State Of Maharashtra vs Nasir Chhannumal Shaikh
2004 Latest Caselaw 944 Bom

JUDGMENT

A.B. Naik, J.

1. By operative order dated 19th August, 2004, we have dismissed the appeal. Now, we record reasons and conclusions for the dismissal of the appeal.

2. This appeal is directed against the judgment and award dated 28th August, 1995 passed by the learned Joint C.J.S.D., Aurangabad allowing the application Exh. 11 by making the award dated 6th February, 1995, given by the sole Arbitrator, as Rule of the Court. Accordingly, the learned trial Judge made the award as part of the decree.

3. A very sorry state of affairs was noticed by us. The award was passed by the sole Arbitrator which was an ex parte award. In spite of the notices given, the officer concerned, in charge of the matter, did not bother to appear before the arbitrator and permitted the proceedings before the arbitrator to go ex parte. Ultimately, the sole Arbitrator Shri V.M. Bedse, Chief Engineer (Retd.) passed the award whereby he determined an amount of Rs. 79,92,075/- with interest at the rate of 18% per annum from 7-2-1995. When the application for making award Rule of the Court was filed, there was delay even in filing written statement. Ultimately, the award was made Rule of the Court, which is challenged in this appeal.

4. Though the appeal is filed by the State of Maharashtra, engaging Special Counsel, even he could not repair the damage which has already caused. In the course of argument, Shri Gangapurwala, learned Special Counsel for the appellant has stated that in fact, double amount was paid to the contractor but, for want of proper care on the part of the officers, neither the suit could be defended nor the proceedings before the arbitrator. Be as it may. We have to proceed to consider whether this Court can set aside award and the judgment of the trial Court.

5. Shri Gangapurwala earnestly requested us to remand the matter back to the Court by giving an opportunity to the appellant to defend and object the award. The request so made cannot be accepted. Hence, we proceed to decide this appeal.

6. The facts giving rise to this appeal are, as follows :

The parties to this judgment will be referred to as per their original status before the Arbitrator. The appellant before us was the original respondent and the respondent before us was the claimant before the Arbitrator.

7. The dispute and differences arising out of the Contract No. LCB/CE-18 of 1987-88 for the work of improvements to Paithan - Shahgad Road in Aurangabad Jalna Districts under the Road Development Programme of Maharashtra Composite Irrigation Projects, MCIP (III) (Jayakwadi Project) for improvement of 6 Mtrs. WRM Road to cater the better means of communication to Market/Mandi Centres in the command area. Shri V. M. Bedse, Chief Engineer (Retd.), P.W.D., Maharashtra, appointed as the sole Arbitrator, has made an award and published the same.

8. The tenders for work in question were invited in the Local Competitive Bidding Form LCB for the Government of Maharashtra by the Executive Engineer, Command Roads Division, Aurangabad for Public Works Department. The claimant submitted his tender in response to the public notice. The tenders were opened and as the claimant's tender was lowest one, was accepted. According to the salient features of the agreement, the estimated cost of the work was, "Estimated Cost of the work : Rs. 1,02,75,556/-

Tender cost (Accepted)                    : Rs. 90,44,525/-
Time limit for completion of work         : 24 months.
Date of submission of the offer           : 19-1-1988
Date of issue of work order               : 29-3-1988
Stipulated date of completion             : 28-3-1990
Extension granted upto                    : 31 - 8-1992
Compensation levied, if any               : Nil
Extra items sanctioned, if any            : Nil
Format of contract                        : Nil
Estimate is based on C.S.R. of the year   : 1987-88
Total Road length                         : 36.770 Kms.
 

NATURE OF CONSTRUCTION :--
 

1. Earthwork for bank work and widening for 6 metre width.
 

2. Providing water bound wearing surface.
 

3. Quarries specified in the tender ; Khandala, Churmapur and Shahagad.
 

4. Average lead as per estimate : Murum - m8 Kms. Metal 18 kms.
 

The work was to be executed under the supervision, direction and control of the Executive Engineer, Command Roads Division, Aurangabad, who was the Engineer in-charge for the contract. The Superintending Engineer, Command Road Circle Aurangabad was, the in-charge Superintending Engineer and the Chief Engineer, Public Works Region, Aurangabad was to be, the in-charge Chief Engineer.
 

