UNION OF INDIA & ORS.versusM/S. NEELAM ENGINEERING & CONSTRUCTION COMPANY

                        [2010] 3 S.C.R. 280


A                  UNION OF INDIA & ORS.
                               v.
        M/S. NEELAM ENGINEERING & CONSTRUCTION
                           COMPANY
                (Civil Appeal No. 2283 of 2010)
8                        MARCH 10, 2010
         [ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.]

       Arbitration Act, 1940 - ss. 14(2), 17, 29, 30 and 33 -
C Petition for making the Arbitration Award a Rule of Court -
  Objections ulss. 30 and 33 to set aside the Award - Rejection
  of objection since it was filed prior to filing of the Award - On
  appeal, held: Filing objection against something which did not
  exist on the date when objection was filed cannot be accepted
o and should be rejected - On .facts, when appellants filed
  objections, the Awardi had not been received in court and
  notice was issued.to Ar"Qitrator'to fill:! original Award - There
  was no occasion for s,uch objection to be filed in -terms of
  Article 119 of the Limitation Act,· 1963 - Thus, objections were
E filed prematurely even prior to the filing of the Award and
  could not be treated as a valid objection - Order of courts
  below upheld - Limitation Act, 1963 - Article 119.

       The question which arose for consideration in this
  appeal was whether the courts below were justified in
F rejecting the objections filed by the appellant ulss. 30 and
  33 of the Arbitration Act, 1940 for setting aside the Award
  since the objection had been filed prior to filing of the
  Award.

G       Dismissing the appeal, the Court

       ·HELD: 1.1. In view of Article 119 of the Limitation Act,
    1963, the period of limitation for filing an application
    commences only after the date of service of the notice

H                                280
 UNION OF INDIA & ORS. v. NEELAM ENGINEERING 281
          & CONSTRUCTION COMPANY

of the making of the Award. The raison d'etre for filing         A
objection u/ss. 30 and 33 of the Arbitration Act, 1940, is
the Award which has to be filed in Court either by the
Arbitrator or at the'.instance of pny of the parties requiring
the Arbitrator to do so. Even the Court may direct the
Arbitrator to file his Award on the application made by any      B
of the parties thereto. Filin'g an objection against
something which did not exist on the date when the
objection was filed is unacceptable and must be rejected.
The objections filed u/ss. 30 and 33 of the Act by the
appellants, therefore, have been rightly held to be pre-         c
mature and such objection could not be treated as a valid
objection filed after the filing of the Award, u/ss. 30 and
33 of the Act in view of the provisions of Article 119 of
th~ Limitation Act, 1963. While the original Award was filed
in 'court on 27th May, 1998, the objections filed u/ss. 30       0
and 33 of the Act, for setting aside the Award was filed
on 3rd January, 1998. Therefore, there was no occasion
for such an objection to be filed in terms of Article 119 of
the Limitation Act, 1963. [Paras 16] [289-C-F]

     1.2. The objection filed by the appellant u/ss. 30 and      E
33 of the Act, for setting 3Side the Award on 3rd January,
1998, was on account of the fact that the respondent had
filed a petition in the Civil Court on 27th February, 1996,
for making the Award a Rule of Court. At the time when
the 'objection was filed, it was noted on 18th February,         F
1998, that the Award had not been received in Court and
notice was issued to the Arbitrator to file the original
Award in pursuance whereof the original Award was filed
in Court on 27th May, 1998. [Para 17] [289-G-H; 290-A]
                                                                 G
    East India Hotels Ltd. vs. Agra Development Authority
(2001) 4 SCC 175; Nilkantha Shidramappa Ningashetti vs.
Kashinath Somanna Ningashetti and Ors. (1962) 2 SCR 551;
Secretary to Government of Karnataka and Anr. vs. V.
Harishbabu (1996) 5 SCC 400; Ratanji Virpal and Co. vs.
                                                                 H
Dhiraj/al Manila/ AIR 1942 Born. 101, referred to.
    282      SUPREME COURT REPORTS                [2010] 3 S.C.R.


