Holding

The interim award was final, no power of review exists under Section 33, the arbitrator’s reply did not create a fresh cause of action, and the limitation period began on receipt of the award, rendering the Section 34 application time‑barred.

Summary

The State of Arunachal Pradesh entered a contract for road bridge construction with M/s Damini Construction, which later refused payment, leading to arbitration. An interim award dated 12‑10‑2003 was issued, which the State later sought to review by letter on 02‑04‑2004; the arbitrator replied on 10‑04‑2004 that he had no jurisdiction to review and that the award was final. The State filed an application under Section 34 of the Arbitration and Conciliation Act on 06‑08‑2004, after the statutory three‑month period (plus 30‑day extension) had expired. The trial court condoned the delay, but the Gauhati High Court set aside that order, holding that the cause of action arose when the award copy was received on 23‑10‑2003 and that the review request was misconceived. On appeal, the Supreme Court affirmed the High Court, stating that the interim award was final, there is no provision for review under Section 33, the arbitrator’s reply did not create a fresh cause of action, and the limitation period began on receipt of the award, making the application time‑barred. Consequently, the appeals were dismissed.

Issues considered

When does the cause of action for filing an application under Section 34 of the Arbitration and Conciliation Act arise?
Whether an arbitral award can be reviewed or clarified under Section 33 of the Act after it has been rendered?
Does the arbitrator’s reply to a request for review constitute a fresh cause of action that can reset the limitation period under Section 34(3)?
Whether an interim award that determines the amount payable is to be treated as a final award for the purposes of limitation.

Legislation cited

Arbitration and Conciliation Act, 1996s. 33, s. 34
Limitation Act, 1963s. 5

Subjects

ArbitrationArbitral awardSection 33Section 34Limitation periodInterim awardReview of awardCause of action

Judgment

A STATE OF ARUNACHAL PRADESH .....
v. j
M/S. DAMINI CONSTRUCTION

FEBRUARY 28, 2007

B (A.K. MA THUR AND V.S. SIRPURKAR, JJ.]

Arbitration and Conciliation Act, 1996-ss. 34 & 33:
}-
Arbitral award-Power of arbitrator to review the award-Appellant
c requested arbitrator in writing to review award and also sought certain
clarifications-Request sent after expiry of period of limitation prescribed ul
s. 34 for setting aside of award-Arbitrator replied that he had no jurisdiction
for review-Held: When award was passed, only option with Appellant was
either to move an application under s.34 within three months or within
D extended period of another 30 days-Question of review was totally
misconceived as there is no such provision in the Act for review of award by
the arbitrator-Also clarifications sought not contemplated under s.33-1n
this background, reply sent by arbitrator does not entitle appellant a fresh
cause of action so as to file an application under s.34(3) by taking the
starting point of limitation from the date of reply given by the arbitrator-
,
E Limitation Act, 1963-Section 5.

Respondent raised bill with regard to the contract it had entered into
with the Public Works Department in State of Andhra Pradesh for executing
work of construction of road bridges. But it was refused payment. The refusal
gave rise to disputes which were referred to arbitration. Arbitrator passed
F an interim award on 12-10-2003. Appellant sent a letter to the arbitrator on
02-04-2004 seeking review of the award. On 10-4-2004, the arbitrator by his
letter stated that he had no jurisdiction to entertain the request for review of .... ~

the award and also informed that the award dated 12-10-2003 was in fact a
final award pertaining to the issues involved. On 21-06-2004, Respondent-
G petitioner filed an application for execution of the interim award dated 12-10-
2003. Thereafter on 6-8-2004, Appellant filed application under s.34 of the
Arbitration and Conciliation Act, 1996 for setting aside the award dated 12-
10-2003 together with an application under s.S of the Limitation Act read
with s.34(3) of the Act for condonation of delay in filing the application for

H 416
STA TE OF ARUNACHAL PRADESH 1·. DAMINI CONSTRUCTION 417
~
setting aside the award. Delay was condoned by the Trial Court. That order A
~ was set aside by the High Court.
"
In appeal to this Court it was submitted by the appellant that the cause
of action arose to the appellant on 10.4.2004 when the letter was received
from the arbitrator and, hence, the appellant was entitled to count the period
of limitation from the date of receipt of such letter from the arbitrator and if B
the limitation was to start from 10.4.2004 then the appellant has a right to
move an application for setting aside of the award under s.34 of the Act within
three months and the extended period of one month and the appellant having
filed the application on 6.8.2004, it was within time.

