Justice J.B. Pardiwala, Justice K.V. Viswanathan, Supreme Court
Delivery Of Arbitral Award To Official Who Didn’t Have Decision-Making Capacity & Wasn’t Party To Arbitration Would Not Be A Valid Service: Supreme Court
|The appeal before the Supreme Court arose from a judgment of the Calcutta High Court by which the order passed by the District Court came to be set aside.
While directing the expeditious disposal of the State’s appeal, the Supreme Court has held that the service of the arbitral award would not be valid when the delivery of the award is made to the Assistant Engineer who was not “a party to the arbitration” and who was not in a decision-making capacity to take further recourse on the award.
The appeal before the Apex Court arose from the judgment of the Calcutta High Court by which the order passed by the District Court came to be set aside, thereby holding that the Section 34 application, preferred by the State against the arbitral award, was time-barred.
The Division Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan held, “We are of the view that the authorised representative of the State could not have taken the final decision to challenge the award. It is only the Secretary of the concerned Department or the Executive Engineer, who could be said to be the competent authority to take a decision as to whether the award could be challenged or not.”
“Admittedly and as is clear from the letter dated 08.08.2014 of the Arbitrator, Annexure P-11 to the Civil Appeal the signed copy of the award was delivered to SDO/AE – TCS D-2 Islampur who was present at the meeting on behalf of the respondent. Applying the dictum in Tecco Trichy Engineers & Contractors (supra) a delivery to the Assistant Engineer who was not “a party to the arbitration” and who was not in a decision-making capacity to take further recourses on the award would not be a valid service of the award”, it added.
Senior Advocate Ajit Kumar Sinha represented the Appellant, while AOR Madhumita Bhattacharjee represented the Respondent.
Factual Background
The arbitral award came to be passed in favour of the appellant, and the State, having suffered an award, challenged the same, invoking Section 34 of the Arbitration and Conciliation Act, 1996. The period of limitation prescribed for the purpose of preferring a Section 34 application is 90 days. Going by the date of the award and the receipt of the xerox copy of the award by the authorised representative of the State, the period of limitation could be said to have expired on February 12, 2014. It was the case of the State that till February 12, 2014, it had no knowledge about the passing of the arbitral award. It was only when the appellant initiated execution proceedings that they came to know about the same.
The State preferred a Section 34 application on March 20, 2014, and it addressed a letter to the Arbitrator to provide a certified copy of the arbitral award. The Section 34 application, being time-barred, according to the District Court, was not entertained, and the Miscellaneous Case came to be dismissed. The High Court allowed the State’s appeal.
Reasoning
On a perusal of the impugned order, the Bench noted that the High Court considered the fact that the award was not served on the Secretary, Irrigation and Waterways Department or the Executive Engineer. According to the High Court, it was only the Secretary, Irrigation and Waterways Department or the Executive Engineer, who could be termed as “party”, as defined in Section 2(1)(h) of the Act 1996.
The Bench, at the outset, explained that the limitation period under the Act 1996 for the Section 34 application is three months from the date of “receipt” of an Arbitral Award or from the date on which the request under Section 33 of the Act is disposed. The proviso to sub-section (3) gives an additional 30 days to a party, provided it can satisfy the Court that it was prevented from filing on time for sufficient reasons.
“The analysis of the provisions above shows that an Application for setting aside an Arbitral Award may be made by such party within three months from the date of its receipt unless the proviso is applicable and that limitation under Sub-section (3) of Section 34 of the Act 1996 commences on the date when the party has received the Arbitral Award”, it said.
The authorised representative had collected a xerox copy of the award duly signed by the Arbitrator but, according to the Bench, the authorised representative in this case would not fall within the ambit of “party” as defined by Clause (h) of Sub-Section (1) of Section 2 to an arbitration agreement. “The application for setting aside an arbitral award in accordance with the provisions of the Act 1996 has to be preferred by such party within three months from the date of its receipt unless the proviso is applicable and that limitation, under Sub-section 3 of Section 34 of the Act 1996, commences from the date when the party has received the arbitral award”, it added.
Referring to the judgment in Union of India vs. Tecco Trichy Engineers & Contractors (2005), the Bench reaffirmed that the the delivery of the copy of the award has the effect of conferring certain rights on the party 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 the award by the Tribunal the receipt thereof by each party constitutes an important stage in the arbitral proceedings.
It was further noticed that the contract was executed between the Superintending Engineer, Mahananda Baraj Circle (I&W) DTE and M/s Motilal Agarwala, the appellant. The Executive Engineer, Teesta Canal Division No.1, Islampur was also a party to the arbitration. The signed copy of the award was delivered to SDO/AE – TCS D-2 Islampur, who was present at the meeting on behalf of the respondent. As per the Bench, the service was not valid as it was made to the Assistant Engineer.
“We take notice of the fact that Tecco Trichy (supra) has been relied upon by this Court in Benarsi Krishna Committee and others v. Karmyogi Shelters Private Limited, reported in (2012) 9 SCC 496, wherein this Court held that the expression “party”, as defined in Section 2(1)(h) of the 1996 Act would be a person who is a “party” to an arbitration agreement”, the Bench further mentioned.
Thus, dismissing the appeal and considering that the litigation was almost 12 years old, the Bench requested the District Court to take up the State's appeal and decide it on its own merit within a period of six months.
Cause Title: M/s. Motilal Agarwala v. State of West Bengal (Neutral Citation: 2025 INSC 1062)
Appearance
Appellant: Senior Advocates Ajit Kumar Sinha, Pijush K. Roy, Advocates Pritthish Roy, Kakali Roy, Khushboo Sharma, AOR Rajan K. Chourasia, Advocates Anand Kumar Chaurasia, Naveen Soni
Respondent: AOR Madhumita Bhattacharjee, Advocate Debarati Sadhu