Karnataka High Court

Pandavpura Sahakari Sakkare Karkhane vs Sumac International Limited on 5 November, 2024

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                                                              MFA No.4668/2019
                                                         C/w MFA No.2879/2019
                                                              MFA No.4667/2019


                 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                       DATED THIS THE 5TH DAY OF NOVEMBER, 2024
                                         PRESENT
                         THE HON'BLE MRS JUSTICE K.S.MUDAGAL
                                           AND
                       THE HON'BLE MR JUSTICE VENKATESH NAIK T
                  MISCELLANEOUS FIRST APPEAL No.4668/2019 (AA)
                                           C/w
                  MISCELLANEOUS FIRST APPEAL No.2879/2019 (AA)
                 MISCELLANEOUS FIRST APPEAL NO.4667/2019 (AA)

                BETWEEN:

                PANDAVPURA SAHAKARI SAKKARE KARKHANE
                PANDAVAPURA R.S.
                MANDYA DISTRICT - 571 435
                REPRESENTED BY ITS
                MANAGING DIRECTOR                               ...APPELLANT
                                                                 (COMMON)
                (BY SRI MANJUNATH B S., ADVOCATE)
                AND:

Digitally       SUMAC INTERNATIONAL LIMITED
signed by K S   REP. BY ITS MANAGING DIRECTOR
RENUKAMBA
                COMPANY HAVING ITS REGISTERED
Location:
High Court of   OFFICE AT B-51, "J" PARK
Karnataka       MAHANAGAR EXTENSION
                LUCKNOW (U.P.)                                ...RESPONDENT
                                                                (COMMON)
                (BY SMT.ANUSHA NANDISH, ADVOCATE FOR
                    SRI GAURAV G K, ADVOCATE)

                     THESE MISCELLANEOUS FIRST APPEALS ARE FILED UNDER
                SECTION 39(1) (VI) OF THE ARBITRATION ACT, 1940 READ WITH
                SECTION 104 OF CPC PRAYING TO SET ASIDE THE JUDGMENT AND
                DECREE    DATED    21.02.2019  PASSED    IN   A.S.NO.1/2017,
                A.S.NO.1/1993 AND A.A.NO.1/2017 RESPECTIVELY ON THE FILE OF
                THE PRINCIPAL SENIOR CIVIL JUDGE & JMFC, SRIRANGAPATNA.
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                                                                 MFA No.4668/2019
                                                            C/w MFA No.2879/2019
                                                                 MFA No.4667/2019


     THESE MISCELLANEOUS FIRST APPEALS HAVING BEEN
HEARD AND RESERVED ON 25.10.2024, COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, K.S.MUDAGAL.J.,
DELIVERED THE FOLLOWING:

CORAM:       HON'BLE MRS JUSTICE K.S.MUDAGAL
             AND
             HON'BLE MR JUSTICE VENKATESH NAIK T

                              CAV JUDGMENT

(PER: HON'BLE MRS JUSTICE K.S.MUDAGAL)

Heard.

2. These appeals are filed challenging the following

orders of the Principal Senior Civil Judge & JMFC,

Srirangapatna. The particulars of the impugned orders are as

follows:

Sl. MFA No. Suit/ Preferred by judgment No. Application

1. 4668/2019 A.S.No.1/2017 Appellant Dismissed /claimant Pandavpura without Sahakari costs

2. 2879/2019 A.S.No.1/1993 Appellant Sakkare Decreed /defendant Karkhane with costs

3. 4667/2019 A.A.No.1/2017 Appellant Decreed /respondent with costs

3. The brief facts of the cases are as follows:

The appellant is a Co-operative Society and runs a

Sugar factory called Pandavpura Sahakara Sakkare Karkhane,

within the limits of Pandavapura Town. The respondent is the

registered company having its Office at Lucknow, Uttar

Pradesh. The respondent carries on business of supply of

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sugarcane crushing machinery and installation of sugar plants

on turn key basis in various parts of the Country. The

appellant invited tenders for converting its existing sugar

company for expanding the capacity from 1500 tonnes cane

per day to 3500 tonnes cane per day.

4. The respondent submitted its offer in response to

the said tender invitation and after negotiations, the tender

price was fixed at Rs.1,545 lakhs. Both the parties entered

into agreement dated 21.09.1990 for designing, procuring

supplying, supervising, manufacturing and commissioning of

machinery and equipment for expansion of the existing sugar

unit from 1500 tonnes cane per day to 3500 tonnes cane per

day.

