V.K. Ittoop Vs State of Kerala and Others

John Mathew, J.@mdashThe Appellant, who is a Contractor, entered into a contract with the Respondents regarding the work "Construction of Civil Station at Thrikkakara A-1 Block levelling site and forming roads-Balance work under contract agreement No. 4/SECC/74-75". Certain disputes arose between the Appellant and the Respondents, which were referred to the Chief Engineer (Arbitration), Trivandrum, for settlement. The Arbitrator made and published his award on 14th May 1978. The arbitrator gave notice to the Appellant and Respondents and to their counsel about the passing of the award by letter dated 14th May 1978. Thereupon the Appellant''s Counsel sent a request to the Arbitrator dated 8th June 1978 to file the award before the Subordinate Judge''s Court at Ernakulam. He also produced non-judicial stamp paper worth Rs. 76.50 for engrossing the award. Copy of this request was also given to the counsel for the Respondents. The Arbitrator filed the award before the Sub Court, Ernakulam along with his letter dated 27th June 1978 requesting the court "to notify the parties of the filing of the award and the connected documents". Copies of the letter of the Arbitrator to the court were sent to all the parties and their counsel. The award was actually filed in court on 15th July 1978. The court did not take any action on the award. The Appellant filed Arbitration O.P. No. 111 of 1984 on 27th October 1984 u/s 17 of the Arbitration Act praying to pronounce judgment according to the award and to pass a decree thereon and for incidental reliefs. The lower Court dismissed the petition on the ground of limitation. In this appeal the Appellant is challenging that order.

2. According to learned Counsel for the Appellant, u/s 14(2) of the Arbitration Act, the court was to give notice to the parties of the filing of the award and no application by any of the parties is contemplated under the statute. Under Rule 10(1) of the Rules framed by the High Court of Kerala under the Arbitration Act the Arbitrator is to file the award in the manner prescribed by Rule 29 of the Kerala Civil Rules of Practice. Under Rule 29 the filing has to be done by the party, his pleader or pleader''s registered clerk to the Chief Ministerial Officer of the Court or any officer specially authorised in that behalf. We are informed that the award was filed by the Government Pleader on behalf of the Arbitrator. Under Rule 10(3) when the Arbitrator files in court the award at the instance of any party, he shall give to such party notice of such filing and produce in court within a week of such filing evidence of service of such notice on the party concerned. As provided in Sub-rule (4) the court shall then order notice of the filing of the award to the other parties affected by the award and such notice shall be taken out by the party at whose instance the Arbitrator or Umpire has filed in court the award. Although the award was filed and copies of the letter of the arbitrator dated 7th June 1978 filing the award were given to all the parties, evidence of service of the notice was not filed in court as required under Sub-rule (3). However, in the letter dated 27th June, 1978 itself it was mentioned that copies were given to all parties and that could be taken as service of notice, the letter being an official act regarding which there was a presumption that official acts have been regularly performed. However, the fact remains that the court did not actually order notice to any of the parties. The Appellant also did not move any application or bring to the notice of the court the necessity of sending notice to parties. As per the rules the notice was to be issued in Form No. 6 requiring to appear and show cause why judgment in terms of the award should not be pronounced. Chapter II of the Civil Rules of Practice relates to the payment of process fee and the manner in which summons or notice is to be served on the parties. Under Rule 61 of that Chapter any proceeding in which summons has to be issued by any court to any person, the party presenting the plaint, application etc. shall also file in court a process memo affixing necessary stamps for the issue of process together with sufficient number of copies of the plaint etc. Under Sub-rule 6 of Rule 61 when orders for the issue of process are passed by the court the date fixed for appearance will be inserted in the Form to be filed by the party on whose behalf summons or notice is issued and the process will be dated and signed by the officer of the court duly authorised. Under Rules 82 and 85 a memorandum for issue of process has to be filed. No specific rule is brought to our notice requiring the court to order notice before the memo for issue of process is to be filed. In so far as the Appellant did not file the process, we have to hold that the non-issue of the notice to the parties was solely due to the reason that process was not filed by the Appellant.