1.2 During the execution of the work, certain disputes and differences arose between the parties to the contract,"
 

9. It is the case of the claimant that the work was prolonged upto 31st August, 1992 i.e. for over and above the stipulated period of 24 months. It is contended that due to delay, default and breaches committed by the department, for which the claimant was required to incur extra expenditure over and above the payments made by the department. According to the claimant, the main causes of delay were non-availability of specified quarries for operation, delay in getting quarries of operation, delay in recording measurement and payment, withholding the payments to be made against the actual work done, payments of extra leads for operating a new quarry as the special quarries were not available for operation, non-availability of space for stacking collected road making material, resulting in damages to the material stacked on road formation by traffic and recording less measurements than the actual quantity stacked, the work done was never fully measured, non-availability of machinery in working condition from the department, wrongful and illegal withdrawal of part work from the claimant and re-entrusting a part of it to him after gap of 17 months, entrusting part of the work to some other agency without the knowledge of the claimant, frequently changing the controlling officers, natural calamities like heavy rains in 1988 and 1990 monsoon season resulting in a great set back to get the momentum after restarting the work in black cotton soil area, shortage and also increase in the prices of diesel and oil from November, 1990 to March, 1991 due to the forced situation arising out of the Gulf war.

10. It is contended that the claimant, under the provisions of L.C.B. tender clause, approached all the concerned authorities for getting the grievance redressed but, of no help. Ultimately, the claimant approached to the Chief Engineer, P.W.D., Aurangabad vide letter dated 14th May, 1992 for referring his claim and demand for arbitration under Clause 53 of the Contract by indicating all relevant facts and figure leading to claims to be recovered from the department. The Chief engineer vide letter dated 26th June, 1992, advised the claimant to approach the Superintending Engineer under Clause 52 of the Contract. Thereafter, the claimant approached the Superintending Engineer vide letter dated 17th July, 1992. Accordingly, the Superintending Engineer, vide letter dated 18th January, 1993, rejected the appeal. Then, again the claimant approached the Chief Engineer against the decision of the Superintending Engineer, under Clause 52 of the Contract. Finally, the claimant, on 11th November, 1993, requested the Chief Engineer to decide the pending appeal within thirty days as there is much delay in getting the appeal decided. The claimant waited for decision of the Chief Engineer on his appeal under Clause 52 of the Contract and finally, on 11-11-1993 he requested for referring the dispute and the claim to the arbitrator. According to the contract clause, the Chief Engineer was required to send the list of three arbitrators within thirty days of the receipt of the notice from the claimant but, as no list was supplied, the claimant after waiting for a long time i.e. upto 4th May, 1994, submitted a list of three officers for selecting and appointing one of them as arbitrator and referring all the disputes and claims to him for the decision under Clause 53 of the Contract. According to the claimant, the Chief Engineer did not select the officer from the list sent by him within 15 days. The claimant, thereafter, waiting for more than 15 days in terms of the arbitration clause, communicated name of Shri Bedse from the list and intimated the same to Shri Bedse and accordingly, appointed him as sole Arbitrator.

11. On appointment of Shri Bedse as sole arbitrator, by the letter/notice dated 13th August, 1994, he fixed preliminary meeting on 30th September, 1994 at Aurangabad and the date was required to be postponed and fixed on 7th October, 1994 at Aurangabad. On 7th October, 1994, the claimant only attended the meeting. Neither the respondent nor its officers from the department were present in the meeting. At that meeting, the claimant appointed the Advocate to present his case. The respondent did not appear before the arbitrator. The claimant filed several documents in support of his case. Thereafter, next meeting was held on 28th October, 1994 and the notice was served on all the concerned in advance. In that meeting also, no one appeared for the respondents. This went on further. Ultimately, on 5th January, 1995, the Arbitrator directed the respondents who were absent all the time, to remain present otherwise, the proceedings would be held ex parte. Accordingly, the date was communicated to all the concerned. Even, on 5th January, 1995, the respondents did not appear and the next meeting was held on 12-1-1995. In that meeting also, the respondents did not appear. Again, it was intimated by the Arbitrator to the respondents to file affidavit etc. and the matter was adjourned. On 23rd January, 1995, the claimant alone filed affidavit on the point of issues those were framed. The respondents were absent on the said date also. The sixth meeting was held on 30th January, 1995 at Paithan but, it was adjourned on account of illness of the claimant's counsel. Then, it was held on 31-1-1995 at Paithan. On that day, the claimant filed some documents. The respondents were absent. As the Arbitrator sought some clarification from the claimant, the claimant had filed an affidavit. Thereafter, site inspection was carried out on 31st January, 1995 from 15.30 to 19.30 Hrs. At the time of inspection also, the respondents never attended. Then, final meeting was scheduled which was intimated to the respondents and the final meeting was held on 1st February, 1995 at Aurangabad. None remained present before the Arbitrator and the Arbitrator, considering the documents produced by the claimant, answered the issues which were framed. On considering all the material, the Arbitrator held the claimant entitled for the amount as per the award and, accordingly, declared and signed the award on 6th February, 1995. After the award was passed, the Arbitrator forwarded the said award to the Civil Court. The claimant had filed an application under Section 14 of the Arbitration Act, 1940 (for short, referred to as the said Act) and prayed that the award which is filed by the Arbitrator in the Court on 20th February, 1995 with a notice to the others, be made Rule of the Court. It is also stated that notice of filing of the award was duly served on the respondent/State by the Arbitrator on 14th March, 1995. The claimant appeared in the Court on 20th March, 1995. On the same day, the respondents appeared and sought time to file say. Accordingly, the case was adjourned and fixed for further hearing on 21st April, 1995. It is contended in the said application that as per the provisions of the Arbitration Act, time of thirty days is allowed to raise objection to the award from the date of service of notice of filing of the award. As no objection is filed, the claimant prayed that the award may be made Rule of the Court by awarding decree under Section 17 of the Arbitration Act. On this application, the respondents filed their say and sought for time till 14th June, 1995.

