Government Of India Bharat ... vs M/S. Acome & Ors.
2008 Latest Caselaw 1032 Del

*                    HIGH COURT OF DELHI AT NEW DELHI

+                           FAO (OS) 248/2007

%


       GOVERNMENT OF INDIA                      ..... Appellant
       BHARAT SANCHAR NIGAM LIMITED
                     Through: Mr.K.C.Kaushik, Abhishek Yadav and
                     Mr.Rahul Kaushik, Advocates

                         Versus

       M/S. ACOME & ORS.                          ..... Respondents
                      Through Mr.Alok Krishna Aggarwal, Mr.Naveen
                      Chawla and Ms.Shruti Chandran, Advocates for
                      respondent No.1

       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE DR. JUSTICE S.MURALIDHAR

    1. Whether reporters of the local papers be allowed to see the
       judgment ?
    2. To be referred to the Reporter or not ?
    3. Whether the judgment should be reported in the Digest ?

                                          JUDGMENT

15.07.2008

CM No.9426/2007(Delay)

For the reasons stated in the application, delay in filing the appeal

stands condoned.

The application is disposed of.

FAO(OS)248/2007 & CM 9425/2007

1. We have heard the learned counsel appearing for both parties.

2. The short question which falls for our consideration in this appeal is

whether the petition filed by the appellant under Section 34 of the Arbitration

and Conciliation Act, 1996 (for short the Act) was barred by limitation.

3. In order to appreciate the controversy involved in this appeal it is

necessary to give facts. The appellant, then Department of

Telecommunications and now Bharat Sanchar Nigam Limited, placed two

purchase orders both dated 1st June, 1988 for supply of PIJF cables for

Mahanagar Telephone Nigam Limited on the respondent M/s. ACOME.

Dispute arose between the parties as according to the appellant some of the

supplies were defective while the respondent maintained that the supplies

were good and were in fact utilized by the appellant.

4. The matter was referred to the arbitral tribunal consisting of three

technical experts, namely, Mr.B.R.Nair (Chairman of the Tribunal),

Mr.T.Narayanamoorthy, the arbitrator nominated by the respondent and

Mr.Ranbir Khanna, the arbitrator nominated by the appellant. Majority

arbitrators, namely, Mr. B.R.Nair and Mr.T.Narayanamoorthy, made and

published award dated 1st February, 2002. The award was not signed

Mr. Ranbir Khanna, the third arbitrator. However reasons for not signing the

award are contained in the award itself. In paragraph 6 of the award the

majority arbitrators recorded that a draft award was prepared and circulated

by the Secretariat and was discussed by the three arbitrators on 12th

November, 2001. While the presiding arbitrator Mr.B.R.Nair and

Mr.T.Narayanamoorthy were more or less in agreement, the third arbitrator,

namely, Mr.Ranbir Khanna disagreed with them and expressed his disability

to make and sign the award. In the minutes of the meeting held on 12 th

November, 2001, annexed to the majority award, the majority arbitrators

recorded that Mr.Ranbir Khanna had opined on that day that no agreement

could be reached on the award and, therefore, he was making his award in

due course of time. As on the date of the publication of the majority award

his award was still not available. Mr.Khanna gave his minority award on 18th

September, 2002. Thereafter the appellant preferred the petition under

Section 34 of the Act on 16th December, 2002 to challenge the majority

award dated 1st February, 2002.

5. A preliminary objection was raised by the respondent that the petition

was barred by limitation since the majority award was made on 1st February,

2002 and communicated to the appellant on the same date. Limitation for

filing objections to the majority award started running against the appellant

from 2nd February, 2002. Section 34(3) of the Act prescribes a limitation of

three months starting from the date on which the party making an

application for setting aside the award received the arbitral award. Upon

sufficient cause being shown to the satisfaction of the Court, this period

could extended by another thirty days but not thereafter. According to the

respondent since the appellant was served with the copy of the award on 1 st

February, 2002, in any event the challenge thereto ought to have been

raised by the appellant before 30th June, 2002 and not thereafter.

6. On the other hand, the contention of the appellant was that unless all

the arbitrators give their reasoned award it cannot be said that there is an

arbitral award. According to the appellant the limitation did not begin to run

for filing objections to the majority award till the decision of the dissenting

arbitrator, dated 18th September, 2002, was received by the appellant, which

was received by the appellant on 24th September, 2002. If limitation is

computed from that date, the petition under Section 34 is well within time.

