PETITIONER:
STATE OF PUNJAB
Vs.
RESPONDENT:
SRI HARDYAL
DATE OF JUDGMENT10/04/1985
BENCH:
MISRA, R.B. (J)
BENCH:
MISRA, R.B. (J)
REDDY, O. CHINNAPPA (J)
CITATION:
1985 AIR 920 1985 SCR (3) 649
1985 SCC (2) 629 1985 SCALE (1)675
ACT:
Arbitration Act 1940 sections 3 and 28 (1) and (2) and
clause 3 of the First Schedule-Written agreement-Containing
arbitration clause-No period fixed for giving award-
Statutory period-Applicability of-Parties participating in
the proceedings after the expiry of prescribed period-
whether amounts to extension of time for making award-
Extension of time for making award-Jurisdiction of
arbitrator-Court's exercise of discretion in extension of
time-Doctrine of waiver and estoppel whether applicable.
HEADNOTE:
By a written agreement , the respondent agreed to
construct bridges and culverts for State Government. The
agreement contained an arbitration clause , the Arbitrator
being the Superannuation intending Engineer. However , no
period was fixed for giving the And . therefore , the
statutory period of four months for giving the award
prescribed in clause 3 of the First Schedule to the
Arbitration Act was applicable.
A dispute arose between the parties. The respondent
sent a notice to the Arbitrator requesting him to accept his
claim and give his award. The respondent claimed
compensation on two counts , namely , (I) that the Sub-
Divisional Officer got certain bridges demolished which had
been construed strictly in terms of the agreement , and (2)
that the respondent had also been directed to stop the work.
The Arbitrator gave his award against the respondent
after the expiry of the prescribed period , the respondent
having participated period , in the proceedings before the
Arbitrator even after the expiry of the statutory period.
The respondent challenged the award but the trial Court
overruled the objection and upheld the award.
On appeal to the High Court , a Single Judge referred
two points for decision by a Division Bench , (l) Whether
the award given after the expiry of the prescribed period
without extension of time by the Court was invalid ? and (2)
Whether the participation in the arbitration proceedings
even after the
650
expiry of the period of limitation prescribed would by
necessary implication amount to extending the time under s.
28 of the Arbitration Act by the Court ?
The Division Bench allowed the objection of the
respondent regarding delay in giving the award , holding
that a party to an arbitration agreement is not estopped
from challenging the 'award of the ground of delay merely
because it had participated in the arbitration proceedings
even after the expiry of the prescribed period without any
demur , that mere dismissal of the objection regarding
delay in the award does not amount an extension of time by
the Court under s. 28 (l) of the Arbitration Act , and that
time can be extended by the court by the exercise of sound
judicial discretion. The appeal was allowed and the case
remanded to the trial Court for deciding whether it was a
fit case for condoning the delay in giving the award by the
Arbitrator.
Allowing the Appeal of the State in part,
^
HELD: l. The provisions of ss. 3 and 28 (1) and (2)
and clause 3 of First Schedule to the Act indicate that it
is open to the parties to an arbitration agreement to fix
the time within which the Arbitrator must give his award,
but it has to be so stated in the agreement itself. If per
chance no time has been specified by the parties in the
arbitration agreement , then by virtue of operation of s.3
with read clause 3 of the First Schedule the award must be
given within four months of the arbitrator 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. [654A-B]
2. Sub-section (t) of s.28 is very wide and confers
full discretion on the Court to enlarge time for the award
at any time , which should , however , be exercised
judiciously. Sub-section (2) of s. 28 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 the consent of parties to the agreement to
enlarge the for making the award.[655 A-B]
H.K Wattal v V.N. Pandya [1974] 1 SCR 259 , followed.
