Citation Codes

Equivalent Citations

citation codes

Case Number

Appeal No. 62 of 1983

Advocates

P.K. Sen with Dipak Basu
Debi De with Sinha Roy

Judges

Anil Kumar Sen
Sudhir Ranjan Roy, JJ.

Acts

S. 20, Arbitration Act, and S. 5 read with S. 8
S. 5 read with S. 8 of the Arbitration Act
provision of S. 12(4), Limitation Act.27.
Art. 119 of the present Limitation Act,
S. 30 read with S. 33, Arbitration Act,
S. 5 read with S. 8, Arbitration Act,
provisions of S. 4, Limitation Act.
provision of S. 5, Limitation Act.
Ss. 30 and 33, Arbitration Act,
Art. 119, Limitation Act,
S. 14(2), Arbitration Act,
S. 3(2)(c), Limitation Act.
S. 12(4), Limitation Act,
S. 5, Limitation Act.26.
S. 20, Arbitration Act,
S. 19, Arbitration Act,

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Smart Summary

Case Summary — Opinion by Anil Kumar Sen, J.

Factual and Procedural Background

The respondent (Union Builders) entered into a contract dated 29 December 1965 with the South Eastern Railway for supply and loading of ballast at Ghatsila and Dhalbhumgarh. The work was completed on 30 June 1969. Disputes arose and the contractor submitted claims by letter dated 5 May 1972 consisting of twelve items (including claims for refund of security deposit, outstanding bills, excess quantity supplied, costs of preparing stacking grounds, claims for additional lead, demurrage, multiple heads of damages and a large claim for interest).

The contract contained an arbitration clause and the disputes were referred to joint arbitrators. While the arbitration was pending the contractor (by letter dated 10 August 1976) sought additional amounts on certain items and sought to quantify interest. The arbitrators made an award on 22 September 1977 in favour of the contractor for Rs. 6,50,778/-, with interest if not paid within two months; that award was paid (together with interest of Rs. 19,220.48) in 1978 in full and final settlement of matters then before the arbitrators.

After receipt of payment, the contractor on 27 July 1978 pressed a fresh claim based on the 10 August 1976 letter. The contractor applied under S.20 of the Arbitration Act in this Court on 27 November 1978 seeking filing of the arbitration agreement and an order to refer the disputes in the 10 August 1976 letter to arbitration. By order dated 19 January 1979 the Court ordered (in terms of prayer (a)) that the arbitration agreement be filed and directed that an arbitrator be appointed to decide the fresh disputes, explicitly stating that the items to be referred must be new items of claims and would not include claims covered by the earlier award of 22‑9‑77.

A contested procedural history followed: the railway appointed an arbitrator (May 1979) and the contractor objected; the contractor filed an application under S.5 read with S.8 on 27 June 1980. Ultimately, by letter dated 20 December 1980 the railway administration referred the entire additional claim (the quantified claim of Rs. 4,62,687 plus interest as in the 10 August 1976 letter) to joint arbitrators S. Ananthanarayan and A. Venugopalan. The contractor lodged a detailed claim before the joint arbitrators on 27 February 1981, including quantified “additional amounts” on some items and an enhanced interest claim. The respondent requested that the umpire take over; the jointly appointed umpire (P.V. Ratnam) accordingly made an award on 28 July 1982 of Rs. 7,00,235.18 with interest if not paid.

The award was filed in court on 4 August 1982; a notice under S.14(2) was served on the appellant on 18 August 1982. The appellant drew up an application under S.30 read with S.33 setting out objections; that application was affirmed on 18 September 1982 (a Saturday) and moved on 21 September 1982. A learned single Judge dismissed the appellant's application on 20 May 1983 solely on the ground of limitation. This appeal (assigned to the bench after remand from the Supreme Court) challenges that order and asks the Court to decide both the limitation point and the merits (jurisdiction and scope of the arbitration reference).

Legal Issues Presented

Whether the appellant's application under S.30 read with S.33 of the Arbitration Act was barred by limitation, having regard to service of notice, holidays/closures of the court and the date the application was verified/moved.
Whether days when the court did not sit (including an undeclared closure due to a full court reference) should be excluded in computing limitation or alternatively whether delay should be condoned under S.5 of the Limitation Act.
Whether the time taken to obtain a certified copy of the award falls to be excluded under S.12(4) of the Limitation Act.
On the merits, whether the umpire had jurisdiction to enter on the reference and make the award (i.e., whether the umpire validly assumed jurisdiction while joint arbitrators were still capable of acting).
Whether the scope of the reference under S.20 (as ordered by the Court) was limited to “new items of claims” and thus whether the umpire exceeded jurisdiction by adjudicating claims already adjudicated or by entertaining additional amounts on previously adjudicated items (including interest claims).

Arguments of the Parties

Appellant's Arguments (Mr. Sen)

The application was moved at the first available date and therefore was within time; the peculiar closure of the court (an undeclared holiday due to the death of the ex‑Government Pleader and related full court reference) should not prejudice the appellant.
Alternatively, under S.12(4) Limitation Act, the time taken to obtain a certified copy of the award (application for certified copy made on 2 Sept 1982 and not delivered before the application was moved) should be excluded from the limitation period.
Alternatively, the Court should condone any short delay under S.5 of the Limitation Act.
On the merits, the umpire had no jurisdiction to make the award because (a) the joint arbitrators had not failed to arrive at an agreed award and therefore the umpire could not assume jurisdiction, and (b) the reference under S.20 was limited to new items of claim, whereas the umpire adjudicated claims which were already the subject matter of the previous arbitration or were mere additional amounts on old items (including interest), so the umpire exceeded his jurisdiction.

