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2006 Supreme(AP) 139
Andhra Pradesh High Court
Judges : B.S.REDDY, D.S.R.VERMA
A.P.State Trading Corporation, rep.by its Managing Director - Appellant
Versus
S.G.Sambandan and Company, rep., by its partner, T.S.Rajeswaran - Respondent
Decided On : 02-07-06
Headnote:Arbitration Act, 1940 - Section 3 First Clause (3), 30 - passing of Award - Time Limit - Arbitrator to pass extended period - However, power to extend time lies with discretion of Court.
Held : Clause (2) of the First Schedule of the Act, it is obvious that-
(a) the award shall be made by the arbitrator within four months after entering on the reference; or if the arbitrator was called upon by either of the party by a notice; or (b) if the Arbitrator was called upon by either of the party by a notice in writing to the Arbitrator to act; or (c) within such extended time as the court may allow.
Therefore, it is abundantly clear that clause (3) of the First Schedule of the Act does not make it totally mandatory that the arbitrator shall make the award within four months. But, the said four months period has to be computed as per the above conditions. In other words, computation of the said four months period shall be subject to the above three said contingencies. Therefore, it cannot be said that if there is any delay, unless the same falls within the mischief of either of the above three contingencies, in our view, is not capable of vitiating the award.
No doubt, the Arbitrator has to pass the award within the time prescribed or within the extended period, as the Court concerned may deem just in its discretion and such a power is vested only with the Court as to whether the period for passing the award can be extended or not.
The proceedings shall not be unduly prolonged and the very act of a party taking willing part in the proceedings before the arbitrator without a demur has no right to raise this objection.
The Arbitrator can be said to have "entered on the reference", as contemplated under Clause (3) of the First schedule of the Act, only when he applies his judicial mind to the disputes between the parties by taking up the matter for hearing and begins to examine the witness and hears the submissions advanced by both parties and not the time when he calls for the claim statements or counter statements from the parties.
In the instant case, admittedly, the second Arbitrator was appointed on 27-3-1999 and a claim was filed on 7-8-1999 and a counter claim was filed on 4-9-1999. All preliminary issues that were raised by the department have been disposed of on 4-12-1999 and the issues for determination were also framed on the same day i. e. on 4-9-1999.
Therefore, in the above circumstances, there was no occasion for the learned Arbitrator before 4-12-1999 to apply his mind to the actual disputes or issues involved. He could frame the issues for determination only on 4-12-1999 and, hence, application of mind as regards the dispute between the parties would start commencing from that date only i. e. 4-12-1999. If that date is to be taken into account, for the purpose of Clause (3) of the first Schedule of the Act, the award was supposed to have been passed within four months thereafter i. e, on or before 4-4-2000 and, admittedly, the award was passed on 03-04-2000. Therefore, we are of the considered view that the award was passed strictly within the period prescribed by the statute viz. , the award should be passed within four months.
( 1 ) HEARD both sides.
( 2 ) SINCE all the abovementioned Civil miscellaneous Appeals and the Civil Revision petition are inter-connected and arise out of a common order, dated 8-6-2001, in o. P. Nos. 11,12 and 15 of 2000, passed by the IV Senior Civil Judge, City Civil Court, hyderabad, they are heard together and are being disposed of by this common judgment.
( 3 ) THE appellant in C. M. A. Nos. 2288, 2609 and 2622 of 2001 and the respondent in c. R. P. No. 4073 of 2001 and C. M. A. No. 2875 of 2001 is the Contractor while the appellant in C. M. A. No. 2875 of 2001 and the petitioner in C. R. P. No. 4073 of 2001 and the respondent no. 1 and the respondent inc. M. A. Nos. 2288, 2609 and 2622 of 2001 respectively, is the department and the respondent No. 2 in c. M. A. No. 2875 of 2001 is the learned arbitrator.
( 4 ) FOR the sake of convenience, in this common judgment, Andhra Pradesh State trading Corporation, represented by its managing Director, Hyderabad and s. G. Sambandan and Company, represented by its Partner, Visakhapatnam, will be referred to as "the Department" and "the Contractor", respectively.
( 5 ) C. R. P. NO. 4073 of 2001 and c. M. A. No. 2875 of 2001 are filed by the department where as C. M. A. Nos. 2288, 2609 and 2622 of 2001 are filed by the Contractor against the common order and decrees, dated 8-6-2001, passed by the IV Senior Civil Judge, city Civil Court, Hyderabad, in O. P. Nos. 11, 12 and 15 of 2000.
( 6 ) THE facts, shorn of, are that there was an agreement, dated 2-1 -1979, between the department and the Contractor for stevedoring, handling, clearing and loading of the imported cement at Visakhapatnam. As per the agreement, the Managing Director of the Department is the Designated arbitrator. Accordingly, owing to certain disputes, he was appointed as an Arbitrator. An interim award also was passed, which was challenged in O. S. No. 342 of 1994 on the file of IV Senior Civil Judge, City Civil court, Hyderabad. Subsequently, the department filed O. P. No. 111 of 1994 to have the Arbitrator changed. The Contractor filed o P No. 114 of 1994 seeking to extend the time for passing of the award. The dispute went up to the hon ble Supreme Court. Consequently, another Arbitrator was appointed. The said Arbitrator was a former judge of the Hon ble Supreme Court.
( 7 ) THERE were 25 claims in total, the total sum of which would come to about Rs. 1. 38 crores. The Department filed a counter claim for Rs 11,36,627-37 paise. After filing claims and counter-claims, on 4-12-1999, the learned Arbitrator framed the issues. The award was passed on 3-4-2000 and as per the award, the Contractor was awarded a sum of Rs. 54,93,478-16 paise. The counterclaim also was partly allowed whereby the department was declared entitled to a sum of Rs 2,01,432-40 paise. After deducting the said sum of Rs. 2,01,432-40 paise from the amount actually awarded to the Contractor, the net amount awarded to the Contractor would come to a sum of Rs. 52,92,045-76 paise
( 8 ) CHALLENGING the said award, the contractor filed O. P. No. 11 of 2000 under section-17 of the Arbitration Act, 1940 (for brevity "the Act"), to make the award rule of court and also filedo. P. No. 12of 2000 under sections-15, 16 and 17 of the Act to modify the award. The Department also filed o P No. 15 of 2000 under Sections-30 and 33 of the Act, to set aside the award.
( 9 ) THE Court below, after considering the contentions of both parties and the material available on record, allowed O. P. No. 11 of 2000, filed by the Contractor, and consequentially, dismissed O. P. Nos. 12 of 2000 and 15 of 2000, filed by the Contractor and the Department, respectively.
( 10 ) CHALLENGING the order and decree, dated 8-6-2001, in O. P. No. 11 of 2000, the department filed C. R. P. No. 4073 of 2001. This Court, initially, by order, dt. 21-9-2001, granted interim stay of the award directing the Department to deposit fifty percent of the amount awarded by the learned