3. However, the court did not proceed under Sub-rule 7 of Rule 10. Under that rule if the arbitrator failed to produce evidence of service of notice of the award or in the event of the failure of the party to take out notice, the court may by order strike the "petition" of the file and consign the award with the connected records to the record without proceeding to pass judgment. Apparently the court did not take any action at all and therefore the matter can be said to be pending when the Appellant filed Arbitration O.P. No. 111 of 1984 requesting the court to pass judgment and decree in accordance with the award. According to learned Counsel for the Appellant, no application is envisaged under the Arbitration Act and the Rules requiring any of the parties to file an application for passing a decree. According to him, it is the duty of the court u/s 17 of the Act to pronounce judgment if there is no application for modifying or remitting the award. He placed considerable emphasis on the words "proceed to pronounce judgment according to the award" occurring in Section 17. He also placed reliance on the following rulings of the different High Courts. In A.R. Savkur Vs. Amritlal Kalidas and Others, Chagla, C.J., speaking for the Bench held as follows:

(3) ...Therefore the scheme of Section 17 is that after an award has been filed an opportunity is given to file an application to set aside the award and the application has got to be filed within the period of limitation. If no application is filed, the party in whose favour the award is made is entitled to a decree upon the award, or if the application is filed and has been dismissed on merits, then also the party in whose favour the award is made is entitled to a decree. It is only when an application to set aside an award having been mads in time and the application having succeeded that the party in whose favour the award is made is not entitled to a decree in terms of the award u/s 17.

In Sheoramprasad Ram Narayanlal Bania Vs. Gopalprasad Parmeshwardayal Shukla and Others, the Madhya Pradesh High Court held as follows:

(12) ...The jurisdiction of the court to embody the award in a decree is not, therefore, dependent upon any application by a party that it should be accepted. Its power under Sections 15 - 17 or 30 and 33, is derived from the filing of the award before it u/s 14. Therefore, after the award was filed in the lower Court on the application of the first Defendant, it had the jurisdiction to accept the award and pass a decree in terms thereof, even if the Plaintiff has made no application for that purpose.

This Court in Joseph Philip Vs. Varkey Mathai and Others, held as follows:

7. Section 17 of the Act says that the court is bound to pronounce judgment according to the award and pass a decree in terms thereof after the time for making an application to set aside the award has expired or an application having been made was rejected by the court. If no application was made within the period of 30 days as prescribed under Article 119 of the Limitation Act and the delay was not condoned by the court in terms of Section 5 of the said Act, the court has to proceed to pronounce judgment.

In Ram Lakhan Mahto Vs. Mukhdeo Mahto and Others, the Patna High Court held that if award is already filed in Court, there is no limitation under Article 119 and that the said provision will apply only to a proceeding in which a prayer is made for filing the award.

4. In Oil and Natural Gas Commission v. Forasol 1984 Sup. S.C.C. 264 Madon, J. held as follows:

...The provisions for enforcing an award under the English Act and under our Act are different. Under the English Act, if it is sought to enforce an award by making an application u/s 26(1), such application has to be made under Order 73, Rule 3 of the Rules of the Supreme Court, 1965, by an originating summons. There is no time-limit provided for taking out such a summons. There is, however, a time-limit provided for making an application to the court to remit an award u/s 22 or to set aside an award u/s 23(2), under Order 73, Rule 5(1) of the Rules of the Supreme Court, 1965, the period of limitation being 21 days after the award has been made and published to the parties. An application for leave to enforce the award u/s 26(1) can, however, be made even before the expiry of the time for moving to set aside the award. In such a case, however, it can be resisted upon the ground that a motion to set aside the award is to be made. It is opined in Russel on Arbitration, Twentieth Edn., Page 375, that in such a case, the party resisting the application would be required to show, upon affidavit, a substantial case for contesting the validity of the award, as well as to swear to his intention of doing so. u/s 17 of our Act, an application for a judgment according to the award can only be made after the time for making an application to set aside the award has expired, or if such application has been made, only after it is refused. Under the English Act, the court is not bound to grant leave to enforce the award. In doubtful cases, it would ordinarily leave the party to pursue his remedy by filing an action on the award.... None of these contentions is available to a Respondent where an application for a judgment according to the award is made u/s 17 of our Arbitration Act, 1940. They can only be raised by way of an application to set aside or remit the award after the award has been filed in court and notice thereof issued to the parties u/s 14 of the Arbitration Act, 1940. The period of limitation for such an application is prescribed by Article 119(b) of the Limitation Act, 1963 (XXXVI of 1963). If the period of limitation expires without any such application being made, the court on application made it for that purpose, must proceed to ''pronounce judgment according to the award'' whereupon a decree has to follow. Section 17 expressly provides that in such a Case ''the court shall...proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow.'' The only ground upon which such a decree can be challenged in appeal is that ''it is in excess of, or not otherwise in accordance with the award. The court before which an application for judgment in terms of the award is made, has therefore, no discretion in the matter except possibly in a case where the award is on the fact of it patently illegal or violative of a provision of the law.

