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1998 Supreme(Mad) 395

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE R. BALASUBRAMANIAN
Union of India - Appellant
Versus
Balaji Brothers - Respondents
C.R.P. No. 2927 of 1998
Decided On : 11 March 1998

Appearing Advocates:Rahul Balaji, K. Gunasekaran, Advocates.

The notice regarding the filing of the award under Section 14(2) of the Arbitration Act, 1940, is a mandatory requirement and failure to issue such notice would render the proceedings before the lower court to pass a decree in terms of the award without jurisdiction.

Headnote:

ARBITRATION ACT, 1940 - SECTION 14(1) AND 14(2) - NOTICE OF FILING AWARD - MANDATORY REQUIREMENT - FAILURE TO ISSUE NOTICE - EFFECT - COURT'S JURISDICTION - DECREE IN TERMS OF AWARD - VALIDITY.

Fact of the Case:

Plaintiff filed a suit before the lower court seeking a decree in terms of an arbitration award passed by the second defendant. The first defendant, who was a party to the arbitration agreement, objected to the suit on the ground that he was not served with a notice regarding the filing of the award as required under Section 14(2) of the Arbitration Act, 1940.

Finding of the Court:

The court held that the notice regarding the filing of the award to be issued by the court to the parties concerned under Section 14(2) of the Arbitration Act is a mandatory requirement and failure to issue such notice would render the proceedings before the lower court to pass a decree in terms of the award without jurisdiction.

Issues: Whether the notice regarding the filing of the award under Section 14(2) of the Arbitration Act is a mandatory requirement.

Ratio Decidendi: The court relied on the provisions of Section 14(1) and 14(2) of the Arbitration Act, 1940, and held that the notice contemplated under sub-section (1) of Section 14 and the notice contemplated under sub-section (2) of Section 14 operate in two different circumstances and mere compliance of the requirement of sub-section (1) would not by itself amount to complying with the requirement of sub-section 2.

Final Decision: The court allowed the revision petition and set aside the decree passed by the lower court. The court directed the first defendant to file his objections or take such other steps as legally permissible to him within 30 days from the date of receipt of the steno copy of the order. The lower court was directed to act on the production of the steno copy of the order by either of the parties before it and dispose of the proceedings not later than 31-7-1998.

Judgment :-

R. BALASUBRAMANIAN, J.

The revision petitioner herein was the first defendant in OS No. 2494 of 1985 on the file of the IX Assistant City Civil Judge, Madras. The first respondent herein was the plaintiff and the second respondent herein was the second defendant in that suit. In this order the parties to this revision will hereinafter be referred to in the same rank in which they are described in the plaint. It appears that the plaintiff and the first defendant were parties to a contract. It also appears that there had been a breach of the terms of the said contract. Therefore, the dispute was referred to an arbitrator, who was the second defendant in that suit. The arbitrator went into the matter and passed an award on 22-2-1985. Thereafter the plaintiff filed the present suit before the lower court and the reliefs which are relevant for the purpose of deciding this case and contained therein are extracted hereunder:

"(a) direct the sole Arbitrator, The 2nd respondent herein, to file the Award published by him on 22-2-1985 and served on the petitioner on 25-2-1985 into this Hon'ble Court along with the entire records;

(b) pass a decree in terms of the Award in favour of the petitioner."

On this, summons had been issued to the defendants. The second defendant being the arbitrator and who passed the award, naturally remained absent. However the first defendant appeared and filed his statement dated 11-11-1986. From the statement it is seen that the grievance of the first defendant was that no notice regarding the filing of the award, as mandatorily contemplated under sub-section (2) of Section 14 of the Arbitration Act, 1940, was served on him and therefore, prayed for the dismissal of the suit. No oral evidence was let in on behalf of both the contesting parties and the award dated 22-1-1985 came to be marked by consent as Ex. A.1. The learned trial Judge overruled the objections of the first defendant as stated above and decreed the suit in terms of the award. The correctness of the said decree is being questioned in this revision.

2. I heard Mr. Rahul Balaji, learned counsel appearing for the revision petitioner and Mr. K. Gunasekaran, learned Additional Central Government Standing Counsel appearing for the first respondent. According to the learned counsel for the revision petitioner notice regarding the filing of the award of be issued by the court to the parties concerned as contemplated under sub-section (2) of Section 14 of the Arbitration Act is a mandatory requirement and unless such notice is issued, the proceedings before the lower court to pass a decree in terms of the award would be without jurisdiction. Therefore the submission of the learned counsel for the revision petitioner is that only after the issue of such notice to him and from the date of receipt of such notice, the period of limitation of 30 days starts running and hence the first defendant cannot be blamed in the eye of law for not taking any steps either to set aside the award and remit it back or for any other relief connected therewith. The learned counsel for the revision petitioner further added that the learned trial Judge had completely overlooked the statutory requirement as referred to above and thus erred in law in decreeing the suit. Opposing these submissions, the learned counsel for the first respondent would contend that the first defendant participated in the proceedings right from the date of serving of the summons and therefore he is deemed to have knowledge about the filing of the award before the court. According to the learned counsel for the first respondent if this position is accepted, then the failure on the part of the first defendant to take any appropriate action within a period of 30 days in challenging that award would automatically result in the decree being passed in favour of the plaintiff.

3. In the light of the submissions made by the learned counsel on either side, I perused the records as well as the order un



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