3 Once the law precedes parties from extending time
after the matter has been referred to the Arbitrator , it
will be contradiction to hold that the same result can be
brought about by the conduct of the parties. There can be no
estoppel against a statute. The time to be fixed for making
the award was initially one of agreement between the parties
but it does not follow , that in the face of a clear
prohibition by law that the time fixed under clause 3 of the
said Schedule can only be extended by the Court and not b y
the parties at any stage. It still remains a matter of
agreement and the rule of estoppel operates. The Act has
injuncted the Arbitrator to give an award with in the
prescribed
651
period of four months unless the same is extended by the
Court. The Arbitrator has no jurisdiction to make an award
after the fixed time. If the award made beyond the time is
invalid the parties are not estopped by their conduct from
challenging the award on the ground that it was made beyond
time merely because of their having participated in the
proceedings before the Arbitrator after the expiry of the
prescribed period. [656H; 657 A-C]
Shambbu Nath v Surja Devi , AIR 1961 All. 180; Shivlal
v. Union of India AIR 1975 M.P.40; and Ganesh Chandra v.
Artatrana AIR 1965 Orissa 17 over ruled.
4. 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 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. The Court has got
the power to extended 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. In the instant case , the High Court was
justified in taking the view that it did. This power can be
exercised even by the appellants court. In view of the
policy of law 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 for
the extension of time. the time for giving the award is
extended and the award will be deemed to have been given in
time The case is however , remanded to the High Court for
decision on the other issued involved. [657 E-G; 658]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1980 of
1970.
From the Judgment and order dated 16.11.69 of the High
Court of Punjab & Haryana in F.A.O. No. 120/62.
Mrs. Urmila Kapur and S.K. Bagga for the Appellant.
The Judgment of the Court was delivered by
MISRA , J. Hardyal , the respondent , entered into a
contract with the State of Punjab , Public Works Department
(Buildings and Roads Branch) for the construction of certain
bridges and culverts on the Mukerian-Naushehra Road. The
agreement between the parties was evidenced by a writing.
The written agreement contained an arbitration clause which
provided that dispute , if any , between the parties would
be referred to the Superintending Engineer, Public Works
Department (Buildings and Roads) , Jullundur Circle. It 11
appears that no period was fixed in the agreement of
reference for giving the award and therefore Period of four
months as prescribed
652
in clause 3 of the First Schedule attached to the
Arbitration Act would be the statutory period for giving the
award.
Some dispute did arise between the parties. The
respondent , therefore , sent a notice on January 7,
1960 to the Superintending Engineer requesting him to accept
his claim to the tune of Rs. 7,568 and give his award
accordingly. The respondent claimed this amount of
compensation broadly on two counts: (1) that the sub-
Divisional Officer had got certain bridges demolished which
according to the respondent had been constructed strictly in
terms of the agreement , and (2) that the respondent had
also been directed to stop the work.
The arbitrator gave his award against the respondent on
April 28 , 1961 , but after the expiry of the prescribed
period. It is , how ever admitted by the respondent that he
participated in the proceedings before the arbitrator even
after the expiry of the statutory period. The respondent
challenged the award by filing an objection under s. 30 of
the Arbitration Act on a number of grounds. On the pleas
taken by the respondent the Senior Sub-Judge framed the
following four issues: (I) whether the objections were
premature , (2) whether the arbitrator had misconducted
himself or the proceedings , (3) whether the award was
against natural justice , and (4) whether the award was
made after inordinate delay.
The learned Judge overruled all the objections and
upheld the award. Issue No. l Was not pressed before him.
The contention of the respondent that reasonable opportunity
had not been afforded to him to adduce evidence , by the
arbitrator , was also repelled by the learned Judge. He
observed
“One of the grounds taken up for setting aside the
award as stated in the application was that the
petitioner was not afforded a reasonable opportunity to
adduce evidence. But the record of the proceedings
dated 24th of April , 1961 shows that the parties did
not want to say any thing further and the hearing of
the case was , therefore, closed under such
circumstances.”
