The District Food and Supplies Controller, Ferozepur vs M/s. Durga Rice Mills and another

L.N. Mittal, J.—In this appeal filed u/s 37 of the Arbitration and Conciliation Act, 1996 (in short ''the Act''), District Food & Supplies Controller, Ferozepur has challenged judgment dated 02.01.2007 passed by learned District Judge, Ferozepur, thereby allowing petition filed by respondent No. 1-M/s Jai Durge Rice Mills (in short, ''the Miller'') u/s 34 of the Act to challenge arbitration award dated 24.05.2002, as well as order/award dated 22.10.2002 rejecting Miller''s application u/s 33 of the Act, both passed by respondent No. 2-Arbitrator and thereby setting aside the award dated 24.05.2002. I have heard learned counsel for the parties and perused the case file.

Counsel for the appellant contended that petition by the Miller u/s 34 of the Act was barred by limitation as the same was filed on 28.04.2003 whereas the supplementary award is dated 22.10.2002 and the petition u/s 34 of the Act could be filed within three months extendable by 30 days as per Section 34 of the Act. On the other hand, counsel for the Miller contended that the Miller received the supplementary award dated 22.10.2002 just a week before the filing of the petition u/s 34 of the Act and, therefore, the said petition was filed within limitation.

I have considered the rival contentions. According to Section 34 (3) of the Act, an application for setting aside the award may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award, or, if a request had been made u/s 33, from the date on which that request had been disposed of by the arbitral tribunal. Further period of 30 days can be extended if the Court is satisfied for the sufficient cause for not filing the petition within three months. The limitation period thus commences from the date of receipt of the award and not from the date of award itself. In the instant case, the Miller specifically pleaded that the award was received by it just a week before the filing of the petition. In the witness box, Miller''s partner Faqir Chand specifically stated the said fact. He was not cross-examined thereon. So, the said statement was impliedly admitted as correct. The Arbitrator endorsed the copy of supplementary award also to both the parties on the date of award itself as per endorsement made on the award. However, there is nothing on record to depict as to how and when the said award was actually sent to the parties. There is no postal receipt on the record of the Arbitrator or on the record of the lower court regarding the date of dispatch of the original award or the supplementary award. Consequently, unchallenged statement of Miller''s partner may be taken at face value to hold that the petition u/s 34 of the Act was filed within limitation.

As regards merits of the case, perusal of the record of the Arbitrator reveals that the Arbitrator has recorded proceedings dated 28.01.1999 and 22.02.1999 only. For 28.01.1999, the Arbitrator had received fax message from the Miller seeking adjournment as the Miller had to engage a counsel. On 22.02.1999, the Miller was absent and no proceedings could be held by the Arbitrator. It was recorded by the Arbitrator in proceedings dated 22.02.1999 that the next date will be intimated to the party (Miller) and claimant (appellant herein) later on. However, there is no record of any other arbitration proceeding, conducted by the Arbitrator or of any date of hearing fixed by the Arbitrator. On the other hand, after 22.02.1999, the Arbitrator straightway passed award dated 24.05.2002 without giving any opportunity to the parties to lead evidence and to address arguments. Consequently, the original award of the Arbitrator as upheld by the supplementary award suffers from jurisdictional error having been passed in violation of principles of natural justice.

No opportunity of leading evidence or of hearing was given to the parties. Sections 24 and 27 of the Act contemplate recording of evidence as well as hearing of arguments by the Arbitrator. In the instant case, no such opportunity was given to the parties. Consequently, the award is vitiated on this ground and has been rightly set aside by the lower court.

However, after setting aside the award, the matter is required to be remitted to the Arbitrator for fresh decision in accordance with law. Learned lower court did not do so. The impugned judgment of lower court, therefore, suffers from illegality to this extent. Accordingly, the instant appeal is partly allowed. While upholding the impugned judgment of learned District Judge for setting aside of the arbitration award dated 24.05.2002, impugned judgment of the learned District Judge is modified to the extent that the matter is remitted to the Arbitrator for fresh decision in accordance with law. Parties are directed to appear before the Arbitrator on 20.09.2012. Records of the lower court as well as of the Arbitrator be sent back at once.