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CASE NO.:

Appeal (civil) 1059 of 2001

PETITIONER:

UNION OF INDIA AND OTHERS

Vs.

RESPONDENT:

MANAGER M/S JAIN AND ASSOCIATES

DATE OF JUDGMENT: 06/02/2001

BENCH:

M B Shah. & S.N. Phukan.

JUDGMENT:

Shah, J.

Leave granted.

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Question involved in this appeal iswhether provisions

of Order IX Rule 13 of the Code of Civil Procedure (for

short referred to as the CPC) or the principles thereof

are applicable in a case where objections under Section 33

of the Arbitration Act, 1940 (for short referred to as the

Act) are not filed and ex-parte decree is passed on the

basis of the award filed before the Court by making the

award rule of the Court. The High Court has arrived at the

conclusion that Order IX Rule 13 CPC is not applicable in

such cases.

Before appreciating the contentions, we would refer to

few dates pertaining to the question involved. Both the

parties to the present appeal were having disputes regarding

the work of design and construction of two lane road bridge

(both sub-structure and super structure) across Feeder Canal

at R.D.16.5 (Balance Work). In a Special Suit No.31 of 1993

filed by the present respondent, the High Court of Calcutta

vide its order dated 25.6.1993 directed appointment of

Arbitrator to settle their disputes. The Arbitrator passed

an award on dated 28.12.1996 against the appellants herein

which was filed before the High Court on 6.3.1997. Notice

for filing objections was received by the appellants on

21.03.1997. Time of 30 days for filing the objections

expired on 20.4.1997, which was a Sunday and, therefore, the

date stood extended to 21.4.1997. The matter was placed

before the Court on 28.4.1997 and on that day the Court

rejected the oral prayer of the learned counsel for the

appellants that since objection application under Sections

30 and 33 of the Act was under preparation, time to file

such application be granted. The award was made rule of the

Court on the same day. On 5.5.1997, appellants filed an

application for setting aside the ex-parte decree and also

submitted that application under Section 30 was ready. In

the said application, grounds for setting aside the award

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and for condoning delay in filing application were

mentioned. Thereafter, another application under Section 33

of the Act raising objections against the award was also

filed on 16.5.1997. The learned Judge by order dated

25.9.1998 dismissed the said application.

Being aggrieved, the appellant moved the Division Bench

by filing an appeal. The Division Bench in view of

conflicting judgments referred the questionwhether the

decree passed in terms of Arbitration Award, where no

objection has been filed within 30 days from the date of

filing of the award in terms of the Act, would be an

ex-parte decree within the meaning of Order IX Rule 13

CPCto the Full Bench? The Full Bench by judgment and order

dated 7.10.1999 dismissed the appeal by holding that: -

We are of the opinion that (1) the decree passed in terms of

Section 17 of the Act where no objection is filed cannot be

said to be an ex-parte decree; (2) an application for

condonation of delay in terms of Section 5 of the Limitation

Act may be applicable for filing an objection either under

Section 30 or 33 of the Act or both; (3) as in the instant

case no such application has been filed, the question of

setting aside the decree does not arise; (4) an application

for setting aside the decree passed in terms of Section 17

of the Act is maintainable only in a case where a decree has

been passed in ignorance of the conditions precedent laid

down therein.

In the result, the High Court rejected the application

for setting aside the decree solely on the ground that

judgment and decree passed in terms of Section 17 of the Act

where no objections are filed before pronouncing judgment

and passing the decree cannot be said to be an ex-parte

decree. That judgment and order is under challenge in this

appeal.

The aforesaid question is required to be decided on the

basis of Section 41 of the Act, which provides that

provisions of CPC are applicable to all the proceedings

before the Court under the Act. It reads thus: - 41.

Procedure and powers of Court.Subject to the provisions of

this Act and of rules made thereunder

(a) the provisions of the Code of Civil Procedure, 1908,

shall apply to all proceedings before the Court and to all

appeals, under this Act; and

(b) the Court shall have, for the purpose of, and in

relation to, arbitration proceedings, the same power of

making orders in respect of any of the matters set out in

the Second Schedule as it has for the purpose of, and in

relation to, any proceedings before the Court:

Provided that nothing in clause (b) shall be taken to

prejudice any power which may be vested in an arbitrator or

umpire for making orders with respect to any of such

matters.

Aforesaid Section is also required to be read in context

of Section 141 of the CPC, which is as under: -

141. Miscellaneous Proceedings.The procedure provided

in this Code in regard to suits shall be followed, as far as

it can be made applicable, in all proceedings in any court

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of civil jurisdiction.

