Tamil Nadu Water Supply And Drainage Board v. N. Abdul Kareem And Ors.

The judgment of the court was delivered by

G.M Akbar Ali, J.:— The appeals are filed against the common order made in Original Petition Nos. 584, 626, 627 and 628 of 1999 dated 26.06.2006 passed by the learned Single Judge of this court.

2. The above four appeals are preferred by the Tamil Nadu Water Supply and Drainage Board, Chennai (hereinafter called as “Board”), who was the petitioner before the learned Single Judge. The Board filed four original petitions seeking to set aside the award passed by the arbitrators under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”). The 1st respondent in OSA No. 7 of 2007 was the claimant/contractor before the arbitrator. The 1st respondent in OSA Nos. 8 to 10 was another claimant/contractor before the arbitrator. In all the above four appeals, common set of questions of law arises and, therefore, we are deciding all the appeals under a common judgment. The Board had entered into four independent contracts with the claimants between 1990-1992 in respect of four different works. After completion of works, disputes arose and the claimants filed original petitions before this court for appointment of arbitrators for resolving the disputes. By order dated 20.08.1997, this court was pleased to pass an order appointing arbitrators and directed that the arbitrators shall complete their arbitration proceedings and publish the award within a period of four months from the date of receipt of the order.

3. The claimants filed separate claim statements on 10.12.1997 claiming compensation under the following heads:

(i) Loss due to delayed interim payments of bills.

(ii) Loss due to added expenses on overheads and establishments.

(iii) Loss due to idle labour.

(iv) Loss due to idle machineries.

(v) Interest on delayed lock-up of deposits.

(vi) Loss due to omission of cable duct.

(vii) Escalation.

(viii) Interest on claims.

(ix) Costs.

4. The arbitrators passed four separate awards directing the Board to pay certain amounts with interest. The Board filed original petitions before this court to set aside the awards under Section 34 of the Act on various grounds. The main grounds raised by the Board before the learned Single Judge were as follows:

(a) There was no arbitration agreement between the parties; there is no dispute between the parties which could be referred to an arbitration and, therefore, the arbitrators had no jurisdiction.

(b) All the claims are barred by limitation.

(c) The awards have been published beyond the time limit of four months.

(d) The Board is not liable to pay loss due to delayed refund of security deposits.

5. After elaborate consideration of the contentions, the learned Single Judge passed an order which reads as follows:

“Therefore, I do not see any merits in the contention of the petitioner-Board that there is no arbitration agreement and there is no jurisdiction for the arbitral tribunal to pass the award. Similarly, the question of limitation was raised for the first time before this court and I have already held that specific pleading with necessary particulars with regard to the question of limitation could have been made before the arbitral tribunal. Limitation is a mixed question of fact and law. The arbitral tribunal is a final court of facts. This court cannot re-appreciate evidence and this court is not an appellate court. Therefore, the petitioner-Board cannot raise the question of limitation for the first time before this court under Section 34 of the Act. Insofar as the award of interest by the arbitral tribunal is concerned, the petitioner-Board is not able to show any clause which prohibits the payment of the past and future interest by the arbitrator. In the absence of such prohibition, the arbitrators are well within their rights to award interest.”

Dissatisfied with the findings of the learned Single Judge, the present appeals are filed on the same set of questions.

