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Kanishka Builders v. Union Of India
Judicial Opinion Summary
Factual and Procedural Background
The petitioner filed an application under Sections 14 and 17 of the Arbitration Act, 1940 requesting that the arbitrator (respondent No. 2) be directed to file the original award dated 27 October 1988 together with depositions/documents and arbitration proceedings in Court. The petition was registered as a suit. The arbitrator filed the award and proceedings in Court and notice of filing of the award was served on the Union of India through the Secretary, Ministry of Defence, on 6 February 1989. No objections to the award were filed within the prescribed period. Subsequently respondent No. 1 filed objections under Sections 30 and 33 of the Arbitration Act (registered as I.A. 2861/89) and applied under Section 5 of the Limitation Act for condonation of delay (registered as I.A. 8962/89). The objections were filed on 10 April 1989 and the condonation application on 30 November 1989. The government offices through which the notice was transmitted (Secretary → Engineer-in-Chief's Branch → Chief Engineer, Delhi Cantt. → CWE) received the notice at various dates between 17 February and 29 March 1989.
Legal Issues Presented
- Whether service of notice of filing of the award on the Secretary to the Government (Ministry of Defence) on 6 February 1989 constituted effective service on the Union of India for reckoning the limitation period under the Limitation Act.
- Whether the delay in filing objections (filed 10 April 1989) and in moving for condonation of delay (filed 30 November 1989) was sufficiently explained and should be condoned under Section 5 of the Limitation Act.
- Whether the objections to the award under Sections 30 and 33 of the Arbitration Act are barred by limitation and should therefore be dismissed.
- Whether the arbitrator had jurisdiction to award pendente lite (or future) interest, and if not, whether that portion of the award should be struck down and the award otherwise made rule of the Court.
Arguments of the Parties
Respondent No. 1 / Union of India (as presented in the opinion)
- Contended that the "concerned department" was the Commander Works Engineer (Project), Delhi Cantt. (CWE) and that the notice received by the Secretary was redirected through several government offices before reaching the CWE.
- Argued that the period for filing objections should be reckoned from the date the CWE actually received the notice (29 March 1989), so objections filed on 10 April 1989 were within limitation.
- Submitted that any delay caused by transmission between government offices was beyond the control of the respondent and should be condoned under Section 5 of the Limitation Act.
Union of India — counsel's submission on approach to limitation
- Relied on the Supreme Court decision in Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji to urge a liberal approach so that matters could be decided on merits.
The opinion does not contain a detailed account of any further specific arguments advanced by the petitioner in opposition to the condonation application beyond the procedural posture and the record of service and filings described above.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| State of Bihar v. Dhajadhari Rai | Procedure of working in Government offices is irrelevant when considering "sufficient cause" under Section 5 of the Limitation Act. | Court applied this principle to hold that the mere chronology of transmission between government offices did not constitute sufficient cause for delaying filing; accordingly condonation was not justified. |
| Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji | Supports a liberal approach to condoning delay so as to do substantial justice and decide matters on merits. | Counsel for the Union relied on this decision; the Court acknowledged the principle but, following later authority (Shanti Devi), held that Katiji cannot be applied universally and that sufficient cause must be shown in each case. |
| Shanti Devi v. Khan Raj | Clarified that Katiji is not a magic wand; court must be satisfied that sufficient cause exists, even while adopting a liberal approach. | Court relied on this authority to require a demonstration of sufficient cause and to reject a blanket application of Katiji in the present facts. |
| Chain of Supreme Court decisions (unnamed) | Establishes that an arbitrator is not a "Court" within the meaning of Section 34 of the Code of Civil Procedure and therefore has no power to award pendente lite or future interest. | Court applied this settled principle to strike out the portion of the award that awarded pendente lite interest as being without jurisdiction, and severed that portion from the award. |
Court's Reasoning and Analysis
The Court proceeded by first determining the point of effective service. Because the suit was instituted against the Central Government, the respondent named was the Union of India; service upon the Secretary, Ministry of Defence on 6 February 1989 was complete service on the Union for reckoning the limitation period. The Court explained that a suit against the Government is legally different from a suit against a public officer: it is not permissible to treat the CWE (a departmental officer) as the respondent or to require service on the CWE for the purpose of computing limitation. The Court held that the Union of India is an integral authority and cannot be split into separate legal personalities such that transmission time between offices would affect the date of service.
