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Judgment
Kuppuswami, J.—The appellants herein undertook work in connection with the earthen dam in the Lakhnapur project. For the work done they claimed a sum of three lakhs from the State of Andhra Pradesh represented by the Superintending Engineer, P. W. D. Irrigation Circle as also interest on the said sum amounting to Rs. 40,000/-. As this was disputed, the matter was referred to an Arbitrator, Sri K. Gundu Rao, Superintending Engineer. He gave an award. The main dispute between the parties was whether the appellants were entitled to payment for the earth lifted and conveyed beyond 90 yards. The Arbitrator held that they were so entitled but without deciding the number of lifts and the amount to be paid for such lifts he left it to be settled by the Superintending Engineer, T. I. P. Circle. The appellant herein filed O. S. No. 50 of 1970 on the file of the Chief Judge, City Civil Court for making the award a rule of Court. The Government in its turn filed O. P. 27 of 1971 for setting aside the award on several grounds, one of the grounds being, that the arbitrator erred in directing the Superintending Engineer to decide the number of lifts as well as the amount payable to the appellants without determining the same himself. O. S. 50 of 1970 and O. P. 27 of 1971 were heard together and by a common Judgment dated 30-6-1971 the learned Chief Judge, City Civil Court held that the appellants were entitled for payment for lifting the earth beyond 90 yards in whatsoever manner it was done whether by head loads or by cart loads. He rejected the various contentions raised by the State against the validity of the award. But he upheld the contention urged on behalf of the State that the Arbitrator ought to have decided the number of lifts for which the appellants were entitled to payment as well as the amount payable to them and the arbitrator was wrong in leaving it undetermined and referring the matter for determination to the Superintending Engineer. He therefore came to the conclusion that the award was incomplete and incapable of execution and the arbitrator was wrong in delegating to the Superintending Engineer the question of determining the extra lifts to be paid for and the rates to be paid. He therefore remitted the award back to the arbitrator to determine the question of the extra number of lifts carried beyond 90 yards and the amount payable to the appellants as per the contract rates after giving an opportunity to the parties to place their evidence. In the result he allowed the O. P. in part and the award was sent back to the arbitrator to give a fresh award in the light of the observation made in the judgment. He also dismissed the suit filed by the appellants herein to make the award a rule of Court with the observation that they were permitted to file a fresh suit after the award was passed again by the Arbitrator.
After the matter was remitted the appellants filed a petition before the Arbitrator giving particulars of the claims and stating that they were entitled to payment of a sum of Rs. 4,97,615/- towards extra lifts for conveying earth of a quantity equivalent to 2,97,700 cum. The arbitrator thereupon addressed the Government represented by the Superintending Engineer, Irrigation Circle (Formerly T. I. P. Circle) to file its statement of case supported by all necessary records before 20-3-72. After protracted correspondence by letter dated 10-12-73 the Superintending Engineer, Irrigation Circle, furnished certain records relating to the contract, without however filing any rejoinder to the petition filed by the appellants. The arbitrator again asked the Superintending Engineer to file his case. In reply to this the Superintending Engineer sent a report stating that there was no authenticated record available in support of the particulars furnished by Sri M. Tirupath Reddy in his letter dated 16-11-1967 in the office file. The Superintending Engineer stated that the Arbitrator may take further action in the matter in the light of the position mentioned in his report. Thus the Superintending Engineer did not file any counter to the petition filed by the appellants before the Arbitrator, but rested content with submitting a report dated 20-3-1974 in which he stated that there were no authenticated records available.
