TMI Blog2018 (8) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... itral award under sub-sections (2) and (2A) of the said section within the stipulated time under sub-section (3) - the provisions contained in sub-sections (5) and (6) of Section 34 of the Act are procedural and not mandatory. Applications allowed. - A.P. No. 346 of 2018 with G.A. No. 1401 of 2018 and GA No. 1555 of 2018 - - - Dated:- 12-7-2018 - Mr. Ashis Kumar Chakraborty J. For the petitioner : Mr. S.N. Mookherjee, Sr. Adv., Mr. Ratnanko Banerji, Sr. Adv., Mr. Swatarup Baerjee, Adv., Ms. Hashnuhana Chakraborty, Adv., Ms. Neelina Chatterjee, Adv. For the respondent : Mr. Siddhartha Mitra, Sr. Adv., Mr. Askash Bajaj, Adv., Ms, Shreya Singh, Adv. ORDER The petitioner has filed the application, A.P. No. 346 of 2018 for setting aside of the arbitral award dated December 11, 2017, read with corrective award dated February 6, 2018 and an additional award dated March 05, 2018 passed by a sole arbitrator (hereinafter referred to as the arbitral award ). In the application, G.A. No. 1401 of 2018 the petitioner has prayed for stay of operation of the impugned award. In the said application the petitioner has also prayed for condonation of its omission to issue th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll and only in sub-Section (5) of Section 34 of the Act contemplates that the right to file an application for setting aside an arbitral award by a party arises only when it has served a notice of the proposed application on the other party and an affidavit of service of the said notice is filed before the Court along with the application. Therefore, according to the respondent, the term shall appearing in sub-section (5) of Section 34 of the Act makes the service of prior notice of the application for setting aside of the arbitral award by the applicant upon the other party a mandatory requirement. Further, sub-section (6) of Section 34 of the Act lays down that an application for setting aside of an arbitral award 'shall' be disposed of expeditiously and in any event within a period of one year from the date of service of the notice under sub-section (5) upon the other party. Learned counsel for the respondent submitted that introduction of sub-sections (5) and (6) to Section 34 of the Act mandates, (i) an application for setting aside an arbitral award can be instituted only after a prior notice under sub-section (5) is issued to the other party, (ii) an affidavit e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is settled law that the question as to whether a statute is mandatory or directory depends upon the intent of the legislature and whether the object of the legislation will be defeated or furthered. The petitioner emphasised that in view of the recommendation of the Law Commission in August, 2014 based on which the Amending Act 3 of 2016 was enacted and the aforementioned objects and reasons mentioned in the Amending Act 3 of 2016 the requirement provided under sub-Section (5) of Section 34 of the Act of issuance of prior notice of the proposed application for setting aside of the arbitral award upon the other party and the application to be accompanied by an affidavit showing service of such notice upon the other party are mandatory requirements which cannot be waived. The respondent further relied upon the decision of the Supreme Court in the case of M/s. Saree Smelting (P) Ltd.-vs-Commissioner of Sales Tax reported in 1993 Supp(3) SCC 97 and contended that presence of the words both shall and only in sub-section (5) of Section 34 of the Act make the requirement of service of prior notice by the applicant upon the other party mandatory and filing of an affidavit to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Supreme Court in the case of Macquire Bank Ltd. -vs- Shilpi Cable Technologies Ltd. reported in (2018) 2 SCC 74. He also cited two unreported Single Bench decisions of the Bombay High Court dated February 21, 2018 and April 19, 2018 in Commercial Arbitration Petition No. 434 of 2017 (Global Aviation Services Pvt. Ltd.-vs-Airport Authority of India) and Commercial Arbitration Petition No. 453 of 2017 (Maharashtra State Road Development Corporation Ltd. -vs- Simplex Gayatri Consortium), respectively holding that the provisions contained in sub-sections (5) and (6) of Section 34 of the Act are directory only. With regard to the decision of the Division Bench of the Kerala High Court in the case of Samsudeen -vs- M/s. Shreeram Transport Finance Co. Ltd. (supra) cited by the respondent it was submitted by the petitioner that the said decision is not supported by any reason. According to the petitioner, the decision of the Patna High Court is based on the provisions of Section 80 of the Code of Civil Procedure which are not akin to the provisions of sub-section (5) of Section 34 of the Act. It was submitted that a bare reading of the provisions contained in sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). By the said order dated September 27, 2017 the Supreme Court stayed the operation of the decision of the Patna High Court in the said case of Bihar Rajya Bhumi Vikas Bank Samity (supra). Therefore, according to the petitioner, the Division Bench decision of the Patna High Court in the said case of Bihar Rajya Bhumi Vikas Bank Samity (supra) cannot be considered for deciding the present applications. On the other hand, the learned Senior Counsel appearing for the respondent submitted even with stay of operation