The plea regarding misconduct on the part of the
arbitrator was also overruled and dealing with this point
the learned Judge observed:
653
“Nothing has been POINTED out to me in the court
during the course of the arguments as to how the arbitrator
has misconducted himself and the proceedings.”
The plea regarding delay in giving the award was
rejected on the ground that the respondent had been
participating in the proceedings before the arbitrator even
after the expiry of the prescribed period of limitation.
The respondent took the matter in appeal to the High
Court. When the matter came up before a learned Single Judge
he referred the following two points for decision by a
Division Bench on account of the importance of the question
involved in the case and also on account of conflict of
judicial opinion on the point:
1. Whether the award given after the expiry of the
prescribed period without extension of time by the
court was invalid ?
2. Whether the rejection of the objection regarding
delay in giving the award on the ground that the
objector had participated in the arbitration
proceedings even after the expiry of the period of
limitation prescribed would by necessary implication
amount to extending the time under s. 28 of the
Arbitration Act by the Court ?
The Division Bench allowed the objection of the
respondent regarding delay in giving the award holding that
a party to an arbitration agreement is not estopped from
challenging the award on the ground of delay merely because
it has participated in the arbitration proceedings even
after the expiry of the prescribed period without any demur.
On the second point the High Court held that mere dismissal
of the objection regarding delay in the award does not
amount to extension of time by the court under s. 28(1) of
the Arbitration Act and indeed time can be extended by the
Court by the exercise of sound judicial discretion.
Accordingly the appeal was allowed , the order of the
Senior Sub-Judge was set aside and the case was sent back to
the trial court for deciding afresh whether it was a fit
case for condoning the delay in giving the award by the
arbitrator after affording opportunity to the parties to
adduce evidence,
654
The State has now come up in appeal on a certificate
granted by the High Court under Art. 133(1)(c) of the
Constitution , as it then stood.
The same points have been reiterated before this Court.
Before dealing with the points involved it will be
convenient to refer to the relevant provisions of the
Arbitration Act. Section 3 reads;
“3. An arbitration agreement , unless a different
intention is expressed therein , shall be deemed to
include the provisions set out in the First Schedule in
so far as they are applicable to the reference.”
Section 28 reads:
“28. (1) The court may , 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.
(2) Any provision in an arbitration agreement
whereby the arbitrators or umpire may , except with
the consent of all the parties to the agreement ,
enlarge the time for making the award , shall be void
and of no effect.”
Clause 3 of First schedule provides:
“3. 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.”
A perusal of these provisions indicates that it is open
to the parties to an arbitration agreement to fix the time
within which the arbitrator must give award , but it has to
be so stated in the agreement itself. If per chance no time
has been specified by the parties in the arbitration
agreement. then by virtue of operation of s. 3 read with cl.
3 of the First Schedule the award must be given within four
months of the arbitrator 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.
655
Sub-section (I) of s. 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-s. (I) of s. 28 should
, however , be exercised judiciously. Sub-section (2) of
s. 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.
In H.K. Wattal v. V.N. Pandya(1) dealing with s. 28(1)
of the Arbitration Act this Court observed:
“There is no doubt that the arbitrator is expected
to make his award within four months of his entering on
the reference or on his being called upon to act or
within such extended time as the court may allow.
Reading clause 3 of the Schedule along with section 28
one finds that the power to enlarge the time is vested
in the court and not in the arbitrator. Clause 3 and
section 28(1) exclude by necessary implication the
power of the arbitrator to enlarge the time. This is
emphasised by section 28(2) which provides that even
when such a provision giving the arbitrator power to
enlarge the time is contained in the agreement , that
pro- vision shall be void and of no effect , The
headnote of section 28 brings out the force of this
position in law by providing that the power is of the
court only to enlarge time for making the award.