5. The contract work was to be executed on or before

01.06.1992. To enable the respondent to install the machinery

etc. the appellant as per Clause 11(2) of the agreement was

required to provide necessary infrastructure like civil work. As

per the terms of the agreement, the appellant paid first and

second mobilization advance amount. Admittedly, third

mobilization amount fell due for payment immediately after

IFCI loan was sanctioned or within 180 days from the date of

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signing of the agreement whichever is earlier. However, the

same was not paid to the respondent. For guaranteeing the

performance of the contractual obligations, the respondent

had submitted the Bank guarantee. The appellant invoked

those Bank guarantees alleging violation of contractual

obligations.

6. Dispute arose between the parties. To settle that,

on 16.01.1992, a meeting of Monitoring Committee was held.

In that meeting, the appellant extended the period of

completion of work from 01.06.1992 to 01.06.1993 for the

reason that the appellant's failure to complete the civil work

led to delay in execution of the contract by the respondent.

Further Committee directed the Managing Director of the

appellant to make payment to the respondent as per the

agreement towards third mobilization amount of Rs.73.25

lakhs for designing and equipments charges. Admittedly, the

said amount was not paid.

7. Respondent alleged that, despite it offering to

complete its work, appellant did not accept the same in the

guise of shortage of funds. Disputes arose between the

parties regarding non-payment of money to the respondent

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and non-performance of the contract etc. As the contract

dated 21.09.1990 contained arbitration clause, the respondent

invoked the arbitration clause of the agreement and filed an

application before the Civil Judge, Srirangapatna in

A.S.No.1/1993 seeking appointment of the Arbitrator and for

permanent injunction to restrain the appellant from carrying

out pending work through any other agency.

8. On 03.12.1994, learned Civil Judge directed the

parties to say which of the Arbitrators to be appointed by

12.12.1994. On 17.12.1994, learned Civil Judge allowed

A.S.No.1/1993 directing the respondent to file the original

agreement containing the Arbitration clause and referred the

matters to Hon'ble Shri Justice U.C.Srivastava, Former Judge

of Allahabad High Court and Hon'ble Shri Justice P.P.Bopanna,

Former Judge of High Court of Karnataka.

9. Hon'ble Arbitrators heard the matter. Hon'ble Shri

Justice U.C.Srivastava gave his award on 11.11.1997 allowing

the claim of the respondent in-part. On 12.12.1997, Hon'ble

Shri Justice P.P.Bopanna rendered his award rejecting the

claim of the respondent and partly allowing the claim of the

appellant. Since there were divergent findings of two

Arbitrators, Former Chief Justice of this Court, Hon'ble Shri

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Justice D.M.Chandrasekhar was nominated as Umpire by

them. Unfortunately, due to his ill-health, Hon'ble Shri Justice

D.M.Chandrasekhar could not proceed with Arbitration

proceedings for a long time. As the parties did not appear

before the Court and nothing was heard regarding Arbitration

proceedings, on 08.06.2006 learned Civil Judge,

Srirangapatna closed the proceedings in A.S.No.1/1993 for

time being.

10. After the demise of Hon'ble Shri Justice

D.M.Chandrasekhar, the arbitrators appointed Hon'ble Shri

Justice G.P.Mathur, the Former Judge of the Supreme Court of

India as Umpire. The Umpire on 03.06.2014 addressed a

letter to Sri D.C.Shivdev, son of late Hon'ble Shri Justice

D.M.Chandrasekhar, informing about arbitral proceedings and

to handover the records of the arbitral proceedings to him. In

response to that, on 11.07.2014, Sri D.C.Shivdev addressed a

letter saying that the records are not traceable. The Umpire

by order dated 12.07.2014 directed the Counsel for the

present respondent to reconstruct the entire records and

submit them. Accordingly, Counsel for the respondent who

appeared before the Umpire, reconstructed the proceedings

and submitted the same to the Umpire serving the copies on

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the appellant. On 13.09.2014, the Hon'ble Umpire recorded

that authenticity of the reconstructed records was admitted by

the appellant herein and the copies were served on it.

11. On 06.06.2016, the Hon'ble Umpire sent notices to

the appellant and respondent informing that the award will be

pronounced and signed on 26.06.2016. The notices were

served on both the parties. On 26.06.2016, the Hon'ble

Umpire pronounced the award, partly allowing the claim of the

respondent, namely awarding Rs.86,45,454/- (Rupees Eighty

Six lakhs Forty Five Thousand Four Hundred and Fifty Four

Only) with interest at 14% p.a., from the date of reference

i.e., 17.12.1994 till the date of the award and interest at 16%

p.a., from the date of the award till the realization of the

amount. The costs of the proceedings were awarded to the

respondent. The counter claim of the appellant was rejected.