Respondent's Arguments (Mr. Dey)

The appellant could and should have presented the application to the Registrar on 18 September 1982 (the Registrar being a proper officer under S.3(2)(c) Limitation Act) and, by not having done so, cannot rely on subsequent events to extend limitation.
Monday 20 September 1982 was not a declared holiday and therefore that date cannot be excluded under S.4 Limitation Act.
S.12(4) Limitation Act does not refer to a certified copy; in any event the appellant had been served with a copy of the award (annexed to the application verified on 18 September 1982), so time for obtaining a certified copy cannot be excluded because no case was made that that copy was not a true/authentic copy of the umpire's award.
On the merits the respondent contended that the earlier arbitration had excluded the interest claim from fresh adjudication (a contention the Court ultimately rejected).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nilkantha v. Kashinath, AIR 1962 SC 666	Authority relied upon to the effect that service of notice (for limitation commencement) need not necessarily be one emanating from the court.	The learned single Judge had relied on this decision to hold that a party's notice of filing of an award starts the running of limitation. The present Court examined that reliance and noted that a later Division Bench view (AIR 1985 Cal 12) interpreted Art.119 to require a court‑emanating notice (i.e., S.14(2) notice) to start limitation; consequently the single Judge's reliance on Nilkantha was not sustained in the present context.
State of West Bengal v. Mondal & Co., AIR 1984 Cal 14	Instance of the learned single Judge's prior reasoning on the same limitation point (used as a basis for the single Judge's conclusions in the present case).	The Court observed that reasons given in that case reflected the single Judge's view that party‑issued notice could start limitation; the present Court found that view unsustainable in light of subsequent Division Bench authority.
Division Bench decision, AIR 1985 Cal 12	Held that the “notice” in Art.119 Limitation Act is a notice under S.14(2) Arbitration Act and must emanate from the court (formal, informal or constructive notice acceptable, but it must come from the court).	The Court accepted the Division Bench's view and held that the learned single Judge's ground for dismissing the S.30 application as time barred (based on party notice) was not sustainable.
Sohanlal Nagarmal v. Manik Lal Seal, 58 Cal WN 313 : AIR 1954 Cal 352	Previously held that filing an application before the Registrar for taking out a notice of motion does not constitute "making" an application; S.3(2)(c) of the present Limitation Act was enacted to override that earlier view.	The Court explained the effect of S.3(2)(c): while it overrode the earlier decision, it did not remove an applicant's option to present applications directly to the court when business rules permit; therefore the Registrar route was not the sole permissible mode and failure to use the Registrar did not, per se, render the application time barred.
Ram Nath Agarwala v. Goenka & Co., AIR 1973 Cal. 253	Full Bench authority explaining what constitutes “entering on the reference” for arbitrators (i.e., the relevant starting point for calculating expiry of arbitrators' time and whether the umpire may properly be called upon).	The Court relied on this Full Bench explanation to conclude that the joint arbitrators' endorsement that they had “entered on the reference” on 9 Feb 1981 was a mistaken endorsement and that the contractor could not validly treat that date as the date on which the joint arbitrators had in law entered on the reference.
N. Chellappan v. Secretary, Kerala State Electricity Board, AIR 1975 SC 230	Authority that a party can by conduct submit to an umpire's jurisdiction and by consenting/agreeing to extensions of time preclude a later challenge to the umpire's jurisdiction.	The Court applied this principle to hold that, although the contractor may have prematurely invoked the umpire, the appellant had submitted to the umpire's jurisdiction and granted extensions, and therefore could not challenge the umpire's jurisdiction on that ground alone.

Court's Reasoning and Analysis

The Court addressed the issues in stages: first limitation, then merits.

Limitation

- The learned single Judge had dismissed the appellant's S.30 application on the ground of limitation, treating service of a party's notice of filing of an award as starting the limitation period (relying on Nilkantha and the learned single Judge's earlier decision in State of West Bengal v. Mondal & Co.). The present Court observed that a Division Bench (reported AIR 1985 Cal 12) had held that the “notice” referred to in Art.119 Limitation Act is a notice under S.14(2) Arbitration Act and must emanate from the court (though it may be formal, informal or constructive). On that basis the single Judge's reason for holding the application time barred was unsustainable.

- Factual chronology: the court's S.14(2) notice was served on the appellant on 18 August 1982; 30 days would expire on 17 September 1982, but that day was a declared court holiday, so the last date fell on 18 September 1982 (a Saturday) and the affidavit verifying the application was sworn that day. The judges did not sit that Saturday; the following Monday (20 September 1982) was treated as effectively unavailable because, though not formally declared a holiday, the court did not sit on account of a full court reference on the death of the ex‑Government Pleader. The application was moved on 21 September 1982.

- The Court analysed whether the appellant had to present the application via the Registrar (per Rules Chap. XX Rrs. 3 and 7) or could move it directly before the Court. It held that S.3(2)(c) Limitation Act does not deprive an applicant of the option to present directly where business rules permit; Chap. XX does not mandate presentation before the Registrar in all circumstances. Therefore failure to file before the Registrar did not automatically make the application time barred.