6. For better appreciation of the case, the following brief facts which are necessary, are narrated hereunder:

In OSA No. 7 of 2007 the respondent was a contractor for the supply and delivery of PVC pipes, special valves and laying and testing and commissioning of special works for distribution system in High Level Zone I to III and Low Level Zone I and II in Pudukottai Municipality. The agreement was dated 15.11.1991 The period of contract was 18 months and the work commenced on 15.11.1991 and the due date was 24.03.1993 Actual date of completion was July 1994. The additional and supplementary works were taken up and completed by 30.12.1994 The date of payment of final bill was 15.03.1996 As some disputes arose during the contract period, the contractor was making demands for settlement and by letter dated 08.03.1995, the contractor intimated the Board to settle the dispute otherwise, to invoke arbitration clause. Thereafter, number of references were made to the Board to name the arbitrator. As there was no reply, the contractor moved the High Court for appointment of arbitrator in OP No. 367 of 1997. The High Court, by its order dated 17.12.1997, issued directions to the Board to nominate the arbitrator. The Board by its letter dated 15.06.1998 intimated the name of the arbitrator and thus, the three member tribunal was appointed by this court by granting four months to pass an award. Various disputes were raised and claims were made on various heads and the details of which are not necessary at present.

7. In OSA Nos. 8, 9 and 10 of 2007 disputes relate to the contracts entered into between the Board and contractor named Samiyappa Gounder, relating to the earthwork, excavation for collection shaft-cum-pump house, excavation for collection shaft and baby tunnel Pillur Reservoir, collection shaft and pump-room inside Pillur Reservoir. The agreements are dated 03.04.1990, 06.05.1991 and 05.02.1992 respectively. There are various dates of commencement of work and duration of contract and actual work has been completed on various dates. However, the works were completed between 12.05.1992 and 13.12.1994 There were disputes between the contractor and the Board and after various correspondence, the contractor had intimated his willingness for an arbitration in the year 1996. As the Board did not respond, the contractor approached this court for appointment of arbitrator and accordingly, a sole arbitrator was appointed, various claims have been made before the arbitrator which were resisted and the details of the claims are not necessary for the present. Ultimately, the arbitrator has passed an award in all the three claims.

8. Now, let us consider the above points raised one by one. Agreement for arbitration and jurisdiction of the arbitrators

9. Mr. K. Alagirisamy, the learned senior counsel appearing for the Board took our attention to the agreement of contract. The arbitration clause of the agreement reads as follows:

“51. Arbitration—All the disputes or differences either during the progress or after completion or after termination or breach of contract in respect of which the decision has not been final and conclusive shall be referred for arbitration.

The arbitrator for fulfilling the duties set forth in the arbitration clause of the preliminary specifications to the TNDSS shall be as follows:

For claims up to Rs. 50,000—Chief Engineer/TWAD Board, The Superintending Engineer (TWAD), Coimbatore - Nilgiris Circle, Coimbatore;

Claims above Rs. 50,000 and up to Rs. 1,00,000 shall be referred to civil court having local jurisdiction, Coimbatore;

Claims above Rs. 1,00,000 shall be referred to High Court of Judicature, Madras.”

10. The learned senior counsel pointed out that for any claims up to Rs. 50,000, arbitrator shall be the person nominated by the Board. The learned counsel pointed out that for the claims above Rs. 50,000 and up to Rs. 1,00,000, the civil court at Coimbatore has jurisdiction and for the claims above Rs. 1,00,000, High Court at Madras shall have jurisdiction to adjudicate the disputes. The learned counsel further pointed out that for only claims up to Rs. 50,000, the matter shall be referred to an arbitrator, in all other cases, the matter shall be adjudicated by the court.

11. In support of this interpretation of reference to court, the learned senior counsel relied on a decision in Crescent Engineering Contractors v. State Of Tamil Nadu, rep. by Secretary to Government Highways Department, 2006 (2) TLNJ 231 (Civil). Mr. Justice Ajit Prakash Shah, the Hon'ble Chief Justice (as he then was), while interpreting the arbitration clause of a governmental order, has held as follows:

“9. Having given anxious thought to the rival arguments made at the bar, I am of the view that the interpretation suggested by the petitioners cannot be accepted and the petitions are liable to be dismissed. What is contemplated by the governmental order is that the existing system of referring the disputes between the contractors and the department to the arbitrator may be continued. The claims up to the value of Rs. 2 lakhs may be referred to the departmental arbitration and claims above Rs. 2 lakhs will be referred to court. The contention of the petitioners is that the words “be referred to court” means referred to the court for appointment of the arbitrator where the value of contract is more than Rs. 2 lakhs. In other words, even claims of more than Rs. 2 lakhs should be referred to arbitration through court. In my opinion, the interpretation suggested by the petitioner's counsel is wholly impermissible. The term be referred to court could only mean that the party may be referred/directed to court for adjudication. Learned Advocate General is right in contending that Section 20 of the old Act contemplates an application to be filed in a court to file an arbitration agreement and then reference would be made by the court to an arbitrator under Section 23 of the said Act. Therefore, the words reference to the court cannot mean reference to the court under Section 20 of the old Act. In any event, the existence of arbitration agreement must be decided on the basis of the terms of the arbitration agreement and on a plain reading of arbitration clause it is clear that the claim should be filed before the court having jurisdiction for decision and only with regard to claims less than Rs. 2 lakhs the matter should be referred to departmental arbitrator, who shall be the Superintending Engineer.”

12. The learned senior counsel for the appellant pointed out that the award can be challenged on the ground of lack of jurisdiction of arbitrator because of non-existence of arbitration agreement and the participation of the party cannot cure the jurisdictional defects. The learned senior counsel relied on a decision in Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) Pvt. Ltd., AIR 1963 SC 90, wherein, the Constitutional Bench of the Apex Court has held as follows:

“21. Now an agreement for arbitration is the very foundation on which the jurisdiction of the arbitrators to act rests, and where that is not in existence, at the time when they enter on their duties, the proceedings must be held to be wholly without jurisdiction. And this defect is not cured by the appearance of the parties in those proceedings, if that is without protest, because it is well settled that consent cannot confer jurisdiction. But in such a case there is nothing to prevent the parties from entering into a fresh agreement to refer the dispute to arbitration while it is pending adjudication before the arbitrators, and in that event, the proceedings thereafter before them might be upheld as referable to that agreement and the award will not be open to attack as without jurisdiction. But it will make all the difference in the result whether the parties have entered into an arbitration agreement as defined in Section 2(a) of the Arbitration Act or have merely taken steps in the conduct of proceedings assumed or believed to be valid. In the former case, the award will be valid, in the latter, a nullity.”

13. The learned counsel also relied on a decision in Dodsal Private Limited v. Delhi Electric Supply Undertaking of the Municipal Corporation of Delhi, AIR 1996 SC 3229 : (1996) 2 SCC 576 : 1996 (1) Arb. LR 409 (SC), which followed the bench, however, referred the question of law to be considered in an appropriate proceedings.

14. Mr. R. Murari, learned counsel for the respondents/claimants submitted that the terms of agreement provide an arbitration clause and the terms of the arbitration clause refer for the appointment of arbitrator. According to the learned counsel, for the claims up to Rs. 50,000, the dispute would be referred to a departmental arbitrator and for the claims above Rs. 50,000 and up to Rs. 1,00,000 a reference shall be made to the civil court having jurisdiction for appointment of arbitrator under the provisions of Indian Arbitration Act, 1940 and for the claims above Rs. 1,00,000 a reference shall be made to the High Court of Judicature at Madras for appointment of an arbitrator.

15. The learned counsel pointed out that under various correspondence, the claimants have requested the Board to name the arbitrator and as there was no response, they had approached this court for appointment of an arbitrator and after contest, the arbitrators were appointed by this court. The learned counsel also pointed out that having participated in the OP proceedings in this court and also in the arbitral proceedings, it is not open to the Board to question the jurisdiction of the arbitrators.