12. Further in the minutes of proceedings dated

26.06.2016, the Hon'ble Umpire recorded as follows:

"(i) Award and records were handed over to the Counsel of the claimant to proceed further to cause the award to be filed in Court.

(ii) The respondent despite receipt of the notice was not present at the time of pronouncement of the award."

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13. Respondent filed A.A.No.5001/2016 under

Sections 14 and 17 of the Arbitration Act, 1940 (for short ' the

Act 1940') before III Additional District and Sessions Judge,

Srirangapatna to accept the award and draw up the decree in

terms of award. Similarly, the appellant filed

A.S.No.5001/2016 before the III Additional District and

Sessions Judge, Srirangapatna under Sections 30 and 33 of

the Act of 1940 for setting aside the award of the Umpire

dated 26.06.2016. The said suit was filed after the appellant

received notice in A.A.No.5001/2016 which was filed on

03.08.2016.

14. On 24.10.2016, the appellant filed

Misc.No.51/2016 before the Principal District and Sessions

Judge, Mandya under Section 24 of CPC seeking transfer of

A.A.No.5001/2016 and A.S.No.5001/2016 from the file of the

III Additional District and Sessions Judge, Srirangapatna to

the Court of the Senior Civil Judge, Srirangapatna. The said

application was allowed on 28.01.2017 and the learned

Principal District Judge withdrew A.A.No.5001/2016 and

A.S.No.5001/2016 and transferred them to the Court of the

Senior Civil Judge, Srirangapatna. On such transfer,

A.A.No.5001/2016 was renumbered as A.A.No.1/2017 and

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A.S.No.5001/2016 was renumbered as A.S.No.1/2017. On

such transfer on 10.03.2017, the records of A.S.No.1/1993

were ordered to be traced and placed before the Court. On

placing such records learned Principal Senior Civil Judge,

Srirangapatna consolidated A.S.No.1/2017, A.A.No.1/2017

and A.S.No.1/1993 together.

15. On 03.04.2018, the appellant filed

W.P.No.14329/2018 before this Court claiming that the notice

of award was not issued by the Court as required under

Section 14(2) of the Act 1940. This Court by order dated

29.05.2018 dismissed the writ petition reserving liberty to the

appellant to raise that ground in the proceeding before the

learned Principal Senior Civil Judge, Srirangapatna in

A.S.No.1/1993 and connected matters.

16. The appellant challenged the award before the

learned Principal Senior Civil Judge & JMFC, Srirangapatna in

A.S.No.1/1993, A.A.No.1/2017 and A.S.No.1/2017 on the

following grounds:

(i) Misconduct of the arbitration proceedings by the

Umpire.

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(ii) Non service of notice of award as per Section

14(1) of the Act 1940 and non service of notice by the Court

under Section 14(2) of the Act 1940.

17. Learned Principal Senior Civil Judge & JMFC,

Srirangapatna on hearing the parties by the impugned

common judgment dated 21.02.2019 decreed A.S.No.1/1993

and A.A.No.1/2017 accepting the award of the Umpire and

dismissed A.S.No.1/2017. Thereby award became the decree

of the Court. The said judgment is challenged by the appellant

in the above appeals.

Submissions of Sri Manjunath.B.S, learned Counsel for the appellant:

18. The Umpire mis-conducted the proceedings by not

serving notice of award on the appellant. The notice dated

06.06.2016 at the most could be understood as intimation of

next date of hearing and that does not amount to award

notice. By non service of award notice, the Umpire acted in

violation of Sections 14(1) and 14(2) of the Act 1940. The

award was not filed in the competent Court as required under

Sections 2(c), 14(2) and 31(4) of the Act 1940. Therefore the

proceedings before the trial Court were vitiated. The award

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was filed before the Court beyond the period of limitation

prescribed under Article 119(a) of the Limitation Act, 1963.

The observation of the trial Court that the service of notice on

the appellant in A.A.No.1/2017 is sufficient compliance of

Section 14(2) of the Act 1940 is erroneous. This Court in

W.P.No.14329/2018 has reserved the liberty to the appellant

to urge that ground. Absolutely there was no entry in the

order sheet in A.S.No.1/1993 about taking the award on

record therefore passing of decree under Section 17 of the Act

1940 is unsustainable. The respondent though received the

records on 26.06.2016 from the Umpire, produced them

before the Court only on 03.08.2016. The original records

were admittedly destroyed and only reconstructed records

were produced before the Umpire. The Umpire without

marking them in evidence proceeded to pass the award. The

trial Court also received those records without verification.

