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1999 Supreme(Cal) 39
High Court Of Calcutta
RANAJIT KUMAR MITRA
NIKHILESH MUKHERJEE - Appellant
Versus
O.N.G.C - Respondent
G. A. 1969 Of 1997
Decided On : 02/05/1999
A.MITRA, D.BANERJI, H.K.Mitter, H.K.SAHA ROY
Failure to take action to challenge an arbitration award within the limitation period, despite having knowledge of the award and the service of notice, can result in waiver of the right to challenge the decree based on that award.
Headnote:
ARBITRATION - AWARD - SERVICE OF NOTICE - SECTION 14 (1) AND (2) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - COMPLIANCE - WAIVER OF RIGHTS - LIMITATION - DECREE - FINALITY.
Fact of the Case:
Petitioners sought to urge additional grounds in support of their pending application to set aside an ex parte decree passed in an arbitration proceeding. They claimed that they were not served with proper notice under sections 14 (1) and (2) of the Arbitration and Conciliation Act, 1996 (the Act) regarding the award made in favor of the respondent.
Finding of the Court:
The court found that the petitioners had received the covering letter and a copy of the award rejecting their claim on June 30, 1987, and were aware of the separate award made in favor of the respondent. Despite this knowledge, they failed to take any action or file an objection within the limitation period. The court also held that the service of notice under section 14 (2) was duly effected by the court's order directing the petitioners' advocates to accept the copy of the petition and the enclosed award, which they did by signing the peon book.
Issues: 1. Whether the petitioners were properly served with notice under sections 14 (1) and (2) of the Act regarding the award made in favor of the respondent. 2. Whether the petitioners had waived their right to challenge the decree by failing to take action within the limitation period.
Ratio Decidendi: 1. The court held that substantial compliance with the requirements of section 14 (2) of the Act is sufficient, and that the service of notice need not be in writing but can be in the form of an intimation or communication. The court found that the petitioners had received such notice through the court's order directing their advocates to accept the copy of the petition and the enclosed award. 2. The court held that the petitioners had knowledge of the award since June 1987 and were aware of the notice served on their advocates in August 1996. Despite this, they chose not to appear in court or take any action to challenge the decree until after the limitation period had expired. Therefore, the court held that the petitioners had waived their right to challenge the decree.
Final Decision: The court dismissed the petitioners' application, holding that it was barred by limitation and that the petitioners had waived their right to challenge the decree by their inaction. The court also awarded costs of the application against the petitioners.
( 1 ) THE Court: In this application the petitioners had prayed for an order to enable them to urge the grounds set out in paragraph 34 of the petition, in support of their pending application for setting aside an exparte decree dated December 24. 1996. They had also prayed for an order of stay of operation of the decree, and stay of further proceedings in execution of the decree. In the petition it had been alleged, that in an arbitration proceedings between the parties the petitioners in their statement of claim a sum of Rs. 76,51,108. 60, and in its counter statement the respondent had claimed a sum of Rs. 4,12,76,316. 67. After six sittings in the reference it would appear, the arbitrator had made and published two separate awards in respect to the claim and the counter claim. The arbitrator had adopted the procedure, it had ben alleged, in compliance with the court's order dated February 24, 1986, that the arbitrator would be appointed in "both the references".
( 2 ) ACCORDING to the petitioners, on June 30, 1987 they had received a copy of an award, under a covering letter written to the Registrar, Original Side, both dated June 6, 1987 and from that award the petitioners had come to learn that their claim had been rejected. An application to set aside the award was made on behalf of the petitioners before this court, on July 28, 1987. The respondent had filed its affidavit-in-opposition on November 16, 1987, and according to the petitioners it was then that, for the first time the petitioners came to learn that the arbitrator had made a separate award in respect to the counter-claim of the respondent, and had awarded in favour of the respondent a sum of Rs. 1,59,50,139. 39. The petitioners alleged, that no notice under sections 14 (1) or 14 (2) was served on them in respect to the award made in favour of the respondent, and no notice under section 14 (2) was served in respect to the award rejecting their claim. It was alleged in the petition that, "after various proceedings initiated and orders made from time to time by the Hon'ble Court, the petitioners caused a search to be made on 5th August, 1998 and thereafter, of the records of the Hon'ble Court on the advice of their learned counsel. " The petitioners alleged, that on September 30, 1996 the advocates for the respondents, by their clerk had purported to serve on the petitioners, notice under section 14 (2) in respect to the award in favour of the respondent at premises No. 15/1, Strand Road, Calcutta. In the affidavit of service, filed by that clerk, according to the petitioners the name of the person who had allegedly received the notice had not been disclosed, not was there any explanation as to why the notice had not been served at the address of the petitioners as appeared in the cause-title of their Statement of Claim, and consequently service of notice under section 14 (2) was bad. According to the petitioners they had no knowledge of the filing of the award until "only recently upon search of court records," and therefore they may be allowed to rely upon the grounds set out in the petition.
( 3 ) IT would appear from the records, that upon receipt from the arbitrator the award which had been made in favour of the respondent, the Registrar, Calcutta High Court, Original Side, found that the award had not been stamped and under his covering letter dated March 2, 1998 he sent the award to the Collector of Calcutta for adjudication. More than eight years had elapsed. Neither of the parties had taken any step in the matter. By a letter dated May 18, 1996 the advocates for the respondent requested the Collector of Calcutta to intimate them, as to the amount of stamp duty that may be payable on the award to enable them to deposit such amount, and serve the notice under section 14 (2) of the Act. The Collector, by its letter dated June 4, 1996 had informed the advocates for the respondent, that the award could not be traced, and requested
