Bombay High Court
Mr. Francisco A D'Souza Acoi And Ors vs L And T Finance Ltd on 30 April, 2015
Author: R.D. Dhanuka
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.1231 OF 2014
1.Francisco A. D'Souza )
House No.247, Acoi, Karaswada, )
Mapusa, Bardez, Goa - 403 507. )
and also at House No.142/B, )
Acoi, Karaswada, Mapusa, )
Bardez, Goa - 403 507. )
2. Oscar de Souza (deceased) )
(2a) Marlene de Souza )
(2b) Carlene de Souza ig )
(2c) Osline de Souza )
All residing at House No.59 )
Camarcazana, Mapusa, )
Bardez, Goa - 403 507. ) .. Petitioners
Vs.
L & T Finance Ltd. )
A company incorporated under the )
provisions of Companies Act, 1956 )
and having its registered office at )
L & T House, N.M. Marg, Ballard )
Estate, Mumbai 400 001 )
and having the Corporate office )
3-B Laxmi Towers C-25 G Block )
Bandra Kurla Complex, Bandra (E), )
Mumbai - 400 051. ) .. Respondent
---
Ms.Zahara Tejani for the petitioners.
Mr.Anand Poojary a/w Ms. S.I. Joshi for the respondent.
---
CORAM : R.D. DHANUKA, J.
DATE : 30th April 2015 ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 2 902.arbp-1231.14.doc Judgment :- . By this petition filed under Section 34 of the Arbitration
and Conciliation Act, 1996, the petitioners have impugned the arbitral award dated 18th September 2012 made by the learned arbitrator.
2. At the threshold, Mr. Poojary, learned counsel for the respondent raises an objection of the limitation in filing present arbitration petition impugning the arbitral award dated 18 th September 2012 which was lodged on 22nd April 2014. In support of this submission, learned counsel for the respondent invited my attention to the compilation of documents forming part of the record before the learned arbitrator and in particular some of the acknowledgments duly signed by the petitioner no.1 and/or his relatives. In so far as the service of the impugned award is concerned, my attention is invited to page 75 of the compilation which indicates that the award was sent by the learned arbitrator at the two addresses i.e. House No.142/B, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507 and also House No.247, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507.
3. In so far as the award sent at the address of House No.142/B, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507 is concerned, the same has been acknowledged by the person who claimed to be the relative of the petitioner no.1.
4. Learned counsel for the respondent invited my attention to the cause title of the petition in which the petitioner no.1 has given both the addresses as his addresses which were mentioned in the two ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 3 902.arbp-1231.14.doc acknowledgment cards. My attention is also invited to paragraph 1.1 of the petition in which the petitioners have averred that the petitioner no.1 has been residing at the addresses mentioned in the cause title of the petition.
5. Learned counsel for the respondent invited my attention to the rejoinder filed by the petitioner no.2b in which it is alleged that the petitioner no.1 does not reside at House No.247, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507 but resides at House No.142/B, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507 and his relative Mary D'Souza resides and she has taken the service of the award. The petitioner no.1 has himself not filed any rejoinder. Learned counsel for the respondent accordingly submits that the copy of the award was sent by the learned arbitrator at the last known address of the petitioners. He submits that at the same address, various notices were also sent to the petitioner no.1 by the learned arbitrator, the receipt of which the petitioners did not dispute. The petitioners had made false and incorrect statements in the rejoinder that the petitioner no.1 was not residing at House No.247, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507 which is also ex facie inconsistent with the averments made in the petition.
6. In support of his submission, the learned counsel placed reliance on the judgment of this Court in the case of Jasvinder Kaur Vs. L & T Finance Ltd. & Anr. delivered on 12th March 2015 in Arbitration Petition No.1053 of 2012 and in particular paragraphs 15 and 18 thereof and would submit that since the award was delivered at the last known addresses which addresses were not disputed by the petitioner no.1 in ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 4 902.arbp-1231.14.doc the petition, in view of Section 3(1)(b) of the Arbitration Act, the copy of the award is deemed to have been served upon the petitioner no.1 at the last know addresses and cause of action for filing of the arbitration petition under Section 34(3) of the Arbitration Act would be commenced from the date of such service or in any event deemed service under the provisions of the Arbitration Act. Paragraphs 15 and 18 of the said judgment read thus :-
"15. Section 3 (1) (b) of the said Arbitration Act makes it clear that even if a place of business, habitual residence or mailing address of a party cannot be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides record of the attempt to deliver it.
