Cmi Limited vs Bharat Sanchar Nigam Ltd. & Anr.
2010 Latest Caselaw 3161 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                    Date of Decision: 08.07.2010

%                          O.M.P 266/2004

      CMI LIMITED                                      ..... Petitioner
                          Through:    Mr. S.K. Gupta and Mr. Manish
                                      Gupta, Advocates

                          versus


      BHARAT SANCHAR NIGAM LTD. & ANR.          ..... Respondents
                    Through:  Mr. Vivek Kishore, Advocate



      CORAM:

      HON'BLE MR. JUSTICE VIPIN SANGHI

      1. Whether the Reporters of local papers may              No
         be allowed to see the judgment?

      2. To be referred to Reporter or not?                     Yes

      3. Whether the judgment should be reported                Yes
         in the Digest?


VIPIN SANGHI, J. (Oral)

1. The challenge in this petition under section 34 of the

Arbitration and Conciliation Act, 1996 ("the Act") is to the arbitral

award dated 28.08.2003 of Sh. S. Maity, sole arbitrator. The challenge

is limited to the rejection of the petitioners claim for interest.

2. The petitioner and the respondent no.1 had entered into an

agreement contained in purchase order dated 08.11.1996, where

under the petitioner agreed to supply PIJF underground cable to the

respondent, BSNL.

3. Disputes arose between the parties, which were referred to

arbitration of Sh. S. Maity, General Manager (Planning), Calcutta

Telephones, BSNL. The learned arbitrator rendered his award dated

28.08.2003, whereby he awarded certain amounts in favour of the

petitioner/claimant. However, the award provided that no interest

needs to be paid to the petitioner by W.B. Telecom Circle. The

petitioner received the said award soon after its making and the

respondent also made payment to the petitioner in terms of the award.

4. After nearly six months of the making of the award, vide letter

dated 09.02.2004 the petitioner invoked section 33 of the Act to seek

interpretation of the award dated 28.08.2003 passed by the learned

Arbitrator. The said interpretation was sought in respect of the award

of the learned Arbitrator, whereby he had held that "no interest needs

to be paid to M/s CMI Ltd. by W. B. Telecom Circle".

5. The said application moved by the petitioner was rejected by

the learned Arbitrator on 06.05.2004, whereby he observed that no

interest is awarded to CMI at all. After receipt of the said

communication, the petitioner has preferred the present petition dated

04.08.2004.

6. I have heard learned counsel for the parties. In my view, the

present petition is barred by limitation inasmuch, as, it has not been

filed within the period of three months from the date on which the

petitioner had received the arbitral award dated 28.08.2003. It has

also not been filed within the extended period of thirty days thereafter.

7. Learned counsel for the petitioner submits that since the

petitioner had preferred the application under Section 33 to seek

clarification of the award and the said application was rejected by the

learned Arbitrator on 06.05.2004, and the present objections have

been filed on 04.08.2004, they were filed within the period of

limitation. This submission of the learned counsel for the petitioner is

without any merit for more than one reason.

8. Firstly, the petitioner has failed to point out that it had been

agreed by the parties that either of them may request the arbitral

tribunal to give interpretation of a specific point or part of the award.

Such an agreement is necessary to move an application before the

arbitral tribunal under section 33(1)(b) of the Act. This is so evident

from the opening words of clause (b), which reads "if so agreed by the

parties ... ... ... ". Pertinently, the requirement of a specific agreement

to invoke section 33(1)(b) stands out in contradistinction with the

absence of any such requirement for a party to invoke clause (a) of

section 33(1) of the Act. The arbitration agreement between the

parties has not been placed before me. However, I have called for the

record of Arbitration Application No.135/1999 (preferred under Section

11 of the Act by the petitioner) and perused clause 20 of the General

(Commercial) Conditions of Contract, which contains the Arbitration

Agreement between the parties. No right has been conferred on the

parties to invoke Section 33(1)(b) of the Act. No subsequent

agreement in terms of Section 33(1)(b) has been pleaded or produced

by the petitioner. Consequently, the application preferred by the

petitioner before the arbitral tribunal under section 33(1)(b) of the Act

was not maintainable at all.

9. Secondly, the award of the learned Arbitrator whereby he

denied interest to the petitioner was amply clear and left no room for

any doubt whatsoever. The learned Arbitrator in his award dated

28.08.2003 had clearly stated that "no interest needs to be paid to M/s

CMI Ltd. by W.B. Telecom Circle". The plain and simple meaning of the

said sentence was that there was no award made in favour of the

petitioner in respect of its claim for interest. There was no question of

seeking any interpretation in respect of this part of the award from the

learned Arbitrator. There was no ambiguity about it. Consequently,

Section 33 of the Act could not have been invoked by the petitioner at

all.

10. A party cannot seek a review of the award made by the

Arbitrator by resort to Section 33(1)(b) of the Act. Under the garb of

an application to seek interpretation of a specific point or part of the

award, a party cannot seek to reargue its claim which has clearly been

disallowed by the Arbitrator. However, the endeavour of the petitioner,

when it moved the application under Section 33 of the Act, was

precisely that.