The trial Court was not justified in relying on those records. As

the application in A.A.No.5001/2016 (A.A.No.1/2017) itself

was filed before the Court having no jurisdiction, the notice

sent by the said Court cannot be said to be in compliance of

Section 14(2) of the Act 1940. Hence, the appeals deserve to

be allowed.

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19. In support of his submissions, he relies on the

following judgments:

(i) East India Hotels Ltd. v. Agra Development Authority1

(ii) Parasramka Com. Co. v. Union of India

(iii) Secretary to Govt. of Karnataka v. V.Harishbabu

(iv) P.Radhakrishna Murthy v. National Buildings Construction Corporation Limited4

(v) M/s.Alpine Housing Development Corporation Pvt. Ltd. v. Ashok S.Dhariwal5

Submissions of Smt.Anusha Nandish, learned Counsel for respondent:

20. The Umpire had sent notice dated 06.06.2016

clearly stating that the award will be pronounced and signed

on 26.06.2016. The notice was sent by speed post to the

appellant on 08.06.2016. Despite that, the appellant did not

appear before the Umpire on 26.06.2016. The Umpire

pronounced and signed the award on 26.06.2016 and handed

over the award along with 15 volumes of the records to the

respondent for filing before the Court. For its own lapses, the

appellant cannot blame the Umpire. The purpose of the notice

under Sections 14(1) and 14(2) of the Act 1940 is only to

(2001) 4 SCC 175 2 1969 (2) SCC 694 3 (1996) 5 SCC 400

(2013) 3 SCC 747

AIR 2023 SC 558

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comply with the principles of natural justice and give

opportunity to the party to the award to challenge the same, if

necessary. After filing the award, notice of the same was

issued in A.A.No.5001/2016. On such service, the appellant

himself filed A.S.No.5001/2016 before the III Additional

District & Sessions Judge, Srirangapatna, therefore it is not

open to the appellant to claim that Sections 14(1) and 14(2)

of the Act 1940 was not complied. Finally the matters were

transferred to the Court of Senior Civil Judge, Srirangapatna

which had referred the matter for Arbitration as decided by

the Principal District & Sessions Judge, Mandya in

Misc.No.51/2016. Therefore there was compliance of Sections

2(c), 14(2) and 31 of the Act 1940. The proceedings before

the Umpire show that the Umpire handed over the award and

the documents to the respondent for filing before the Court.

In such cases, Article 119(a) of the Limitation Act does not

apply. Therefore the contention that A.A.No.5001/2016 was

filed beyond limitation is without any merits. The proceedings

dated 13.09.2014, before the Umpire (4th hearing) clearly

show that the appellant's Counsel himself admitted the service

of records on the appellant and the authenticity of the

documents produced. Considering the same, the Umpire relied

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on those documents. Thus it is not open to the appellant to

contend that the documents were not authenticated etc.

Before the trial Court also, the appellant did not dispute the

correctness of the documents. The Umpire on consideration of

the material placed and consideration of the contention of

both side has passed the award. The scope of interference by

the trial Court in such award under the Act 1940 is very

limited. The trial Court on judicious appreciation of the

contentions raised and the material on record has passed the

impugned judgment. The judgments relied on by the

appellant's Counsel are not applicable. There is no merit in the

appeals and they are liable to be dismissed with costs.

21. In support of her submissions, she relies on the

following judgments:

(i) Secretary to Govt. of Karnataka v. V.Harishbabu6

(ii) Kumbha Mawji v. Dominion of India7

(iii) Tata Keshavaiah Setty v. M.Ramayya Setty8

(iv) ITC Ltd. v. George Joseph Fernandes9

(v) Bharat Coking Coal Ltd. v. Annapurna Constructions10

(1996) 5 SCC 400

AIR 1953 SC 313

AIR 1969 Mysore 361

(2005) 10 SCC 425

(2008) 6 SCC 732

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(vi) Oswal Agro Mills Ltd. v. Oswal Woollen Mills Ltd.11

(vii) Hari Krishna Wattal v. Vaikunth Nath Pandya12

(viii) Atlanta Ltd. v. Union of India13

(ix) Raipur Development Authority v. M/s.Chokhamal Contractors14

22. On careful consideration of submissions of both

side and on perusal of records, the question that arises for

determination of the Court is "Whether the impugned

judgment and decree accepting the Umpire's award is

sustainable in law"?