of the judgment passed by the Division Bench of the Patna High Court his other contentions with regard to mandatory nature of the provision under sub-section (5) of Section 34 of the Act justifies the rejection of A.P. No. 346 of 2018 along with G.A. No. 1401 of 2018 and G.A. No. 1555 of 2018. I have considered the facts of the present case and the arguments advanced by the learned counsel appearing for the respective parties. In the cases of Babu Ram Upadhya (supra) and Manbodhan Lal Srivastava (supra), the Supreme Court quoted with approval the following quotation from Crawford on the Construction of Statutes. The question as to whether a statute is mandator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the scope and effect of the provisions incorporated by the Amending Act of 1999 in Section 26(2), Order IV Rule 1(4) and Order VI Rule 15(4) of the Code with effect from July 01, 2002. By the Amending Act of 1999, sub-section (2) was introduced in Section 26 of the Code providing that in every plaint facts shall be proved by affidavit. The said Amending Act also introduced sub-rule (4) of Rule 15 under Order VI stipulating that the person verifying the pleading shall also furnish an affidavit in support of his pleadings. Rules 1 to 8 under Order VII of the Code specifically deal with the contents of the plaint which has to be complied with for the purpose of institution of a suit under Chapter VII of the Original Side Rules. In the said case, the plaintiff filed the suit before this High Court, after the Amending Act of 1999 came into effect but, the plaint did not contain an affidavit by the person who verified the plaint. In an appeal filed before the Division Bench against an interlocutory order passed in the said suit in favour of the plaintiff, the defendant contended that since the plaint filed by the plaintiff did not accompany an affidavit in support of the plead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avit by the plaintiff. Thus, the Division Bench held that after the defect was removed the suit must be deemed to have been duly instituted with effect from July 28, 2004 and not before that date and consequently, the interlocutory order passed by the learned Single Judge at a point of time when the suit had not been duly instituted could not survive. It is the said decision of the Division Bench which was assailed by the plaintiff in the Special Leave Petition before the Supreme Court. The Supreme Court, however, held that the intention of the legislature in bringing about the various amendments in the Code with effect from July 01, 2002 were aimed at eliminating the procedural delays in the disposal of civil matters, the amendments effected to Section 26, Order IV and Order VI Rule 15, are also geared to achieve such object, but being procedural in nature, the amended provisions are directory in nature and non-compliance therewith would not automatically render the plaint non est, as has been held by the Division Bench of the Calcutta High Court. Further, in the case of Sambhaji (supra) the Supreme Court was called upon to construe the following provision contained in Order VIII ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Accordingly, the provisions contained in the said Section 34 of the Act is reproduced hereinbelow: 34. Application for setting aside arbitral award - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub- section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that- (i)a party was under some incapacity; or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. (5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. (6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party. From a reading of the above provisions it is evidently clear that the substantive right of a party to challenge an arbitral award is provided by sub-sections (2) and (2A) of Section 34 of the Act stipulating the grounds on which an arbitral award can be set aside by the Court. Sub-sections (3) of the said Section 34 of the Act lays down the statutory period of limitation within which an application for setting aside of an arbitral award has to be filed before the Court. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above findings I have already arrived at in this case I do not find any persuasive effect in the said decision. As pointed out by the petitioner the Division Bench decision of the Patna High Court in the case of Bihar Rajya Bhumi Vikas Bank Samity (supra) has been stayed by the Supreme Court. The decision of the Supreme Court in the case of M/s. Saru Smelting (P) Ltd. (supra) cited by the respondent dealt with a case involving interpretation of an exemption notification issued under the Proviso to sub-section (2) of Section 3A of the U.P. Sales Tax Act, 1948. It is settled principle of revenue law that interpretation of an exemption notification needs strict construction of the words used in the notification. Thus, the decision of the Supreme Court in the case of M/s. Saru Smelting (p) Ltd. (supra) cannot be applied for interpreting the provisions contained in sub-sections (5) and (6) of the Act. In the case of Mackinnon Mackenzie Co. Ltd. (supra) the Supreme Court held the provisions contained in Sections 25-F and 25-FFA of the The Industrial Disputes Act, 1947 providing for service of one month's notice or payment of wages for the notice period upon the workman in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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