The arbitrator thereafter fixed 20th April, 1974 for hearing of the case. The Counsel for the appellants as well as the representative of Government attended the hearing and took part in the deliberations. Statements were recorded from the counsel for the appellants as well as the Executive Engineer, who appeared for the Government. The counsel for the appellants admitted that the number of extra lifts was worked out by the appellants without deducting the initial lifts and that in respect of the quantities he adopted for working out the claims, the quantities arrived at were based on rough calculations. The Executive Engineer stated that the facts mentioned in the report of Sri M. Tirupath Reddy, formerly Executive Engineer, Lakhanapur Project, could not be verified as there were no authenticated records available. The arbitrator therefore thought it fit to proceed upon the report dated 16-11-1967 submitted by Sri Tirupath Reddy, Executive Engineer, who was incharge of the Lakhanapur Project which contained vital information regarding the quantity of earth work involved in connection with the contract. The Executive Engineer had calculated the details of lifts and the details of calculations were also enclosed with the report. As per that statement the quantity of work done was 2,70,177-20 cum. of earth work and the financial implication involved for the work done till then was mentioned as 2,99,700 Cum. till the date of the report. In the absence of any other information the Arbitrator took the quantity as reported by the Executive Engineer in the above report as correct and held that the appellants were entitled to Rupees 2,90,500/- towards the extra lifts in conveying earth beyond 90 yards at contract rates. He accordingly directed the Government to pay to the appellants the said sum.
The appellants thereupon filed O. S. 181 of 1974 before the Additional Chief Judge, City Civil Court, Hyderabad, praying that the award may be made a rule of Court. The Government filed O. P. 149 of 1975 to set aside the award. Both the suit and the O. P. were heard together and disposed of by a common judgment. Before the learned Judge the main contention that was raised was that when the award was remitted by the Chief Judge, City Civil Court on 30-6-1971, no time was fixed in the said order for submitting the award. Hence the award in pursuance of such a direction was nullity. This contention was accepted and the learned Chief Judge held that even the reference to the Arbitrator was not valid and consequently the award also was a nullity and was liable to be set aside. In the result the learned Chief Judge allowed the O. P. with costs and dismissed the suit with costs. In the view that he took viz., that the award was a nullity as no time was fixed by the Chief Judge, City Civil Court, in the order remitting the matter for consideration, the learned Chief Judge did not consider various other contentions raised by the parties.
The contractor has filed this appeal against the order dismissing the suit and the revision petition against the order allowing the O. P. to set aside the award.
In this appeal as well as in the revision petition the main question that arises for consideration is whether the reference as well as the award is a nullity because the learned Chief Judge in his order dated 30-6-1971 remitting the award failed to fix any time.
Under S. 16(3) of the Arbitration Act (hereinafter referred to as the Act) the Court may from time to time remit the award or any matter referred to arbitration to the Arbitrator or umpire for consideration upon such terms as it thinks fit-
(a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred;
(b) where the award is so indefinite as to be incapable of execution; or
(c) where an objection to the legality of the award is apparent upon the face of it.
Under S. 16(3) of the Act where an award is remitted under sub-section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the court; Provided that any time so fixed may be extended by subsequent order of the Court. Section 16(3) provides that an award remitted under sub-section (1) shall become void on the failure of the arbitrator or umpire to consider it and submit his decision within the time fixed. It is argued on behalf of the respondent that under S. 16(3) where an award is remitted under sub-section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court; this provision which requires the Court to fix a time within which the arbitrator shall submit his decision is mandatory and as admittedly such a requirement has not been complied with, the reference to arbitration as well as the award are invalid. In support of this contention reference is also made to a similar provision occurring in S. 23 of the Act which provides that the Court shall, by order, refer to the arbitrator the matter in difference which he is required to determine, and shall in the order specify such time as it thinks reasonable for the making of the award.
