has taken a rival stand. Thought it is manifestly clear the term 'Architects' has been used in normal parlance as meaning 'M/S Adlakha & Associates' and not meaning an architect in the strict sense of the term as appearing in the Architect's Act. The plea of the petitioner is hypertechnical in this respect and no such intention or meaning can be gathered from a complete reading of the agreements dated 28.10.1983 between the petitioner and M/S Adlakha & Associates or in agreement dated 20.11.1995 between the petitioner and the respondent no. 1. Also there is no material on record to infer that M/S Adlakha & Associates or Shri Promod Adlakha are different entities. It appears that they are synonym of each other. In business circles it is common to CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 42 of 52 43 carry on business by individuals in the assumed names and such practice is widely accepted. Even banks open accounts in the names of such concerns and tenders are also invited or accepted from such concerns notwithstanding the fact they have no juristic existence.
74. There is considerable ambiguity in the clauses of the agreement and no where the word 'arbitration' has been used in various clauses thought in sum and substance they convey a meaning synonym of arbitration. However when the petitioner had raised an objection by virtue of the letter dated 30.07.2003 of Shri Girish Aggarwal, Advocate, purported to be on behalf of the petitioner, taking the objection that there existed no arbitration agreement or that Shri Promod Adlakha had no jurisdiction to act, it was incumbent upon the Arbitral Tribunal to deal with it within the four corners of law, as enshrined in section 16 of the Act as given hereunder:
16.Competence of arbitral tribunal to rule on its jurisdiction. (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 43 of 52 44 purpose,
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed , or participated in the appointment of, an arbitrator. (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall he raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in subsection (2) or subsection (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in subsection (2) or subsection (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34." CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 44 of 52 45
75. However the ambiguity and controversy has been set at rest now as the petitioner on page 5 of its petition in para III (a) has admitted clause 45 stipulates that dispute is to be settled by means of arbitration. However such an admission was not available to the Arbitral Tribunal at the time when the objection in the form of a letter of the petitioner's advocate was taken.
Aspect of Limitation (Whether the reference is time barred?)
76. Section 43 of the Act reads as under: "43.Limitations. (1) The Limitation Act, 1963 (36 of 1963), shall, apply to arbitrations as it applies to proceedings in court.
(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in section 21.
(3) Where an arbitration agreement to submit further disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 45 of 52 46 that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper. (4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted."
77. Thus it is apparent that the law of limitation is applicable to the arbitration proceedings. However it is apparent that no issue of limitation was ever raised before the Arbitrator by the petitioner. In fact, the petitioner after joining the arbitration proceedings on 20.10.2003 and 15.11.2003 through its representative Shri Avinash Arora, its Treasurer, played truant and let the proceedings go exparte.
78. It is just and necessary to refer to section 3 of the Limitation Act, 1963 which reads as under: "3. Bar of limitation. -- (1) Subject to the provisions contained in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 46 of 52 47 shall be dismissed although limitation has not been set up as a defence.
(2) For the purpose of this Act --
(a) a suit is instituted --
(i) in an ordinary case, when the plaint is presented to the proper officer;
(ii) in the case of a pauper, when his application for leave to sue as a pauper is made; and
(iii) in the case of a claim against a company which is being wound up by the court, when the claimant first sends in his claim to the official liquidator;
(b) any claim by way of a set off or a counter claim, shall be treated as a separate suit and shall be deemed to have been instituted --
(i) in the case of a set off, on the same date as the suit in which the set off is pleaded;
(ii) in the case of a counter claim, on the date on which the counter claim is made in court;
(c) an application by notice of motion in a High Court is made when the application is presented to the proper officer of that court."
79. Thus it the bounden duty of every court to deal with the aspects of limitation notwithstanding whether any objection to same has been taken or not. This is for the reason that limitation bars the remedy. There can be no waiver of law. There is no estoppel CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 47 of 52 48 against the statute. The petitioner on its part has not raised this question before the Arbitral Tribunal. After sending its objections through its Advocate and after causing two appearances through its Treasurer it has not joined the proceedings. Thus the nature of objections as taken by the petitioner in the present proceedings under Section 34 of the Act which are primarily factual in nature were not put forth before the Arbitral Tribunal as the petitioner after joining for a few hearings did not participate in the proceedings.
80. The objections to limitation raised now by the petitioner in the present proceedings including the allegations of forgery go to the root of the matter. I am not repeating them for the sake of brevity and also to rule out any prejudice to any of the party. I would revisit the aspect while rendering final decision.
Award whether nonspeaking?
81. The award is what it is. It is mandate of law as enshrined in section 31 (3) that the award shall state the reasons on which it is based until or unless the parties have agreed that no reasons are to be given or that the award is on the agreed terms. In the CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 48 of 52 49 present case, the petitioner was exparte and the award has been based on material available to the Arbitral Tribunal. It is the settled law that the arbitration awards are not to be written as judgments of the courts. As long as the award shows some reason on the face of it no fault can be found with it. This award also sails in the same boat.
More than one Arbitrator?
82. The petitioner has tried to project that a reading of clause 45 of the agreement dated 20.11.1995 speaks of more than one Arbitrator. Clause 45 of the said agreement reads as under: "All disputes or differences of any kind whether arising out of or in connection with the contract or the carrying out of the work (whether during the progress of the works or after their completion; or whether before or after their completion, and whether before or after their determination, abandonment or breach of contract) shall be referred to or settled by the Architects who shall state their decisions writing. Such decision may be in the form of a final certificate or otherwise. The decision of the Architect with respect to all matters shall be final and without appeal as stated in clause 37."
CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 49 of 52 50
83. In my opinion the argument of petitioner does not hold any water. Use of the words 'Architects' or 'their' do not indicate plural sense in reference to the context if the agreement is read in totality.
Whether award is Exparte?
84. The form of the award shows that it is exparte as the petitioner after appearing in few hearings did not appear to contest the claim. However, the fact remains that the objections taken by the petitioner under Section 12 of Act were not considered.
O R D E R
85. In view of my above discussion it is apparent that there has been departure from the mandate of Legislature in non considering the plea of challenge to jurisdiction of the Arbitral Tribunal on various aspects and the nonconsideration has occasioned a failure of justice.
86. Thus the award dated 09.08.2005 is set aside and the matter is remanded back to the Arbitral Tribunal to consider the objections of the petitioner (as contained in the letter dated 30.07.2003 of Shri Girish Aggarwal, Advocate, purported to CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 50 of 52 51 have been sent on behalf of the petitioner herein), in accordance with law.
87. While so considering the objections the Arbitrator shall be uninfluenced by the various observations made by this Court. Nothing stated herein shall tantamount to an expression of opinion on the merits of the case.
88. If after hearing the parties on the above referred to objections (as contained in letter dated 30.07.2003 of Shri Girish Aggarwal, Advocate) the Arbitrator comes to a conclusion that he has jurisdiction to proceed in the matte, the matter be proceeded with on merits in accordance with and final award shall be passed.
89. Keeping in view the age of the dispute it is expected of the parties that they will render full assistance to the Arbitral Tribunal to expedite the matter.
90. A copy of this award be also sent to the Arbitral Tribunal and the parties shall appear before the Arbitral Tribunal on 16.02.2012 at 4 P.M.
91. The objections under section 34 of the Act are disposed of accordingly.
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92. File be consigned to Record Room.
Announced in the Open Court On this 16th day of January 2012 (MAN MOHAN SHARMA) ADJ (Central)12, Delhi CS 485/2009 Hindon Cooperative Group Housing Society Ltd. vs. Builtwell Construction & Anr. Page 52 of 52