High Court Of Calcutta
M. M. DUTT, C. K. BANERJEE
STATE - Appellant
Versus
M/S.A.MONDAL - Respondent
Appeal 81 Of 1984
Decided On : 08/01/1984
ARBITRATION - APPLICATION FOR SETTING ASIDE AWARD - LIMITATION - NOTICE OF FILING OF AWARD - INTERPRETATION OF ART. 119, LIMITATION ACT, 1963 AND S. 14 (2), ARBITRATION ACT, 1940.
Fact of the Case:
Appellant, the State of West Bengal, challenged the dismissal of its application to set aside an arbitration award on limitation grounds. The respondent, a contractor, had won the tender for the construction of a Primary Health Centre and entered into a contract with the appellant. The contract contained an arbitration clause. The respondent claimed an enhancement of the rate by 30% for work done during an extended period, leading to the appointment of an arbitrator. The arbitrator directed the appellant to pay the respondent a sum of Rs. 1,98,483/- with interest. The appellant received a letter from the respondent informing them of the filing of the award in Court. The appellant claimed it took steps to file an application to set aside the award but faced delays due to the long Pujah Vacation and a misunderstanding regarding the date of receipt of the notice under S. 14 (2), Arbitration Act.
Finding of the Court:
The Court held that the notice referred to in Art. 119, Limitation Act, is a notice under S. 14 (2), Arbitration Act, and must emanate from the Court. The letter from the respondent informing the appellant of the filing of the award could not be treated as a notice under S. 14 (2) as it did not originate from the Court. The Court also found that the period of limitation should be computed from the date of receipt of the notice under S. 14 (2) issued by the Registrar, Original Side of the Court. The Court further held that the arbitrator acted illegally in not deciding the appellant's contention that the respondent's claim was barred by limitation, as this was one of the matters referred to arbitration.
Issues: 1. Whether the letter from the respondent informing the appellant of the filing of the award could be treated as a notice under S. 14 (2), Arbitration Act, for the purpose of limitation? 2. When should the period of limitation for setting aside the award be computed from? 3. Whether the arbitrator acted legally in not deciding the appellant's contention that the respondent's claim was barred by limitation?
Ratio Decidendi: 1. The Court interpreted Art. 119, Limitation Act, and S. 14 (2), Arbitration Act, to hold that the notice of filing of the award must emanate from the Court. The letter from the respondent did not satisfy this requirement and could not be considered a valid notice under S. 14 (2). 2. The Court held that the period of limitation should be computed from the date of receipt of the notice under S. 14 (2) issued by the Registrar, Original Side of the Court. 3. The Court found that the arbitrator acted illegally in not deciding the appellant's contention that the respondent's claim was barred by limitation, as this was one of the matters referred to arbitration.
Final Decision: The Court allowed the appeal, set aside the judgment of the learned Judge, and remitted the award to the arbitrator with a direction to reconsider the award after deciding on merits the plea of the appellant that the claim of the respondent was barred by limitation.
( 1 ) THIS appeal has been preferred by the appellant, the State of West Bengal, against the judgment and order D/- March 1, 1984 of a learned single Judge of this Court dismissing the application of the appellant under Ss. 30 and 33, Arbitration Act, 1940.
( 2 ) THE appellant invited tenders for the construction of a Primary Health Centre at Madhab Nagar, P. S. Pathar Pratima, District 24 Parganas. The appellant accepted the tender of the respondent and entered into a contract with it for the construction of the said Primary Health Centre at the rate mentioned in the contract. The contract also contained an arbitration clause.
( 3 ) ACCORDING to the appellant, the construction work was completed by the respondent on 8-11-1974, but according to the respondent the work was completed before June 15, 1976.
( 4 ) THE respondent by its letter D/- August 21, 1981 raised a dispute claiming, inter alia, the enhancement of the rate by 30% in respect of the work done by the respondent during the extended period. By the said letter the respondent also claimed the appointment of an arbitrator within a period of fifteen days of the date of the letter. After the expiry of the said period, the respondent filed an application before a learned Judge of this Court under S. 8. Arbitration Act praying for the appointment of an arbitrator. The appellant opposed the said application on the ground that the claim of the respondent was barred by limitation. The learned Judge, however, by her order D/- March 12, 1982 appointed Sri D. M. Mukherjee, a retired Chief Engineer of the Government of West Bengal, the arbitrator.
( 5 ) AS per the direction of the arbitrator, the parties submitted their respective written statements. The appellant in its counter statement specifically took the plea that the claim of the respondent was barred by limitation. It appears from the minutes of the proceedings of the 7th hearing before the arbitrator that the arbitrator took the view that the Court's order appointing him as arbitrator implied that the appellant's plea that the respondent's claim was barred by limitation was turned down. Accordingly, the arbitrator directed that the arbitration proceedings would continue in terms of the order of the Court. There is no dispute that the arbitrator did not entertain and decide the appellant's plea that the claim of the respondent was barred by limitation.
( 6 ) ON 22-9-1983, the arbitrator made an award whereby he directed the appellant, the State of West Bengal, to pay to the respondent contractor a sum of Rs. 1,98,483/- with interest at the rate of 10% per annum with effect from March 12, 1982, the date of reference to arbitration, till the date of payment of the amount under the award or the date of the decree, whichever is earlier.
( 7 ) THE award was filed in Court by the arbitrator on 29-9-1983. It appears that the respondent by its letter D/-29-9-1983 informed the Executive Engineer, 24 Parganas, South Division, Construction Board Directorate, Government of West Bengal, of the filing of the award in this Court by the arbitrator on 29-9-1983. It is the case of the appellant that after receipt of the said letter of the respondent, the appellant had taken steps in regard to the filing of an application for setting aside the award. On October 28, 1983, the appellant, however, received a letter from its Advocate, Mr. R. C. Deb that an application for setting aside the award could be made within thirty days of the date of receipt of the notice under S. 14 (2), Arbitration Act.
( 8 ) IT is the specific case of the appellant that on 27-10-1983, the appellant had received the notice under S. 14 (2), Arbitration Act issued by the Registrar, Original Side of this Court. It is alleged that the entry in the Receipt Register of the appellant showing that the said notice under S. 14 (2) was received on 12-10-1983 and not on October 27, 1983, is wrong and has been so entered by the employee concerned in collus
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