16. A perusal of the endorsements made by the postal department clearly indicates that various attempts were made by the postal department to deliver the copy of the award at the last known place of residence and business of the petitioner. In my view, thus the copy of the said award is deemed to have been received by the petitioner on 14 th January 2011. Admittedly, the arbitration proceedings having been lodged on 30th August 2012 are thus not within the time prescribed under Section 34 (3) of the said Arbitration Act and is thus barred by limitation under the said provision.
17. Be that as it may, a perusal of the record forming part of the compilation and also the arbitration proceedings clearly indicates that the learned arbitrator had sent several notices to the petitioner from time to time at the last known address. The petitioner does not dispute the address mentioned in the notices issued by the learned arbitrator and shown on the acknowledgement card.
18. In these circumstances, I am not inclined to accept the bare submission of the learned counsel for the petitioner that none of the notices or pleadings were served upon the petitioner at any point of time during the pendecy of the arbitration proceedings either from the respondent no.1 or from the learned arbitrator. In view of Section 3(1) (b) of the said Arbitration Act, all such notices of the arbitration proceedings are deemed to have been received by the petitioner. Since the petitioner has chosen not to remain present inspite of the service of the notices of the record and proceedings of the arbitration, the petitioner cannot be shown any indulgence by this Court under Section 34 of the said Arbitration Act. Learned arbitrator thus is justified in making an ex parte award against ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 5 902.arbp-1231.14.doc the petitioner. In my view, the petitioner has not made out any case of violation of the principles of natural justice in this matter."
7. Learned counsel for the respondent also placed reliance on the judgment of this Court passed on 16th July 2014 in the case of Apex Encon Projects Pvt. Ltd. & Anr. Vs. L & T. Finance Ltd. & Anr. in Arbitration Petition (L) No.501 of 2014 and other connected matters and more particularly paragraphs 12 to 15 in which this Court has taken a similar view about deemed service relying upon the provisions of Section 3(1)(b) of the Arbitration Act and Section 27 of the General Clauses Act. Paragraphs 12 to 15 of the said judgment read thus :-
"12. With regard to the service upon petitioner No.2 in each of the above petitions, who are Directors of the company, one Nekkanti Rama Rao and one Padmavati Rama Rao, the packets containing award have been sent by registered post to the place of business of the guarantors which is the corporate address of the petitioners. Aside from Section 27 of the General Clauses Act which shows the deeming provision of the service, a similar deeming provision is under Section 3(1) (a) of the Act. Under section 3(1)
(a) any written communication is deemed to be received if it is delivered to the addressee inter-alia at its place of business just as in section 27 of the General Clauses Act the service is deemed to be effected by properly addressing, prepaying and by positing by registered post, a letter containing the document.
13. It is argued on behalf of the petitioners that delivery by post is different from receipt by the party and that the service contemplates both delivery as also receipt. The delivery is deemed to be received under Section 3(1) (a) if the aforesaid provision is complied and consequently such service would show the award received by the party in a manner prescribed by law as held in the case of State of Maharashtra (Supra).
14. It is argued that the learned arbitrator served the award upon the address of the respondent which was other than its registered address and if the facility was given to the respondent it should have been also given to the petitioners. Indeed it is seen that the facility has been granted though the arbitrator is not mandatorily required to grant it unless the mailing address is provided. There are only two addresses of the petitioners and the learned arbitrator has served the award upon both the addresses. Having seen that it is deemed to have been received by the corporate office and that it is ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 6 902.arbp-1231.14.doc actually delivered to and received by the registered office, the learned arbitrator cannot be faulted upon the service.
15. The service is, therefore, seen to have been effected upon the both the addresses of the first petitioners in April, 2013. The service upon the petitioner No.2, the guarantors in each of the above petitions, is also correctly made. The petitions have not been filed until 10 th March, 2014.
The petitions filed about year after such service are barred by the special Law of Limitation under Section 34(3) of the Act."
