2001 (2) TMI 979 - SC - Indian Laws

Supreme Court clarifies arbitration procedures under CPC and Arbitration Act

The Supreme Court held that Order IX Rule 13 of the CPC is applicable to arbitration proceedings, including cases where objections are not filed under the ... Whether provisions of Order IX Rule 13 of the Code of Civil Procedure or the principles thereof are applicable in a case where objections under Section 33 of the Arbitration Act, 1940 are not filed and ex-parte decree is passed on the basis of the award filed before the Court by making the award rule of the Court? Held that:- Appeal allowed. The provisions of CPC are specifically made applicable and there is no reason to hold that Order IX Rule 13 would not be applicable in case where judgment is pronounced under Section 17 of the Act in absence of objection application tendered by the party objecting to the award. For all purposes such decree is ex-parte for the party objecting to the award. Under C.P.C. ex-parte decree has no technical meaning. Division Bench was right in arriving at the conclusion that this was a fit case for condoning the delay and setting aside the decree dated 28th April 1987. Issues Involved:1. Applicability of Order IX Rule 13 of the Code of Civil Procedure (CPC) to arbitration proceedings.2. Whether a decree passed in terms of an arbitration award without objections is an ex-parte decree.3. Extension of time for filing objections under Section 30/33 of the Arbitration Act, 1940.4. Court's duty to pronounce judgment in terms of the award under Section 17 of the Arbitration Act.5. Applicability of Section 5 of the Limitation Act to arbitration proceedings.Issue-wise Detailed Analysis:1. Applicability of Order IX Rule 13 of the CPC to Arbitration Proceedings:The Supreme Court examined whether the provisions of Order IX Rule 13 CPC or its principles apply to cases where objections under Section 33 of the Arbitration Act, 1940, are not filed, and an ex-parte decree is passed based on the award. The High Court concluded that Order IX Rule 13 CPC is not applicable in such cases. However, the Supreme Court held that Section 41 of the Arbitration Act makes the provisions of the CPC applicable to all proceedings before the Court under the Act, including Order IX Rule 13. Thus, in proceedings initiated for making the award rule of the Court, provisions of CPC, including Order IX Rule 13, are applicable.2. Whether a Decree Passed in Terms of an Arbitration Award Without Objections is an Ex-parte Decree:The Full Bench of the High Court held that a decree passed in terms of Section 17 of the Arbitration Act, where no objection is filed, cannot be said to be an ex-parte decree. The Supreme Court disagreed, stating that for all purposes, such a decree is ex-parte for the party objecting to the award. If the party satisfies the Court that there was sufficient cause for not filing objections within the prescribed time, the Court has the power to set aside such a decree by following the procedure prescribed under Order IX Rule 13 CPC.3. Extension of Time for Filing Objections under Section 30/33 of the Arbitration Act:The Supreme Court noted that Section 5 of the Limitation Act, 1963, allows for the extension of the prescribed period of limitation in civil proceedings if the applicant shows sufficient cause for not making the application within such period. The relevant provision for filing objection applications before the Court is Article 119 of the Limitation Act, 1963, which provides a 30-day period for setting aside the award. The Court held that on showing sufficient cause, the delay in filing an application for setting aside the award could be condoned.4. Court's Duty to Pronounce Judgment in Terms of the Award under Section 17 of the Arbitration Act:The Supreme Court emphasized that before pronouncing judgment, the Court must apply its mind to determine whether there is any cause to modify or remit the award. The phrase 'pronounce judgment' indicates a judicial determination by a reasoned order. The Court cannot pass a decree blindly without considering the provisions of Sections 15 and 16 of the Arbitration Act, which provide for modification or correction of the award or remitting it to the arbitrator for reconsideration.5. Applicability of Section 5 of the Limitation Act to Arbitration Proceedings:The Supreme Court reiterated that Section 5 of the Limitation Act is applicable to arbitration proceedings. Even after a decree is passed under Section 17 of the Arbitration Act, an application under Section 30 can be entertained if sufficient cause is established. The rejection of such an application would be a refusal to set aside the award and would be an appealable order under Section 39(1)(vi) of the Arbitration Act.Conclusion:The Supreme Court allowed the appeal, condoned the delay in filing the objection application under Section 30/33 of the Arbitration Act, and set aside the impugned judgment and order of the High Court. Consequently, the judgment and decree passed by the learned Single Judge were also quashed and set aside. The Court emphasized the necessity of judicial determination before pronouncing judgment in terms of the award and upheld the applicability of CPC provisions, including Order IX Rule 13, to arbitration proceedings.