In a writ petition challenging an order extending the arbitrator's time limit, the Gauhati High Court held Section 8 inapplicable where the arbitrator was court-appointed under Section 20, dismissing the petition.
Writ petition dismissed; interim stay on the lower court order vacated.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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GAHC010046012022
THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/1699/2022
THE UNION OF INDIA AND 2 ORS
REPRESENTED BY GARRISON ENGINEER (AF), TEZPUR, P.O.-SALONIBARI, P.S.-TEZPUR, DIST-SONITPUR, PIN-784104
2: THE COMMANDER WORKS ENGINEER (AF) BORJHAR P.O.-AIRPORT BORJHAR GUWAHATI (ASSAM) PIN-781015
3: THE CHIEF ENGINEER AIR FORCE ELEPHANT HILLS SHILLONG REPRESENTED BY GARRISON ENGINEER AIR FORCE TEZPUR P.O.-SALONIBARI P.S.-TEZPUR DIST-SONITPUR ASSA
VERSUS
SMTI. KRISHNA DEVI @ SABITRI DEVI (RANI)
W/O LATE SUKHRAM DHIMAN, C/O SRI GHANSHYAM DAS DHIMAN, M/S S.R. ENGINEERING CONSTRUCTION, VILL-HALESWAR, P.O.-HALESWAR, P.S.-TEZPUR, DIST-SONITPUR, ASSAM
Advocate for the Petitioner : MRS. A GAYAN
Advocate for the Respondent :
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BEFORE
HON’BLE MR. JUSTICE MANASH RANJAN PATHAK
04/04/2022
Heard Mrs. A. Gayan, learned counsel for the petitioners and Mr. Ghanshyam Das Dhiman in-person for the sole respondent.
2) Petitioners had filed a petition being Petition No. 195/2022 under Section 8(2) of Arbitration Act, 1940 before the learned District Judge, Sonitpur, Tezpur against the sole respondent praying for appointment of a new Arbitrator in Arbitration Case No. 1/2019 by substituting or terminating the earlier Arbitrator, who failed to pass the award within the prescribed time, wherein the sole respondent herein was the only opposite party. Said petition No. 195/2022 of the petitioner was duly registered and numbered as Misc.(j) Case No. 01/2022 [arising out of T.S. (Arb) No. 19/2003].
3) After hearing the parties, the learned District Judge, Sonitpur, Tezpur by order dated 28.02.2022 passed in said Misc.(j) Case No. 01/2022 rejected the prayer of the petitioners for appointment of new Arbitrator under Section 8(2) of the Arbitration Act, 1940 and extended the period of the sole Arbitrator for another three months from the date of the said order i.e., on or before 31.05.2022, as it appeared to the said Court to be justified fact and circumstances of the said case.
4) Being aggrieved with the said order dated 28.02.2022 passed by the learned District Judge, Sonitpur, Tezpur in the said Misc.(j) Case No. 01/2022, noted above, the petitioners have preferred this writ petition.
5) Husband of the respondent was a proprietor of a firm, namely, S.R. Engineering Construction at Haleswar in the District of Sonitpur. During his lifetime, he secured a work order from the petitioner vide CA No. CWE/TEZ/8 of 1987-88 for construction of the permanent Armament Section under Garrison. On completion of the said work, his son received payment against the bill raised on 18.01.1993 endorsing ‘no further claim’. It was alleged that the said
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payment was accepted as the husband of the petitioner was in need of cash for making payment to his creditors. The respondent raised a dispute relating to the payment under the contract which was communicated to the petitioners on 11.01.1993 to resolve the issue under Clause 70 of IAFW of the Arbitration Agreement which was turned down by the Garrison Engineer on 17.05.1993 against which the respondent preferred an appeal under Section 20 of the Arbitration, 1996 before the Court at Delhi being T.S. Case No. 170/1994. However, the same was dismissed for want of jurisdiction. Against the same, the respondent preferred an appeal before the Hon’ble Delhi High Court. Said appeal too was dismissed directing the Court below to return the petition for filing the same before the proper forum. In terms of the same, the learned Additional District Judge, Delhi by order dated 17.12.1999 returned the petition to the respondent for its presentation before the appropriate Court having jurisdiction. Accordingly, the respondent preferred an application under Section 20 of the Arbitration Act, 1940 before the Court of Civil Judge, Sonitpur being T.S. (Arbitration) Case No. 19/2003, which was dismissed on 10.05.2004. Against the same, the respondent preferred an appeal before this High Court. On 21.09.2018, said appeal of the respondent was dismissed, remanding the matter to the Court of learned District & Sessions Judge, Sonitpur, Tezpur for appropriate adjudication of the said application under Section 20 of the Arbitration Act, 1940 preferred by the respondent as well as its own merit and in accordance with law.
