Karnataka High Court
Sri. V.N. Ramamurthy vs The Honble Arbitrator (Nh-7) on 7 December, 2020
Author: Nataraj Rangaswamy
Bench: Nataraj Rangaswamy
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF DECEMBER 2020
BEFORE
THE HON'BLE MR.JUSTICE NATARAJ RANGASWAMY
M.F.A. No.6117/2015
BETWEEN:
SRI. V.N. RAMAMURTHY
SON OF LATE SRI.NARAYANAPPA (ALIAS) NYNEPPA
AGED ABOUT 45 YEARS,
RESIDING AT VARLAKONDA VILLAGE,
SOMANAHALLI HOBLI,
GUDIBANDE TALUK
CHIKKABALLAPUR DISTRICT
CHIKKABALLAPUR - 562 101.
... APPELLANT
(BY SRI. L S CHIKKANAGOUDAR, ADVOCATE)
AND:
THE HON'BLE ARBITRATOR (NH-7)
& DEPUTY COMMISSIONER
CHIKKABALLAPURA DISTRICT
CHIKKABALLAPUR - 562 101.
... RESPONDENT
(BY SRI. H.K. BASAVARAJ, AGA)
THIS MFA IS FILED UNDER SECTION 37(1)(b) OF THE
ARBITRATION AND CONCILIATION ACT, AGAINST THE
JUDGMENT AND ORDER DATED 24.06.2015 PASSED IN
A.S.NO.15/2013 ON THE FILE OF THE PRINCIPAL
DISTRICT JUDGE, AT CHIKKABALLAPUR, DISMISSING THE
ARBITRATION SUIT FILED UNDER SECTION 34(1)(2) AND
(3) OF THE ARBITRATION AND CONCILIATION ACT.
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THIS MFA COMING ON FOR HEARING, THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is filed by the plaintiff in A.S.No.15/2003 challenging the judgment dated 24.06.2015 passed by the court of Principal District Judge, Chikkaballapura.
2. The facts shorn of other details as pleaded in the appeal memorandum are that the appellant herein was the owner of land bearing Sy.Nos.76/1, 76/3, 77 of Varlakonda village, Gudibande Taluk, Chikkaballapura District, totally measuring 4 Acres 7 Guntas, part of which was acquired by the National Highways Authority of India for the purpose of widening National Highway No.7. An order dated 12.07.2007 was passed by the competent authority under Section 3G (1) of the National Highways Act, 1956 awarding a sum of Rs.90,000/- per acre as compensation for acquisition of a portion of the aforesaid land.
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3. The appellant termed the compensation as inadequate and sought reference of his dispute by an application dated 02.11.2007. The Land Acquisition Officer referred the dispute to the Arbitrator as provided under Section 38 (5) of the National Highways (Amendment) Act, 1997. The Arbitrator without issuing notice to the appellant, and in his absence enquired and passed an award dated 30.11.2012. Later, a notice of the award dated 01.02.2013 was addressed to the appellant which was served on 05.04.2013. However, a copy of the award dated 30.11.2012 was not enclosed with the notice of the award. In terms of the said award notice, the appellant was directed to receive the enhanced compensation of Rs.80,107/- which was received by the appellant on 05.04.2013 under protest. Later, the appellant applied and obtained a copy of the award on 17.05.2013 and challenged the award before the District Judge, Chikkaballapura in an arbitration suit under Section 34 of the Arbitration & Conciliation 4 Act, 1996 (henceforth referred to as Act of 1996) in A.S.No.15/2013. The appellant also filed an application under Section 34 (3) of the Arbitration and Conciliation Act, 1996 for condonation of delay in filing the arbitration suit.
4. The court below issued suit summons to the respondent, which did not appear and was placed exparte. The Court below heard the arbitration suit and in terms of the Judgment dated 24.06.2015, dismissed the arbitration suit on the ground that it was filed belatedly.
5. The petitioner has therefore filed this appeal under Section 37 of the Act of 1996, challenging the aforesaid Judgment of the Court below.
6. The learned counsel for the appellant has contended that a copy of the award dated 30.11.2012 was not enclosed with the award notice dated 5 01.12.2013. The learned counsel also brought to the notice of the court Section 31 (5) of the Act, which mandates that after an arbitral award is passed, a signed copy should be delivered to each party. Thus, he contended that in the absence in proof regarding delivery of the copy of the award, limitation to file an arbitration suit under Section 34 of the Arbitration Act, 1996 would not commence. The learned counsel for the appellant contended that under Section 34 (3) of the Act of 1996, the limitation to file an arbitration suit commences from the date of receipt of an arbitral award.