Our attention was drawn to the decision of a Division Bench of this Court in Ramakrishnanna v. Lakshmibayamma, AIR 1958 AP 497 wherein it was held that the fixing of time by the Court within which the Arbitrators have to make their award is mandatory and therefore generally speaking where the order does not fix a time limit for the return of the award the reference is a nullity. The same view was expressed in B. Subbarama Naidu Vs. B. Siddamma Naidu and Others, where it was observed in paragraph 2 that it is undoubtedly true that S. 23 of the Arbitration Act requires that an order referring a dispute to an arbitrator must specify the time within which the award is to be made and the fixation of the time for making the award is imperative. It is therefore argued that on the very same reasoning contained in these two decisions the fixing of time under S. 16(3) of the Act is equally mandatory and if no such time is fixed by the Court the award is a nullity. Reliance is also placed upon the decision reported in H. L. Jain v. Punjab State ILR (1964) P&H 816 where it was held that the provisions contained in S. 16 (2) and (3) of the Act are of a mandatory nature and the Court is bound to fix some time within which the Arbitrator shall submit his decision and in the absence of any time having been fixed or extended by order of the Court it is not possible to see how the order will not become void.
We are unable to accept the contention that the requirement as to fixation for time under S. 16(3) of the Act within which the arbitrator shall submit his decision to the Court is mandatory and the failure to do so will render the reference as well as the award a nullity. It is well settled that no general rule can be laid down to decide whether a provision is directory or mandatory. The use of the word ''shall" though generally taken in a mandatory sense does not mean that in every case it shall have that effect. The question whether a statute is mandatory or directory depends upon the intent of the legislature which has to be ascertained by considering the nature of the provision, its design and the consequences which would follow from construing it one way or the other. Further, when the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature it has been practice to hold such provisions to be directory only. Vide Montreal Street Rly. Co. v. Normandin 1917 AC 170.
Bearing these principles in mind it may be considered whether the requirement of fixation of time in S. 16(3) is mandatory. u/s 16(3) it is provided that an award remitted under sub-section (1) of S. 16(3) of the Act shall become void on the failure of the arbitrator to re-consider it and submit his decision within the time fixed. Whereas it is specifically provided that an award shall become void if the arbitrator does not submit his decision within the time fixed, there is no such provision indicating the consequence of the court not fixing the time when remitting the award. The legislature which took care to provide for the consequences of the arbitrator not submitting his decision within the time fixed by the court did not choose to lay down the consequences for not fixing the time by the Court. If it was the intention that in the absence of any fixation of time by the court the award is a nullity there was no difficulty for the legislature in making a specific provision to that effect. There is thus intrinsic evidence in the section itself which would indicate that the requirement of the fixation of time contained in S. 16(3) of the Act is not mandatory.
It is true that the decisions in Ramakrishnamma v. Lakshmibayamma (AIR 1958 Andh Pra 497) (supra) and B. Subbarama Naidu Vs. B. Siddamma Naidu and Others, lay down that the provision in S. 23 of the Act requiring the court to fix a time for submitting the award is mandatory. But in our view there is no analogy between the two provisions. It has to be noted that S. 23 occurs in Chap. IV which deals with arbitrations in suits and provides that where in any suit all the parties interested agree that any matter in difference between them in the suit shall be referred to arbitration, they may at any time before judment is pronounced apply in writing to the court for an order of reference. In such a case the court shall refer to the arbitrator the matter in difference and has further to specify a time as it thinks reasonable for making an award. The main reason for coming to the conclusion that this provision is mandatory is that unless a time is fixed and the arbitrator gives his award within the time so fixed the court will not be in a position to proceed with the suit. In regard to arbitration under S. 16(3) of the Act, however, there is no such difficulty as s. 16(3) does not apply to cases where a suit is pending in the court and the matter comprised in the suit being referred to an arbitrator for determination of the suit.
In this connection reference may be made to a decision reported in Robindra Deb Manna v. Jogendra Deb Manna AIR 1923 Cal 410 which is referred to in Ramakrishnamma v. Lakshmibayamma (AIR 1958 AP 497). In that decision it was observed dealing with S. 508 of the CPC 1882 corresponding to S. 23 of the Act as follows :
"If after an order of reference a court wrongly proceeded to try the suit, it would contravene an express prohibition. If by the order of reference no time is fixed at all, the error is of the same class, no time limit means no control (underlining is ours); and the Court is not authorised to abandon control save to the extent and upon the terms laid down."