16. The learned counsel for the respondents referred to a decision in Agra Development Authority v. Sheikhein International, 2007 (3) Arb. LR 1 (All.) (DB), wherein the Allahabad High Court has held as follows (at page 7 of Arb. LR):

“10. Now, the next question is whether the appellants are estopped from raising this point after participation in the arbitration proceeding or not. In State Of Rajasthan v. Nav Bharat Construction Co., (2005) 11 SCC 197 : AIR 2005 SC 2795 : 2005 (3) Arb. LR 429 (SC) it was held, following the ratio of Prasun Roy v. The Calcutta Municipal Development Authority, AIR 1988 SC 205 : (1987) 4 SCC 217-1987 (2) Arb. LR 196 (SC), that a party shall not be allowed to blow hot and cold simultaneously. Long participation and acquiescence in the proceedings preclude such a party from contending that the proceedings were without jurisdiction. Basically the principle of waiver and estoppel is not only applicable where the award had been made but also where a party had challenged the proceedings, in which he participated. Learned counsel appearing for the appellants contended before the court that their participation is not such which can be construed as long participation. According to us, the words “long participation”, which have been used here, are not disjunctive but conjunctive in nature with the word “acquiescence”. The acquiescence is the appropriate word to construe the cause. Question of long participation possibly arose in that particular matter which continued for a considerable period. This arbitration proceeding was not continued for a considerable period but effective participation was there. One aspect is very clear that the arbitrator was appointed on 19.02.1996 and the award was obtained on 03.08.1996 This appeal was preferred on 18.07.1996 Therefore, it can be safely presumed that sufficient acquiescence was there to preclude the appellants from taking the plea of improper appointment of arbitrator and jurisdiction. If we goby the judgment of Prasun Roy v. The Calcutta Municipal Development Authority (supra) it will be seen that acquiescence was made known following the book of Russell on Arbitration, 18th Edition, Page 15, which explains the position as follows:

‘If the parties to the reference either agree beforehand to the method of appointment or afterwards acquiesce in the appointment made, with full knowledge of all the circumstances, they will be precluded from objecting to such appointment as invalidating subsequent proceedings. Attending and taking part in the proceedings with full knowledge of the relevant fact will amount to such acquiescence’.”

17. We carefully considered the contentions. The arbitration agreement consists of an arbitration clause. As per the agreement, all the disputes or differences either during the progress and after completion or after termination or breach of contract in respect of which, the decision has not been final and conclusive shall be referred for arbitration. The arbitrator, for fulfilling the duties as set forth in the arbitration clause, shall be:

1. For claims up to Rs. 50,000, either the Chief Engineer or Superintending Engineer;

2. For claims above Rs. 50,000 and up to Rs. 1,00,000, a reference to the civil court;

3. For claims above Rs. 1,00,000, reference to the High Court.

18. The interpretation of the arbitration clause in the agreement alone will decide the issue. The arbitration clause in the agreement has to be read in whole and not in isolation. After participating in the arbitral proceedings whether the Board could be allowed to raise the question of jurisdiction is also to be considered.

19. The learned senior counsel referred the decision in Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) Pvt. Ltd. (supra). This decision was referred to another Constitution Bench per decision in Dodsal Private Limited v. Delhi Electric Supply Undertaking of the Municipal Corporation of Delhi (supra) to decide the questions of law—(i) whether the present was the case of contract being void or voidable; and (ii) whether a mandatory provision cannot at all be waived. While referring, the bench observed (at pages 410-411 of Arb. LR):

“7. Another legal aspect is also involved in the present case. The same is whether, an arbitration agreement can be read de hors what was contained in the contract. The respondent having itself appointed one of the arbitrators in writing, an examinable question arises whether this act cannot be said to constitute an implied agreement to refer the matter to arbitration. It may be pointed out that Section 7(2) of the aforesaid Ordinance recognises a separate agreement also.

8. Though the aforesaid questions were not examined in Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) Pvt. Ltd. (supra) and it would have been open to us to decide the same ourselves, we do not propose to do so, lest it be thought that we are overreaching the decision by the larger bench. Instead, we desire that a Five Judge Bench—Waverly being a rendering by such a bench—should decide whether in the context of the legal aspects mentioned by us above, it is open to a person like the respondent to raise the question of lack of jurisdiction of the arbitrator(s) and thereby deny the fruits (to the other side) of a long-fought and won battle, involving huge expenditure of time, money and energy, and thereby cause serious damage to equity also, which is an equally important facet to be borne in mind by the courts when seized with deciding a lis between parties.”