[Explanation.In this section, the expression

proceedings includes proceedings under Order IX, but does

not include any proceeding under Article 226 of the

Constitution]

Section 41 of the Act leaves no doubt that in a

proceeding where an application is filed for passing the

decree on the basis of the award submitted by the

arbitrator, the provisions of the CPC are applicable and

there is no provision which excludes operation of Order IX.

Similarly, in view of Section 141 of the CPC, the procedure

prescribed in the Code is to be followed as far as it can be

made applicable to all proceedings in the Court of civil

jurisdiction. Hence, in the proceedings initiated for

making the award rule of the Court, provisions of CPC

including Order IX Rule 13 would be applicable. As per the

Explanation to Section 141, the expression proceedings

includes proceedings under Order IX CPC.

Other provision which is required to be taken into

consideration is Section 5 of the Limitation Act, 1963,

which inter alia provides for extension of prescribed period

of limitation in making application in the civil

proceedings, if the applicant satisfies the Court that he

had sufficient cause for not making application within such

period. For the purpose of filing objection application

before the Court, the relevant provision is Article 119 of

the Limitation Act, 1963, which inter alia provides that

period of limitation is 30 days for filing the award in the

Court from the date of service of notice of the making of

the award and 30 days for setting aside the award or getting

an award remitted for reconsideration from the date of

service of notice of the filing of the award. It requires

no further discussion that on sufficient cause being shown,

if there is any delay in filing an application for setting

aside the award, it could be condoned. We would further

refer to Sections 15, 16, 17, 30 and 33 of the Act, which

read as under: -

15. Power of Court to modify award.(1) The Court may

by order modify or correct an award

(a) where it appears that a part of the award is upon a

matter not referred to arbitration and such part can be

separated from the other part and does not affect the

decision on the matter referred; or

(b) where the award is imperfect in form, or contains

any obvious error which can be amended without affecting

such decision; or

(c) where the award contains a clerical mistake or an

error arising from an accidental slip or omission.

(Emphasis added)

16. Power to remit award.(1) The Court may from time

to time remit the award or any matter referred to

arbitration to the arbitrators or umpire for reconsideration

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

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matter not referred to arbitration and such matter cannot be

separated without affecting the determination of the matters

referred; or

(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.

(2) 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. (3) An award remitted under

sub-section (1) shall become void on the failure of the

arbitrator or umpire to reconsider it and submit his

decision within the time fixed.

(Emphasis added)

17. Judgment in terms of award.Where the Court sees no

cause to remit the award or any of the matters referred to

arbitration for reconsideration or to set aside the award,

the Court shall, after the time for making an application to

set aside the award has expired, or such application having

been made, after refusing it, proceed to pronounce judgment

according to the award, and upon the judgment so pronounced

a decree shall follow, and no appeal shall lie from such

decree except on the ground that it is in excess of, or not

otherwise in accordance with the award.

30. Grounds for setting aside award.An award shall not

be set aside except on one or more of the following grounds,

namely:

(a) that an arbitrator or umpire has misconducted

himself or the proceedings;

(b) that an award has been made after the issue of an

order by the Court superseding the arbitration or after

arbitration proceedings have become invalid under Section

35;

(c) that an award has been improperly procured or is

otherwise invalid.

33. Arbitration agreement or award to be contested by

application.Any party to an arbitration agreement or any

person claiming under him desiring to challenge the

existence or validity of an arbitration agreement or an

award or to have the effect of either determined shall apply

to the Court and the Court shall decide the question on

affidavits:

Provided that where the Court deems it just and

expedient, it may set down the application for hearing on

other evidence also, and it may pass such orders for

discovery and particulars as it may do in a suit.

In view of the aforequoted Sections, it can be stated

that-- (a) after receipt of an award, the Court can suo motu

refuse to make award rule of the Court on the ground that

(i) part of the award is upon a matter not referred to

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arbitration; and (ii) the award is imperfect in form or

contains any obvious error. The Court can also remit the

award to arbitrator in case (i) where the award has left

undetermined any matter referred to arbitration; or (ii)

where it has determined any matter not referred to

arbitration; or (iii) the award is so indefinite as to be

incapable of execution; or (iv) is on the face of it

illegal. This is also provided under parenthesis clause of

section 17 which provides Where the Court sees no cause to

remit the award or any of the matters referred to

arbitration for reconsideration or to set aside the award,

the Court shall proceed to pronounce judgment Therefore,

it cannot be stated that in case where objections under

Section 30 or 33 are not filed the Court is bound to pass

decree in terms of the award.

(b) Section 5 of Limitation Act gives discretion to the

Court to extend the time for filing application under

Section 30 or 33 raising objections to the award.