12. On 20th June, 1995, the respondents submitted the say and raised various contentions challenging the appointment of the Arbitrator, passing of the award ex parte. It is contended that the claimant delayed the contract work even after extension which was granted upto 31st August, 1992. It is contended that the work was got completed from another agency. The defect liability period lapsed on 20th February, 1993. It is contended that the arbitrator is appointed illegally and not binding on the State. On the basis of the contentions that were advanced and the pleadings, the learned trial Judge rejected the contention of the respondents. It is to be noted that the respondents filed an application Exh. 20 on 1st July, 1995 seeking condonation of delay in filing say to the award. The said application was objected by the claimant and the learned Judge, after hearing the parties and by elaborate reasons, rejected the said application vide order dated 28th August, 1995. The order of rejection of the said application was not specifically challenged before this Court either by revision or in the present appeal. But, contention was advanced before us that the delay should have been condoned. It was contended before us by the learned Special Counsel that the trial Court erroneously held that Section 5 of the Limitation Act, is not applicable to the facts of the present case. It is contended by Shri Gangapurwala that taking into consideration the provisions of Section 17 of the Arbitration Act, he submitted that the words used in Section 17 that "after the time for making an application to set aside award has expired" have to be read as the period mentioned in Limitation Act. He contended that in Exh. 20 it was stated that the copy of the award was not received. Therefore, the reply could not be filed. We put a specific question to Shri Gangapurwala as to whether the copies of the award were served on the department or on the District Government Pleader. By referring to the application, the learned Special Counsel has stated that it was not received by the District Government Pleader and, therefore, the say could not be filed. We have seen application Exh. 20 wherein it is stated that pursuant to the letter dated 18th March, 1995 given by the Executive Engineer, Public Works Division, Aurangabad, the District Government Pleader has filed his appearance and applied for filing written statement. Thereafter, the case was filed on 24th April, 1995. It is stated in the application that by this time, the copy of the award was not issued. Therefore, the application was moved for supply of the copy to the department (respondents). The copy of the award was produced and the parawise remarks were called from the concerned department. Parawise remarks so received were not in detail and insufficient to draft reply and it was not to the satisfaction of the District Government Pleader. Thereafter, the District Government Pleader sought detail parawise remarks. This was communicated to the department by the D.G.P. vide his letter dated 6th June, 1995 and as soon as the remarks were received, the written statement was filed. Having perused the application Exh. 20 and the order passed thereon by the learned trial Judge on 28th August, 1995, it is not possible for us to accept the contention of Shri Gangapurwala that the application for condonation of delay was erroneously rejected. Shri Gangapurwala has contended that the award is passed in excess of the amount than the claim. He submitted that the arbitrator has no jurisdiction to pass such an award. Therefore, he submitted that the learned trial Judge should have not passed the judgment in terms of the award in his jurisdiction under Section 17 of the Arbitration Act and the learned trial Judge should have remitted the award to the arbitrator for reconsideration. When we asked the learned Special Counsel to point out from the record regarding the details of the excess payment made, the learned Counsel, on perusal of the record which is called by us in this appeal, was not in a position to point out any document/material from the record. The learned Special Counsel for the respondents, with usual fairness, has accepted that no other documents, even the agreement between the parties, on which the arbitration proceedings were initiated and concluded, were placed on record. The contention that the learned Counsel has advanced regarding excess payment and the jurisdiction of the arbitrator was not raised before the trial Court nor before the arbitrator. In our considered opinion, if the jurisdiction of the Arbitrator was to be questioned, the respondents should have appeared before the Arbitrator and challenged his jurisdiction and should have requested the Arbitrator to rule on his jurisdiction. Having failed to do so, in our considered view, it is too late now to accept the contention of the learned Special Counsel that the award is without jurisdiction and excess payment is made. Shri Gangapurwala has made frequent request to us to accept his oral submission and remit back the matter to the trial Court by giving opportunity to the respondents to establish the case. Shri Dhorde, learned Counsel for the claimant has opposed the request made by the learned Special Counsel. He pointed out from the award that the arbitrator has given maximum chances to the department/respondents to appear but, for the reasons best known to them, the officers of the respondents did not appear. Be as it may, no case is made out for remand of the matter.