The respondent's contention that delay in transmission through various government offices (Secretary → Engineer-in-Chief's Branch → Chief Engineer → CWE) constituted sufficient cause was rejected. The Court noted that the notice itself and an accompanying copy of the application identified the concerned department (CWE) and that routing the notice through multiple offices in the way done provided no adequate explanation for the delay. The mere chronology of office-to-office movement, without explanation of why the papers were not acted upon earlier, did not constitute "sufficient cause" under Section 5 of the Limitation Act. The Court applied the principle from State of Bihar v. Dhajadhari Rai that internal government procedure is irrelevant for sufficiency of cause.
While the Union urged a liberal approach based on Katiji to decide matters on merits, the Court invoked Shanti Devi v. Khan Raj to emphasize that Katiji cannot be used automatically; the applicant must still demonstrate sufficient cause. Finding no sufficient cause, the condonation application (I.A. 8962/89) was dismissed and, consequently, the objections under Sections 30 and 33 of the Arbitration Act (I.A. 2861/89) were dismissed as barred by limitation.
Independently of the limitation issue, the Court examined the award and found an error: the award had allowed pendente lite interest to the petitioner from 26 December 1987 (mistyped as 1988) to payment/decree. Relying on the well-established line of Supreme Court decisions that an arbitrator is not a "Court" within Section 34 of the Code of Civil Procedure and lacks the power to award pendente lite or future interest, the Court held that this portion of the award was without jurisdiction. The offending portion was severable and therefore deleted.
The Court then made the modified award rule of the Court, passed a decree in terms of the modified award, and, invoking Section 29 of the Arbitration Act, ordered interest on the principal sum from the date of the order until payment at the rate of 12% per annum.
Holding and Implications
Core Holding: I.A. 8962/89 (condonation application) and I.A. 2861/89 (objections under Sections 30 and 33 of the Arbitration Act) are dismissed as barred by limitation; the award is modified by deleting the portion awarding pendente lite/future interest as being without jurisdiction; the modified award is made rule of Court and a decree is passed.
Consequences:
- The objections to the award filed by respondent No. 1 were held to be time-barred and dismissed.
- The portion of the award granting pendente lite or future interest (from 26 December 1987/1988 to payment) was struck down as beyond the arbitrator's jurisdiction and severed from the award.
- The remaining award was made rule of the Court and a decree was passed in its terms; the Court ordered interest on the principal sum at 12% per annum from the date of the order until payment (under Section 29 of the Arbitration Act).
- No costs were awarded; the suit was disposed of.
The opinion does not purport to create new legal precedent; it applies established principles (service on the Secretary for suits against the Union, the standard for "sufficient cause" under Section 5, and the settled rule that an arbitrator cannot award pendente lite interest).
Arun B. Saharya, J.
(1) THE petitioner has filed an application under Sections 14 and 17 of the Arbitration Act, 1940 praying that the arbitrator, respondent No. 2, may be directed to file the original award dated 27th of October 1988 together with depositions/documents and arbitration proceedings in this Court. This petition has been registered as a suit.
(2) AFTER the arbitrator filed and award along with the proceedings etc. in this Court, notice of filing of the award was issued to the petitioner and to respondent No. 1. No objections to the award were, however, filed within the prescribed period. Later, respondent No. filed objections under Sections 30 and 33 of the Arbitration Act and thereafter moved an application under Section 5 of the Limitation Act for condonation of delay. These applications were registered as I. A. 2861/89 and I. A. 8962/89 respectively.
(3) THE record shows that notice of filing of the award was served upon the respondent Union of India, through Secretary, Ministry of Defence, South Block, New Delhi on 6th of February, 1989. But, the objections were filed on 10th of April, 1989 and the application for condonation of delay on 30th of November, 1989.
(4) SERVICE of notice on the Secretary on 6th of February 1989 is admitted. It has been submitted, however, that 'the concerned Department' in this case is Commander Works Engineer (Project), Delhi Cantt. (hereinafter referred to as the CWE). After receiving the notice, Office of the Secretary redirected it to Engineer-in-Chief's Branch where it was received on 17th of February 1989. This Branch sent it to the Office of the Chief Engineer, Delhi Cantt. where it was received on 21st of March 1989. From there, it was again redirected to and was ultimately received by CWE on 29th of March, 1989. On these facts, it is claimed that objections to the award filed on 10th of April, 1989 are within limitation. Further, it is submitted that the delay, if any, occurred in the course of transmission of the notice, it was beyond the control of the respondent, and should be condoned.