Thus the main reason for holding that the provision regarding the fixation of time in Section 508, C. P. C. corresponding to S. 23 of the Arbitration Act is mandatory is that otherwise the court would abandon its control over the suit. That situation does not arise in a case of remittance under S. 16(3) of the Act.
Further if the provision in S. 23 is considered mandatory and the award made in the circumstances is held to be a nullity no serious consequences will result. The suit will be continued and a decision will be rendered in the suit. On the other hand, if S. 16(3) is held mandatory and the award declared a nullity, that would mean that the parties will be left without any remedy. In other words, the failure of a duty enjoined on the court to fix a time would result in serious consequences to the parties who had no control over the performance of the duty. It would not promote the main object of the legislature viz., to encourage resort to arbitration.
We do not agree with the decision in H L. Jain v. Punjab State (ILR (1964) P&H 816) which relied upon the decision of the Privy Council in Raja Hasr Narain Singh v. Chaudhrain Bhagwant Kour (1891) 18 Ind App 55 where the Privy Council was concerned with an order under S. 508, Civil P. C. referring a suit to arbitrator without fixing a time. As we have already pointed out the same considerations do not apply to an order made under S. 16(3) of the Arbitration Act.
Further it is doubtful whether S. 16(3) itself applies where the award is not remitted but where any matter referred to arbitration is remitted to the Arbitrator for reconsideration. Under S. 16(3) the Court is entitled to remit either the award or any matter referred to arbitration to the arbitrator. u/s 16(3) where an award is remitted the court shall fix the time within which the arbitrator shall submit his decision. Dealing with S. 16(3) which provides that the award remitted becomes void if the arbitrator does not submit his decision within the time fixed by court, Sarkar in "the Law of Arbitration in British India" (Tagore Law Lectures) says that S. 16(3) apparently has no application as it applies only to a case where an award is remitted and does not cover a case where instead of the award "any matter referred to arbitration" is remitted. On the same reasoning it would follow S. 16(3) also will not have application to a case where only any matter referred to arbitration and not the entire award is remitted. In this particular case the learned Chief Judge has in his order dated 30-6-1971 rejected all other submissions made by the Government against the award, but held that the arbitrator was wrong in leaving undetermined the number of lifts and the rates to which the contractor was entitled and leaving it to be decided by the Superintending Engineer. It was on that ground he stated that the award was incomplete and required that matter to be referred to arbitration. It has to be noticed that the O. P. was allowed in part which would indicate that only certain matters were remitted for reconsideration.
For the reasons stated above we do not agree with the decision of the lower Court that as no time was fixed by the court in its order dated 30-6-1971 the reference as well as the award is a nullity.
The learned Chief Judge stated that in view of his conclusion that the reference to the arbitrator was not valid it was not necessary for him to consider the other points canvassed by the learned Government Pleader that the arbitrator had violated some directions contained in the judgment of the Chief Judge and committed the irregularities which vitiated the award. In view of our decision that the reference and award is not a nullity, all the other points raised by either party in the case which have been left undecided by the court below will have to be considered. We may make it clear that the findings on questions which are considered by the learned Chief Judge regarding the absence of notice under s. 80, Civil P. C., the question of limitation etc. are confirmed as the view of the lower Court in respect of those matters was not questioned by the learned Government Pleader.
We therefore set aside the order of the Court below and remand the O. P. and suit for consideration on the other questions raised by the Government. The Miscellaneous Appeal and the Revision Petition are allowed. We direct the parties to bear their costs here and in the lower court. In the revision petition, the Advocate''s fee is fixed at Rs. 100/-.
As it is already several years since the matter was referred to arbitration, the court below is directed to dispose of these matters within one month from the date of receipt of records.
Appeal and revision allowed.