Dismissing the appeals, the Court c
HELD: I.I. The submission of the appellant is totally misconceived and
it cannot be accepted. A perusal of the interim award passed by the arbitrator
clearly shows that it was final to the extent of the claims decided therein.
This interim award did not mince any word and determined the amount after
discussing the claims in detail and finally calculated the amount under each D
of the claims. Therefore, there was no confusion in this award. [Para 6]
[421-C, F]
,. 1.2. It was absolutely thoughtlessness on the part of the appellant to
> have written a letter after six months i.e. on 2.4.2004 seeking review of the
interim award. Firstly, the letter had been designed not strictly under s.33 of E
the Act because under that Section a party can seek certain correction in
computation of errors, or clerical or typographical errors or any other errors
of a similar nature occurring in the award with notice to the other party or if
agreed between the parties, a party may request the arbitral tribunal to give
an interpretation ofa specific point or part of the award. This application which
was moved by the appellant does not come within any of the criteria falling F
under s.33(1) of the Act. It was designed as ifthe appellant was seeking review
--·~ of the award. Since the Tribunal had no power of review on merit, therefore,
the application moved by the appellant was wholly misconceived. Secondly, it
was prayed whether the payment was to be made directly to the respondent or
through the Court or that the respondent might be asked to furnish Bank
G
guarantee from a nationalized Bank as it was an interim award, till final
verdict was awaited. Both these prayers in this case were not within the scope
ofs.33. Neither review was maintainable nor the prayer which had been made
in the application had anything to do with s.33 of the Act. The prayer was
with regard to the mode of payment. When this application does not come within
H
418 SUPREME COURT REPORTS [2007} 3 S. C.R.

A the purview of s.33 of the Act, the application was totally misconceived.
!Para 6) 1421-F, B-E)

1.3. The reply given by the arbitrator does not give any fresh cause of
action to the appellant so as to move an application under s.34(3) of the Act.
In fact, when the award dated 12.I0.2003 was passed the only option with the
B appellant was either to have moved an application under Section 34 within
three months as required under sub-section (3) of Section 34 or within the
extended period of another 30 days. But instead of that a totally misconceived
application was filed and there too the prayer was for review and with regard
to mode of payment. The question of review was totally misconceived as there
C is no such provision in the Act for review of the award by the arbitrator and
the clarification sought for as to the mode of payment is not contemplated
under Section 33 of the Act. Therefore, in this background, the application
was totally misconceived and the reply sent by the arbitrator does not entitle
the appellant a fresh cause of action so as to file an application under Section
34(3) of the Act, taking it as the starting point of limitation from the date of
D reply given by the arbitrator i.e. I0.4.2004. [Para 6) [421-G-H; 422-A, BJ

CIVIL APPEALLATE JURISDICTION: Civil Appeal No. 1099 of2007.

From the Judgment and final Order dated 7.2.2005 of the Gauhati High
Court in Writ Petition (C) No. 408 (AP) of2004.
E WITH
C.A. No. 1100 of2007.

Anil Shrivastav for the Appellant.

F R. Venkataramani, Rameshwar Prasad Goyal, Manish Goswami (for Ml
s. Map & Co.) for the Respondent.

The Judgment of the Court was delivered by

A.K. MATHUR, J. I. Leave granted in both the Special Leave Petitions.
G
2. Since the question of law involved in both the appeals is common,
they are disposed of by this common judgment. For the sake of convenience,
the facts stated in Civil Appeal arising out ofS.L.P.(c) No.14804 of2005 are ·.
taken into consideration.

H 3. This appeal is directed against the order passed by learned Single
ST ATE OF ARUNACHAL PRADESH v. DAMINI CONSTRUCTION [AK MATHUR, J.] 4J9

. ~
Judge of the Gauhati High Court, Itanagar Bench in Writ Petition No.408
of 2004 whereby learned Single Judge set aside the order dated 15.9.2004
A
passed by the Deputy Commissioner cum District Judge, Papum Pare, District,
Yupia in Miscellaneous Application No. I 0 of 2004 condoning the delay in
making application under Section 34 of the Arbitration and Conciliation Act,
1996 (hereinafter to be referred to as 'the Act' ), being not maintainable. Hence,
the order dated 15.9.2004 was set aside and the writ petition was allowed. B
Aggrieved against this order passed by the High Court of Gauhati, Itanagar
Bench, State of Arunachal Pradesh has preferred the present appeal.