A                        Case Law Reference:
          (2001) 4 sec 115        Referred to.          Para 11
          (1962) 2 SCR 551        Referred to.          Para 12
          (1996) 5 sec 400        Referred to.          Para 13       "'
B
          AIR 1942 Bom. 101       Referred to.          Para 14

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    2283 of 2010.
c       From the Judgment & Order dated 6.12.2006 of the High
    Court of Judicature at Punjab & Haryana at Chandigarh in Civil
    Revision No. 229 of 2005.

       Indira Jaising, ASG, Binu Tamta, Kiran Bhardwaj, Anil
D Katiyar, D.S. Mahra for the Appellants.

        Mahabir Singh, Rakesh Dahiya, Gagan Deep Sharma,
    Ajay Pal for the Respondent.

          The Judgment of the Court was delivered by
E
          ALTAMAS KABIR, J. 1. Leave granted.

       2. An Agreement No.GE/CHD-61/88-89 was entered into
  between the Appellant, Union of India, and the Respondent, M/
F s Neelam Engineering & Construction Company, for providing
  additional security lighting arrangement in various zones at
  TBRL Range, Ramgarh, near Chandigarh. Certain disputes
  arose between the Appellants and the Respondent which were
  referred to the arbitration of Col. T.S. Plaha, appointed as the
G sole Arbitrator for adjudication of the said disputes between the
  parties. The sole Arbitrator made his Award on 27th January,
  1996, for a sum of Rs.1,70,020/-, together with interest at the
  rate of 18% per annum from 31st December, 1991, till the date
  of decree or payment, whichever was earlier, in favour of the
  Respondent. On 27th February, 1996, the Respondent filed a
H
UNION OF INDIA & ORS. v. NEELAM ENGINEERING 283
& CONSTRUCTION COMPANY [ALTAMAS KABIR, J.]
petition in the Civil Court under Sections 14(2), 17 and 29 of        A
the Arbitration Act, 1940, for making the Award dated 27th
January, 1996, a Rule of Court.

     3. After an interval of about two years, on 3rd January,
1998, the Appellants filed an objection petition under Sections
                                                                      B
30 and 33 of the Arbitration Act, 1940, for setting aside the
Award published by the sole Arbitrator, on the ground that the
Arbitrator had misconducted himself while giving his finding on
the claims of the parties.

      4. On 18th February, 1998, the Court directed the               C
Arbitrator to file the Award in Court. When the matter was listed
for hearing on 27th May, 1998, the Court recorded that reply
 had been received to the objection petition which had been filed
 and that the original arbitration file had been received from the
Arbitrator. The case was, therefore, adjourned till 27th July,        D
 1998, for filing rejoinder. After considering the application made
by the Respondent under Sections 14(2), 17 and 29 of the
Arbitration Act, 1940, and the objection filed by the Appellant,
the Civil Court rejected the said objection by holding that since
the objection had been filed prior to filing of the Award, the        E
same was premature and could not be taken note of and further
that the objection had been filed beyond the period of limitation
as prescribed under Article 119 of the Limitation Act. The Civil
Court accordingly allowed the Appellants' application under
Sections 14(2), 17 and 29 of the Arbitration Act, 1940, and           F
ordered that the Award dated 27th January, 1996, be made a
Rule of Court, and granted interest at the rate of 18% per annum
thereupon from the date of order till realization.

    5. Aggrieved by the said order of the learned Civil Judge,
Junior Division, Chandigarh, the Appellants herein filed an           G
appeal against the same before the learned Additional District
Judge, Chandigarh, being C.R. No.52 dated 8th August, 2003,
under Section 39 of the aforesaid Act.