6) On 26.08.2019, said application under Section 20 of the Arbitration Act, 1940, i.e., T.S. (Arbitration) Case No. 19/2003 was allowed by the learned District Judge, Sonitpur, Tezpur directing the present petitioners, i.e., defendants in the said T.S. (Arbitration) Case No. 19/2003 to produce the arbitration agreement in reference before the Court within 20 days from the date of said order, referring the matter to the arbitration, directing the parties to the proceeding at liberty to come to an agreement in the matter of appointment of arbitrator of their choice, failing which the Court proposed Mrs. Moumita Borah, Advocate, Gauhati High Court as sole Arbitrator for resolving the dispute between the parties.
7) Said sole arbitrator appointed by the Court vide order dated 26.08.2019 passed in said T.S. (Arbitration) Case No. 19/2003, noted above, entered into the reference to decide the dispute between the petitioners and the respondent in Arbitration Case No. 1/2019 as per the provisions of Arbitration Act, 1940 and informed the parties vide later dated 17.10.2019.
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8) Placing the provisions of Section 3 of Arbitration Act, 1940 read with Clause 3 of the First Schedule of said 1940 Act, the petitioners stated that sole arbitrator appointed by the Court should have completed the arbitration proceeding by passing the Award within 4 (four) months from 17.10.2019, i.e., by 17.02.2020 and since 17.02.2020, no proceeding before the said sole arbitrator is valid since its statutory period of 4 (four) months to adjudicate such arbitration proceeding expired under the provisions of said 1940 Act.
9) Petitioners also stated that neither of the parties filed any application for extension of the term of 4 (four) months of the sole Arbitrator to conclude the said arbitration proceeding and it is settled that if any award is made beyond the time, it is invalid. As such, petitioners on 30.12.2021 issued Notice under Section 8(1) of said 1940 Act for appointment of a new arbitrator in said Arbitration Case No. 1/2019 to the respondent as well as the sole arbitrator for appointment of new arbitrator in the said arbitration case within a period of 15 (fifteen) days from the date of receipt of the said notice from the panel of Arbitrators (Engineer) as on 09.12.2021 approved by the Indian Council of Arbitration (ICA). The respondent by communication dated 04.01.2022 disapproved the appointment of new arbitrator in the said arbitration proceeding, pending between her and the petitioners.
10) Since no steps were taken for appointment of a new arbitrator in said Arbitration Case No. 1/2019 in spite of services of notices under Section 8(1) of said 1940 Act issued on 30.12.2021, therefore, the petitioners in the first half of January 2022 itself filed Petition No. 195/2022 under Section 8(2) of Arbitration Act, 1940 before the learned District Judge, Sonitpur, Tezpur praying amongst others for stay of the further proceeding of said Arbitration Case No. 1/2019 as the sole arbitrator appointed by the Court spent its force on 17.02.2020 and the continuance of the said proceeding before the said sole arbitrator is in contravention of the law laid down by the Hon’ble Supreme Court in the case of State of Punjab -Vs- Hardyal, reported in (1985) 2 SCC 629 and to supply the vacancy caused by the learned sole arbitrator Mrs. Moumita Borah, Advocate, Gauhati High Court by a new arbitrator as per Section 8(2) of said 1940 Act, 1940.