(5) IN the present case, the suit has been instituted against the Central Government. The Union of India is the authority named as the respondent in accordance with Section 79 of the Code of Civil Procedure. This is different from a suit against a public officer where the notice has to be delivered to him or left at his office. It is only for the purposes of that kind of a case that the Court may deviate from the usual mode, and if it appears to it that the summons or notice may be conveniently so served, send it for service on the defendant to the head of the office in which he is employed, as envisaged under Order V Rule 27, Civil Procedure Code. In the present case, the CWE is not the respondent. This is not a suit against a public officer (the CWE). It is againt the Central Government. The notice had to be served on the Secretary to the Government and not on anyone else. Therefore, serve of the notice on Union of India was complete when it was left at the office of the Secretary, Ministry of Defense of the Central Government.
(6) THE plea that the CWE is the concerned department and that the time taken in transmission of the notice to him should be excluded, cannot be accepted. The Union of India is an integral authority. This is the authority named as the respondent. It cannot be split into different legal personalities, one being the Secretary, Ministry of Defence and the other the CWC, the so-called concerned department of the Government. It really makes no difference whether the Secretary transmits the notice to the concerned department or not. The service on Union of India is conclusive to reckon the prescribed period under the Limitation Act when the notice is left at the office of a Secretary to the Government.
(7) SINCE the notice of filing of the award was served on the Union of India through Secretary, Ministry of Defence, South Block, New Delhi on 6th of February 1989, it cannot be said that the objections filed on 10th of April 1989 were within limitation.
(8) THERE appears to be no justification for the notice being sent from Office of the Secretary to the Engineer-in-Chief's Branch and from there to the Office of the Chief Engineer and then to the CWE. The notice served on the Secretary itself indicated that it concerned the CWE. In addition to this, a copy of the application under Sections 14 and 17 of the Arbitration Act was also forwarded to the Secretary. Para 3 of that application gave full particulars of the contract and the concerned department. In these circumstances, it cannot be claimed that respondent No. 1. acted diligently, or that the delay occurred beyond the control of respondent No. 1, in routing the notice through such a long channel down to the CWE, especially in a court case involving limitation.
(9) THE various offices of the Government, who dealt with the notice in the present case, are located in Delhi. Yet, no explanation at all has been offered for the time taken after expiry of the prescribed period in movement of the papers from one stage to the other. The application merely mentions the dates when papers were passed on from one to the other office of the Government. This cannot be said to be an explanation of sufficient cause for the delay. As held in State of Bihar v. Dhajadhari Rai1 procedure of the working in Government offices is irrelevant for considering sufficient cause for the purposes of Section 5 of the Limitation Act.
(10) LEARNED counsel for Union of India relied upon the decision of Supreme Court in Collector, Land Acquisition, Anantnag and another v. Mst. Katiji and other2, to contend that the Court should adopt a liberal approach to do substants justice to parties by disposing of matters on merits.
(11) IN Shanti Devi v. Khan Raj3, Hon'ble Mr. Justice D. P. Wadhwa of this Court observed that the judgment in Katiji's case cannot be used as a magic wand to be applied in all cases and in all situations. The Court must be satisfied that the applicant has sufficient cause for not making the application within the period prescribed. In doing so, of course, it should adopt a liberal approach in examining the circumstances of the case.
(12) AS earlier discussed, the Union of India has failed to show sufficient cause for the delay in filing objections to the award within the prescribed period. Accordingly, I. A. 8962/89 has to be dismissed.
(13) CONSEQUENTLY, objections filed by respondent No. 1 under Sections 30 and 33 of the Arbitration Act, registered as I. A. 2861/89, are also dismissed as the same are barred by limitation.
(14) EVEN otherwise, I have perused the award. I find no error apparent on the face of the award except in respect of the portion allowing pendente life interest to the petitioner from 26th of December 1987 (incorrect typed as 1988) to the date of payment or the date of decree, whichever is earlier. It is now well established by a chain of decisions of the Supreme Court that an arbitrator is not a Court within the meaning of Section 34 of the Code of Civil Procedure and has no power to award pendente lite or future interest. As such, this portion of the award is without jurisdiction. It is severable from the rest of the award. It is, therefore, deleted.
(15) THE modified award is hereby made rule of the Court and a decree is passed in terms thereof. In exercise of the power under Section 29 of the Arbitration Act, I order interest, from today till the date of payment at the rate of 12% per annum, to be paid on the principal sum adjudged by the award.
(16) AS result, I. As. 2861/89 and 8962/89 are dismissed and a degree is passed in terms of para 15 of this order. The suit is accordingly, disposed of. No costs.
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