20. In Dodsal Private Limited v. Delhi Electric Supply Undertaking of the Municipal Corporation of Delhi [reported as 2001 (Suppl.) Arb. LR 641 (SC)] the reference was taken up and the Constitution Bench held as follows (at page 644 of Arb. LR):

“3. We are of the view that it is not necessary to go into the question referred to the Constitution Bench. The reference to arbitration was in the year 1971 and the award was given in the year 1975. The parties have been litigating for over two decades. Keeping in view the facts and circumstances of this case, we are of the view that the ends of justice would be met if DESU is directed to pay the principal amount which was awarded by the arbitrators in the year 1975. As stated above, the arbitrators awarded a sum of rupees ten lakhs. We are not inclined to pay any interest. Dr. Singhvi, the learned counsel appearing for DESU states that the payment shall be made to the appellant within three months from today.

4. We leave the question of law referred to us open to be decided in some other appropriate proceedings.”

As the Five Judges Bench of the Apex Court left the question open, the matter rests there.

21. Normally, any order, decision or decree or award made or passed without jurisdiction is a nullity. But under the new Act, Section 16 provides competence of arbitral tribunal to rule on its jurisdiction, and it also provides for the time to object. Admittedly, the question of jurisdiction was not an issue before the arbitrators. Nevertheless, it was raised before the Single Judge and also in these appeals.

22. In the present case, we have before us Clause 51 which we have extracted already. A similar clause has already been interpreted in Crescent Engineering Contractors v. State Of Tamil Nadu (supra) to mean that the parties agreed to have their disputes adjudicated by court and not by arbitration, if the claim is above a certain monetary value. In that case, the objection was raised at the earliest juncture. Here the appellants did not raise the objection before the arbitrator, but had participated in the proceedings. If that point had been raised before the arbitral tribunal, the tribunal would have decided the Kompetenz-Kompetenz. When the matter came up before the Chief Justice, the Chief Justice appointed the arbitrators on 20.08.1997 under Section 11 of the Act, even then, there was no objection. The said order is a judicial order and that has also attained finality. The time for raising objections is incorporated in Section 16 of the Act.

23. In Krishna Bhagyi Jala Nigam Ltd. v. G. Harischandra Reddy, (2007) 2 SCC 720 : 2007 SCACTC 14 (SC) : 2007 (1) Arb. LR 148 (SC) the Apex Court held as follows (at page 152 of Arb. LR):

“9. We do not find any merit in the above agreements. The plea of “no arbitration clause” was not raised in the written statement filed by Jala Nigam before the arbitrator. The said plea was not advanced before the civil court in Arbitration Case No. 1 of 2001. On the contrary, both the courts below on facts have found that Jala Nigam had consented to the arbitration of the disputes by the Chief Engineer. Jala Nigam had participated in the arbitration proceedings. It submitted itself to the authority of the arbitrator. It gave consent to the appointment of the Chief Engineer as an arbitrator. It filed its written statements to the additional claims made by the contractor. The Executive Engineer who appeared on behalf of Jala Nigam did not invoke Section 16 of the Arbitration Act. He did not challenge the competence of the arbitral tribunal. He did not call upon the arbitral tribunal to rule on its jurisdiction. On the contrary, it submitted to the jurisdiction of the arbitral tribunal. It also filed written arguments. It did not challenge the order of the High Court dated 10.09.1999 passed in CMP No. 26 of 1999. Suffice it to say that both the parties accepted that there was an arbitration agreement, they proceeded on that basis and, therefore, Jala Nigam cannot be now be allowed to contend that Clause 29 of the contract did not constitute an arbitration agreement.”

24. In view of the above decision and language of Section 16 of the Act, we do not see any merit in the contention of the appellants.