    6. The submissions which had been made before the                 H
                  ·.


    284     SUPREME COURT REPORTS                   [2010] 3 S.C.R.


A   learned Civil Judge, Junior Division, Chandigarh, were
    reiterated in the Appeal. It was contended that while the Award
    was passed by the Arbitrator on 22nd January, 1996, the
    petition under Sections 14(2), 17 and 29 of the Ar.bitration Act,
    1940, was filed by the Respondent Company on 27th February,
s   1996. Directions were, thereafter, given by the Trial Court to
    the Arbitrator to produce the Award in Court and the same
    appears to have been sent by the learned Arbitrator by post
    and was received by the Trial Court on 18th February, 1998. It
    also appears that notice was issued to both the parties, but
c   ultimately on account of inadvertence, on subsequent dates it
    was recorded that the Award had not been received. Ultimately,
    on 27th May, 1998, the Trial Court recorded that the original
    arbitration file had been received and the case was adjourned
    till 27th July, 1998, for filing rejoinder. The Appeal Court,
    therefore, held that legally and technically both the parties came
0
    to know about the filing of the Award in Court for the first time
    on 27th May, 1998, although, the Award had been received
    through the post in the Court on 18th February, 1998. Having
    regard to the above, 27th May, 1998, was held to be the date
    when the parties had notice of filing of the Award. It was also
E   observed that under Article 119 of the Limitation Act, 1963, a
    party to an Arbitration Award could file objection, with a prayer
    to set aside or modify the Award, within 30 days from the date
    of notice of filing of the Award in Court. The Appeal Court also
    recorded the fact that in this case without waiting for the filing
F   of the Award in Court, the Appellants herein filed their
    objections to the Award on 3rd January, 1998, before the
    Award had been received in the Court and the parties had
    notice thereof. It was accordingly held that it could not be said
    that the objections were barred by limitation, but they were in
G   fact pre-mature and could not, therefore, be taken note of. In
    fact, during the course of arguments, it was also the case of
    the Respondent Company that the objection filed on behalf of
    the Appellants could not be held to be barred by limitation, but
    was pre-mature and the Appellants were not competent to file
H   the said objection before the Award was received in the Court.
UNION OF INDIA & ORS. v. NEELAM ENGINEERING 285
& CONSTRUCTION COMPANY [ALTAMAS KABIR, J.]

     7. Aggrieved by the order of the Appeal Court, the A
Appellants filed a Civil Revision in the High Court. However,
the said Civil Revision was dismissed by the High Court as per
the order impugned in this appeal.

     8. Learned Additional Solicitor General, Ms. Indira Jaising, 8
submitted that both the Trial Court and the High Court erred in
holding that the objection filed on behalf of the Appellants under
Sections 30 and 33 of the Arbitration Act, 1940, could not be
taken note of, having been filed even before notice of filing of
the Award had been issued. Ms. Jaising contended that since C
the objection was already on record, the same ought to have
been taken into consideration while considering the
respondent's application under Section 14(2) of the above Act
for making the Award a Rule of Court, instead of holding the
same to be pre-mature and disregarding the same. Ms. Jaising
submitted that in order to do complete justice to the parties, D
the Trial Court should not have relied upon technicalities, which
only served to defeat the very purpose of Sections 30 and 33
of the above Act. Ms. Jaising submitted that this was not a case
of negligence on the part of the Appellants, but that the
Appellants had acted promptly on receiving a copy of the E
Award.

     9. Ms. Jaising submitted that the consequence of the order
passed by the learned Trial Judge, as endorsed by the Appeal
Court and the High Court, will have far reaching consequences     F
since under the Award the Appellants are to pay the awarded
amount to the Respondent together with interest at the rate of
18% per annum from 31st December, 1991 upto the date of
decree or payment, whichever was earlier.

     10. Ms. Jaising submitted that since notice had not been G
issued to the parties upon filing of the Award in Court and Article
119 of the Limitation Act, 1963, provided for a period of 30
days from the date of service of notice to file an application for
setting aside an Award, it could not be contended that the
objection was barred since notice had not at all been issued H
    286     SUPREME COURT REPORTS.                 (2010] 3 S.C.R.


A to the parties after filing of the Award. Ms. Jaising submitted
  that the finding of the Trial Court as also that of the High Court
  that the object of notice was merely to make parties aware of
  the filing of the Award and that the said object had been
  satisfied, since on 27th May, 1998, the parties had knowledge
B of the filing of the Award in Court, was contrary to the aforesaid
  provisions of the Limitation Act and was liable to be set aside.
  Ms. Jaising submitted that the notice contemplated under Article
   119 of the Limitation Act was not meant to be oral, particularly
  when Section 14(2) of the Arbitration Act, 1940, made it
C absolutely clear that upon the Arbitration Award being filed in
  Court, the Court is reqt,Jired to give notice to the parties of the
  filing of the Award. Ms. Jaising submitted that the langu~ge of
  Section 14(2) was mandatory and cast a duty upon the Court
  to give notice to the parties regarding the filing of the Award
  so that objection, if any, thereto could be taken as provided
0 under the Act. Ms. Jaising submitted that not having done so,
  the High Court could not have held that the objection filed under
  Section 30 and 33 of the Arbitration Act, 1940, was barred by
  limitation.

