Holding

The award was deemed served under Section 3, the Section 34 objection was time‑barred, and the arbitrator’s appointment was valid, leading to the reversal of the High Court’s decision.

Summary

The dispute arose from a family arrangement and partnership deed concerning a cinema hall, where the appellant sought execution of an ex‑parte arbitral award dated 25 August 1999. The respondent contested the award, claiming he never received it and filed a Section 34 application beyond the 90‑day limit. The executing court, relying on the postman's testimony that the award was tendered and refused, deemed the award served under Section 3 of the Arbitration and Conciliation Act, 1996, and dismissed the Section 34 petition as time‑barred. The High Court set aside that order, but the Supreme Court held that the presumption of service under Section 3 was valid, the objection was indeed barred by limitation, and the arbitrator’s appointment was proper. Consequently, the High Court’s judgment was set aside and the executing court’s order restored.

Issues considered

Whether service of the arbitral award was deemed effected under Section 3 of the Arbitration and Conciliation Act, 1996 despite the respondent's alleged refusal.
Whether the Section 34 application challenging the award was filed within the statutory 90‑day period.
Whether the appointment of the alternate arbitrator complied with the arbitration clause in the family arrangement.
Whether the High Court was correct in setting aside the executing court’s order.

Legislation cited

Arbitration and Conciliation Act, 1996s. 3, s. 33, s. 34
Code of Civil Procedure, 1908s. Order 21 Rule 26

Subjects

ArbitrationEx‑parte awardService of awardSection 34 limitationArbitrator appointmentPartnership disputeExecution of award

Judgment

[2008] 17 S.C.R. 455
•
KAILASH RANI DANG A
II.
RAKESH BALA AN.EJA & ANR.
(Civil Appeal Nos 7257-7258 of 2008)
DECEMBER 12, 2008
B I

[DALVEER BHANDARI AND HARJIT SINGH BEDI, JJ.]

,)...
ARBITRATION AND CONCILIATION ACT, 1996:
ss.3, 33 and 34 - Execution of ex-parte award -
Objections to - HELD: In view of the statement of the postman c
that he tendered the envelope to the addressee at his
business place but latter refused to accept it, the presumption
uls 3 that the document was delivered is attracted - Objection
uls 34 having been filed beyond the permissible maximum
time of 90 days was rightly rejected by executing court- Code D
of Civil Procedure, 1908 - Execution of award made by
~ arbitrator.
>
The appellant filed on 7 .4.2000 an application for
execution of the ex-parte award dated 25.8.1999 passed
by the arbitrator over a dispute with regard to the E
earnings from a Cinema Hall which were agreed to be
equally divided between the appellant and her cousin,
namely 'SC' (the respondent), under a family arrangement
dated 21.7 .1998 stated to have 'been entered into between
them. The respondent filed an application under Order 21,
F
t Rule 26 CPC, before the executing court seeking a stay
.... of the execution proceedings and denying any
knowledge of the passing of the award dated 25.8.1999.
He pleaded, inter alia, that his Manager had gone to
attend the arbitration proceeding on 25.8.1999 but as
neither the appellant nor the arbitrator reached the venue, G
he after having waited for an hour returned. He also filed
-i. on 28.11.2000 an application u/s 34 of the Arbitration and
.... Conciliation Act, 1996 for setting aside the ex-parte award
stating that he received copy of the award only on
455 H

--
456 SUPREME COURT REPORTS [2008] 17 S.C.R.

