Meaning of delivery of award by the Tribunal to the 'party'

2005(1) RAJ 506 (SC) Union of India Vs Tecco Trichy Engineers & Contractors Decided on 16.3.2005 The Southern Railway entered into a contract with the Respondent and the contract was signed by the then Chief Project Manager, presently the Chief Engineer (CE). When disputes arose, in exercise of the power conferred by the arbitration clause in the contract, the General Manager (GM), Southern Railway, appointed an arbitrator as well as the presiding arbitrator. The tribunal so constituted gave its award, a copy of which was delivered on 12.3.2001 in the GM's office and receipt of the same was acknowledged by someone in the office. The CE received the award copy on 19.3.2001. On 10.7.2001, the CE applied for setting aside the award and an application for condonation of delay of 27 days was filed under S.34(3), based on the assumption that the award was received on 19.3.2001. The Respondent contested this application saying that the award was delivered on 12.3.2001 and the High Court agreed with the Respondent. It was held that according to Section 31(5), 'after the arbitral award is made, a signed copy shall be delivered to each party'. Section 2(1)(h) defines a "party" as meaning 'a party to an arbitration agreement'. The court examined the meaning assigned to the term "party" in the context of the State or a Government Department, esp. a large organization like the Railways. It is well known that the Ministry of Railways has a very large area of operation covering several divisions with different division heads and departments with their own department heads. The GM, at the apex position, holds responsibility for strategic decisions, organizational policies, administrative instructions etc. The day to day management and operations of different departments rest with different department heads, who are directly connection with their department's functioning and is alone expected to know the progress of the matter pending before the arbitral tribunal. Thus, in a large organization like the Railways, "party" as referred to in Section 2(1)(h) r/w Section 34(3) has to be construed to be a person directly connected and involved in the proceedings and who is in control of the proceedings before the arbitrator. The delivery of an arbitral award, to be effective, has to be 'received' by the party and this delivery by the tribunal and receipt by the party sets in motion several periods of limitation, therefore it is an important stage in the arbitral proceedings. The court held that in the present case, the CE had signed the agreement on behalf of the Railways. In the arbitral proceedings, he represented the organization and notices were served on him. Even the award clearly mentioned that the Railways is represented by DY. CE/Gauge Conversion, Chennai. The subject matter of arbitration related to the department of the CE. Therefore, the High Court had erred in its decision and the Claimant's application for setting aside the award is allowed.

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