13. Shri Gangapurwala, learned Special Counsel for the respondents submitted before us that neither party has filed award in the Court but, the arbitrator himself has forwarded it to the Court with a request to make the award Rule of the Court. He brought to our notice Section 14 of the Act which does not permit the arbitrator to file the award in the Court himself. To understand the contention raised, it will be appropriate for us to reproduce Section 14 of the said Act which reads, thus :

"14. Award to be signed and filed.-- (1) When the arbitrators or umpire have made their award, they shall sign it and shall give notice in writing to the parties to the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award.

(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award.

(3) Where the arbitrators or umpire state a special case under Clause (b) of Section 13, the Court, after giving notice to the parties and hearing them, shall pronounce its opinion thereon and such opinion shall be added to, and shall form part of the award."

14. By perusing the abovesaid section, it is not possible for us to endorse the contention of the learned Special Counsel. It is true that on 27th February, 1995 the Arbitrator through the Advocate had filed the award and thereupon, notices were issued to the parties. By doing so, no irregularity or illegality is committed by the arbitrator, which will vitiate the order of the Court. It has come on record that after the award was filed in the Court, the court gave notice to the respondents and pursuant to the notice, they appeared. At this stage, the respondents had a remedy to challenge the award by resorting to the provisions of Section 30 of the said Act, but for the reasons best known, it was not done. This aspect has a bearing on the issue in the light of the provisions of Section 178 of the said Act.

15. Coming to the provisions of Section 17 of the said Act, on which heavy reliance is placed by Shri Gangapurwala, that as the award was ex parte, the learned Judge should have referred the award back to the arbitrator for reconsideration as it was filed by the arbitrator and it was an ex parte award. Having considered Section 17 of the said Act, it is not possible for us to accept the contention of Shri Gangapurwala that merely because the award was an ex parte award, the Court is bound to remit the matter back to the arbitrator. Once, the award is placed on record of the court, the court has to act in terms of the provisions of Section 17 of the said Act and if it comes to the conclusion that after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, the Court has to proceed to pronouncement the judgment. Admittedly, no application as required under Section 30 was filed by the respondents in the Court for setting aside the award. On this backdrop, we have to consider the scope of the court in setting aside the award. As we have noticed that Section 17 of the said Act, there is no discretion left to the court to pronounce judgment when the application under Section 30 of the said Act was not filed within time so specified. For setting aside the award, the party has to make a ground that the arbitrator has acted illegally, has committed misconduct or there is infirmity. The grounds to set aside the award are provided under Section 30 of the said Act, which reads thus :

"30. An award shall not be set aside except on one or more of the following grounds, namely :--

(a) that an arbitrator or umpire has misconducted himself or the proceedings;

(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;

(c) that an award has been improperly procured or is otherwise invalid."

16. Admittedly, an application as required under Section 30 of the said Act was not filed. In view of this aspect, in our view, the learned trial Judge was right in making the award as Rule of the Court. In this respect, we may refer to the judgment of the Apex Court in the case of Madan Lal (dead) by his legal representative v. Sunder Lal and Anr. reported in AIR 1967 SC 1233, wherein the Apex Court has held that if a party wants an award to be set aside on any of the grounds mentioned in Section 30, it must apply within 30 days of service of notice of filing of the award as provided in Article 158 of the Limitation Act. When the party challenging the award has admittedly, not filed an application under Section 30 of the said Act, then there is no scope for the respondents - appellants before us, to contend that the award should have been set aside. The moment the contingency referred in Section 30 of the said Act and the limitation thereof has come to an end, then the court has no other go than to pass judgment in terms of the award as referred to in Section 17 of the said Act. In our view, therefore, the learned Special Counsel was not able to convince us about the grounds for setting aside the award or oral submissions were advanced without there being any foundation on record. Therefore, we have no other go than to dismiss the appeal. At this stage, we may refer to the judgment delivered by us in First Appeal No. 422 of 1992 on 16th June, 2004, The Superintending Engineer and Ors. v. Ajit Construction Builders and Engineers, Nanded, wherein we had an occasion to consider the identical issue raised in this appeal and by following the ratio in the judgment of the Apex Court in the case of Nilkantha Sidramappa Ningashetti v. Kashinath Somanna Ningashetti and Ors., AIR 1962 SC 666, we have taken a view that when no party files an objection praying for the setting aside of the award, no question of refusing to set it aside can arise and therefore, appeal itself was not maintainable under Section 39(1)(vi) of the said Act. We follow our judgment in the aforesaid case. Admittedly, there is no application filed by the appellant State under Section 30 of the said Act to set aside the award and, therefore, in our view, no case is made out to interfere in the order passed by the learned Civil Judge. Hence, we dismiss the appeal. No order as to costs.