11) Petitioners stated that the sole Arbitrator appointed by the Court in T.S. (Arbitration) Case No. 19/2003 entered into reference vide letter dated 17.10.2019 and from 17.10.2019 period of 4 (four) months came to an end on 17.02.2020. Thereafter, consent regarding extension of time of
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the said sole arbitrator for another 8 (eight) months from 17.09.2019 granted by the petitioners came to an end in August 2020. Since August 2020 to till the date of issuance of notice by the petitioner under Section 8(1) of said 1940 Act on 30.12.2021 as more than one year has elapsed and as per Section 28 of the said 1940 Act, the Court only has the power to enlarge the time for making award by the Arbitrator, therefore extension granted to the said Arbitrator earlier by the parties (petitioners and the respondent herein) after 17.02.2020, ought not to have been granted, being contrary to the provisions of law and that no such application has been filed by either of the parties for extension of the term of the sole Arbitrator before the expiry of its period of 4 (four) months on 17.02.2020.
12) But without considering such facts and without filing any application by either of the parties to the processing for extension of the term of the sole arbitrator before expiry of her term on 17.02.2020, the petitioners submitted that the Court (District Judge, Sonitpur, Tezpur) committed illegality in rejecting their application under Section 8(2) of Arbitration Act, 1940 for appointment of a new Arbitrator in Arbitration Case No. 1/2019 by Judgment dated 28.02.2022 passed in Misc.(j) Case No. 01/2022 [arising out of T.S. (Arb.) No. 19/2003] and in enlarging the time upto 31.05.2022 for making award by the Court appointed said sole Arbitrator in the Arbitration Case No. 1/2019, inspite of observing the same by the Court itself.
13) Therefore, petitioners have prayed for issuance of Writ of Certiorari/Mandamus and/or appropriate Writ to set aside the said Judgment dated 28.02.2022 passed by learned District Judge, Sonitpur, Tezpur in Misc.(j) Case No. 01/2022 [arising out of T.S. (Arb.) No. 19/2003] and to supply the vacancy caused by learned sole Arbitrator Mrs. Momita Borah, Advocate, Gauhati High Court by a new arbitrator as per Section 8(2) of Arbitration Act, 1940 and appointing a new Arbitrator in the Arbitration Case No. 1/2019 from the panel of Arbitrators (Engineer) as on 09.12.2021 approved by the Indian Council of Arbitration.
14) On 08.03.2022. while issuing notice to the respondent, this Court in the interim suspended the operation of said Order dated 28.02.2022 passed by learned District Judge, Sonitpur, Tezpur in Misc.(j) Case No. 01/2022 [arising out of T.S. (Arb.) No. 19/2003] till the returnable date, which is still in force.
15) Respondent contended that as per Military Engineer Service, The General Conditions of Contracts for Lump Sum Contracts (I.A.F.W-2249) as applicable in the present case, both the
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respondent and the petitioner have entered into an agreement that all disputes between the parties to the Contract be referred to the sole arbitrator and that the arbitrator shall be deemed to have entered into the reference and the date he issues notice to both the parties asking them to submit to him their statements of the case and pleadings in defence, where the arbitrator may from time to time with the consent of the parties enlarge the time up to but not exceeding one year from the date of his entering into the reference for making and publishing the award. It is also contended by the respondent that she as well as the petitioners participated regularly in the proceeding of said Arbitration Case No. 1/2019 and it is the petitioners who are delaying the matter, supplied one of the copy of the contract agreement before the said arbitrator only on October/November, 2020 after a lapse of more than one year six months and that there was complete lockdown since March, 2020 imposed by the Government of India because of Pandemic COVID 19. The respondent also submitted that it is only due to failure and delay on the part of the petitioners to submit the relevant documents, the arbitrator could not complete the proceeding and it is the petitioners who restrained the arbitrator for making and publishing the Award in said Arbitration Case No. 1/2019.
16) Mrs. Gayan, learned CGC on behalf of the petitioners placed the Judgments of the Hon’ble Supreme Court in the cases of State of Punjab Vs. Hardyal, reported in (1985) 2 SCC 629 and Modern Hotel Vs. Commissioner of Central Excise and Others, reported in (2616) 15 SCC 620.
17) Respondent has placed the judgments of the Hon’ble Apex Court in the cases of Ram Barai Singh -Vs- State of Bihar, reported in (2015) 14 SCC 592; S.B.P. & Co. -Vs- Patel Engineering, reported in (2005) 8 SCC 618 and State of Jammu and Kashmir -Vs- Ghulam Mohd. Dar and Another, reported in (2004) 12 SCC 327 and also relied on the case of Hardyal (supra).
18) Considered the Judgments cited by the parties, noted above and also their arguments.