Limitation

25. According to the appellants, the claims are hopelessly barred by limitation, since reference of dispute for arbitration was sought beyond the period of three years from the date when cause of action arose, i.e from the date of notice making the claim.

26. In all the claims, the date of agreement and the actual date of completion were in between 1991 and 1994. After the completion, the claimants have been making various claims to the Board under various correspondences.

27. Mr. K. Alagirisamy, learned senior counsel for the appellant pointed out many of the claims are barred by limitation. The learned counsel referred some of the claims which were for the period of 1991 and 1992. The learned counsel pointed out only in 1997, the reference was made to the court for appointment of arbitrators and the claim statements were filed on 10.12.1997 and on 20.07.1998

28. Mr. R. Murari, learned counsel for the respondents submitted that the cause of action arose only after the settlement of the final bill. The learned counsel also pointed out that the question of limitation was not raised by the Board before the arbitrators and it was not on issue before the arbitrators.

29. On the contrary, the learned counsel for the appellant pointed out that the question of limitation was raised by the Board in the petition filed to set aside the award under Section 34 of the Act before the learned Single Judge, but the same was not considered by him. The learned counsel pointed out on various dates during 1992 the claimants have made specific claims and stated that the point of limitation had started in 1992 and the claims were made only in the year 1997. The learned counsel relied on a decision in State of Orissa v. Damodar Das, AIR 1996 SC 942 : (1996) 2 SCC 216 : 1996 (1) Arb. LR 221 (SC), wherein the Apex Court has held as follows (at pages 223- 224 of Arb. LR):

“6. …The cause of arbitration arises when the claimant becomes entitled to raise the question, that is, when the claimant acquires the right to require arbitration. An application under Section 20 is governed by Article 137 of the Schedule to the Limitation Act, 1963 and must be made within 3 years from the date when the right to apply first accrues. There is no right to apply until there is a clear and unequivocal denial of that right by the respondent. It must, therefore, be clear that the claim for arbitration must be raised as soon as the cause for arbitration arises as in the case of cause of action arisen in a civil action.”

30. The learned counsel also relied on a decision in Panchu Gopal Bose v. Board of Trustees for Port of Calcutta, AIR 1994 SC 1615 : (1993) 4 SCC 338 =1993 (2) Arb. LR 97 (SC), wherein the Apex Court has held as follows (at page 101 of Arb. LR):

“7. …Cause of action shall be deemed to have commenced when one party serves the notice on the other party requiring the appointment of an arbitrator…“

31. He also relied on a decision in Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority, AIR 1988 SC 1007 : (1988) 2 SCC 338 : 1988 (2) Arb. LR 270 (SC), wherein the Apex Court has held as follows (at pages 271- 272 of Arb. LR):

“4. …The question is for the present case when did such dispute arise. The High Court proceeded on the basis that the work was completed in 1980 and, therefore, the appellant became entitled to the payment from that date and the cause of action under Article 137 arose from that date. But in order to be entitled to ask for a reference under Section 20 of the Act, there must not only be an entitlement to money but there must be a difference or dispute must have arisen. It is true that on completion of the work, a right to get payment would normally arise but where the final bills as in this case have not been prepared as appears from the record and when the assertion of the claim was made on 28.02.1983 and there was non-payment, the cause of action arose from that date, that is to say, 28.02.1983 It is also true that a party cannot postpone the accrual of cause of action by writing reminders or sending reminders but where the bill had not been finally prepared, the claim made by a claimant is the accrual of the cause of action….”

32. On the contrary, Mr. Murari, learned counsel for the respondents relied on Vimal G. Jain v. Vertex Financial Services Pvt. Ltd., 2007 (4) Arb. LR 18 (Bom.) (DB), wherein the Bombay High Court has considered Section 4 of the Act and held as follows (para 8, page 21 of Arb. LR):

“A party to the arbitration proceedings seeking to raise the point of bar of limitation for initiating the arbitration proceedings should raise the issue at the earliest opportunity and in any case not later than the submission of the statement of defence, otherwise it would be deemed to have been waived.”