8. Per contra, learned counsel appearing for the petitioners submits that the petitioner no.1 was not staying at the addresses at which the award is alleged to have been served. She submits that the copy of the award was received by the petitioners for the first time when the execution proceedings were filed by the respondent against the petitioners. She submits that unless the copy of the award was received from the learned arbitrator, limitation to file the petition under Section 34 (3) of the Arbitration Act did not commence and thus, the petition is within time.
9. In support of her submission, the learned counsel placed reliance on the judgment of the Supreme Court in the case of Union of India Vs. Tecco Trichy Engineers and Contractors, reported in AIR 2005 SC 1832 and in particular paragraph 7 thereof and it is submitted that since the copy of the award was not personally served upon the relative of the petitioner no.1, it would not amount to a proper service and limitation did not commence. Paragraphs 7, 10 and 11 of the said judgment read thus :-
"7. 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 ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 7 902.arbp-1231.14.doc 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 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.::: Downloaded on - 05/05/2015 23:59:24 :::
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10. 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.
11. 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 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."
10. Learned counsel for the petitioners also placed reliance on the judgment of this Court in the case of Mukesh Nanji Gala Vs. Heritage Enterprises, reported in 2015(2) Bom C.R. 123.
11. A perusal of the record indicates that there is no dispute that the learned arbitrator had sent various notices at the last known addresses of the petitioners mentioned in the petition. A perusal of the affidavit in rejoinder filed by the petitioner no.2b indicates that the petitioners had not disputed that such notices sent by the learned arbitrator in past at the ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 9 902.arbp-1231.14.doc same addresses were received by the petitioners. In the arbitration petition, it is also admitted by the petitioners that he has been residing at the same two addresses at which the learned arbitrator had sent notices as well as the copy of the award. Only for the first time in the affidavit in rejoinder filed by the petitioner no.2b stated that the petitioner no.1 was not residing at House No.247, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507 which is contrary to the averments made in the petition.
12. In my view, the stand taken by the petitioners in the rejoinder that the petitioner no.1 does not reside at House No.247, Acoi, Karaswada, Mapusa, Bardez, Goa - 403 507 is inconsistent and contrary to the statement made in the petition. It is thus clear that the petitioners have not come to this Court with clean hands. This Court in the case of Apex Encon Projects Pvt. Ltd. & Anr. Vs. L & T. Finance Ltd. & Anr. (supra) and in the case of Jasvinder Kaur Vs. L & T Finance Ltd. & Anr. (supra) after adverting to the provisions of Section 3(1)(b) of the Arbitration Act and Section 27 of the General Clauses Act has held that the notices are sent by the Registered Post A.D. at the last known addresses of the petitioners and the same have not been returned by the postal authority and therefore, it would amount to a deemed service of such notices and proceedings. In my view, the said two judgments squarely apply to the facts of this case. I am respectfully bound by the aforesaid two judgments.
13. In so far as the judgment of the Supreme Court in the case of Union of India Vs. Tecco Trichy Engineers and Contractors (supra) relied upon by the petitioners is concerned, the Supreme Court has considered the situation where the General Manager of the southern ::: Downloaded on - 05/05/2015 23:59:24 ::: ppn 10 902.arbp-1231.14.doc railway, in-charge of the matter was not served with the copy of the award at his address and thus, the Supreme Court took a view that the General Manager who was the departmental head and was best person to take a final decision, whether the arbitral award shall be challenged or not and thus since he was the person directly connected with and involved in the proceedings and who was in control of the proceedings before the learned arbitrator ought to have served with the copy of the award was not served, limitation had not commenced. In my view, the said judgment does not apply to the facts of this case.
14.
In so far as the judgment of this Court in the case of Mukesh Nanji Gala Vs. Heritage Enterprises (supra) relied upon by the learned counsel for the petitioners is concerned, in that matter, this Court has considered the questions as to whether the party who was not a party to the agreement could have challenged the award under Section 34 of the Arbitration Act or not. In my view, the said judgment relied upon by the learned counsel for the petitioners does not apply to the facts of this case. Thus the reliance placed on these two judgments is misplaced.
15. In my view, the petitioners were duly served with the copy of the award by the learned arbitrator in the year 2012 itself whereas the petitioners have lodged the petition on 22nd April 2014 which is beyond the period of three months from the date of service of the impugned award. The petition is thus ex facie barred by law of limitation and is accordingly dismissed. No order as to costs.
R.D. DHANUKA, J.
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