A 7.10.2000 'during tt~e course of: execution proceedings.
Thereafter, the respondent expired and his legal
representatives were brought on record, including his
wife as respondent no. 1. The appellant filed a reply to
respondent's petition content'.iing that the same was
I

B barred by limitation. The executing court, relying upon
· the testimony of the Postman that the respondent had
refused on 31.8.1999 to accept the envelope sent by the
arbitrator, held that the respondent was deemed to have
been served and as such his petition u/s 34 of the Act was
c barred by limitation, and accordingly dismissed the
same. Respondent no. 1 filed a revision petition before
the High Court which allowed the same and set aside the
order of the executing court. T'e review application filed
by the appellant having been dismissed by the High
o Court, she· filed the appeals.
It was co.ntended for the appellant that the deceased-
res po n dent had knowledge of the arbitration
proceedings and deliberately did I
not appear before the
arbitrator; that though the respondent denied execution
E of the family arrangement dated 21. 7.1998, he did not
deny execution of the partnership deed dated 7.6.1995
which was the parent document; and that as per the
statement of the Postman testifying respondent's refusal
to accept the notice on 31.8.1998 and in view of s.3 of the
F Act, it was deemed to have been served. On behalf of the
respondent, besides reiterating the arguments that were
raised before the executing court, it was conte nded that
1

in view of the certificate date~ 26.8.2003 issued by the
Manager of the Hotel to the effect that on 30.8.1999 the
G respondent had checked into the Hotel at 8.10 a.m. and
on 31.8.1999 he checked out at 8.35 p.m., the statement
of the Postman was a lie and,· •herefore, presumption u/s
3 of the Act stood dispelled!. Lastly, the respondents
challenged the very appolntment of the arbitrator
H contending that no request was made to the first person
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 457
---.t

named in the family arrangement as the sole arbitrator, A

- 4!' and since on his refusal could only the alternate arbitrator
be approached, the appointment of the latter was not
justified. '\

Allowing the'tnain appeal, the Court
B'
HELD:1.1. A bare perusal of provisions of s.3 "of the
I

Arbitration and Conciliation Act, 1996 would reveal, if a
,.-... written communication is delivered to the addressee
personally at his place of business, it shall be deemed to
have (leen received by him on the day it was delivered.
Admittedly, a copy of the award had been sent to the
c
deceased-respondent at the address of the HaU which
was, in fact, the property and the subject matter of the
partnership business between the parties. In this view of
the matter, the statement of the postman becomes
extremely relevant wherein he deposed that on the 30th o..
August 1999, the deceased respondent was not present
":
~ in the cinema premises and that on the following day he
refused to receive the communication even when
tendered to him which fact was endorsed by the Postman
on the envelope which was returned to the sender. Thus, E
by virtue of sub-clause (a) of s.3 (1) read withs. 3(3), of
the Arbitration and Conciliation Act, 1996 a presumption
that the document had indeed been delivered is writ large
on the facts of the case. [Para 6) [466-E-H]
1.2. The certificate issued by the Hotel is dated 26th F
¥
,... August 200~, that is, about four years after the event.
Moreover, it is significant that in the objections filed in the
executing court, no reference whatsoever was made to
this document and, even more significantly, it was
produced in the executing court for the first time during d
the course of arguments. Therefore, this document is an
..._ afterthought and has been created with the object of
strengthening the submission that the copy of the award
could not have been delivered to the respoJ1dent as he
was absent from the cinema on the two crucial dates. ~
458 SUPREME COURT REPORTS (2008] 17 S.C.R.

A · [Para 6] [467-A-C]
Union of India vs. Tecao Trichy Engineers and
Contractors (2005) 4 SCC 2~9 and Oil & Natural Gas
<..