(c) The Civil Procedure Code including Order IX Rule 13

is applicable to the proceedings initiated by producing

award before the Court for passing a decree.

(d) The power of the Court to modify the award under

Section 15 or to remit the award to the arbitrator for

reconsideration under Section 16 varies from the

jurisdiction of the Court to set aside the award under

Section 30 or to determine the validity of the arbitration

agreement or an award under Section 33.

The result isbefore pronouncing judgment, the Court has

to apply its mind to arrive at the conclusion whether there

is any cause to modify or remit the award. Further the

phrase pronounce judgment would itself indicate judicial

determination by reasoned order for arriving at the

conclusion that decree in terms of award be passed. One of

the meaning given to the word Judgment in Websters

Comprehensive Dictionary [International Edition, Vol. I

(1984)] reads thus : the result of judging; the decision

or conclusion reached, as after consideration or

deliberation. Further, Order XX Rule 4(2) C.P.C. in terms

provides that Judgment shall contain a concise statement

of case, the points for determination, the decision thereon,

and the reasons for such decision. This is antithesis to

pronouncement of non-speaking order.

Section 17 of the Act is, to some extent, similar to the

provisions of Order VIII Rule 5 and/or Rule 10 CPC. Order

VIII provides the procedure where written statement by the

defendant is not filed. Order VIII Rule 5(2)(4) provides

that where the defendant has not filed a pleading, it shall

be lawful for the court to pronounce judgment on the basis

of facts contained in the plaint and after pronouncing the

judgment a decree is required to be drawn up in accordance

with such judgment. Under Order VIII Rule 10 where any

party from whom a written statement is required under Rule 1

or Rule 9 fails to present the same within the time

permitted or fixed by the court, the court shall pronounce

judgment against him or make such order in relation to the

suit as it thinks fit and on the pronouncement of such

judgment a decree shall be drawn up. This rule gives a

discretion to the Court either to pronounce the judgment

against the defendant or make such order in relation to the

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suit as it thinks fit. While interpreting Order VIII, this

Court in Balraj Taneja & Another v. Sunil Madan & Another

[(1999) 8 SCC 396] held that merely because written

statement is not filed the Court should not proceed to pass

judgment blindly and observed thus:-

The court has not to act blindly upon the admission of

a fact made by the defendant in his written statement nor

should the court proceed to pass judgment blindly merely

because a written statement has not been filed by the

defendant traversing the facts set out by the plaintiff in

the plaint filed in the court. In a case, specially where a

written statement has not been filed by the defendant, the

court should be a little cautious in proceeding under Order

8 Rule 10 CPC. Before passing the judgment against the

defendant, it must see to it that even if the facts set out

in the plaint are treated to have been admitted, a judgment

could possibly be passed in favour of the plaintiff without

requiring him to prove any fact mentioned in the plaint. It

is a matter of the courts satisfaction and, therefore, only

on being satisfied that there is no fact which need be

proved on account of deemed admission, the court can

conveniently pass a judgment against the defendant who has

not filed the written statement.

Similarly, when the Court is required to proceed without

objection application under Section 30 or 33 of the Act, it

can not pronounce the judgment without considering the

provisions of Sections 15 and 16 of the Act, which provide,

as stated above, for modification or correction of any award

or for remitting it to the arbitrator for re-consideration

on the ground that (i) there is any error of law apparent on

the face of the award, (ii) the award is incapable of being

executed, (iii) the award has left undetermined any of the

matters referred to arbitration, (iv) that a part of the

award is upon a matter not referred to arbitration and (v)

the award contains any obvious error. Jurisdiction of the

Court to pronounce judgment depends on exercise of its power

to modify or remit the award.

Further, the Full Bench of the High Court arrived at the

conclusion that decree passed in terms of Section 17 of the

Act where no objection has been filed cannot be said to be

an ex-parte decree because (1) even if both the parties are

absent, the Court has duty to pass a decree unlike the

provision of Order IX of the CPC; (2) the Court passes the

decree on the basis of award, which may not be a speaking

one and no party before it is required to file its proof in

respect of its claim or defence; and (3) in a suit there is

a plaintiff and defendant and Order IX deals with them. As

against this, in a proceeding based on award, strictly

neither party of an award is plaintiff or defendant and both

of them are entitled to ask the Court to pronounce judgment

according to the award. As discussed above, the distinction

made by the High Court on the ground that even if both the

parties are absent, the Court has duty to pass a decree

unlike the provisions of Order IX CPC is baseless. Before

pronouncing judgment the Court is required to consider and

follow the provisions of Sections 15 and 16 of the Act.