E      11. Appearing on behalf of the respondent, Mr. Mahabir
  Singh, learned Senior Advocate, submitted that service of
  notice is only to inform the parties regarding filing of the Award
  in Court and it was not mandatory that the same would have to
  be in writing. In the absence of any prescribed mode of service
F of notice, even oral notice would be sufficient. In support of his
  submission, Mr. Singh referred to the judgment of this Court in
  East India Hotels Ltd. vs. Agra Development Authority ((2001)
  4 sec 175], wherein it was held that service of notice was an
  essential requirement under Section 14(2) of the aforesaid Act
G and that mere recording of the presence of the parties in Court
  would not amount to service of notice. This Court, in fact,
  observed that when the Trial Court had recorded that the Award
  had been filed by the Umpire and directed that the counsel for
  parties be informed and counsel for both the parties had in due
H course taken note of the said order by endorsing the
 UNION OF INDIA & ORS. v. NEELAM ENGINEERING 287
 & CONSTRUCTION COMPANY [ALTAMAS KABIR, J.]

proceeding sheet, in such case the provisions of Section 14(2)       A
would have been held to be duly complied with. It was also held
that notice need not be issued in writing, but could also be oral,
but that the fact of filing of the Award by the Umpire had to be
informed to the learned counsel for the parties and was to be
noted by them. In such a situation, it was held that the essential   B
requirement of $ub-section (2) of Section 14 had been
complied with, inasmuch as; intimation of filing of the Award
had been given to the parties.

      12. Mr. Mahabir Singh then referred to the decision of this
Court in Nilkantha Shidramappa Ningashetti vs. Kashinath             C
 Somanna Ningashetti and others [(1962) 2 SCR 551], wherein
the question of notice under Section 14(2) of the 1940 Act fell
for consideration together with Article 158 of the Indian
Limitation Act, 1908, relating to filing of objections against the
Award of the Arbitrator. While dealing with the said question,       D
a Bench of four Judges of this Court held that communication
by the Court to the parties or through counsel of the information
that an Award had been filed was sufficient compliance with
the requirements of Sub-Section (2) of Section 14 of the 1940
Act with respect to the giving of notice to the parties concerned    E
about the filing of the Award. This Court went on to say that
notice did not necessarily contemplate communication in
writing. The expression "give notice" in Sub-Section (2) of
Section 14 of the 1940 Act simply means giving intimation of
the filing of the Award. Such intimation need not be given in        F
writing and could be communicated orally and that the same
would amount to service of notice when no particular mode of
service was prescribed.

     13. Mr. Mahabir Singh also referred to the decision of this G
Court in Secretary to Government of Karnataka & Anr. vs. V. ·
Harishbabu [(1996) 5 SCC 400], wherein also it was
emphasized that in the absence of any formal mode of service,
notice need not be in writing and may also be given orally. What
was essential was that notice or intimation or a communication
                                                                     H
    288      SUPREME COURT REPORTS                   (2010] 3 S.C.R.


A of filing of the Award would have to be issued by the Court to
  the parties and served upon them. It was also held that the
  period of limitation for filing objections seeking the setting aside
  of an arbitration Award commenced from the date of service
  of notice issued by the Court upon the parties regarding the
B fling of the Award under Section 14(2) of the Act. The issuance
  of such notice by the Court is a mandatory requirement and
  limitation would begin only after notice of the filing of the Award
  is given by the Court.

