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HIGH COURT OF CALCUTTA
Sanjib Banerjee, J.
ASSAM STATE WEAVING AND MANUFACTURING CO. LTD.
VS.
VINNY ENGINEERING ENTERPRISES (P) LTD.
EC No. 147 of 2009; GA No. 2864 of 2009; GA No. 2763 of 2009
Decided On: December 2, 2009
ARBITRATION - ENFORCEMENT OF AWARD - ARBITRATION AND CONCILIATION ACT, 1996 - ARBITRAL TRIBUNAL'S LIEN ON AWARD - SECTION 39 - ARBITRAL AWARD - NOT DEEMED DECREE UNDER SECTION 36 - TIME FOR MAKING APPLICATION TO SET ASIDE AWARD UNDER SECTION 34(3) NOT EXPIRES - RECEIPT OF COPIES OF AWARD BY ALL PARTIES TO REFERENCE - JURISDICTIONAL FACT.
Fact of the Case:
An award-holder sought to implement an arbitral award of December 22, 2008. The first award-debtor had wrongfully received payment under an agreement of June 22, 1992 without supplying the material that the agreement envisaged. The arbitrator found in favor of the claimant on five counts and the sum awarded was directed to be paid within three months from the date of the making of the award, failing which interest at the rate of 18 percent was payable. The award-holder caused the award to be transmitted from Guwahati to the Calcutta High Court. The award-debtors took out execution proceedings seeking dismissal of the execution proceedings on the ground that they have not been furnished copies of the award by the arbitrator.
Finding of the Court:
The award has not ripened to a decree in the absence of the receipt of the arbitral award by the other parties to the reference. The execution proceedings were misconceived and cannot be continued. The award-holder has to fork out the costs of the reference not paid by one or more of the other parties to ensure that such other parties obtain their copies of the award so that the time under section 34(3) of the Act can begin to run.
Issues: Whether the award-holder can implement an arbitral award without furnishing copies of the award to all parties to the reference?
Ratio Decidendi: The receipt of copies of the arbitral award by all parties to a reference is a jurisdictional fact that has to be established before a Court assumes authority to set about implementing the award. Section 34(3) of the Arbitration and Conciliation Act, 1996 makes the clock begin to tick, so to say, only upon the receipt of an arbitral award by the concerned party thereto. The legal fiction under section 36 of the present Act, that elevates an award to the status of a decree without the award being made a judgment of Court, operates only when "the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused." The second limb of section 36 does not apply in this case and it is only the first part of the section that needs to be considered. The legal fiction brought about by a deeming provision has to be strictly construed. An award would only be deemed to be a decree under section 36 if (as is relevant in this case) the time for making a setting aside application in respect thereof has expired. For any prescribed time to expire there must be a beginning point. Section 34 makes the receipt of an arbitral award the beginning point for the time computed under sub-section (3) to be assessed. If there is no receipt of the award, the time does not begin to run. If the time does not begin to run, there is no question of the time-limit expiring.
Final Decision: Execution application dismissed. General applications allowed.
( 1 ) A legal question of some importance has arisen with only a solitary precedent of some vintage rendered on-an interpretation of the previous avatar of the current applicable statute brought as a guiding light.
( 2 ) AN award-holder seeks to implement an arbitral award of December 22, 2008. By the award substantial sums have been found due and owing from the first judgment-debtor. The award-holder says that upon the expiry of the statutory period as envisaged in section 34 of the Arbitration and Conciliation act, 1996 and the award ripening for implementation as a deemed decree under section 36 of the Act, the award-holder caused such decree to be transmitted from Guwahati to this Court.
( 3 ) THE two parties arrayed as judgment-debtors have taken out GA No. 2864 of 2009 and GA No. 2763 of 2009, respectively, seeking dismissal of the execution proceedings on the identical ground that they have not been furnished copies of the award by the arbitrator.
( 4 ) THE award-holder instituted a money suit before a Court in Kamrup, guwahati alleging that the first award-debtor had wrongfully received payment under an agreement of June 22, 1992 without supplying the material that the agreement envisaged. In view of an arbitration clause contained in the agreement, the disputes between the parties to the agreement were required to be carried before an arbitrator. The arbitrator found in favour of the claimant on five counts and the sum awarded was directed to be paid within three months from the date of the making of the award, failing which interest at the rate of 18 per cent was payable.
( 5 ) THE original copy of the award supplied to the award-holder has been appended to the execution application. The award-holder has pleaded in the affidavit in support of the tabular statement that the "respondent has not chosen to take delivery of the award. . . upon payment of the pending remuneration of the said arbitrator. " It has been averred that the award remains unchallenged as no application for setting aside the same had been filed within the period prescribed therefor in the statute. The award-holder contends that the award has become final and binding and is executable in the same manner as a decree passed by a Civil Court by virtue of section 36 of the 1996 Act. The award-holder informs that a tabular statement had been taken out on June 3, 2009 before the District Judge at Kamrup whereupon the award and deemed decree was transferred for execution to this Court.
( 6 ) UPON the execution proceedings being launched in this Court an order was made on September 23, 2009.
( 7 ) THE award-debtors claim that by a writing of December 22, 2008 the arbitrator had forwarded a memorandum to Advocates representing the award-debtors. A bill dated December 19, 2008 for a sum of Rs. 94,000/- and another bill dated April 16, 2008 for a sum of Rs. 48,000/- had been furnished on account of the remuneration of the arbitrator. The award-debtors claim that the arbitrator offered to make over the award to them only upon payment of the bills.
( 8 ) IN addition to the common case, the second party arrayed as award-debtor has claimed that she was not a party to the arbitration agreement but was added by the arbitrator as a party to the reference and that neither could the award have been made against her nor has the award, as would be evident from the copy thereof made over to the award-holder, found her liable in any manner.
( 9 ) THE award-debtors complain of suppression of material facts by the award-holder. They say that an arbitration petition was filed by the second award-debtor before the Gauhati High Court seeking a direction for a copy of the award being made over to her by the arbitrator. They say that such petition remains pending. They claim that till such time they get copies of the award due to them, the clock does not begin to run for them to apply for setting aside the award.
( 10 ) THE award-debtors refer to sections 34, 3
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