- The Court further addressed whether 20 September 1982 should be excluded. It held that an applicant should not be penalised where judges were not available to entertain the application and therefore that date should be excluded. Even if that date could not be excluded, the Court was prepared to exercise its discretion under S.5 Limitation Act to condone that single day's delay. Consequently the application was treated as within time. Because of this conclusion, the Court did not decide the S.12(4) point (time for obtaining certified copy).

Merits — Jurisdiction and Scope of Reference

- The Court then considered the merits because all material was on record and it would shorten litigation to decide the S.30 application itself.

- Jurisdiction of the Umpire: Mr. Sen argued the Umpire could not assume jurisdiction while joint arbitrators had not failed to agree. The Court acknowledged that the contractor's reliance on 9 Feb 1981 as the date the joint arbitrators “entered on the reference” was mistaken and that the legal test of when arbitrators have entered on reference is governed by prior Full Bench authority (Ram Nath Agarwala). However, the Court found that the appellant (railways) had effectively submitted to the umpire's jurisdiction by participating, submitting to arbitration by the umpire and granting extensions of time; invoking N. Chellappan, this conduct precluded the appellant from challenging the umpire's jurisdiction on that ground.

- Scope of S.20 reference: The Court focussed on the express terms of the S.20 order dated 19 January 1979 which directed that items to be referred "must be new items of claims" and the petitioner would "not be entitled to canvass or agitate any of the claims which are covered by the award dt. 22‑9‑78." The Court analysed the actual claims referred to the joint arbitrators/umpire and concluded:

The earlier reference (April 1974) covered 12 items; the 12th item expressly was “interest on claims.” That earlier arbitration produced a lump sum award which was paid together with interest awarded by the arbitrators.
After receipt of that payment the contractor sought "fresh" arbitration but the claimed items in the fresh reference were not genuinely new items — they were additional amounts on items already adjudicated (items 3, 4, 7 and 11) and interest on claims earlier adjudicated. The contractor's letter of 10 August 1976 had asked to quantify additional amounts but those additional amounts were not permitted in the earlier arbitration; such refusal did not mean the interest or other claims were excluded from the earlier arbitration.
The S.20 order limited the fresh reference to new items; additional amounts on old items and the interest claims already the subject of the earlier award fell outside that limitation. Accordingly the umpire exceeded jurisdiction by entertaining and adjudicating those matters.

- The Court also commented that the umpire's award was manifestly perverse on its face: the contractor had originally sought a total additional claim of Rs. 4,62,687 (which itself included a quantified interest claim of Rs. 3,47,937), yet the umpire awarded Rs. 7,00,235.18 — and the umpire's treatment of interest claims suggested he had allowed claims and expanded the reference beyond what the Court had ordered. The Court characterized this as acting materially beyond jurisdiction and as gross perversity.

Holding and Implications

Holding: The appeal is allowed. The Court set aside the learned single Judge's order dated 20 May 1983 (which had dismissed the S.30 application on the ground of limitation), allowed the appellant's application under Ss.30 and 33 Arbitration Act, and set aside the umpire's award dated 28 July 1982. The reference is superseded under the Court's power under S.19 Arbitration Act.

Implications:

Direct effect on the parties: The umpire's award of Rs. 7,00,235.18 is quashed and the S.30 application succeeds; the Court has exercised its S.19 power to supersede the reference on the ground that the disputes were covered by the previous arbitration and that there was a lack of bona fides in the attempt to obtain fresh arbitration on those matters.
Limitation principle applied: the Court accepted the Division Bench view (AIR 1985 Cal 12) that notice under Art.119 is a S.14(2) court notice, and it held that the appellant's S.30 application was not time barred taking into account court closures and condonation under S.5 where appropriate.
No order as to costs was made.
The opinion resolves this litigation between the parties on the record before the Court; the opinion does not purport to lay down a novel general proposition of law beyond the application of cited precedents and statutory provisions to the facts of this case.

Disposition: Appeal allowed; award set aside; reference superseded; no order as to costs.

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Union Of India v. Union Builders .

Anil Kumar Sen, J.:— This is an appeal which has lately been assigned to us after remand from the Supreme Court of India. Union of India representing the railway administration is the appellant before us and the appeal is directed against an order dt. May 20, 1983, passed by a learned single Judge of this Court dismissing the appellant's application under S. 30 read with S. 33 Arbitration Act, which was registered as Award Case No. 200 of 1982. The application has been dismissed solely on the ground of limitation. In order to appreciate and decide the points at issue it would be necessary to refer to certain facts which may be set out briefly as follows:

2. The respondent, Union Builders, entered into an agreement dt. Dec. 29, 1965, with the South Eastern Railway administration for supply and loading of ballast at two stations, namely, Ghatsila and Dhalbhumgarh. The work under the contract was completed on June 30, 1969, but certain disputes and differences arose between the respondent (hereinafter referred to as the contractor) and the authorities of the South Eastern Railway with regard to certain claims put forward by the contractor. Those claims were put forward in the contractor's letter dt. May 5, 1972, and those were set out in 12 items as follows:

1) Claim for refund of balance security deposit: Rs. 2,082.00

2) Claim on account of outstanding bills: Rs. 9,520.00

3) Claim for payment of excess quantity supplied: Rs. 63,000.00

4) Claim towards the cost for preparing stacking grounds: Rs. 25,000.00

5) Claim of payment for additional lead involved: Rs. 1,98,000.00

6) Claim for demurrage: Rs. 10,025.00

7) Claim of damages for loss due to stoppage of work: Rs. 1,20,000.00

8) Claim of damages for loss due to irregular supply of rakes: Rs. 4,80,000.00

9) Claim of payment for extra work done with regard to cleaning, levelling and dressing of stacking grounds: Rs. 25,000.00

10) Claim of damages for loss due to non-supply of rakes from July 1967 to September 1967: Rs. 50,000.00

11) Claim of damages for loss due to insufficient provision of stacking grounds: Rs. 25,000.00

12) Interest Rs. 10,07,627.00

3. Since the contract incorporated an arbitration clause the dispute so raised by the contractor by the letter, as aforesaid, was referred to arbitration by the joint arbitrators, Sri N. Gopalakraishna and Sri K.S Guha.