Corporation Ltd. Vs. Saw Pipes Ltd. (2003) 5 SCC 705, held
inapplicable.
B ~

2.1. I~ is significant that though the execution of the
family arrangement has beeh denied, the fact of the
partnership deed qua Cinema '!Hall has not been denied.
It is also clear that the cinema was under tile complete
C and effective control of the deceased-respondent and
after his death under the control of ,his legal
representatives and; that nothing has been paid to the
appellant on account of the i~come of the partnership.
The deceased-respondent had received the copy of the
statement of claim filed by the appellant before the
D arbitrator but, he, as is clear from the observations of the
arbitrator, adopted an obstructionist attitude during the
course of arbitration proceedings. I
[Para 8] [470-F-G]
2.2. In view of the observations made by the
-E arbitrator, and the fact that no misc<!nduct has been
alleged against the arbitrator, it would be taken as proved
that the deceased;..respondent had deliberately stayed
away from the arbitra\ion p!roceedings in order to
frustrate and delay the claim of the appellant. [Para 9)
F [473-D]
3.1. The record shows that the appellant had -+
addressed a letter ~ated 2nd July 1999 to the first
arbitrator named in thefamily atrangement
I
to arbitrate in
the dispute and he had, by his letter dated 7th July 1999,
G refused to accede to the request because of his ill-health
and that a copy of this letter had also been endorsed to
the deceased-respondent. Face.d with this situation, the
appellant wrote letter dated 12th July 1999 requesting the
1

alternate arbitrator named in the family arrangement to act
H as the arbitrator which request was accepted. These
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 459

facts were not denied by the deceased-respondent at any A
stage. It must, therefore, be taken that these
communications relied on by the appellant were indeed
exchanged. [Para 10] [473-G-H; 474-A]
3.2. Even assuming that the family arrangement
dated 21st July 1998 had not been executed and a B,
dispute on facts had to be raised, the deceased-
respondent ought to have done so before the arbitrator
and a boycott of the proceedings was unjustified.
Therefore, there is no flaw whatsoever in the conduct of
the arbitration proceedings by the arbitrator. The C
judgment of the High Court cannot be sustained and is
set aside. The connected appeal becomes infructuous.
[Para10] [474-A-B]
Case Law Reference:
(2005) 4 sec 239 held inapplicable para 2 D
(2003) 5 sec 705 held inapplicable para 5
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7257-7258 of 2008.
From the Judgment and final Order dated 07.8.2007 & E
'

· 13.11.2006 of the High Court of Judicature at Allahabab, in
Review Application no. 270768 of 2006 and Civil Revision No.
78 of 2006.
Arun Jaitely, Satinder Singh Gulati and Kamaldeep Gulati
for the Appellants. F
.... Ranjit Kumar, Kumar Rajesh Singh, Manoj Saxena, Dr.
Kailash Chand for the Respondents. ·
The Judgment of the Court was delivered by
HARJIT SINGH BEDI, J. 1. Leave granted. G
2. These appeals arise out of the following facts: On 7th
June, 1995 a partnership deed was executed between
Subhash Chander Aneja, since deceased, his son Amit Aneja
and the appellant Kailash Rani Dang, a cousin of Subhash
Chander Aneja, aforesaid with regard to the running of Alka ~
460 SUPREME COURT REPORTS [2008] 17 S.C.R.

A Cinema, situated at P-2, Sector-15 NOIDA. The shares in the
partnership were also delineated therein. On 21st July, 1998,
a family arrangement was entered into between Subhash
Chander and Kailash Rani, in which it was agreed that the latter
would get 50% of the earnings from the Cinema Hall as well
B as from the commercial exploitation of the adjoining plot,
whereas 50% would go to the former. This agreement also
contained an arbitration clause 1whereby all disputes and
differences would be referred to the sole arbitration of Shri
Hans Raj Dang and on his non-avajlability, to the sole arbitration
c of Dr. Amar Nath Kumar. Disputes having arisen, Kailash Rani
vide her letter dated 2nd July, 1999, invoked the arbitration
clause in the family arrangement 'by writing to Shri Hans Raj
Dang requesting him to act as the arbitrator. Shri Hans Raj
Dang, however, vide his letter dated 7th July, 1999 informed
D Kailash Rani that he would not be able to act as such· because
of ill-health. Copies of these letters 'were sent to the respondent
Subhash Chander as well. Kailash .Rani, in these
circumstances, wrote a letter dated 12th July, 1999 to the
alternate Arbitrator Dr. Amar Nath Kumar requesting him to act
E as the arbitrator and also informing him that though the cinema
1