Further, once it is held that provisions of CPC are

applicable and if the party who seeks decree in terms of the

award is absent, the Court may refuse to pass a decree. For

the same reason, the second ground given by the Court also

cannot be supported because even in case of non-speaking

award the Court is required to follow mandate of Sections 15

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and 16 of the Act before pronouncing the judgment. The

third ground for holding that in case of award there is no

plaintiff or defendant, therefore, Order IX CPC which deals

with absence of plaintiff or defendant would not be

applicable also cannot be sustained because under Section 41

of the Act the provisions of CPC are made applicable to

arbitration proceedings before the court and to the appeals

under the Act. In arbitration proceedings, there is no

question of suit being filed as award is tendered for

passing decree in terms of the award. Similarly, Section

141 of the CPC also contemplates proceedings other than suit

in any court of civil jurisdiction and provides that

procedure provided in the Code in regard to the suit shall

be followed as far as it can be made applicable. In such

proceedings, there may not be practice or procedure

describing parties as plaintiff or defendant. Hence, in

arbitration proceedings even if the suit is not filed,

procedure provided in CPC is applicable and there is no

reason to hold that as no party is described as plaintiff or

defendant, Order IX would not be applicable. Even if the

nomenclature of plaintiff or defendant is required to be

taken into consideration, the party who seeks decree in

terms of award can be held to be plaintiff and the party who

objects to such award can be treated as defendant. If the

contention that for application of CPC there must be suit,

plaint, plaintiff, defendant or written statement is

accepted, the provisions of Section 41 of the Act and

Section 141 of CPC would be nugatory.

At this stage, we would refer to some decisions, which

were referred to by the High Court. The Court referred to@@

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Ganeshmal Bhawarlal v. Kesoram Cotton Mills Ltd. [AIR (39)@@

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1952 Calcutta 10], wherein the learned Single Judge observed

that inspite of Section 43 of the Arbitration Act and

Section 141 of the CPC strictly the provision of Order IX

Rule 13 does not apply to proceedings for setting aside an

ex parte decree passed under Section 17 but the principles

of Order IX Rule 13 CPC should be followed and the judgment

and decree passed under Section 17 could be set aside where

such decree was passed without duly giving the notice of

filing the award or without allowing the time for applying

to set aside the award to expire. In Government of A.P. v.

Bactchala Balaiah [AIR 1985 A.P. 52], the High Court

considered various decisions to the same effect and held

that provision of Order IX Rule 13 will not apply to the

decree passed under Section 17 of the Arbitration Act in

terms of the award filed in the Court by the arbitrator as

it cannot be treated as ex-parte, especially when a petition

under Section 30 of the Act for setting aside the award was

not filed within 30 days from the date of service of notice

of the application of the award in the Court. In case of

Ram Chander v. Jamna Shankar, [AIR 1962 Raj. 12], the

Court followed the decision of Calcutta High Court in

Ganeshmals case (supra) and observed that principles of

order IX rule 13 should be followed and in any case the

Court has inherent power to correct the injustice and to set

aside the judgment and decree passed ex-parte without notice

to the interested party.

In our view, as discussed above, the provisions of CPC

are specifically made applicable and there is no reason to

hold that Order IX Rule 13 would not be applicable in case

where judgment is pronounced under Section 17 of the Act in

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absence of objection application tendered by the party

objecting to the award. For all purposes such decree is

ex-parte for the party objecting to the award. Under C.P.C.

ex-parte decree has no technical meaning. Order IX Rule 6

CPC provides that where the plaintiff appears and the

defendant does not appear when the suit is called for

hearing, then if it is proved that summons was duly served,

the Court may make an order that suit be heard ex-parte.

After passing such order if a decree is passed ex-parte

against the defendant, under Rule 13, the Court has power to

set it aside if it is satisfied that summons was not duly

served or that defendant was prevented by any sufficient

cause from appearing when the suit was called on for

hearing. Similarly, if party objecting to the award

satisfies to the Court that for sufficient reasons objection

application was not tendered within prescribed time, Court

has power to set aside such decree. Therefore, if

application for setting aside the award is filed beyond the

prescribed time and sufficient cause for condoning the delay

in filing objection application is established, the Court

has power to set aside such decree by following the

procedure prescribed under Order IX Rule 13 CPC.

Further, large part of the controversy involved in this

appeal is covered by the decision rendered by this Court in

Essar Constructions v. N.P. Rama Krishna Reddy [(2000) 6

SCC 94]. The Court observed that because of the

applicability of Section 5 of the Limitation Act, 1963, if

the court has not pronounced judgment for whatever reason,

although the time prescribed for making the application has

expired and an application for setting aside the award is

made with a prayer for condonation of delay, the court

cannot pronounce judgment until the application is rejected.

