1996 (7) TMI 579 - SC - Companies Law

Summary

Issues Involved:
1. Commencement of the period of limitation for filing objections to an arbitration award.
2. Requirement of notice by the court under Section 14(2) of the Indian Arbitration Act.
3. Validity of the trial court's and High Court's decisions regarding the filing of objections.

Detailed Analysis:

1. Commencement of the Period of Limitation for Filing Objections to an Arbitration Award:
The primary issue in this case is determining when the period of limitation begins for filing objections to set aside an arbitration award. According to the judgment, the period of limitation commences from the date of service of the notice issued by the court regarding the filing of the award under Section 14(2) of the Indian Arbitration Act. The court emphasized that such a notice need not be in writing but must be a clear communication or information issued by the court to the parties.

2. Requirement of Notice by the Court under Section 14(2) of the Indian Arbitration Act:
The judgment highlights the mandatory requirement for the court to issue a notice to the parties upon the filing of the award by the arbitrator. It is stated that the notice from the court under Section 14(2) need not be formal or written; it can be oral. However, the essential requirement is that the court must communicate the filing of the award to the parties. The court clarified that a notice by the arbitrator under Section 14(1) is not a substitute for the court's notice under Section 14(2). The court must issue its notice after the award is filed to allow the parties the opportunity to file objections.

3. Validity of the Trial Court's and High Court's Decisions Regarding the Filing of Objections:
The trial court made the award a rule of the court and passed a decree based on the assumption that the appellant had not filed objections within 30 days of the arbitrator filing the award. The High Court upheld this decision, stating that the appellant had knowledge of the filing of the award through the government pleader's endorsement. However, the Supreme Court found this approach incorrect. The court held that the period of limitation for filing objections starts from the date of service of the notice issued by the court, which, in this case, was deemed to be 13.7.1993. The court observed that neither the trial court nor the High Court had issued a proper notice regarding the filing of the award, and thus the period for filing objections had not commenced as assumed by the lower courts.

Conclusion:
The Supreme Court set aside the orders of the trial court and the High Court, remanding the case to the trial court for fresh disposal in accordance with the law. The court granted the appellant 30 days to file objections to the award and directed the trial court to dispose of the matter expeditiously. The judgment underscores the importance of the court's notice under Section 14(2) in initiating the period of limitation for filing objections to an arbitration award.