33. The learned counsel also relied on Bharat M. Nagori v. Satish Ashok Sabnis, 2003 (4) RAJ 47 (Bom.)=2003 (3) Arb. LR 427 (Bom.), wherein, it is held as follow (at page 430 of Arb. LR):

“7. …The respondent in his affidavit did not raise the plea that this claim is barred by limitation. Consequently, the said contention had to be rejected. This issue, therefore, was not an issue for consideration before the arbitral tribunal. The issue of limitation on the facts pleaded would be a mixed question of fact and law. Under these circumstances considering the pleadings it is not possible to hold that the claim filed is barred by limitation.”

34. It is well settled that the question of limitation is a mixed question of law and facts. As rightly pointed out by the learned counsel for the appellant, the cause of action arose when the amount become due and payable. However, when that amount became due and payable is a question of fact. According to the claimants, the work was completed in the year 1994. According to the claim petition filed by the respondent in OSA No. 7 of 2007, the date of final bill was 15.03.1996 As far as the claimant in other three appeals are concerned, he has been corresponding with the Board from 21.11.1991 by various letters till 09.03.1992 However, the arbitrator had found that the actual date of completion of work was only in the year 1995 and the actual date of payment was 9/1995 and 30.03.1996

35. The learned counsel for the appellant pointed out that on the eighth hearing of excavation shaft in Pillur Reservoir dated 01.08.1998, the Board raised the plea of limitation before the arbitrator. However, the Board would admit before the arbitrator and it was recorded by the arbitrator as follows:

“Question of limitation was dealt with in terms of contract. Claims should have been made within 30 days of defect liability period (Clause 53 on page 71). Arbitrator should have been appointed within 30 days of D.L period. I could not dictate to the court such an agreement might have been valid before 1997. Contract Act was amended and it says that such prescription of time limiting the period is not valid. The limitation clause is struck by this amendment. The other limitation is 3 years. This will apply only from date of final bill. Unless final bill is prepared I do not know what to claim and what not to. Therefore, the final bill date will determine the limitation and this is satisfied in the instant case.”

36. However, there is a lack of evidence regarding the date of final bill. It is a mixed question of law and facts, that cannot be decided at this stage. In Tamil Nadu State Construction Corporation Ltd. v. Gardner Landscape Pvt. Ltd., AIR 2005 Madras 236 : 2005 (2) Arb. LR 622 (Mad.) this court has held that the payment on a final bill would amount to an acknowledgement as mentioned in Section 19 of the Limitation Act.

37. In any event, the issue of limitation is a mixed question of law and facts and the learned Single Judge has rightly held “a wide foundation should be laid before the arbitrator by giving adequate figures, facts and evidence to prove that claim is barred by limitation”.

38. We are in agreement with the learned Single Judge.

The awards have been published beyond the time limit of four months

39. While appointing the arbitrators, this court had granted four months time to publish the award. The appointment of arbitrator was on 20.08.1997 According to the award, the first date of hearing was on 14.10.1997 There was an inspection of site on 28.03.1998 There were eight sittings of the arbitration. The arbitrators have stated that the parties have extended the time till 31.05.1999

40. The learned senior counsel for the appellant submitted that the arbitrators were directed to pass the award within four months from the date of receipt of the order of this court, by which they were appointed. The learned counsel pointed out that the awards were made only in the year 1999. The learned counsel pointed out that the courts alone have power to extend the time for making the award.

41. The learned counsel relied on a decision in State Of Punjab v. Hardyal, AIR 1985 SC 920 : (1985) 2 SCC 629 : 1985 Arb. LR 297 (SC), wherein the Apex Court has held as follows (at pages 299-300 of Arb. LR):

“10. sub-section (1) of Section 28 is very wide and confers full discretion on the court to enlarge time for making the award at any time. The discretion under sub-section (1) of Section 28 should, however, be exercised judiciously. Sub-section (2) of Section 28 also makes it evident that the court alone has the power to extend time. It further provides that a clause in the arbitration agreement giving the arbitrator power to enlarge time shall be void and of no effect except when all the parties consent to such enlargement. It is not open to arbitrators at their own pleasure without consent of the parties to the agreement to enlarge time for making the award.”

