Point of Law: Arbitration Award – Execution - By virtue of the provisions of Section 36, since it is a money decree and the Code of Civil Procedure in Order XLI Rule 1(3) mandates imposition of the terms and conditions for even lodging of a proceeding challenging the award.

JUDGMENT :

Heard. Rule. The learned advocate Mr. G.K. Naik-Thigle waives service for the respondent. On the request of the parties the matter is heard finally at the stage of admission.

2. By invoking the powers of this Court under Article 226 and 227 of the Constitution of India, the petitioners are challenging the order passed by the District Judge-2 in Civil Misc. Application No. 217/2020 a proceeding filed by them under Section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter ‘the Arbitration Act’), whereby the application (Exh. 11) filed by them, seeking stay to the execution and operation of the Arbitral Award dated 30.01.2019 has been stayed, however, with a condition of depositing 60% of Rs. 32,62,48,730/- with interest at the rate of 12% from the date of award and further direction to furnish security for the balance amount.

3. The parties had entered into three agreements whereby the respondent firm had undertaken the work of transportation of food grain against specified charges during the period from 01.04.2001 to 31.05.2006. The dispute occurred in respect of the incremental escalation in transportation charges from year to year. The parties went to Arbitral Tribunal which passed an Award under challenge. It appears that the contracts were then extended up to 18.06.2008.

4. The learned A.G.P. Mr. Lakhotiya vehemently submitted that a serious dispute as regards limitation crops up in the matter in as much as, the respondent has approached the Arbitral Tribunal after a lapse of several years when as per clause 31 of the agreements, it should have taken steps for commencing the arbitral proceeding within six months of completion of the contract which was 30.05.2006. He would submit that even if it is assumed that the contract was subsequently extended, such extended period had ended on 18.06.2008. In spite of such serious objection having been raised the Tribunal has clearly overlooked it and has come out with unacceptable reasons. The observations and the conclusions of the Tribunal in that regard are clearly perverse, arbitrary and capricious and provides a legitimate ground for the petitioners to seek its setting aside under Section 34 of the Arbitration Act. The Award is clearly in conflict with the basic notions of morality and justice and is opposed to and in contravention of fundamental policy of Indian law barring stale claims.

5. The learned A.G.P. would submit that though the learned Judge of the lower Court has considered this aspect, no appropriate weight is attached to these circumstances.

6. The learned A.G.P. would then submit that in fact, the whole process of arbitration has not been properly invoked. The respondent along with few other similarly placed contractors had made a joint request to the Arbitrator who is none other than the Divisional Commissioner of Aurangabad region seeking to invoke arbitral proceedings. He would submit that the law does not contemplate any such joint arbitration application. He would submit that even that was preferred on 15.01.2009.

7. The learned A.G.P. would further submit that the Government Resolution being relied upon by the respondent and referred to and made basis by the Tribunal for arriving at the resolution and particularly the Charts A to C by referring to which the dues have been arrived at for calculating were actually rejected by the Principal Secretary. However the award has been passed by taking into account these charts which were never finalized by the Principal Secretary. He would further submit that pursuant to the Government letter dated 27.04.2006, only 5% annual increment was to be given in the rate of the transportation agreed between the parties. It was specifically mentioned in the letter that no further increase would be admissible and still the Tribunal has gone ahead and passed the award.

8. The learned A.G.P. would therefore submit that it is a clear case of the award being obtained by inducement within the meaning of second proviso