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2014 Supreme(All) 1294

ALLAHABAD HIGH COURT
BEFORE : TARUN AGARWALA AND DR. SATISH CHANDRA, JJ.
GENERAL MANAGER, U.P. STATE SUGAR CORPORATION, UNIT MUNDERWA AND ANOTHER ....Appellants
Versus
M/s. LAL AND KUMAR HUMAYUNPUR AND ANOTHER .....Respondents
(First Appeal From Order Nos. 851 and 853 of 2001, decided on 23rd September, 2014)

Advocates:
Counsel :
Dr.Y.K. Srivastava for the Appellants; H.N. Singh for the Respondents.

Headnote:Contract—Termination—Award—Passed by Arbitrator—Legality of—As per provision of Clause 34 of the contract, sole arbitrator appointed to dissolve the dispute, who entered into the reference and passed award—Appellant filed an application under Section 17 of the Arbitration Act, 1940 for making the award a Rule of the Court—Rejected—Held, arbitrator had not acted arbitrarily, irrationally, capriciously or independently of the contract—The application for setting aside award rightly rejected and the award was made a Rule of the Court. [Paras 10, 11, 13, 14 and 15]

       Result; Appeals Dismissed.

JUDGMENT

Hon’ble Tarun Agarwala, J.—The appellants issued a tender for construction of residential quarters at Munderwa District. The value of the contract was Rs. 58,59,818.42. The opposite party gave his tender, which was accepted and a contract was executed. The contract was required to be completed within 12 months.

2. It is alleged that the claimant started the work, but, within three months the appellants issued a notice terminating the contract. The opposite party issued a notice dated 18.4.1994 claiming an amount of Rs. 34,96,259.84 and asked the appellants to appoint an Arbitrator under the contract. The appellants, in accordance with the provision of Clause 34 of the contract, appointed a sole arbitrator, who entered into the reference and gave an award dated 15.7.1997 awarding a sum of Rs. 11,05,981/- under various heads alongwith pendentilite interest @12% per annum from 1.3.1992 to the date of award and the future interest @ 6% per month till the date of payment of decree, which ever was earlier.

3. The opposite party, upon receipt of the award, filed an application under Section 17 of the Arbitration Act, 1940, (hereinafter referred to as the “Act”) for making the award a Rule of the Court. The said application was numbered as Misc. Case No. 128 of 1997. The Court below issued notice to the appellant, which was served on 4.10.1997. The appellants thereafter filed an application purporting to be an application for setting aside the award under Section 30 of the Act, which was numbered as 10-Ga-2 in Misc. Case. No. 128 of 1997, praying that the award given by the arbitrator should be set aside. Subsequently, the said application of the appellants was separately registered as Misc. Case No. 23 of 2000.

4. The appellants’ application under Section 30 of the Act as well as the opposite parties application under Section 17 of the Act was decided together. The Court below, by the order dated 12.2.2001, rejected the application of the appellants for setting aside the award and made the award the Rule of the Court. The appellants, being aggrieved by the rejection of their application, has filed the present appeal under Section 39 of the said Act praying that the order dated 12.2.2001 passed by the Civil Judge, Senior Division, Basti in Misc. Case No. 23 of 2000, be set aside and that the order making the award the Rule of the Court be also set aside.

5. In this background, we have heard Dr.Y.K. Srivastava, the learned counsel for the appellants and Sri H.N.Singh, the learned senior for the respondents.

6. The learned counsel for the appellants contended that the application of the appellants for setting aside the award was rejected by the Court below on the ground that it was barred by limitation, which is wholly incorrect and perverse and, consequently, the impugned order could not be sustained and was liable to be quashed. In this regard, the learned counsel placed reliance upon the provisions of Section 14(2) and Article 119-(b) of the Limitation Act.

7. Section 14(2) of the Arbitration Act, 1940 contemplates that the Arbitrator is required to file the award in a Court and the Court shall thereupon give notice to the parties for the filing of the award. It is, therefore, clear that the Court is required to give notice to the parties with regard to the filing of the award and the period of Limitation would start from the date when the notice is served upon a party. Article 119(b) of the Limitation Act indicates the period within which the validity of the award could be challenged after the award is filed in the Court. The said provision prescribes the period of limitation of 30 days for making an application after the required notice regarding filing of the award of the Court is given to the parties. In the light of these provisions, we find that the award was made by the Arbitrator on 15.7.1997. Notice was sent by the Court to the appellants and was served on 4.10.1997. The appellants filed objection for setting aside












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