42. The learned counsel for the respondent also relied on the same judgment, wherein the Apex Court has held that the court can extend the time for arbitration even after passing of the award and has upheld the award which was the subject matter before them. In paragraph 14, it is held as follows (at page 301 of Arb. LR):

“The policy of law seems to be that the arbitration proceedings should not be unduly prolonged. The arbitrator, therefore, has to give the award within the time prescribed or such extended time as the court concerned may in its discretion extend and the court alone has been given the power to extend time for giving the award. As observed earlier, the court has got the power to extend time even after the award has been given or after the expiry of the period prescribed for the award. But the court has to exercise its discretion in a judicial manner. The High Court in our opinion was justified in taking the view that it did. This power, however, can be exercised even by the appellate court. The present appeal has remained pending in this court since 1970. No useful purpose will be served in remanding the case to the trial court for deciding whether the time should be enlarged in the circumstances of this case. In view of the policy of law that the arbitration proceedings should not be unduly prolonged and in view of the fact that the parties have been taking willing part in the proceedings before the arbitrator without a demur, this will be a fit case, in our opinion, for the extension of time. We accordingly extend the time for giving the award and the award will be deemed to have been given in time.”

43. The learned Single Judge in paragraph 47 of the order, has observed as follows:

“47. I am unable to countenance this contention. It is true that four months time was fixed by this court to complete the arbitration proceedings. It is also not in dispute that the petitioner-Board willingly participated before the sole arbitrator even after the time fixed by this court expired, without voicing any protest. In such circumstances, it is not for the petitioner to turn around and question the award on this point at this juncture. Even otherwise, extension of time can be sought and given at any time, even after the proceedings are over…”

44. Therefore, the point raised by the appellant was already dealt with by the learned Single Judge and the award is not vitiated for want of extension of time by the court. As per the judgment in State Of Punjab v. Hardyal (supra) even in the appellate stage, time can be extended. Therefore, this objection is rejected.

Whether the claimant is entitled for loss due to delayed refund of security deposits ?

45. According to Clause 32 of the agreement, a security of 5% would be retained by the Board from every bill and kept back until the final bill is passed. At that time, 2.5% would be returned to him and balance 2.5% would be returned 24 months after satisfactory performance of the work.

46. The learned senior counsel pointed out that at the time of final bill, 2.5% will be returned and the balance will be returned only after 24 months of the satisfactory performance of the work. The learned counsel pointed out that the arbitrator had held that there was a delay in repayment and has granted loss due to the delayed payment, which is wrong.

47. In all the awards, the arbitrator had calculated the delay periods as 39 months and 33 months. The arbitrator had calculated the delay from the schedule date of payment and actual date of payment. According to the appellants, the retained amount has to be refunded only after 24 months of the actual date of completion.

48. We have no reason to interfere in that calculation at this stage. In Oil and Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., AIR 2003 SC 2629 : (2003) 5 SCC 705 : 2003 (2) Arb. LR 5 (SC) the Apex Court has laid down certain parameters of court's jurisdiction under Section 34 of the Act and has held (para 53, page 33 of Arbj LR):

“even if the award passed by the arbitral tribunal is erroneous, it is settled law that when two views are possible with regard to interpretation of statutory provisions and/or facts, the court would refuse to interfere with such award.”

49. Therefore, we are of the considered view that the learned Single Judge has rightly held that there is no ground to interfere with the award under Section 34 of the Act and for the reasons stated above, we agree with the learned Single Judge. In the result, all the appeals are dismissed. No costs. Consequently, connected MPs are closed.