4. When the arbitration proceeding was pending on August 10, 1976, the contractor put forward a claim of additional amounts on items 3, 4, 7 and 11 as above and the contractor further proposed to claim interest at 6% with, effect from 1-7-69 to 31-8-74 assessed at Rs. 3,47,937/- and for further interest from 1-9-74 until the payment to be assessed by the arbitrators. The additional amounts claimed on items 3, 4, 7 and 11 were Rs. 8,250/-, Rs. 95,000/-, Rs. 5,000/- and Rs. 6,500/- respectively. The sum total of such additional amounts claimed together with the quantified interest of Rs. 3,47,937/- amounted to Rs. 4,62,687/-. Such additional claim was opposed on behalf of the railway administration and the railway administration insisted that the arbitration should stand limited to the reference already made and the arbitration did proceed accordingly.

5. On Sept. 22, 1977, the arbitrators made an award for a sum of Rs. 6,50,778/- for payment by the railway administration in full and final settlement of all the claims of the contractor and further directed that the said amount should be paid within two months failing wherein they directed payment of interest at 10% on the awarded amount until the date of payment. There is no dispute that a judgment was passed on the award and the railway administration paid not only the amount awarded namely, Rs. 6,50,778/- but also a sum of Rs. 19,220.48 towards the interest and the contractor received the same in the year 1978 in full and final settlement of all claims forming the subject matter of reference including interest payable thereon.

6. Having received last of the instalments of the said amount in June 1978, the contractor on July 27, 1978, put forward a fresh claim based on their letter dt Aug. 10, 1976, referred to hereinbefore. The railway administration having refused to entertain such claim the contractor filed an application under S. 20 Arbitration Act, in this court on Nov. 27, 1978. In this application under S. 20 the contractor alleged in clear terms that he wanted a fresh arbitration with regard to the additional claims put forward by him in his letter dt. Aug. 10, 1976. Prayers set out in this application were as follows:

“a) that the arbitration contained in the agreement dt. 28th April 1965, be filed;

b) notice be issued on the respondent to show cause why the said agreement should not be filed;

c) if the respondent fails to show cause or shows insufficient cause the aforesaid agreement be filed and the claims/disputes mentioned in the letter dt. 10th Aug. 1976, be referred to the arbitrator to be appointed in terms of the arbitration clause set out in para 3 herein;

d) such further or other order or orders be made and directions given as this court may seem fit and proper;

e) costs.”

7. This application was disposed of on contest by the railway administration and a learned single Judge of this Court on Jan. 19, 1979, made the following order:

“There will be an order in terms of prayer (a) of the petition. There will also be an order directing the respondents to appoint an arbitrator in accordance with the arbitration agreement to decide the fresh disputes which are now sought to be raised by the petitioner/claimant.

I make it clear that those items to be referred now must be new items of claims and they will not be entitled to canvass or agitate any of the claims which are covered by the award dt. 22-9-78.”

8. It is unfortunate that in making the order this court did not consider or decide whether the additional claims put forward by the contractor in their letter dt. Aug. 10, 1976, did constitute fresh disputes nor did this court by the order specify the disputes and differences which should constitute the subject matter of arbitration in terms of the order made under S. 20. This uncertainty had led to a protected litigation following the said order.

9. Acting on the said order on May 4, 1979, the railway administration appointed an arbitrator and proposed to refer to him for arbitration the additional claim of the contractor in respect of item 3 and item 11 as specified in the contractor's letter dt. Aug. 10, 1976. The contractor objected. A lot of correspondence was entered into and ultimately on June 27, 1980, the contractor moved a fresh application in this court under S. 5 read with S. 8, Arbitration Act, which was registered as O.S Matter No. 1321 of 1980. In this application, the contractor claimed that since the railway administration had failed to comply with the court's order dt. Jan. 19, 1979, and refer the entire claim put forward by them for arbitration the court should make the appointment of an arbitrator so that the contractor may refer their claim to such an arbitrator.

10. Pending this proceeding, it appears that the railway administration was advised to make a reference of the entire additional claim so put forward by the contractor to joint arbitrators reserving the administration's right to dispute the admissibility of such claims. That was done by the railway administration by their letter dt. Dec. 20, 1980, which is to be found at page 34 of the paper book.

11. By this letter Sri S. Ananthanarayan, and Sri A. Venugopalan were appointed the joint arbitrators and what was referred to them for adjudication was exactly the additional claim of Rs. 4,62,687/- + interest as specified in the contractor's letter dt. Aug. 10, 1976. Such an appointment being made, the contractor's application under S. 5 read with S. 8 of the Arbitration Act was disposed of leaving it to the said arbitrators to proceed with the arbitration.