4. Brief facts which are necessary for disposal of this appeal are that
the respondent herein entered into a contract agreement bearing No.DD/03 of
1992-93 with the State of Arunachal Pradesh in Public Works Department for
c
executing the contractual work of construction of road bridges. The value of
the work in question although was initially fixed at Rs.77.43 lakhs but on the

- basis of the post tender negotiation by and between the parties, the price of
the work was re-fixed at Rs. I. 15 crores. The work was to be completed within
two calendar years from the date of commencement of the work. The work D
commenced on 10.4. 1993 and it was completed in March, 1999. According to
the petitioner-respondent herein the delay in execution of the work was due
'y to deviation from the original scope of work and several obstructions and
·' difficulties including delay in approval of the design and drawings and also
in making payment against running accounts bills from time to time. The
E
respondent herein raised bill for the contractual work which according to the
respondent was refused to be paid due to certain arbitrary and untenable
reasons. Such refusal gave rise to a dispute and accordingly, need arose for
arbitration. The respondent then approached the Court under section 11(6) of
the Act which was numbered and registered as Arbitration Case No.21 of 2000
and the same was disposed of by the High Court appointing an arbitrator to F
adjudicate the dispute between the parties. One arbitrator was appointed on
.-, 18.10.200 I but subsequently that arbitrator was changed by the present
arbitrator. On 12. 10.2003 the arbitrator passed an interim award awarding
Rs.65,52,878/- with simple interest to be calculated if the award amount was
not paid within 60 days from the date of the award. However, the period of
limitation prescribed under Section 34(3) of the Act for setting aside the award
G
expired in the meantime. The appellant then wrote a letter to the arbitrator for
review of the award and also sought clarification in respect of the award on
2.4.2004. On I 0.4.2004 the arbitrator by his letter stated that he had no
jurisdiction to entertain the request for review of the award and also informed
that the award dated 12.10.2003 was in fact a final award pertaining to the H
420 SUPREME COURT REPORTS [2007] 3 S.C.R.

A issues involved. On 21.6.2004 the respondent- petitioner filed an application
for execution of the interim award dated 12.10.2003 before the Deputy f •
Commissioner. On 6.8.2004 the appellant filed an application under Section 34
of the Act for setting aside the award dated 12.10.2003 together with an
application under Section 5 of the Limitation Act read with Section 34(3) of
B the Act for condonation of delay in filing the application for setting aside the
award. The said application was entertained and was fixed for hearing on
condonation of delay after 15 days. Aggrieved against this order, a writ
petition was filed by the respondent herein but the same was disposed of by
the High Court with the observation that as the matter was pending before
the court below it would not be appropriate to interfere at this stage and left
C the Deputy Commissioner to decide the matter. The Deputy Commissioner,
Papum Pare, Itanagar by the impugned order dated 15.9.2004 decided the
application condoning the delay in preferring the application under Section
34 of the Act by the appellant. Aggrieved against this order, the present writ

D
petition was filed by the respondent herein. It is the legality of this order
which was challenged before the High Court. Learned Single Judge of the
High Court after hearing both the parties came to the conclusion that the
order passed by the Deputy Commissioner in condoning the delay was not
-
correct and it took the view that under section 34 of the Act, there was a delay
of seven months from the date of first order and a delay of six months from
the date of second order.
E
5. The plea of the appellant- State before the court below was that the
award was passed on 12.10.2003 and a copy was received on 23.10.2003. As
such, the period of limitation started from 23 .I 0.2003. Since the letter was sent
by the appellant to the arbitrator on 2.4.20043 for review of the award and a
reply thereof was received on 10.4.2004 whereby the matter was clarified by
F the arbitrator, therefore, the cause of action accrued in favour of the appellant
on 10.4.2004 and application under Section 34 of the Act was filed on 6.8.2004
i.e. within three months and the extended period of one month, therefore, it
was within limitation. Though this contention prevailed before the trial court
but the same failed before the High Court on the ground that the cause of
G action accrued to the appellant on 23.10.2003 when the appellant received the
copy of the award and the letter which was written on 2.4.2004 was totally
misconceived. The interim award was final with regard to the claims raised
therein, therefore, the whole exercise undertaken by the appellant was totally
misconceived. Hence, learned Single Judge allowed the writ petition and set
H aside the order of the trial court. Aggrieved against this order passed by the
STATE OF ARUNACHAL PRADESH v. DAM!Nl CONSTRUCTION [A.K. MA THUR, J.] 421

learned Single Judge, the present appeal was filed, A
.• 6. We have heard learned counsel for the parties and perused the
record. Learned counsel for the appellant tried to persuade us that in fact the
cause of action has arisen to the appellant on l 0.4.2004 when the letter was
received from the arbitrator and therefore, the appellant was entitled to count
the period of limitation from the date of receipt of the letter from the arbitrator B
and if the limitation was to start from I0.4.2004 then the appellant has a right
to move an application for setting aside of the award under section 34 of the
Act within three months and the extended period of one month and the
appellant having filed the application on 6.8.2004, therefore, it was within time.
The submission of learned counsel for the appellant is totally misconceived C
and it cannot be accepted. A perusal of the interim award passed by the
arbitrator clearly shows that it was final to the extent of the claims decided
therein and it may be relevant to refer to the concluding portion of the award
which reads as under :