hall was bringing an income of Rs. 2.5 lacs per month, she had
not been paid a single penny on that account. Dr. Amar Nath
Kumar accordingly wrote a letter dated 17th July, 1999 to
Kailash Rani calling upon her to ifile her statement of claim
F before 25th July, 1999 and to send a copy thereof to Subhash
Chaoaer, through registered post. ~e also called upon Subhash -+
Chander to file his reply to the statement of claim by 2nd August
1999 and fixed 11.00 AM. on 8th August, 1999 as the date
and time of the hearing at a specified venue at Ghaziabad. On
G 23rd July, 1999, Kailash Rani dispafched her statement of claim
by registered post to the Arbitrator as well as to Subhash
Chander. The receipt of this statement was acknowledged by
Subhash Chander by his commu~ication on 29th July, 1999.
addressed to Kailash Rani wherein he asked for the supply of
certain documents, failing which it would not be possible for him
H
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 461
[HARJIT SINGH BEDI, J.]
to file a reply to the statement of claim. Kailash Rani, vide her A
letter dated 2nd August 1999, replied reminding Subhash
~
Chander that the documents he was seeking were already in
. his possession as he was one of the executants thereto, but
that in any case the copies could be taken from the arbitrator
during the course of hearing on 8th August, 1999. Subhash B
Chander nevertheless, through his Advocates, Mis. Sen & Sen
addressed a communication dated 7th August, 1999 to the
).. arbitrator denying the execution of any family arrangement
dated 21st July, 1998 and again asking for the supply of the
documents referred to in the statement of claim, and further, that C.
the arbitration proceedings be deferred till all the documents
were in fact supplied. As a follow up to the communication from
his Advocates, Subhash Chander did not appear before the
Arbitrator on 8th August, 1999. The Arbitrator, accordingly,
addressed a letter to him pointing out that his non-appearance D
justified the initiation of ex-parte proceedings but another
~ opportunity "Yas being afforded to him and further that Kailash
• Rani had undertaken to supply copies of all documents relied
upon by her on the next date,of hearing in his presence. The
hearing was also fixed at 11.00 A.M .. on 25th August, 1999. E
Subhash Chander however did not appear before the Arbitrator
on 25th August, 1999 as well and after waiting till 2.00 P.M. on
that date the Arbitrator ordered ex-parte proceedings and
thereafter passed an ex-parte Award against him. A copy of
the Award was sent by the Arbitrator to both parties through F
j. speed post; the copy of the Award being addressed to
... Subhash Chander at his business address, Alka Cinema, P-
2, Sector -15, NOIDA. The Postman visited the cinema
premises on 30th August, 1999 but Subhash Chander was not
present. The Postman went to the address again the next day G
but Subhash Chander refused to receive the registered
envelope, though the name of the sendor Dr. Amar Nath Kumar,
~ the Arbitrator stood written thereon. The Postman accordingly ·
returned the envelope to the sender with an endorsement of
refusal dated 31st August 1999. Kailash Rani thereafter (on 7th
H
462 SUPREME COURT REr;>ORTS [2008) 17 S.C.R.