Analysis

23. Admittedly, the appellant is a Co-operative Society

running sugar factory and the respondent is an Industrialist

dealing in supply of machinery and installation of sugar plants.

It is also admitted that the appellant as a part of his project of

expansion of the capacity of its sugar crushing, on 21.09.1990

entered into a contract with the respondent for designing,

procuring, supplying and commissioning of machinery etc. It is

also not disputed that the contract contained an arbitration

clause. Disputes arose between the parties which led to

(2007) 140 DLT 396

(1973) 2 SCC 510

(2022) 3 SCC 739

(1989) 2 SCC 721

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respondent filing A.S.No.1/1993 before Principal Senior Civil

Judge, Srirangapatna seeking reference of the dispute to the

Arbitrator. As already noted, two members of the arbitral

Tribunal gave divergent awards in 1997 which led to referring

the matter to the Umpire. Due to the ailment and death of the

Umpire first appointed, the matter was in a dead store upto

2014.

24. In the meantime, on 08.06.2006, the Court closed

A.S.No.1/1993 for want of appearance of the parties. On

appointment of second Umpire on 24/31.03.2014, the records

were reconstructed, then parties were heard and award was

passed on 26.06.2016. By the impugned judgment and order,

the same is upheld which is challenged in these appeals.

25. The proceedings commenced under the Act 1940.

Later by Arbitration and Conciliation Act, 1996 (for short 'Act

1996'), the Act 1940 was repealed. Section 85 of the Act 1996

which deals with repeal and savings reads as follows:

"85. Repeal and savings-(1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.

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(2) Notwithstanding such repeal-

(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties

but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;

(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act.

26. In the light of the above provision, only Section of

Act 1940 can be invoked for setting aside the award, as there

was no agreement to the contrary between the parties.

27. Section 30 of Act 1940 which provides for setting

aside the arbitral award reads as follows:

"30. Grounds for setting aside award.-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.

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28. The appellant had challenged the award on the

following grounds:

(i) That the Umpire has mis-conducted the

proceedings;

(ii) The award is otherwise invalid.

29. The improper conducting of the proceedings is

imputed to the Umpire on the following grounds:

(i) Reconstructed records were not marked in

evidence and their authenticity was not verified.

(ii) Notice of award was not given as required under

Section 14(1) of the Act 1940.

(iii) The award was not filed as per Section 14(2) of

the Act 1940 before the Court of proper jurisdiction.

(iv) The Umpire did not consider the documents

produced before him.

(v) The trial Court did not verify the genuineness of

documents filed by the respondent along with the award.

Reg. Authentication of reconstructed records:

30. There is no dispute that the original records were

handed over to the first Umpire Hon'ble Shri Justice

D.M.Chandrasekhar. On his demise the subsequent Umpire by

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letter dated 03.06.2014 requested D.C.Shivdev the son of first

Umpire who in turn by his reply dated 11.07.2014 informed

that he could not trace those records. Thereafter, on

12.07.2014, the Umpire directed the respondent to

reconstruct the records and submit it. The proceedings dated

13.09.2014 before the Umpire read as follows:

"13.09.2014- Shri P.K.Gupta, Director, Shri Manoj Swarup, Ms.Lalita Kohli and Shri Abhishek Swaroop, Advocates present for Claimant.

Shri B.S.Manjunath, Advocate present for Respondent.

Learned counsel for claimant and Learned Counsel for Respondent have submitted that in view of the circumstances of the case the time for making the Award may be extended. Period is accordingly extended by four months.

Learned counsel for Claimant has made a statement that copy of entire record was sent to the Respondent- The Pandavpura Sahakari Sakkara Karkhane Limited. Shri B.S.Manjunath has admitted that copy of the complete record has been received by his client and they do not dispute its authenticity or correctness.

As jointly requested by learned counsel for parties, the Arbitration matter shall be taken up for further proceedings at 11 AM on 1.11.2014 (Saturday) at the same venue.

Sd/-

G.P.Mathur, (UMPIRE)"

(Emphasis supplied)

31. Further in the proceedings before the Umpire

dated 26.06.2016, the Umpire has recorded handing over of

the award and the documents as follows:

"Minutes of Proceedings dated 26.06.2016 The award in the above matter was pronounced and signed. The Minutes of Proceedings, Applications filed and Orders passed thereon and the Award was

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handed over to the learned counsel for claimant for taking further steps in accordance with Law. The entire record of the Arbitration matter was also handed over to the learned counsel for the claimant."