7. He further contended that, in order to initiate a proceeding under Section 34 of the Act of 1996, the appellant obtained a copy of the award on 17.05.2013 and thereafter filed the arbitration suit on 26.07.2013, which was within three months from the date of receipt 6 of copy of the award and therefore he contends that the arbitration suit was filed within the time prescribed.
8. In order to ascertain whether the copy of the award dated 30.11.2012 was sent to the appellant along with the copy of the notice, the learned AGA was directed to place on record the proof of service of the award dated 30.11.2012 by the Arbitratror-cum-Deputy Commissioner, Chikkaballapur District.
9. The learned AGA submits that the records were immediately not available and that the same were forwarded to the National Highways Authority.
10. The documents placed on record before the court below would indicate that the appellant had received copy of the award notice dated 01.02.2013 in respect of arbitration award dated 30.11.2012. It is also seen that he had received the compensation determined in terms of the award under protest on 05.04.2013. The 7 appellant has placed on record, a copy of the award dated 30.11.2012 which he obtained thereafter from the Arbitrator on 17.05.2013 and then filed the proceeding under Section 34 of the Act.
11. Section 31 (5) of the Arbitration and Conciliation Act, 1996 reads as follows:
31. Form and contents of arbitral award.-
(1)........
(2)........
(3)......
(4).......
(5) After the arbitral award is made, a signed copy shall be delivered to each party.........
The Apex Court in the case of Benarsi Krishna Committee and Others vs. Karmyogi Shelters Private Limited reported in 2012 (9) SCC 496 has held as under:
"16. The view taken in Pushpa Devi Bhagat vs. Rajinder Singh reported in (2006) 5 SCC 566, is in relation to the authority given to an Advocate to act on behalf of a party to a proceeding in the proceedings itself, which cannot stand satisfied where a provision such as Section 31(5) of the 1996 Act is concerned. The said provision clearly indicates that a signed copy of the Award has to be 8 delivered to the party. Accordingly, when a copy of the signed Award is not delivered to the party himself, it would not amount to compliance with the provisions of Section 31(5) of the Act. The other decision cited by Mr. Ranjit Kumar in Nilkantha Sidramappa Ningashetti vs. Kashinath Somanna Ningashetti reported in AIR 1962 SC 666, was rendered under the provisions of the Arbitration Act, 1940, which did not have a provision similar to the provisions of Section 31(5) of the 1996 Act. The said decision would, therefore, not be applicable to the facts of this case also.
17. In the instant case, since a signed copy of the Award had not been delivered to the party itself and the party obtained the same on 15-12- 2004, and the Petition under Section 34 of the Act was filed on 3-2-2005, it has to be held that the said petition was filed within the stipulated period of three months as contemplated under Section 34(3) of the aforesaid Act. Consequently, the objection taken on behalf of the Petitioner herein cannot be sustained and, in our view, was rightly rejected by the Division Bench of the Delhi High Court".
Therefore, it is incumbent upon the Arbitrator to deliver copy of the award to each of the parties before him.
12. Section 34 of the Arbitration and Conciliation Act, 1996 reads as follows:
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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 sub-section (2) and sub-section (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
(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 matters 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 10 derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter 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 1.--For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,--
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.] Explanation 2.--For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] [(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.] 11 (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(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.
[(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub- section (5) is served upon the other party.]
13. In the present case, notice of the award dated 01.02.2013 does not indicate that the copy of the award was enclosed. There is no material proof to show that 12 the copy of the award was delivered to the appellant. It is no doubt true that the appellant has received compensation assessed by the Arbitrator on 05.04.2013 under protest, but that itself would not indicate that the appellant had notice and knowledge of the contents of the award for him to file the proceeding under Section 34 of the Act. The limitation prescribed under Section 34 (3) mandates that the application for setting aside the award cannot be made after three months from the date of receiving the arbitral award. Therefore, in the present case, in the absence of any proof to show that the appellant had notice of the award of the Arbitrator, the limitation will have to be reckoned from the date when the claimant had received the copy of the arbitral award i.e., on 17.05.2013. Since the appeal is filed within three months from the date of receipt of copy of arbitral award, the proceedings under Section 34 of the Act was well within the limitation prescribed and therefore, the court below could not have rejected it on 13 the ground that it was filed belatedly beyond the time prescribed under Section 34 (3) of the Act of 1996.
14. In that view of the matter, the appeal is allowed. The impugned order passed by the court below is set aside and the case is remitted to the Court below. The court below shall now consider the claim of the appellant on merits of the case and pass appropriate orders within four months from the date of reopening the normal functioning of the Courts. Parties to bear their own costs.
Sd/-
JUDGE Np/-