7. The learned single Judge on exhaustive consideration of the Act held

that the award of a multi-member arbitral tribunal comes into force on

making and publishing of the majority award, provided the reason for

omission of the signature of the minority arbitrator is contained in the

majority award itself. Consequently, the petition under Section 34 of the Act

was dismissed as barred by limitation.

8. At the outset we mention that even under the Arbitration Act, 1940 it

has been consistently held that the award might be pronounced by majority

of the arbitrators and failure of one of the arbitrators to sign the award does

not affect the validity of the award. (See: Ram Narain Ram & Others v.

Pati Ram Tewari & Others : AIR 1916 Patna 156 and R.Dashratha Rao

& Others v. K.Ramaswamy Iyengar (Umpire) & Others : AIR 1956

Madras 134.)

9. Section 31 of the 1996 Act which is material for our purpose requires

that an arbitral award must be in writing and signed by all the arbitrators

whether the award is unanimous or not. An oral award is unknown to the

1996 Act. Sub-section (2) of the Section 31 deals with arbitral proceedings

with more than one arbitrator. As per sub-section (2) bearing signatures of

majority of all the members of the arbitral tribunal shall be sufficient so long

as valid reasons for the omitted signature is made clear. Section 31

contemplates a single award and there is no plurality of award and

signatures of majority of the members of the arbitral tribunal are sufficient

so long as reasons for omission of the signatures of the minority arbitrator

are contained in the majority award itself. Thus it is enough if the award is

signed by the majority arbitrators and refusal of the minority arbitrator to

sign will not affect its validity. Learned counsel for the respondent has

referred to the following passage from Russel on Arbitration at page 271 of

the 21st Edition (1997). In para 6-059 Russel states as follows:

"If however there is no chairman, then decisions, orders and awards must be made by all or a majority of the tribunal. Any member of the tribunal who does not assent to an award need not sign it and may set out his own views of the case in a "dissenting opinion". This is for the parties'

information only and does not form part of the award, but it may be useful in terms of adding weight to the arguments of a party wishing to appeal against the award."

The aforesaid commentary makes a reference to the specific provisions of

the Arbitration Act, 1996 as in force in England. The scheme of the two Acts

is similar and same principles of law would apply in the context of Indian Act.

10. Learned counsel appearing for the appellant, however contended that

the delay occurred due to bonafide mistake of the legal advisor and even the

Ministry of Law, Justice and Company Affairs, Department of Legal Affairs

opined that the third arbitrator may be persuaded to pronounce his

dissenting opinion, if any, whereafter the matter can be put up. Thereafter,

Department of Legal Affairs opined that decision of the majority will prevail

and as such the award of the majority dated 1st February, 2002 should be

challenged immediately. Accordingly the appeal was preferred immediately.

He submitted that the delay in filing was due to the bona fide mistake of the

legal advisor and it is liable to be condoned under Section 5 of the Limitation

Act, 1963. He placed reliance on the decision of the Supreme Court in

M/s.Concord of India Insurance Co. Ltd v. Smt.Nirmala Devi and

Others reported in (1979) 4 SCC 365. He has also referred to the decision of

the Supreme Court in State of Goa v. Western Builders reported in (2006)

6 SCC 239 where according to him the Court held that the provisions of

Limitation Act, 1963 are applicable to an application under Section 34 of the

Act. This argument is required to be stated only to be rejected. In Union of

India v. Popular Construction Company reported in (2001) 8 SCC 470 it

has been categorically held that the period of limitation cannot be extended

by the Court beyond the period of thirty days and the bar of limitation is

absolute. The decision in State of Goa v. Western Builders (supra),

wherein the Court held that provisions of Section 5 of the Limitation Act,

1963 are not applicable to an application under Section 34 of the Act but

provisions of Section 14 would apply to such an application, does not in any

way support the appellant. Rather it supports the respondent. Since Section

5 of the Limitation Act is not attracted, the principles laid down in

M/s.Concord of India Insurance Co. Ltd are also not applicable. In the

result the appeal fails and is dismissed accordingly.

                                          CHIEF JUSTICE



                                          S.MURALIDHAR
JULY 15, 2008                                (JUDGE)
'v'