The Court also observed that even after a decree is passed

under Section 17, an application under Section 30 can be

entertained provided sufficient cause is established. In

either case, the rejection of the application would be a

refusal to set aside the award. In case where such

application is rejected on the ground that it is delayed and

no sufficient cause has been made out under Section 5 of the

Limitation Act, it would be an appealable order under

Section 39(1)(vi) of the Act.

In the present case, before passing decree on 28th

April, 1997, the learned Advocate for the appellant prayed@@

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for extending the time for tendering objection application@@

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under Section 30/33 of the Act. By some mistake that being

an oral prayer, as recorded in the judgment, was rejected by

the Court and the decree was passed. Thereafter on 5th May,

an application for setting aside the award and for condoning

the delay for filing objections was filed by Advocate S.

Bhattacharya. The said application was accompanied by

affidavit of Bijon Kumar Ghosal, Executive Engineer, Farakka

Barrage Project. For condonation of delay, it was pointed

out that Executive Engineer approached the advocate on 17th

April and gave him instructions for drafting the

application. On 18th, 19th and 20th April, the Court was

closed being holiday, Saturday and Sunday respectively. It

was also stated that appellants counsel started preparing

the draft on 22nd April which was finalised on 29th and was

thereafter engrossed, stamped and was made ready on 2nd May.

It was tendered before the Court on 5th May. That

application was prepared and signed by Advocate Shri S.

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Bhattacharya. Further, appellant filed an application on

16th May for recalling the judgment and decree passed on

28th April in Award Case No.22 of 1997. In that application

also, same reasons for condoning delay in filing the

application were mentioned and the prayer recalling the

judgment and decree and to grant leave to file the

application for setting aside the award was made. In

support of that application supplementary affidavit was

tendered on 19th May.

From the aforementioned facts, it is apparent that

within period of limitation, the Executive Engineer of the

Department contacted the counsel on 17th April and gave him

necessary instructions for filing objection application

against the award. There was delay in preparing the same by

the learned counsel. It appears that the same counsel

requested the Court, unfortunately orally, that objection

application was under preparation and thereafter tendered it

before the Court on 5th May. From the said averments, it is

apparent that delay in preparing and tendering the

application before the Court was on the part of the

concerned advocate. This would be sufficient cause for

condoning, approximately 12 to 13 days delay in filing

objections. In Essar Constructions (supra), this Court

heldeven after a decree is passed under Section 17, an

application under Section 30 can be entertained provided

sufficient cause is established. In either case the

rejection of the application would be a refusal to set aside

the award. This decision would be applicable to the facts

of the present case and as there was sufficient cause for

condoning the delay, the Court ought to have set aside the

ex parte decree passed on the basis of the award.

At this stage, we would mention that before referring

the question to the Larger Bench, the Division Bench in its

judgment dated 16th December 1998 held that in the

application filed under Section 33 of the Act, which was

affirmed earlier, the appellant had prayed for condonation

of delay and asked leave to file application under Section

33 on the ground stated therein. The Court observed that

there was some procedural error in seeking leave of the

Court to file objections, but it would not warrant a

rejection of the prayer. The Court also held that there was

no dispute that the case papers had been handed over by the

appellants representative to the counsel for drafting the

application under Section 33 on 17th April 1997 before the

expiry of the period of limitation; after that matter was

beyond the control of the appellant until the application

was prepared; delay of counsel in preparing and finalising

the draft cannot be attributed to the appellant; the

application was settled by senior counsel on 29th April

1997; thereafter it was typed; 1st of May was holiday and

the Court was closed. The application was accordingly

affirmed on 2nd May and therefore, the delay has been

sufficiently explained, more so when the appellant is

Government. The Court, therefore, held that it would have

allowed the appeal and condoned the delay in filing

application under Section 33 and consequently set aside the

decree dated 28th April, 1987 but having regard to

difference of opinion with regard to applicability of Order

IX Rule 13, the matter was referred to larger bench. As

stated above, in our view, the Division Bench was right in

arriving at the conclusion that this was a fit case for

condoning the delay and setting aside the decree dated 28th

April 1987.

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In the result, the appeal is allowed. Delay in filing

the objection application under Section 30/33 of the Act is

condoned. The impugned judgment and order dated 07.10.1999

passed by the High Court in APOT No.858 of 1998 is set aside

and consequently the judgment and decree dated 28.4.1997

passed by the learned Single Judge in Award Case No.22 of

1997 is also quashed and set aside. There shall be no order

as to costs.