19) Section 3 of the Arbitration Act, 1940 relates to Provision in implied arbitration agreement and stipulates as follows: –
An arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule insofar as they are applicable to the reference.
20) Rule 3 of the First Schedule to said 1940 Act reads as follows:-
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The arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the court may allow.
21) Section 8 of the Arbitration Act, 1940 relates to Power of Court to appoint arbitrator of umpire and it stipulates as follows:-
any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.
22) S.20 of the Arbitration Act, 1940 relates to Application to file in Court arbitration agreement and it reads as follows:–
(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants.
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(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants requiring them to show cause within the time specified in the notice why the agreement should not be filed.
(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court.
(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable.
23) Section 28 of the Arbitration Act, 1940 relates to Power to court only to enlarge time for making award and reads as follows: -
24) From the perusal of the impugned Judgment and Order dated 28.02.2022 passed by learned District Judge, Sonitpur, Tezpur in Misc.(j) Case No. 01/2022 [arising out of T.S. (Arb.) No. 19/2003], it is seen that the Court after considering the entire background of the case and taking the aide of Para-14 of the Judgment of the Hon’ble Supreme Court in the case of State of Punjab Vs. Hardyal, (supra), exercising its judicial discretion has passed the said order enlarging the time of the said sole Arbitrator for making the Award in Arbitration Case No. 1/2019.
25) In a case arising out of Arbitration Act, 1940, the Hon’ble Supreme Court in the case of Jatinder Nath Vs. Chopra Land Developers (P) Ltd., reported in (2007) 11 SCC 453, have held that –
17. …………………………………………………………………….. Chapter II of the Arbitration Act covers references, in which the parties may proceed, if nothing goes wrong, up to the stage of delivery of the award, without the intervention of the Court. This does not mean that the Court has no authority to intervene at an early stage, should it become necessary. In the present case, as stated above, the arbitrator entered upon a reference pursuant to the notice given by the appellant on 24-8-1992. The notice was given on 20-81992. Therefore, Section 8 of the Act has no application. Section 8 applies only where the parties do not concur in the appointment. Section 8 and Section 20 operate in different
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provinces. Section 20 confers power on the court to order the agreement to be filed and to make an order of reference to the arbitrator appointed by the parties or where they do not agree, the court can appoint any other person of its choice as an arbitrator. This discussion is important. This difference between Section 8 and Section 20 shows that the reference flows from an agreement between the parties in the cases falling under Section 8. The reference flows from the agreement in cases falling under Chapter II of the Arbitration Act and as long as the agreement stands, Court under Section 19. Under that section, where award becomes void under Section 16(3) or where an award is set aside, the Court may by an order supersede the reference and shall thereupon order that the arbitration agreement shall cease to have effect. Therefore, till such time as the order is passed by the court under Section 19 superseding the reference, the same shall remain valid till the agreement is superseded. This is the scope of Section 8 read with Section 19 of the Act. On the other hand, in cases falling under Section 20 of the Act, power is conferred on the Court to make an order of reference to the arbitrator. That power is conferred on the Court which orders the agreement to be filed before it. In a proceeding under Section 8, disputes are presented by the parties before the arbitrator, whereas in proceedings under Section 20, the disputes are referred by the Court. It is for this reason that it has been repeatedly held that merely because an arbitrator does not make an award within the specified period of four months the court has the power to extend the period. The award given by an arbitrator after four months is not binding on the parties. Such an award is vitiated as the arbitrator has no power to make an award after four months. However, a bare failure of an arbitrator to make an award within the time allowed by law will not involve the consequences of it being set aside only on that ground. The Court has ample powers in a given case to extend the time and give life to the vitiated award by exercising judicial discretion under Section 28 of the Act. An application to have the award set aside on the ground that it was made beyond time prescribed has to be moved under the Act. No separate suit would lie for that purpose. Section 28 is not limited only to references to arbitration made in a suit pending before the court. Further, the power given to the court under Section 28 is so wide that it can extend the time even if the award is made beyond four months from the date of the arbitrator entering upon the reference. The only restriction is that it must be exercised with judicial discretion.