(Emphasis supplied)

32. List of files containing 15 Volumes of documents

which were handed over to the appellant reads as follows:

Volume - 1 Statement of Claim Pages 1 to 329

Volume - 2 Affidavit of Sri.A K Verma in support Page 1 to 77 of claim Volume - 3 Objection of Respondent Page 1 to 40

Volume - 4 Counter claim by Respondent Page 1 to 70

Claimants reply to Counter Claim Page 71 to 103

Volume - 5 Rejoinder by claimant Page 1 to 44 Documents filed by Respondent with Page 1 to 326 Volume - 6 counter claim Volume - 7 Documents filed by Respondents Page 1 to 256

Volume - 8 Statement of C.W.3 Page 1 to 4 Respondents Application to file Additional Evidence with affidavit and Page Annexure Volume - 9 Written arguments of Claimant Page 1 to 53

Volume - 10 Written Arguments of Respondent Page 1 to 83

Volume - 11 Rejoinder Arguments of Claimant Page 1 to 47

Volume - 12 Evidence of Respondent Page 1 to 54 Award by Mr.Justice P P Bopanna Page 1 to 463 Volume - 13 (In 2 Volumes) Volume - 14 Award by Mr.Justice U C Srivastava Page 1 to 69

Volume - 15 Affidavit in Rebuttal Page

Complete record handed over Received the Arbitration documents today Sd/- Sd/-

      G.P.Mathur                                        26.06.2016,
      26.06.2016
                                                         Sd/-
                                                  Manoj Swarup, Adv.
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33. In the light of such clear admission on the part of

the appellant in the proceedings before the Umpire, the

contention that the authenticity of the reconstructed

documents should have been verified by the Umpire and by

the trial Court deserves no merit.

34. The records of A.A.No.5001/2016 show that

P.K.Gupta, the Director of the respondent along with his

application under Section 17 of the Act 1940 and the affidavit

filed in support of the application, produced depositions and

documents taken in proof before the Umpire. The Court took

them on record. Under Section 114 Illustration (e) of the

Indian Evidence Act, 1872 there is a presumption that

official/judicial acts are duly performed. As the Umpire's

proceedings recorded handing over of the records and the

award to the respondent to proceed in accordance with law, as

per the proceedings in A.A.No.5001/2016 the same were said

to be produced and the representative of the respondent had

filed an affidavit to that effect, the initial burden that the

records of arbitration proceedings were produced stood

discharged. If the appellant disputed the correctness of those

documents, the burden was on it to rebut the said

presumption. Neither the appellant choose to lead evidence to

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rebut such presumption nor summoned the Umpire for

confirmation of the documents. He is raising such baseless

contentions that the said documents ought to have been

authenticated and produced by the Umpire and the Court.

35. The above facts and circumstances show that

before the Umpire there was a clear admission of authenticity

of the records and before the trial Court no attempts were

made to establish its contention that after receiving the

records from the Umpire and before filing them to the Court

the documents were tampered.

Reg. Non compliance of Section 14(1) and 14(2) of the Act, 1940:

36. These two points overlap on each other. Therefore

to avoid repetition, they are taken up together. It was

contended that the Umpire did not issue notice of award in

compliance of Section 14(1) of the Act 1940 and the award

was not filed before the proper Court as per Section 14(2) of

the Act 1940. It was contended that, even if the notice of

award was issued in A.A.No.5001/2016, the same was not the

compliance of Section 14(1) of the Act 1940.

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37. Sections 14(1) & 14(2) of the Act 1940 read as

follows:

"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 of 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."

38. Under the notice dated 06.06.2016, the Umpire

notified both parties as follows:

"The Arbitral Tribunal will hold sitting at 11.30 A.M. on 26.06.2016 in Conference Room, Sector 15-A Club, NOIDA, (U.P). The award shall be pronounced and signed and same shall be given to the parties."

39. The appellant does not dispute service of said

notice. But on 26.06.2016 appellant or any of its

representatives did not appear before the Umpire. Therefore

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Umpire pronounced the award and handed over the award and

the records to the respondent.

40. Reading of Section 14(1) of the Act 1940 shows

that it contemplates notice of making and signing of the award

and not the service of copy of the award. Reading of Section

14(2) of the Act 1940 makes it clear that the Umpire is

required to serve the signed copy of the award only if the

party to the arbitration agreement requests or so directed by

the Court and that too on payment of fees, charges and costs

etc. Without appearing before the Umpire and making such

requests for service of copy, the appellant cannot blame the

Umpire saying that Sections 14(1) & 14 (2) of the Act 1940 is

violated.