11. Paragraphs 3 to 7 of the said application demonstrate the

aforesaid position. The same are therefore reproduced herein below:

"3. It is submitted that the claim of the Claimant CMI relates to a purely commercial transactions. The claimant had

claimed interest @ 18% per annum from June 1997 till the date of the award and thereafter till the actual payment.

4. It is submitted that it needs to be clarified and interpreted as to whether the interest is not payable to CMI Ltd., only after the date of the award or no interest is payable to CMI Ltd., at all under the award.

5. The Respondents have withheld approximately Rs.50.06 Lacs from the claimant with effect from June-1997 which is over a period of Six & Half Years and the claimant is entitled to receive interest due to the illegal withholding of the said payment which has been subsequently awarded by this Hon'ble Arbitral Tribunal.

6. That this being in the nature of commercial transactions once the award has held that the payment was wrongfully withheld from the claimant, there has to be an award of interest on the amount wrongfully withheld.

7. In the light of the aforesaid this Hon'ble Arbitral Tribunal may be pleased to clarify as to whether the interest is not paid to CMI Ltd., from the date of the award or no interest awarded at all to CMI Ltd., under the award."

12. As aforesaid, there was no question of the award being

clarified or interpreted on the aspect as to whether interest was not

payable to CMI Ltd. only after the date of the award or no interest was

payable to CMI Ltd. at all under the award. No other part of the award

dealt with the aspect of payment of interest for any period, either

before the date of the award or after the date of the award. The

application moved by the petitioner was therefore wholly misconceived

and by moving such an application, the petitioner cannot seek to take

umbrage under section 34(3) of the Act.

13. Secondly, even the said application filed under Section 33 of

the Act before the learned Arbitrator was filed after much delay. The

said application, in any event, could have been filed within 30 days

from the receipt of the arbitral award as, admittedly, the parties had

not provided for any other time period within which such an application

could be moved. The award dated 28.08.2003 had been received by

the petitioner soon after its being made. The application under section

33 was moved only on 09.02.2004. There was a delay in the moving of

the said application of more than 4 months.

14. Learned counsel for the petitioner submits that the period of

30 days prescribed under Section 33 for moving an application under

that provision is not mandatory and the same could have been

extended.

15. A perusal of the application moved by the petitioner by resort

to Section 33 of the Act shows that the petitioner did not seek to

explain the delay in moving the said application. Even if the

submission of the learned counsel for the petitioner, that the limitation

provided for under Section 33 is not mandatory and that the same can

be extended were to be accepted, the party moving such an

application beyond the period of 30 days would certainly have to

explain the reasons for the delay in moving the application. However,

the petitioner has not offered any explanation whatsoever for the said

delay. The petitioner did not even seek the condonation of the said

delay.

16. Even otherwise, I have difficulty in accepting the submission of

the learned counsel for the petitioner that the period of 30 days

prescribed under Section 33 of the Act can be relaxed and the delay

can be condoned by the Arbitrator. Neither Section 33 nor any other

provision of the Act gives the power to the arbitral tribunal or even the

Court to condone the delay in moving an application under Section

33(1)(b) of the Act. Pertinently, the absence of the power to condone

the delay in the moving of an application under section 33(1)(b) of the

Act stands out when one notices that the period within which the

arbitral tribunal may make the correction or interpretation (which is

also 30 days under section 33(2) of the Act) may be extended by the

arbitral tribunal under section 33(6) of the Act.

17. The scheme of the Act, on a conjoint reading of Section 34(3)

and Section 33 of the Act, does not support the submission of the

petitioner. The application for setting aside the award should be made

within three months from the date of receipt of the award. The power

of the Court to condone the delay beyond the period of three months is

limited to a further period of 30 days only and no more. The only

exception carved out in Section 34(3),which enables a party to file the

objections beyond the period of three months is where a request has

been made to the Arbitrator under Section 33 to correct computational,

clerical or typographical errors or errors of similar nature or to give an

interpretation of a specific point or part of the award. An application for

setting aside of award may be made within three months from the date

on which the request has been disposed of by the arbitral tribunal.

18. A party cannot seek to extend the period of limitation for

preferring the objections merely by filing a belated application under

Section 33 of the Act before the Arbitrator, or by filing an application

under Section 33 of the Act which is not maintainable in the facts of a

given case. If the submission of the learned counsel for the petitioner

were to be accepted, it would lead to an absurd result, as is evident

from the facts of this case as well. A party who has failed to file its

objections within the period of limitation prescribed under Section

34(3) of the Act, would then move an application under Section 33 of

the Act before the learned Arbitrator even when there may be no

justification for it and wait for its disposal and soon after its disposal,

the party may move an application for setting aside the award, which

otherwise has got time barred, as has been done in the present case.

Therefore, the aforesaid submission of the learned counsel for the

petitioner is rejected.

19. The objections to the denial of interest should have been

raised within the period of limitation prescribed under Section 34(3) of

the Act, after the receipt of the award dated 28.08.2003. The same

has admittedly been raised only on 04.08.2004. Consequently, the

present objection petition is barred by limitation and is therefore,

dismissed.

VIPIN SANGHI, J.

JULY 08, 2010 sr