A April, 2000) filed an Application in the Court of the District
Judge, Gautam Budh Nagar for the execution of the Award.
Subhash Chander at this stage filed an Application under Order
21 Rule 26 of the Code of Civil Procedure in the Executing
Court seeking a stay of the execution proceedings, and denying
B any knowledge of the passing of the Award dated.25th August,
1999 and also, inter alia, pleading that though he had not
appeared before the Arbitrator or:i 25th August, 1999, one
Mishra, his Manager, had done so on his behalf, who, after
having waited for an hour, had foun,d neither the appellant nor
c the Arbitrator present, on which he hi=id gone away and that this
· fact had been communicated to ·th~ Arbitrator by Registered
"post on 6th September, 1999. He, also filed an application
dated 28th November 2000 under SectionI
34 of The Arbitration
and Conciliation Act, 1996 (hereinafter referred to as "the Act")
o praying that the ex-parte Award dated 25th August, 1999 be
set aside emphasizing therein that rie had received a copy of
the Award only on 7th October, 2000 during the course of the
execution proceedings. Subhash Chander expired on 29th
November 2000 and is now represented by his L.Rs including
E respondent No. 1 Rakesh Bala Anejal his widow. Kailash Rani,
in response to the aforesaid objecti<>n petition, filed a reply
pleading that it was time barred and raising several objections
on merits as well. The District Judge - the Executing Court,
thereafter, called upon the parties to 1Produce their evidence.
F The statement of the Postman Dhararn Pal, who had tendered
the envelope on 30th and 31st August, 1999 which Subhash
Chander had refused to accept wa~ recorded. The Court
accordingly concluded that as Subha~h Chander had refused
to accept the notice from the Postman re was deemed to have
been served and as such the application-under Section 34 was
G clearly beyond time as the maximum titne permissible for such
I
an application was 90 days. The objection petition was, thus,
dismissed. Rakesh Bala filed a Revision Petition in the _
Allahabad High Court which set aside the order of the Executing
Court vide the impugned judgment dateC:f 13th November 2006,
H
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 463
[HARJIT SINGH BEDI, J.]
-. which to us, suffers from some basic contradictions. This is A
what the Court had to say:
~
"It is true that in usual course if the entry of refusal of
service of the award is made by the Postman it is to be
accepted by the Court as correct. In this view of the matter
the present objections are to be found presented after the B
/ expiry of the limitation period provided for the purpose. The
service of award upon a party who is definitely aggrieved
J~ by the same is not a matter to be viewed very lightly. The
service is not a mere formality and it is a matter of
substance. The termination of .an arbitral proceedings are c
always subject to certain conditions and it is also subject
to provisions of Section 33 & 34 of the Act. In fact the
delivery of award to a party has to be effective after the
same has been received by the said party. This delivery
actually has the effect of conferring 'certain rights upon the D
parties as also bringing to an end the right to exercise
-~ .those rights on expiry of the period of limitation'. Therefore,
~
the delivery of the copy of the award made is something
which is very substantial for the parties. The mere entry of
refusal of acceptance by the Postman upon the registered E
envelope should not be given so much importance as to
shut the entire available avenues for the redressal of his
grievance of a party which has been quite adversely
effected by it."
In support its observations the High Court relied on the F
t- judgment of this Court in Union of India vs. Tecco Trichy
,...
Engineers and Contractors (2005) 4 SCC 239. It was
accordingly held that the date of receipt of the Award by
Subhash Chander would be deemed to be 11th October 2000
and as such the application under Section 34 of the Act was G
within time. Kailash Rani filed a review application against the
..__ judgment dated 13th November, 2006 but it too was dismissed
on 7th August 2007./ caced with this situation, Kailash Rani is
before us in the present appeals, both against the orders dated
13th November, 2006 and 7th August 2007. H
'
~~-

'

464 SUPREME COURT REPORTS [2008] 17 S.C.R.
e '.- '
•'
~

A 3. Mr. Arun Jaitley, the learned senior counsel for the
appellant has raised several arguments d.uring the course of
hearing. He has first pointed out that Subhash Chander, the ~
deceased respondent, had always adopted an indifferent
I

attitude towards the arbitration I
proceedings inasmuch that
B though he had knowledge I of the proceedings he had
deliberately stayed away on theI 25th August 1999 when he, as
\
per his own statement, had not appeared before the Arbitrator
but. had sent his Manager Mi~hra instead,. though even his
-A
alleged appearance was an afterthought. He has also pointed
c out that Subhash Chander in his objection petition had denied
the execution of the family arrangement dated 21st July 1998
though the execution of the partnership deed which was, in fact,
the parent document executed on 7th June 1995 had not been
denied and this too, and the fact that the appellant Kailash Rani
D though entitled to 50% of the income from the cinema had not
received even a penny on that account, was the reason for his
recalcitrant attitude. He has pleaded that it is in this background ....__
that the matter would have to be· examined even with regard to .4