41. Section 14(2) of the Act 1940 requires the Court

to give notice to the parties of filing of the award. In the

present case, such notice was issued by the III Additional

District & Sessions Judge, Srirangapatna as the respondent

filed A.A.No.5001/2016 under Sections 14 & 17 of the Act

1940 requesting the Court to pass decree in terms of the

award. On service of such notice, the appellant itself filed

A.S.No.5001/2016 under Sections 30 and 33 of the Act 1940

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on 19.10.2016 challenging the award. For that, the appellant

claims that the award ought to have been filed in

A.S.No.1/1993 before the Principal Senior Civil Judge,

Srirangapatna, therefore filing of the award and the notice

issued in A.A.No.1/2017 are not in compliance with Sections

14(1) and 14(2) of Act 1940 in the eye of law. Therefore such

notice has no legal effect.

42. To substantiate such contentions, the appellant's

Counsel relies on the definition of the Court in Sections 2(c)

and 31 of Act 1940. Sections 2(c) and 31 of the Act 1940 read

as follows:

"2(c) "Court" means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not except for the purpose of arbitration proceedings under section 21 include a Small Cause Court;

"31. Jurisdiction.-(1) Subject to the provisions of this

Act, an award may be filed in any Court having jurisdiction in the matter to which the reference relates.

(2) Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between

the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by no other Court.

(3) All applications regarding the conduct of arbitration proceedings or otherwise arising out of such

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proceedings shall be made to the Court where the award has been, or may be, filed, and to no other Court.

(4) Notwithstanding anything contained elsewhere in this Act or in any law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court."

43. Section 31(2) of the Act 1940 speaks of deciding

the questions regarding validity, effect or existence of an

award. In these cases, apparently, the proceedings

commenced in the year 1993. However, that culminated in the

award of the Umpire on 26.06.2016 i.e. after about 23 years.

By that time, admittedly, the reference Court had closed the

proceedings on 08.06.2006. Probably, due to the passage of

time, the parties also did not keep track of the proceedings in

A.S.No.1/1993 and that led to closure of the said case. By the

date of award i.e. 26.06.2016, under the Act 1996, Act 1940

was repealed. As per Section 2(e) of Act 1996, in domestic

arbitration, Court means Principal Court of original jurisdiction

in a District. Probably under that misconception,

A.A.No.5001/2016 was filed before the III Additional District &

Sessions Judge, Mandya sitting at Srirangapatna. The fact of

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appellant himself filing A.S.No.5001/2016 before the same

Court shows that appellant also had gone by Section 2(e) of

Act 1996. Moreover, subsequently both the cases were

transferred to the Court of Principal Senior Civil Judge,

Srirangapatna for consideration along with A.S.No.1/1993

where that was revived. The III Additional District & Sessions

Judge, Srirangapatna had not decided the matters and had

only issued notice. Such proceedings are analogous to a

situation under Order VII Rule 10 of CPC. If a plaint was

presented before the Court which has no jurisdiction and the

parties are served in the said case and ultimately the plaint is

returned for presentation before the proper Court after fixing

the date of appearance of the parties, it cannot be said that

the initial service of notice is void ab initio or filing itself has to

be nullified.

44. As rightly pointed out by learned Counsel for the

respondent, the purpose of issuing notice under Section 14(2)

of the Act 1940 is only to comply with the principles of natural

justice and to enable the other party to proceed under Section

33 of the Act 1940 to challenge the award, if he so desires. In

the present case, since the appellant did not appear before

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the Umpire on the date of pronouncement of the award and

make a request to the Umpire to furnish the copy of the award

and as his challenge in A.S.No.5001/2016 was entertained by

the III Additional District & Sessions Court, Srirangapatna, the

judgments in Parasramka Com. Co.'s and East India Hotel

Ltd.'s cases referred to supra cannot be justifiably applied to

the facts of these cases.

Reg. Applicability of Article 119(a) of the Limitation Act:

45. It was contended that as per Article 119(a) of the

Limitation Act, the award ought to have been filed within 30

days of the making of the award, but the award in the case

was filed beyond 30 days, therefore A.A.No.1/2017

(A.A.No.5001/2016) was barred by time. The other contention

was that the award ought to have been treated as filed on the

date it was taken on record by the Principal Senior Civil Judge,

Srirangapatna on the transfer of A.A.No.1/2017 to the said

Court. The analogy of return of the plaint for presentation to

the proper Court applies to these contentions also. In view of

Section 14 of Limitation Act the date of limitation has to be

counted as the date on which A.A.No.5001/2016 was filed

before III Additional District & Sessions Judge, Srirangapatna.