12. On Feb. 27, 1981, the contractor lodged their claim in the fresh arbitration before the joint arbitrators and this claim is to be found at page 94 of the paper book. In this claim, the contractor made it clear that what was being put forward was not any new item of claim but only the additional amounts on items 3, 4, 7 and 11 of the claims adjudicated in the first arbitration. Referring to item 3 in this claim the contractor alleged that the total amount which is due to them for excess supply of ballast would be Rs. 63,750.00 loading charges at Rs. 6/- per 100 cft. amounting to Rs. 7,500, the sum total being Rs. 71,250.00. Deducting therefrom the sum of Rs. 63,000/- which was the subject matter of adjudication in the first arbitration the additional amount on that account was laid at Rs. 8, 250/-. Similarly with regard to item 4 the contractor alleged that the costs incurred by them for preparing stacking grounds would amount to Rs. 1,20,000.00 so that deducting therefrom the sum of Rs. 25,000/- which was the subject matter of adjudication on this head in the first arbitration, the claim is now Rs. 95,000/-. Similarly, referring to item 7, the contractor alleged that the total damage suffered by him is Rs. 1,25,000/- so that deducting therefrom the sum of Rs. 1,20,000/- which had already been adjudicated in the previous arbitration the additional claim is Rs. 5,000/-. Referring to item 11, it was similarly alleged by the contractor that the total damages suffered by him would amount to Rs. 31,500/- so that deducting therefrom a sum of Rs. 25,000/- which had already been the subject matter of adjudication in the first arbitration on this account the additional claim is Rs. 6,500/-.

13. Lastly, the contractor put forward a claim for interest. On this head, they enhanced their claim further than what they claimed in their letter dated August 10, 1976. We have indicated hereinbefore that in the said letter the contractor claimed interest at 6% on the amount of their claim then put forward from 1-7-69 to 31-8-74 and claimed a liquidated amount of Rs. 3,47,937/- towards such interest and they further claimed interest from 1-9-74 till the date of payment to be assessed by the arbitrators.

14. In lodging the claim before the arbitrators, the contractors put forward their claim with regard to interest on the following terms:—

“va) Payment of interest on Rs. 6,50,778.00 from 1-7-69 to 22-9-77 at 12½% b) Payment of interest on Rs. 1,14,750.00 from 1-7-69 to 9-2-81 at 12½% Rs. 6,69,307.08 via) Payment of interest on the awarded sum from 10-2-81 to the date of making and publishing the award at 12½% — amount cannot be calculated b) Payment of interest on the awarded sum from the date of making and publishing the award to the actual date of payment at 12½% — amount cannot be calculated now Rs. 1,78,420.80

15. An additional sum of Rs. 10,000/- was put forward in this claim towards the cost of the High Court proceedings under S. 20, Arbitration Act, and S. 5 read with S. 8 of the said Act.

16. The railway administration strongly controverted the claim so put forward in their counter statement filed on Sept. 25, 1981.

17. Strangely, however, before any effective steps for arbitration by the joint arbitrators could be taken, at the instance of the contractor and at their request made on Oct. 9, 1981, the umpire, appointed by the joint arbitrators, took over the arbitration proceedings and the umpire Sri P.V Ratnam made an award on Jury 28, 1982. The umpire made an award of a sum of Rs. 7,00,235.18 in favour of the contractor and further directed payment of the said amount within two months with a further direction that in the event of non-payment within the said period, the railway administration was to pay interest at 10% on the awarded amount from the date of publication of the award until the date of payment.

18. That award was filed in this court on Aug. 4, 1982, and the contractor by a letter of the said date informed the General Manager of the South Eastern Railway that such an award has been filed in court. On Aug. 18, 1982, a notice issued by this court under S. 14(2), Arbitration Act, was served upon the railway administration. On Sept. 2, 1982, the appellant filed an application for a certified copy of the award in this Court. The folios were notified on Sept. 10, 1982, and the same was filed in this court on September 14, 1982. The certified copy of the award was made ready for delivery on Sept. 21, 1982.

19. In the meantime, however, the appellant drew up their application under S. 30 read with S. 33, Arbitration Act, setting forth their ground of objection to the award. Sept. 17, 1982, having been declared to be a holiday for this court on account of Mahalaya, the said application was affirmed in this court on Sept. 18, 1982, which was a Saturday. The said application could not be moved on Monday, Sept. 20, 1982, as according to the appellant on the death of the ex-Government Pleader of this Court there was a full court reference and the court was closed after the reference. The application accordingly was moved on September 21, 1982, and a notice of motion was taken out for setting aside the award. This application was dismissed as indicated hereinbefore by a learned single judge of this court by the order dt. May 20, 1983, solely on the ground of limitation and hence this appeal.