          14. Mr. Mahabir Singh, learned counsel, referred to a
C   decision of the Bombay High Court in Ratanji Virpal & Co. vs.
    Dhiraj/al Manila/ [AIR 1942 Born. 101], where a similar
    question had fallen for consideration of the learned Judge.
    While considering the provisions of Sections 14 and 31 of the
    Arbitration Act, 1940, the Court held that till an Award was filed
D   in Court, no application could be filed for setting aside the
    same. While holding as above, the High Court took into
    consideration the amendment in Schedule I of the Limitation
    Act, 1908, where Article 158 was substituted with a new Article
    which provided that under the 1940 Act, to set aside an Award
E   or to get an Award remitted for re'consideration, the period of
    limitation is 30 days from the date of ::.~rvice of notice of filing
    of the Award. The Bombay High Court held that in amending
    the Limitation Act, the legislature contemplated that an
    application for setting aside the Award could only be made after
F   the date of service of noticE;l~pf filing of the Award and,
    therefore, the limitation of 30 days is fixed after that particular
    date. The Court ultimately held that it was not competent for a
    party to the arbitration Award to file a petition for setting aside
    the Award till the Award had been filed. Mr. Singh submitted
G   that having regard to the views expressed in the aforesaid
    judgment and having particular regard to the provisions of
    Article 119 of the Limitation Act, 1963, where limitation for
    making an application under the 1940 Act .for setting aside an
    Award has been fixed as 30 days from the date of service of
H   notice of the filing of the Award, the question of filing an
 UNION OF INDIA & ORS. v. NEELAM ENGINEERING 289
 & CONSTRUCTION C6MPANY [ALTAMAS KABIR, J.]
 objection under Sections 30 and 33 of the said Act prior to the     A
 filing of the Award, did not arise. Mr. Singh submitted that the
 appeal was without merit and was liable to be dismissed.

      15. We have carefully considered the submissions made
 on behalf of the Appellants and though they appear to be            8
 attractive, we are unable to accept the same.

       16. In view of Article 119 of the Limitation Act, 1963, the
 period of limitation for filing an application commences only
 after the date of service of the notice of the making of the
 Award. The raison d'etre for filing objection under Sections 30     C
 and 33 of the Arbitration Act, 1940, is the Award which has to
 be filed in Court either by the Arbitrator or at the instance of
 any of the parties requiring the Arbitrator to do so. Even the
 Court may direct the Arbitrator to file his Award on the
 application made by any of the parties thereto. Filing an           D
 objection against something which did not exist on the date
 when the objection was filed is unacceptable and must be
 rejected. All the decisions cited by Mr. Mahabir Singh take a
similar view. The objections filed under Sections 30 and 33 of
the Arbitration Act, 1940, by the Appellants herein, therefore,      E
have been rightly held to be pre-mature and could not be treated
to be an objection filed after the filing of the Award. While the
original Award was filed in Court on 27th May, 1998, the
objections filed under Sections 30 and 33 of the Arbitration Act,
1940, for setting aside the Award was filed on 3rd January,          F
1998. There was, therefore, no occasion for such an objection
to be filed in terms of Article 119 of the Limitation Act, 1963.

     17. The objection filed by the Appellant under Sections 30
and 33 of the Arbitration Act, 1940, for setting aside the Award
on 3rd January, 1998, was obviously on account of the fact that G
the Respondent had filed a petition in the Civil Court on 27th
~ebruary, 1996, for making the Award a Rule of Court. At the
time when the objection was filed, it was noted on 18th
                                                                         j
February, 1998, that the Award had not been received in Court u
and notice was issued to the Arbitrator to file the original Aw~rd   J
                                                                     \
    290      SUPREME COURT REPORTS                   [2010] 3 S.C.R.


A   in pursuance whereof the original Award was fifed in Court on
    27th May, 1998.

         18. It is unfortunate that although the Appellants filed their
    objection under Sections 30 and 33 of the Arbitration Act, 1940,
    the same was done prematurely even before the filing of the
8
    Award and such objection could not be treated as a valid
    objection under Sections 30 and 33 of the Act in view of the
    provisions of Article 119 of the Limitation Act, 1963.

        19. We, therefore, have no option, but to dismiss the
C   appeal. The appeal is, accordingly, dismissed, but without any
    order as to costs.

    N.J.                                          Appeal dismissed.