26) In the case of Haryana SEB Vs. Universal Fasteners (P) Ltd., reported in (2010) 15 SCC 764, the Hon’ble Apex Court have held that –
So far as the first question is concerned, Section 28 of the Arbitration Act (Arbitration Act, 1940) regulates the enlargement of time which provides that the Court if it thinks fit whether the time for making the award has expired or not and whether the award has been made or not enlarge from time to time, the time for making the award.
27) It is already noted above that on the basis of an application under Section 20 of the Arbitration Act, 1940 preferred by the respondent renumbered as T.S.(Arbitration) 19/2003,
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learned District Judge, Sonitpur, Tezpur by its judgment and order dated 26.08.2019 directed the present petitioners to produce the arbitration agreement in reference before the Arbitrator and also appointed the sole Arbitrator to resolve the disputes between the parties. This fact is not denied by either of the parties and rather admitted the same.
28) It is also admitted position that the Court appointed sole Arbitrator entered into the reference in Arbitration Case No. 1/2019 as per the provisions of Arbitration Act, 1940 and informed the parties vide letter dated 17.10.2019 and within four months from it the said Arbitrator did not pass the Award in the said arbitration case.
29) As held by the Hon’ble Apex Court in the case of Jatinder Nath Vs. Chopra Land Developers (P) Ltd (supra), the Notice issued by the petitioner under Section 8(1) of the Arbitration Act, 1940 to the respondent and the Arbitrator concerned as well as the application filed by it before the Court under Section 8(2) of said 1940 Act were not maintainable since the sole Arbitrator in the case in hand was appointed by the Court in a proceeding filed by the respondent under Section 20 of said 1940 Act.
30) Moreover, while rejecting the said application of the petitioner filed under Section 8(2) of said 1940 Act, though on different reason, but the Court after considering entire aspect of said Arbitration Case No. 1/2019 exercising its discretion under Section 28 of the Arbitration Act, 1940 extended the period of said Court appointed sole Arbitrator up to 31.05.2022 by its order dated 28.02.2022 passed in Misc.(j) Case No. 01/2022, which however is presently under stay in terms of the interim order dated 08.03.2022 passed earlier in the present proceeding.
31) It is also not the case of the petitioners that the said Court appointed sole Arbitrator was not acting i.e., her conduct indicates that she had refused to act or neglected to discharge her duty and that it has become necessary for appointment of another person arbitrator in her place.
32) Considering the reasons noted above, this Court is of the view that the impugned order dated 28.02.2022 passed by learned District Judge, Sonitpur, Tezpur in Misc.(j) Case No. 01/2022 [arising out of T.S. (Arb.) No. 19/2003] does not call for any interference.
33) Accordingly, this writ petition, being devoid of any merit, stands dismissed.
34) The interim order passed earlier on 08.03.2022 in the present proceeding suspending the
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operation of said order of the learned District Judge, Sonitpur, Tezpur dated 28.02.2022 passed in Misc.(j) Case No. 01/2022 [arising out of T.S. (Arb) No. 19/2003] stands vacated.
JUDGE
Comparing Assistant
2 issues framed by the court
Whether Section 8 of the Arbitration Act, 1940 applies when the arbitrator is appointed by the Court under Section 20 of the same Act.
Whether the District Judge acted within its discretion in extending the time for making the award under Section 28 of the Act.
Colour shows how this judgement treated each authority
State of Punjab Vs HardyalReferred¶24
(1985) 2 SCC 629 · Who else cites this
Modern Hotel Vs Commissioner of Central Excise and OthersReferred¶40
(2616) 15 SCC 620
Ram Barai Singh -Vs- State of BiharReferred¶41
(2015) 14 SCC 592 · Who else cites this
S.B.P. & Co. -Vs- Patel EngineeringReferred¶41
(2005) 8 SCC 618 · Who else cites this
State of Jammu and Kashmir -Vs- Ghulam Mohd. Dar and AnotherReferred¶41
(2004) 12 SCC 327 · Who else cites this
Jatinder Nath Vs Chopra Land Developers (P) Ltd.Applied¶25
(2007) 11 SCC 453 · Who else cites this
Haryana SEB Vs Universal Fasteners (P) Ltd.Referred¶26
(2010) 15 SCC 764 · Who else cites this
3 provisions across 1 enactments
The Union of India and 2 Ors
Smti. Krishna Devi @ Sabitri Devi
Manash Ranjan Pathak
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