20. The first point which naturally arises for our consideration is the point of limitation. In the judgment under appeal, the learned single Judge has not given any reason for arriving at the conclusion that the application is time barred. We are, however, told that no reason has been assigned because the learned Judge had given reasons in another case involving the same point, namely, in the case of State Of West Bengal… v. Mondal & Co.…., AIR 1984 Cal 14. Relying on the decision of the Supreme Court in the case of Nilkantha v. Kashinath, AIR 1962 SC 666 it was held by the learned single Judge that for the purpose of calculating limitation under Art. 119 of the present Limitation Act, service of notice need not necessarily be one emanating from the court. Service of a notice even by a party about the filing of the award would be sufficient for the purpose of starting of the limitation to run. In that view, according to the learned single Judge, the appellant being served with a notice dt. Aug. 4, 1982, by the contractor intimating the filing of the award in court, the limitation for making an application for setting aside the award expired with the expiry of 30 days therefrom which so expired much before the day when the application was verified or actually moved. The aforesaid decision of the learned single Judge has since been overruled by a Division Bench of this court on appeal and the Bench decision is reported in AIR 1985 Cal 12. The Division Bench considering all the earlier authorities on the point including the decision of the Supreme Court in the case of Nilkantha, held that the notice referred to in Art. 119, Limitation Act, is a notice under S. 14(2), Arbitration Act, and such a notice may be formal informal or constructive but it must emanate from the court. That was also the view of an earlier Division Bench of this court which was not cited before the learned single Judge but which was referred to and relied on by the Division Bench in overruling the decision of the learned single Judge. Such being the position, the reason which led the learned single Judge to hold the present application to be time barred is not sustainable.

21. But even so there are other difficulties for the appellant. There is no dispute that the notice issued by the court under S. 14(2), Arbitration Act, was served on the appellant on August 18, 1982. The last day for making the, application would, therefore, expire on Sept. 17, 1982. That day being a declared holiday for the court, the last date would fall on Sept. 18, 1982. That was a Saturday and on that day the application was duly verified by an affidavit sworn before the Commissioner. It being a Saturday the court was not closed but the Judges did not sit to entertain any such application which under the Rules was to be moved before the Judges taking such application. Monday following was Sept. 20, 1982. Unfortunately, that was an undeclared holiday. We say an undeclared holiday because of late an improper precedent is being developed by the members of the bar when on the death of a member of the Bar, they close their respective libraries and force the Judges to retire. That exactly what happened on Sept. 20, 1982, when on the death of ex-Government Pleader of this court there was a full court reference, the Judges were made to retire and the court virtually remained closed though it was not declared a holiday. The application was moved on the day following, that is, on Sept. 21, 1982.

22. According to Mr. Sen who is appearing on behalf of the appellant, the application having been moved on the first available date before the expiry of the period of limitation, in the circumstances set forth hereinbefore, it should be held that it was filed within time. Alternatively, relying upon S. 12(4), Limitation Act, it has been contended by Mr. Sen that when the appellant's application for copy of the award was made on Sept. 2, 1982, and such a copy had not yet been delivered on the day the application was moved, the time required for getting the copy should be excluded and when so deducted it must be held that the application had been filed well within the period of limitation. Lastly, it has been contended by Mr. Sen that by way of abundant caution there was a prayer for condonation of delay and in the facts and circumstances a good case for such condonation of delay having been made out, the appellant is entitled to such a relief.

23. Mr. Dey appearing on behalf of the contractor respondent has strongly contested the points thus raised by Mr. Sen. Referring to the provisions of Rr. 3 and 7 of Chap. XX of the Original Side Rules, it has been contended by Mr. Dey that the appellant could have presented the application before the Registrar on Sept. 18, 1982, since the said Registrar was the proper officer within the meaning of S. 3(2)(c), Limitation Act. That not having been done, according to Mr. Dey, the subsequent events cannot be availed of by the appellant for the purpose of extending the period of limitation. It has also been contended by Mr. Dey that in any event Monday, Sept. 20, 1982, not being a declared holiday for the court, the appellant cannot exclude the said date under the provisions of S. 4, Limitation Act. So far as the time for taking out the certified copy of the award is concerned, according to Mr. Dey S. 12(4), Limitation Act, does not speak of any certified copy. In this case, according to Mr. Dey the appellant was served with a copy of the award and obviously it was so served by the Umpire. A copy of such an award was annexed to the application which was verified on Sept. 18, 1982. Further, according to Mr. Dey, the appellant not having made out any case that such a copy is not a true and authentic copy of the award made by the Umpire, merely because the appellant had applied for a certified copy of such an award that time cannot be excluded.

24. We have carefully considered the rival contentions thus put forward before us.

25. It is no doubt true that S. 3(2)(c), Limitation Act, was incorporated in the present Limitation Act, to override the earlier view of this court expressed in the case of Sohanlal Nagarmal v. Manik Lal Seal, 58 Cal WN 313 : (AIR 1954 Cal 352), where it was held that filing of such an application before the Registrar for taking out a notice of motion does not constitute making of an application which can be made only when it reaches the court to be moved. But S. 3(2)(c), Limitation Act, does not take away the right of an applicant to present an application to the court directly if the rules of business so permit and in that event for calculating the limitation the applicant can well exclude the days when the courts are closed in the sense that the Judges do not sit to entertain such an application though office remains open. In our opinion, Chap. XX, Rr. 3 and 7 relied on by Mr. Dey do not lay down any mandatory rule that every application has to be presented before the Registrar. In our opinion the provisions of Chap. XX leave an option with the applicant either to move the application before the court directly or to file the same in the Registrar's office for taking out a notice of motion together with affidavit or affidavits of service and the affidavits in support thereof duly complying with the other requirements of the relevant Rule. Therefore, in our opinion, the mere fact that the appellant could have filed the application in the office of the Registrar after complying with the other requirements of R. 7, does not render the application time barred only because it was not so done. The applicant having the other option he could well wait for the next available date to move the application in court and that exactly was done in the present case. But here again, a difficult question arises as to whether, the Judges not being available for moving the application on Monday, Sept. 20, 1982, in the circumstances pointed out hereinbefore, that date should also be excluded. Mr. Dey may be right in pointing out that the said day was not formally declared to be a holiday. But in our view the applicant ought not to be made to suffer for absence of a proper court for reception of such an application and, therefore, the said day should as well be excluded. If Sept. 20, 1982, be excluded, it must be held that the application was presented well within time when it was moved before the court on Sept. 21, 1982. Even assuming for a moment that the appellant is not entitled to exclusion of Sept. 20, 1982, that not being a formally declared holiday for the court, the undisputed facts in our opinion make out a sufficient case for condonation of that day's delay under the provision of S. 5, Limitation Act. Therefore, even if we accept the contention of Mr. Dey and hold that Sept. 20, 1982, cannot be excluded for the purpose of calculating the period of limitation, we feel no hesitation in condoning that day's delay in exercise of our discretion under S. 5, Limitation Act.