the receipt of a copy of the award by him on 31st August 1999,
E as held by the executing court or on the 11th of October 2000
as observed by the High Court. In this connection, Mr. Jaitley
has then brought to our notice the statement of Dharam Pal
PW1, the postman who deposed that he had visited Alka
Cinema on the 30th August 1999 and after finding Shri Aneja
.
absent he had again visited t~e next day but the latter had
F
refused to accept the envelope on which he had made an
r
1-
'
endorsement to that effect and ~eturned the-unsealed envelope
4.
..... ~
to the sender. Relipnce has also been placed on Section 3 of '
,___
the Act which talks about the re4eipt of written communications,
to support.,the argument tha~ as the envelope had been
G
addressed to the very address~ which was the subject matter
of the business and the·-partnership, it was deemed to have
been served. Mr. Jaitley has also. distinguished the judgment
~ I
of this· Court in Tecco Trichy Engineers (suprar and submitted \-

')'
that it had no applicability to the facts of the present matter.
H
~

KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 465
=--- [HARJIT SINGH BEDI, J.]

4. Mr. Ranjeet Kumar, the learned senior counsel for the A
respondent has, however, pointed out that the execution of the
.~
family arrangement dated 7th June 1995 had been denied by
him and as the service of the award was a matter of great
moment and with deep ramifications for him and his family,
there was no reason as to why he would not have filed his 8
objections had he been served on the 30th August 1999 or 31st
)
-1 August 1999, as alleged. He has also pleaded that Subhash
Chander had asked for several documents by his
I .>-. communication dated 29th June 1999 and the request had
been reiterated on 7th August 1999, and as the said c
documents had not been supplied, he had advisedly stayed
..... away from the arbitration proceedings. It has also been
submitt_eJ:i that as per the family arrangement dated 21st July
1998, the sole learned arbitrator was Shri Hans Raj Dang and
in his absence Dr. Amar Nath Kumar and that there was no D
evidence to show that the former had, at any stage, been
...., approached to assume the role of arbitrator and as such the
) very initiation of proceedings before the latter was not in order.
·He has also pleaded that in any case the presumptions, if any,
raised on account of Section 3 of the Act had been dispelled E
by the certificate dated 26th August 2003 issued by the
Manager of Hotel Shakti, Allahabad to the effect that Subhash
Chander Aneja had checked into the hotel at 8.10 a.m. on 30th
August 1999 and had checked out on the 31st of August 1999
at 8.35 p.m. to submit that on both dates when the postman
F
}-
had allegedly visited the premises of Atka Cinema in Noida,
Subhash Chander Aneja had been in Lucknow and the
-I • postman's statement was, thus, a complete lie. Mr. Ranjeet
Kumar has placed reliance on Tecco Trichy Engineers (supra)
and, in addition, on Oil & Natural Gas Corporation Ltd. Vs. Saw
G
Pipes Ltd. (2003) 5 SCC 705 in support of his submissions.
5. We have heard the learned counsel for the parties and
~ gone through the record. We reproduce herein-under Section
...... 3 of the Act:
"Sec.3. Receipt of written communications. -(1) Unless H
466 SUPREME COURT REPORTS
1
[2008) 17 S.C.R. e
A otherwise agreed by the parties-
(a) any written communication is deemed to have
been -received if it is delivered to the addressee
personally or at his place of business, habitual
residence or mailing address, and
B
(b) if none of the places referred to in clause (a) can
be found after making a reasonable inquiry, a
written communication is deemed to have been
received if it is sent to the addressee's last known
place of business,_ habitual residence or mailing
c address by regist~red letter or by any other means
which provides a' record of the attempt to deliver
it.
(2) The communications is deemed to have been
D received on the qay it is so delivered.
(3) This section _- does not apply to written
qommunication ifll respect of proceedings of any
judicial authority."
6. A bare perusal of the aforesaid provisions would reveal
E that if a written communication is delivered to the addressee
personally at his place of business, it shall be deemed to have
been received by him on the day it was delivered. Admittedly,
a copy of the award had bee~ sent to Subhash Chander at the
Alka Cinema which was, in fact, the property which was the
F subject matter of the partnership business between the parties.
In this view of the matter, the statement of the postman Dharam
Pal becomes extremely relevant wherein he deposed that on
the 30th August 1999, Subha.sh Chander had not been present
in the cinema premises and t~at on the next day he had refused
G to receive the communication even when tendered to himwhich
fact had been endorsed by him on the envelope which had then I