"I further direct that the awarded amount is indicated above along D
with the interest, wherever shown till the date of interim award
amounting to Rs.65,52,878.00 (Rupees Sixty five lakhs fifty two
thousand Eight hundred seventy eight only), shall be paid by the
Respondents to the Claimant within 60 days from the date of the
' ; award, failing which a simple interest on the unpaid amount @ 18%
(Eighteen percent) per annum shall be payable to the Claimant by the E
respondents after 60 days of this interim award."

Therefore, this interim award which did not mince any word and determined
the amount after discussing the claims in detail and finally calculated the
amount under each of the claims. Therefore, there was no confusion in this F
award. It was absolutely thoughtlessness on the part of the appellant to have
written a letter after six months i.e. on 2.4.2004 seeking review of the interim
~ ~ award to the following effect:
".
"While submitting the request for review the case, it is also
requested that your honour may kindly consider (sic.) the following G
points regarding mode of payments, if at all, the payment is to be
made, as the award given by your honour is for the interim payment.

(a) Whether payment is to be made directly to Mis. Damani
Construction Co. or through honourable court.
H
422 SUPREME COURT REPORTS (2007] 3 S.C.R.

A (b) In case, the payment is to be made directly to M/s.Damani
Construction Co., an equivalent Bank Guarantee Bond from any ~
Nationalized Bank shall be required from the Contractor since it will
be an interim payment and final verdict awaited.

Submitted for your kind consideration please."
B
Firstly, the letter had been designed not strictly under section 33 of the Act
because under Section 33 of the Act a party can seek certain correction in
computation of e1rnrs, or clerical or typographical errors or any other errors
of a similar nature occurring in the award with notice to the other party or
if agreed between the parties, a party may request the arbitral tribunal to give
C an interpretation of a specific point or part of the award. This application
which was moved by the appellant does not come within any of the criteria
falling under Section 33(1) of the Act. It was designed as ifthe appellant was
seeking review of the award. Since the Tribunal had no power of review on
merit, therefore, the application moved by the appellant was wholly
D misconceived. Secondly, it was prayed whether the payment was to be made
directly to the respondent or through the Court or that the respondent might
be asked to furnish Bank guarantee from a nationalized Bank as it was an
interim award, till final verdict was awaited. Both these prayers in this case
were not within the scope of Section 33. Neither review was maintainable nor
the prayer which had been made in the application had anything to do with
E Section 33 of the Act. The prayer was with regard to the mode of payment.
When this application does not come within the purview of Section 33 of the
Act, the application was totally misconceived and accordingly the arbitrator
by communication dated I0.4.2004 replied to the following effect.

"However, for your benefit I may mention here that as per the scheme
F of the Act of 1996, the issues/ claims that have been adjudicated by
the interim award dated 12.10.2003 are final and the same issues
cannot be gone into once again at the time of passing the final
award."

Therefore, the reply given by the arbitrator does not give any fresh cause of
G action to the appellant so as to move an application under Section 34(3) of
the Act. In fact, when the award dated 12.10.2003 was passed the only option
with the appellant was either to have moved an application under Section 3.4
within three months as required under sub-section (3) of Section 34 or within
the extended period of another 30 days. But instead of that a totally
H misconceived application was filed and there too the prayer was for review
STATE OF ARUNACHAL PRADESH v. DAMINI CONSTRUCTION [A.K. MATHUR, J.] 423

and with regard to mode of payment. The question of review was totally A
~ misconceived as there is no such provision in the Act for review of the award
by the arbitrator and the clarification sought for as to the mode of payment
is not contemplated under Section 33 of the Act. Therefore, in this background,
the application was totally misconceived and the reply sent by the arbitrator
does not entitle the appellant a fresh cause of action so as to file an application
under Section 34(3) of the Act, taking it as the starting point of limitation from B
the date of reply given by the arbitrator i.e. 10.4.2004.

7. Thus, in this background, the view taken by learned Single Judge
appears to be justified and there is no ground to interfere in this appeal.
Consequently, there is no merit in both the appeals and the same are dismissed C
with no order as to costs.

B.B.B. Appeals dismissed.