26. On the view thus taken by us on the point of limitation, it is not necessary for us to go into and decide the other point raised by Mr. Sen and controverted by Mr. Dey, namely, the time taken for obtaining a certified copy of the award should be excluded under the provision of S. 12(4), Limitation Act.

27. Since the only point on which the application under S. 30 read with S. 33, Arbitration Act, has been dismissed by the learned single Judge is overruled by us for reasons given hereinbefore, the next question which arises for our consideration is as to whether we should remand the application back for reconsideration on its merits or we should do so ourselves in this appeal. Since in our opinion all the materials for the purpose of disposing of the application are on record, we should ourselves dispose of the application on its merits in order to shorten the litigation. On the merits, it is difficult for us to sustain the award passed by the Umpire.

28. According to Mr. Sen when the disputes were pending adjudication before the joint arbitrators and when neither the time for making the award had expired nor had the joint arbitrators failed to arrive at an agreed award, the Umpire could not have assumed jurisdiction to enter on the reference and make an award. In this case, the joint arbitrators were appointed on Dec. 20, 1980, and the joint arbitrators appointed the Umpire on Feb. 9, 1981. On Feb. 9, 1981, the joint arbitrators calle upon the parties to lodge their claims. The contractor lodged his claim on Feb. 27, 1981. The appellant lodged the counter claim on Sept. 25, 1981. On Oct. 9, 1981, the contractor took the stand that since the time to make the award by the arbitrators had expired the matter should go to the Umpire and that was what was demanded of the Umpire in the contractor's letter dt. Oct. 9, 1981. In our opinion, Mr. Sen is right in pointing out that the contractor could not have assumed the date Feb. 9, 1981, as the date on which the joint arbitrators entered on the reference. Though our attention has been drawn by Mr. Dey to the minutes of the arbitrators where they had endorsed that on Feb. 9, 1981, they had entered on the reference, in our opinion that was a mistaken endorsement. What actually constitutes entering on reference had been judicially explained and the reference has been rightly made by Mr. Sen to a Full Bench decision of this court on the point in the case of Ram Nath Agarwala v. Goenka & Co., AIR 1973 Cal. 253. Though Mr. Sen may thus be right in contending that on the day the Umpire assumed jurisdiction on the letter of the contractor dated Oct. 9, 1981, he did it without jurisdiction for the simple reason that requirement of para 4 of Sch. I, Arbitration Act, had not been made out, yet unfortunately the appellant in our view conferred such jurisdiction upon the Umpire which otherwise he did not have by not only submitting to his jurisdiction but consenting to arbitration by him and by giving extension of time by mutual consent to the Umpire to complete the arbitration and make the award. Having done so, the appellant cannot now challenge the jurisdiction of the Umpire. Reference may be made to the decision of the Supreme Court in the case of N. Chellappan v. Secy., Kerala State Electricity Board, AIR 1975 SC 230.

29. Though the above ground challenging the jurisdiction of the Umpire raised by Mr. Sen fails, the other ground raised by Mr. Sen has, in our view, much substance. There can be no dispute that the reference in the present case is a reference under S. 20 and must be limited to the order of reference by the court. We have quoted the order of reference hereinbefore. In spite of all ambiguity, one thing is clear, namely, the fresh reference is limited to items which must be new items of claim not covered by the earlier adjudication. That being the specific restriction put by the order of reference, in our opinion the Umpire should not have assumed jurisdiction to arbitrate on any item which was earlier adjudicated. We have referred to the material terms of the earlier reference dt. April 23, 1974, hereinbefore. That was a reference in respect of 12 items of disputes. The 12th item was “interest on claims.” Though the quantum of claim in respect of the other 11 items was quantified, the claim in respect of interest was not so quantified but was left to be adjudicated by the arbitrators. The arbitrators made a lump sum award and further directed that the said amount if not paid within 60 days would carry interest at 10% until realisation. There is no dispute that the awarded amount was fully paid to the contractor together with interest so awarded by the arbitrators. After having received such payment the contractor put forward fresh claim in respect of 6 items. Of these 6 items, 5th item is claim in respect of interest at 6% on various claims including claims adjudicated in the earlier arbitration from 1-7-69 to 31-8-74 amounting to Rs. 3,47,937.00. 6th item was also a claim of interest from 1-9-74 on the award to be made till the date of payment, the amount of the claim not being quantified. That was the claim put forward at the time when the application under S. 20, Arbitration Act, was filed. Before the arbitrators, the contractor in lodging their claim enhanced their claim on account of interest as follows:

“a) Payment of interest on Rs. 6,50,773/- (which was the awarded sum in the first arbitration) from 1-7-69 to 22-9-77 at 12½% amounting to:

Rs. 6,69,307.08.

b) Payment of interest on Rs. 1,14,750.00 (that is the fresh claims put forward) from 1-7-69 to 9-2-81 at 12½% amounting to:

Rs. 1,78,420.30

c) Payment of interest on the awarded sum from 10-2-81 to the date of publishing the award

d) Payment of interest on the awarded sum from the date of publishing the award to the date of actual payment

Interest was claimed at 12½% on the above two last accounts and the amount was left to be calculated by the arbitrators. In our opinion, the claim of interest being the subject matter of adjudication in the earlier arbitration and the contractor having received the sum awarded on that account together with interest as awarded in the earlier arbitration proceeding they were not entitled to claim any interest on claims earlier adjudicated or on the earlier award because of specific reservation made by this Court in the order of reference under S. 20 as made in the present case. Though Mr. Dey appearing on behalf of the contractor strongly contended before us that the claim of interest was excluded from the earlier arbitration, we are unable to accept his contention in this regard. No doubt the contractor in his letter dt Aug. 10, 1976, wanted to quantify the interest earlier claimed and that was not allowed by the appellant but such refusal, in our opinion, does not constitute exclusion of the claim on the point of interest from the earlier arbitration. Such refusal only meant that the claim with regard to interest was left to be calculated entirely by the arbitrators in their own wisdom. It is rather strange that though the contractor himself had received interest at 10% on the awarded amount on the terms of the earlier award he repeats the same claim once more in the present reference and the Umpire too in making a lump sum award obviously goes beyond his jurisdiction to entertain and make an award on such a claim.

30. Even the other four items of claim which constituted the subject matter of adjudication by the Umpire are not new items. The claim put forward by the contractor and referred to hereinbefore makes it clear that those were also the items of claim before the earlier arbitrators, bearing Nos. 3, 4, 7 and 11 of the items of claim then put forward. What was being claimed in the second arbitration was nothing but additional amounts over those items. It is no doubt true that during the pendency of the earlier arbitration proceeding the contractor wanted to put forward those claims for additional amount in their letter dt. Aug. 10, 1976, and that was not allowed since the arbitration was restricted to the quantum specified in the contractor's original claim dt. May 5, 1972. In our opinion, if the contractor had insisted upon their claim for additional amount on the aforesaid items then under adjudication they should have sought for intervention of the court on the refusal of the railway administration to allow those additional claims to go in for adjudication. That not having been done the contractor, in our opinion, cannot treat those additional claims to be new items of claims. The order of reference under S. 20 makes it clear that what would go for fresh adjudication was new items of claim and not additional amounts on old items of claim. In that view, in our opinion, the Umpire had no jurisdiction to entertain any of the claims so entertained by him in terms of reference made under S. 20, Arbitration Act, and hence it cannot but be held that the Umpire had no jurisdiction to entertain any of the claims adjudicated by him or make an award as made by him.

31. Before we part, we cannot but take note of an aspect which not only goes to show that the Umpire in making the award acted entirely beyond his jurisdiction but further that he is guilty of gross perversity. From the facts set out hereinbefore, it would appear that the contractor in their application under S. 20, Arbitration Act, wanted a fresh arbitration with regard to a claim amounting to Rs. 4,62,687/- together with interest that may be awarded on the awarded amount until the date of payment. That amount of Rs. 4,62,687 included the claim of Rs. 3,47,937.00 as interest on the previous award Reference under S. 20, Arbitration Act, having been made by the court in respect of such a claim, we fail to appreciate how the Umpire could entertain a claim of over Rs. 8,00,000/- in respect of interest alone and then make a lump sum award for a sum of Rs. 7,00,235.18. Obviously, therefore, the Umpire was allowing the contractor to add to and extend the claims that was referred to arbitration by the court under S. 20, Arbitration Act, forgetting all the time that he possesses no such jurisdiction.

32. For reasons aforesaid, we cannot but accept the contention of Mr. Sen that the award as made in the present case by the Umpire is materially beyond his jurisdiction and is otherwise perverse on the face of record Such an award is invalid in law because it does not conform to the submission in the present case on a reference under S. 20, Arbitration Act. The appellant's application under S. 30 read with S. 33, Arbitration Act, therefore, must succeed.

33. In the result, the appeal succeeds and is allowed. The order dt. May 20, 1983, passed by the learned single Judge in Award Case No. 200 of 1982 being set aside, we allow the appellant's application under Ss. 30 and 33, Arbitration Act, and set aside the award passed by the Umpire on July 28, 1982. We further supersede the reference in exercise of our power under S. 19, Arbitration Act, since, in our opinion, the disputes are all covered by the previous arbitration and there is utter lack of bona fides on the part of the contractor to refer the disputes, as referred, to fresh arbitration.

34. There will be no order as to costs.

Sudhir Raman Roy, J.:— I agree.

Appeal allowed.

Union Of India v. Union Builders .

Case Summary — Opinion by Anil Kumar Sen, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments (Mr. Sen)

Respondent's Arguments (Mr. Dey)

Table of Precedents Cited

Court's Reasoning and Analysis

Limitation

Merits — Jurisdiction and Scope of Reference

Holding and Implications

Union Of India v. Union Builders .

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