5. The Supreme Court while comparing the English provision with the Indian provision in the case cited above refers to "application" to pass a judgment in terms of the award. The Supreme Court also observes that notice has to be issued to the parties after the award has been filed u/s 14 of the Arbitration Act. Section 17 of the Act do not specifically require any application to be filed. That section only refers to application to set aside the award. Even to Sub-rule 7 of Rule 10 provides that the court may by order strike the "petition" of the file and consign the award or the signed copy thereof to the record room. The practice that is being followed in all civil Courts wherever the court is empowered to grant a relief is to grant such a relief on a petition or application. In arbitration cases also the practice that is being followed is the same. Even in this case the Appellant actually filed the petition on which the present order is passed. In Basappa Veerappa Karni v. Chanabasappa Shidappa Angadi AIR 1960 Mys 190 the Mysore High Court has referred to Rule 373 of the Rules framed by the High Court of Judicature at Bombay providing for the manner in which application u/s 17 is to be filed. In the Rules framed by the High Court of Kerala there is no such specific provision. However the party at whose instance the award is filed in court is to take out notice to the other parties affected by the award. As noticed above, the process has to be filed by the party at whose instance the award was filed. Therefore even under the present rules the party at whose instance the award is filed, is bound to take the initiative to give notice to all the affected parties. Under the circumstances, we are of the view that the practice that is being followed in all proceedings including arbitration proceedings, namely that for obtaining a relief from court a party has to file an application or petition, has to be followed as a rule of practice and therefore the party in whose favour an award is passed is to file an application in court for passing a judgment in terms of the award. It is advisable for the Rule Committee of the High Court to frame appropriate rule in this regard.

6. Learned Government Pleader relying on the ruling of the Supreme Court in The Kerala State Electricity Board, Trivandrum Vs. T.P. Kunhaliumma, pointed out that the Supreme Court has held that the applications contemplated under Article 137 of the Limitation Act are not applications confined to the Code of Civil Procedure. Article 137 will apply to any petition or application filed under any Act to a civil Court. Therefore according to learned Counsel an application u/s 17 of the Arbitration Act ought to have been filed by the Appellant within three years when the right to apply accrues, under the above said residuary provision of the Limitation Act. Since no such application was filed within three years of the filing of the award, according to learned Government Pleader, the application ought to be dismissed as barred by limitation. There is considerable force in this argument. Learned Government Pleader also referred to Frick India Ltd. Vs. The Executive Engineer, Project Public Health Division No. 4, Chandigarh and Another, where that court held that application made after one year from date of forwarding award to the applicant was barred by limitation. The court also held that receipt of copy of the application through registered post is due notice in terms of Section 14(1) of the Arbitration Act. Learned Government Pleader also referred to Smt. Susama Acharya and Another Vs. Baikunthanath Acharya and Others, wherein the Orissa High Court held that notice intimating filing of the award in court is mandatory and if notice was not issued, the order passed making the award a rule of court is liable to be set aside.

7. However, in view of the fact that there was no specific provision in the Act or the Rules directing the filing of an application for passing a judgment in terms of the award, we do not think that in this case the application ought to be dismissed as barred by limitation. The Appellant did not pay process for issuing the notice of filing of the award to all the affected parties. But the court did not take further action as envisaged in Sub-rule 7 of rule 10 of the Arbitration Rules. If the award was consigned to the records the applicant had a remedy under Sub-rule 8 and he could have moved a petition to restore the award to file. We think that this procedural mistake happened in view of the fact that arbitration proceedings are rare in the subordinate courts in this State. However, it is a well settled principle that parties should not suffer due to the act of court or mistake of court (See Rodger v. The Comptoir D'' Escompte De Paris 1869-71 E.R.P.C. Appeals and Jang Singh Vs. Brijlal and Others, .

8. Considering the entire facts and circumstances of this case, we allow this appeal holding that the petition is not barred by limitation and remand the Original Petition to the lower Court for disposal in accordance with law. Parties are directed to appear before the lower Court on 5th October 1987. A copy of this judgment will be forwarded to the Rules Committe of the High Court for consideration.