2005 Supreme(SC) 485

2005(2) Supreme 622
Supreme Court of India
(From Madras High Court)
R.C. Lahoti, CJI, G.P. Mathur & P.P. Naolekar, JJ.
Union of India —Appellant
versus
Tecco Trichy Engineers & Contractors —Respondents
Civil Appeal No. 1784 of 2005
(@ SLP (C) No. 20446 of 2002)
Decided on 16-3-2005
Counsel for the Parties :
For the Appellant : K. Radhakrishnan, Sr. Advocate, T.A. Khan, S.N. Terdal and Mrs. Anil Katiyar, Advocates.
For the Respondent : Arvind Kumar, Ms. Poonam Prasad and Ms. Laxmi Arvind, Advocates.

Important point
In an organisation like railways “party” referred to in Section 2(h) r/w Section 34(3) Arbitration and Conciliation Act is to be ­construed to be a person directly connected with and involved in the proceedings and who is in control of the proceedings before Arbitrator.­

Headnote:Arbitration and Conciliation Act, 1996—Section 34(3) r/w Section 31—Application for setting aside arbitrator award along with applica­tion seeking condonation of delay of 27 days—Delay condonation appli­cation contested on ground that delay was of 34 days and being appeal beyond 30 days it could not be condoned by Court—High Court accepted objection and dismissed appeal and condonation application—Appeal—Question which would be ­effective date on which appellant was delivered that and reason arbitral award where from limitation should be calculated?—Meaning to be assigned to the term “party” and “party making the application” for setting aside the award in context of the State or any department of government—Any organiza­tion like Railways, “party” is to be construed to be a person directly connected with and involved in the proceedings and who was in control of proceedings before Arbitrator—Chief Engineer was the authority who had signed agreement on behalf of Union of India and was ­directly concerned with arbitration—General Manager of the Railways had only ­referred the matter for arbitration—Service of the arbitral award on General Manager by way of receipt in his inwards office could not be taken to be a sufficient service to constitute starting point of limitation under Section 34(3) of the Act—Service of notice on Chief Engineer would be the starting point of limitation and by that delay was of 27 days and deserved to be condoned.­

       Held : Form and contents of arbitral award are provided by Section 31 of the Act. The arbitral award drawn up in the manner prescribed by Section 31 of the Act has to be signed and dated. According to sub-Section (5), “after the arbitral award is made, a signed copy shall be delivered to each party”. The term “party” is defined by clause (h) of Section 2 of the Act as meaning `a party to an arbitration agreement’. The definition is to be read as given unless the context otherwise requires. Under sub-Section (3) of Section 34 the limitation of 3 months commences from the date on which “the party making that appli­cation” had received the arbitral award. We have to see what is the meaning to be assigned to the term “party” and “party making the application” for setting aside the award in the context of the State or a department of the Government, more so a large organization like the Railways. (Para 6)

       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. (Para 10)

       The learned Single Judge of the High Court as also the Division Bench have erred in holding the application under Section 34 filed on behalf of the appellant as having been filed beyond a period of 3 months and 30 days within the meaning of sub-Section (3) of Section 34. There was a delay of 27 days only and not of 34 days as held by the High Court. In the facts and circumstances of the case, the delay in filing the application ­deserves to be condoned and the application under sub-Section (1) of Section 34 of the Act filed on behalf of the appellant deserves to be heard and decided on merits. (Para 12)