been returned to the sender. We are, thus; of the opinion that ''
by virtue of sub-clause (a) df Section 3 (1) read with Section
3(3), a presumption that the document had indeed been
H delivered is writ large on ttle facts of the case. Mr. Ranjeet
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 467
[HARJIT SINGH BEDI, J.]

Kumar has, however, drawn our attention to the certificate A
issued by Hotel Shakti. We find that this document is dated 26th
August 2003 that is about four years after the event. Moreover,
it is significant that in the objections filed in the executing court,
no reference whatsoever had been made to this
communication and, even more significantly, it had been B
produced in the Executing Court for the first time during the
course of arguments. We are, therefore, of the opinion that this
document is an afterthought and created with the object of
strengthening the submission that the copy of the award could
not have been delivered to Subhash Chander as he had been C
absent from the cinema on the two crucial dates.
7. Mr. Rc;injeet Kumar's reliance on Tecco Trichy
Engineers case (supra) to our mind is tenuous. In this matter,
the Southern Railways had entered into a contract and a dispute
having arisen, the matter was referred to arbitration. The Tribunal D
gave its award on the 10th March 2001/11th March 2001 and
a copy of the award was delivered in the office of the General
Manager, Southern Railway on 12th March 2001 and an
acknowledgement of its receipt was given by some clerk. On
10th July 2001, the Chief Engineer presented an application E
for setting aside of the award and also an application for
condonation of delay under Section 34(3) of the Act. 'The
application for condonation of delay was contested by the
contractor as being beyond limitation. The objection found
favour with the learned Single Judge of the High Court who F
rejected the application holding it as barred by limitation. This
.~-
decision was upheld by the Division Bench leading to the filing
of an appeal in this Court. This Court set aside the aforesaid
judgment and while doing so observed that the Ministry of
Railways was a very large conglomerate with several divisions G ·.
and sub-divisions headed by senior officers and the General
Manager being at the apex of the administration of the division
was responsible for laying down the policy and taking broad
strategic decisions and was not involved in the day-to-day
management and operations of the different departments and H

-
468 SUPREME COURT REPORTS [2008] 17 S.C.R.
e
~

A that it was only departmental head, who was directly connected
with a particular dispute who would know what the matter was 1'
about. This is what the Court had to say:
7. It is well known that the Ministry of Railways has a
very large area of operation covering several divisions,
B having different divisional heads and various departments
within the_ division, having their own departmental heads.
The General Manager of the Railways is at the very apex
of the division with the responsibility of taking strategic -..(,,,
decisions, laying down policiesi of the organisation, giving
c administrative instructions and issuing guidelines in the
organisation. He is from elite managerial cadre which runs
~
the entire organisation of his division with different
departments, having different i departmental heads. The
day-to-day management and operations of different·
D departments rests with different departmental heads. The
departmental head is directly connected and concerned
·-
with the departmental functioning and is alone expected .),._