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46. Further, this Court in para 6 of the judgment in

Tata Keshavaiah Setty's case referred to supra in this regard

held as follows:

"6. ................................................................................................ The language of this part of Art. 119 makes it clear that the period of limitation which it prescribes does not govern the production of an award by the arbitrator or the umpire as the

case may be but governs only an application made to the court by a person other than the arbitrator or the umpire for a

direction that the arbitrator or the umpire should produce the award. But, the production of the award by the arbitrator or the umpire as the case may be is not within that Article of the Limitation Act and there is no period of limitation prescribed by the Act for such production."

(Emphasis supplied)

47. For that the appellant's Counsel contended that

award was not filed or caused to be filed by the Umpire as

contemplated under Section 14(2) of the Act 1940, therefore,

the benefit of that judgment cannot be invoked. Whereas

respondent's Counsel submits that though Umpire's

proceedings dated 26.06.2016 clearly show that the award

was handed over to the respondent to proceed in accordance

with Section 17 of the Act 1940, though the same was not

specifically spelt out. To appreciate that contention, at the

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cost of repetition, the minutes of proceedings dated

26.06.2016 are extracted below:

"Minutes of Proceedings dated 26.06.2016 The award in the above matter was pronounced and signed. The Minutes of Proceedings, Applications filed and Orders passed thereon and the Award was handed over to the learned counsel for claimant for taking further steps in accordance with Law. The entire record of the Arbitration matter was also handed over to the learned counsel for the claimant."

(Emphasis supplied)

Reading of the above order shows that the award was not

simply handed over to the respondent, but that came with a

qualification that it was handed over to the claimant for taking

further steps in accordance with law. What would have been

the next course open to the claimant who had succeeded

atleast partly? That would be the filing of award in the Court

under Section 17 of the Act 1940 seeking decree in terms of

the award. Thereby the Umpire's award was caused to be filed

though he did not file it directly.

48. The Hon'ble Supreme Court in the judgments in

Harishbabu's and Kumbha Mawji's cases referred to supra

has held that under Section 14(2) of the Act 1940, the Umpire

can cause the award to be filed in the Court. However, it was

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held that there was a statement to that effect in the

application. Since the Umpire caused the award to be filed in

the Court, the contention that A.A.No.1/2017 was barred by

time was rightly rejected by the trial Court.

Reg. Non-consideration of documents by Umpire and non-consideration of grounds urged before the trial Court:

49. Appellant's Counsel contended that in awarding

Rs.86,45,454/- etc. the Umpire has not considered the

material on record and the trial Court also did not consider

those contentions. The question whether in an appeal against

Arbitration award the Appellate Court can

re-appreciate the evidence as a first appeal against the decree

of the Civil Court, is no longer res integra. As long back as in

the year 1989, the Constitutional Bench of the Hon'ble

Supreme Court in para 20 of the judgment in Raipur

Development Authority's case referred to supra referring to

76th Report on Arbitration Act, 1940 by Law Commission of

India opined that the scheme of arbitration act is to provide a

domestic forum for speedy and substantial justice and the

award can be questioned under Section 30 of the Act 1940 on

a very limited ground.

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50. The larger Bench of the Hon'ble Supreme Court in

Atlanta Ltd.'s case referred to supra while summarizing the

law about the scope of interference in the award invoking

Sections 30, 33 and 39 of the Act 1940 held that:

(i) In such cases, the Court does not sit in an appeal

over an award passed by the arbitrator;

(ii) Challenge can only be on the grounds specified in

Sections 30 and 33 of the Act 1940 i.e. error apparent on the

face of the award and the arbitrator has misconducted himself

or the proceedings;

(iii) Challenge cannot be on the ground that the

Arbitrator has drawn his own conclusion or failed to appreciate

relevant facts;

(iv) Court cannot substitute its own view on conclusion

of law and facts against the one drawn by the Arbitrator as if

sitting in an appeal, simply because different view is possible.

51. In the present case, in paras 26 to 78 of the

award, the learned Umpire considered the rival contentions of

the parties in the pleadings, the evidence adduced by them

and the implications of the contract with reference to the

provisions of the Contract Act. The Umpire had also

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considered in paras 84 and 85 of the award, the claims of the

claimant under different heads, the expenses incurred by the

claimant, justification for the claim and ultimately passed the

award partly allowing the claim of the present respondent and

dismissing the counter claim. When such reasoned award is