Sub-section (2) of section 28 , however ,
indicates one exception to the above rule that the
arbitrator cannot enlarge the time , and that is when
the parties agree to such an enlargement. The occasion
for the arbitrator to enlarge the time occurs only
after he is called upon to proceed with the arbitration
or he enters upon the reference. Hence it is clear that
if the parties agree to the enlargement of time after
the arbitrator has entered on the reference , the
arbitrator has the power to enlarge it in accordance
with the mutual agreement or consent of the parties.
That such a consent must be a post-reference consent ,
is also clear from section 28(2) which renders null and
void a provision
l. [1974] 1 SCR 259.
656
in the original agreement to that effect. In a sense
where a provision is made in the original agreement
that the arbitrator may enlarge the time , such a
provision always implies mutual consent for enlargement
but such mutual consent initially expressed in the
original agreement does not save the provision from
being void. It is , therefore, clear that the
arbitrator gets the jurisdiction to enlarge the time
for making the award only in a case where after
entering on then arbitration the parties to the
arbitration agreement consent to such enlargement of
time.
The next question that crops up for consideration
is what will be the effect if a party to the arbitration
took part in the proceedings before the arbitrator even
after the expiry of four months , that is , the period
prescribed for giving the award. Some High Courts have taken
the view that in such a situation the condition of four
months period will be deemed to have been waived. Such a
view has been taken by the Allahabad High Court in Shambhu
Nath v. Surja Devi.(1) A learned Single Judge of that High
Court observed:
“A party to an arbitration agreement who
voluntarily takes part in the arbitration proceedings
after the expiry of four months will be deem , d to
have waived the implied condition as to time.”
A similar view has been taken by the Madhya Pradesh
High Court in Shivlal v. Union of India(2). In Ganesh
Chandra v. Artatrana(3) a single Judge of the Orissa High
Court observed:
“If the parties , after the expiry of four
months, submit themselves to the jurisdiction of the
arbitrators and take part in the proceedings enabling
them to pass an award , it cannot be said that the
arbitrators acted without jurisdiction. In such a
contingency , the principle of waiver and estoppel
would have full application.
Once we hold that the law precludes parties from
extending time after the matter has been referred to the
arbitrator , it will be
(1) AIR 1961 All. 180.
(2) AIR 1975 M.P. 40.
(3) AIR 1965 Orissa 17.
657
contradiction in terms to hold that the same result can be
brought about by the conduct of the parties. The age long
established principle is that there can be no estoppel
against a statute. It is true that the time to be fixed for
making the award was initially one of agreement between the
parties but it does not follow that in the face of a clear
prohibition by law that the time fixed under cl. 3 of the
Schedule can only be extended by the court and not by the 1
parties at any stage , it still remains a matter of
agreement and the rule of estoppel operates. It need be
hardly emphasized that the Act has injuncted the arbitrator
to give an award within the prescribed period of four months
unless the same is extended by the court. The arbitrator has
no jurisdiction to make an award after the fixed time. If
the award made beyond the time is invalid the parties are
not estopped by their conduct from challenging the award on
the ground that it was made beyond time merely because of
their having participated in the proceedings before the
arbitrator after the expiry of the prescribed period.
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 along has been given the
power to extend time for giving the award. As II 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.
The other questions involved in the case. however ,
have not been dealt with by the High Court and it rest
content by making a
658
bald observation that there is no other point to be decided
in this appeal. The objector-respondent had raised a number
of pleas fore challenge the award giving rise to four
issues. It was , therefore , obligatory for the High Court
to consider those points unless they had been given up by
the objector-respondent. There is nothing on the record to
suggest that the respondent had given up those grounds. The
case will , therefore , have to be sent back to the High
Court for deciding the other issues involved in this case.
We accordingly allow the appeal in part and set aside
that part of the order by which the High Court remanded the
case to the trial court for deciding whether time should be
extended. The case is sent back to the High Court for
deciding other issues involved. In the circumstances of the
case the parties shall bear their own costs.
A.P.J. Appeal allowed.
659