~
to know the progress of the matter pending before the
Arbitral Tribunal concerning !iis department. He is the
E person who knows exactly where the shoe pinches,
whether the arbitral award is adverse to the department's
interest. The departmental head would naturally be in a
position to know whether the rarbitrator has committed a
mistake in understanding the department's line of
F submissions and the grounds available to challenge the
1

award. He is aware of the factual aspect of the case and
also the factual and legal aspects of the questions involved
__...
.
in the arbitration proceedings. It is also a known fact and
the Court can take judicial noti€e of it that there are several
G arbitration proceedings pending consideration concerning
affairs of the Railways before arbitration. The General
Manager, with executive workload of the entire division
cannot be expected to know ,all the niceties of the case ~

pending before the Arbitral Tribunal or for that matter the .....
H arbitral award itself and to take a decision as to whether

-
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 469
[HARJIT SINGH BEDI, J.]

the arbitral award deserves challenge, without proper A
·~ assistance of the departmental head.
9. In the context of a huge organisation like the
Railways, the copy of the award has to be received by the
person who has knowledge of the proceedings and who
would be the best person to understand and appreciate B
the arbitral award and also to take a decision in the matter
of moving an application under sub-section (1) ·or (5) of
-->- Section 33 or under sub-section (1) of Section 34.
10. In the present case, the Chief Engineer had
signed the agreement on behalf of the Union of India
c
entered into with the respondent. In the arbitral
proceedings the Chief Engineer represented the Union of
India and the notices, during proceedings of the arbitration,
were served on the Chief Engineer. Even the arbitral award
D
clearly mentions that the Union of India is represented by
the Deputy Chief Engineer/Gauge Conversion, Chennai.
~
. The Chief Engineer is directly concerned with the
arbitration, as the subject-matter of arbitration relates to
the department of the Chief Engineer and he has direct
knowledge of the arbitral proceedings- and the question : E '

involved before the arbitrator. The General Manager of the
Railways has only referred the matter for arbitration as
required under the contract. He cannot be said to be aware
of the question involved in the arbitration nor the factual
~spect in detail, on the basis of which the Arbitral Tribunal F
~ had decided the issue before it, unless they are all brought
• to his notice by the officer dealing with that arbitration and
who is in charge of those proceedings. Therefore, in our
opinion, service of the arbitral award on the General
Manager by way of receipt in his inwards office cannot be G
taken to be sufficient notice so as to activate the
-l department to take appropriate steps in respect of and In

- -·
regard to the award passed by the arbitrators to constitute
the starting point of limitation for the purposes of Section
34(3) of the Act. The service of notice on the Chief H

-
470 SUPREME COURT REPORTS [2008] 17 S.C.R.

A Engineer on 19-3-2001 would be the starting point of
limitation to challenge the award in the Court. f-•·

11. We cannot be oblivious of the fact of impersonal
approach in the government departments and
organisations like Railways. In the very nature of the
B working of government departments a decision is not
taken unless the papers have reached the person
concerned and then an approval, if required, of the
competent authority or official above has been obtained.
All this could not have taken place unless the Chief
c Engineer had received the copy of the award when only
the delivery of the award within the meaning of sub-section
(5) of Section 31 shall be deemed to have taken place.
As would be evident, no arialogy:between the case before us
and the above cited case exists. 1The second judgment relied
0
upon by Mr. Ranjeet Kumar i.e. qil & Natural Gas Corporation
Ltd. Vs. Saw Pipes Ltd. (2003) 15 SCC 705 deals with the
general policy pertaining to crrtain kinds of arbitration
agreements and has nothing to 1do with the question posed
before us. We, therefore, find r that Mr. Ranjeet Kumar's
E arguments based on these twp cases are misplaced.
8. A discussion on this aspect would be incomplete without
a reference to the obstructionist attitude of Subhash Chander
during the course of the arbitration proceedings. It is significant
F that though the execution of the family arrangement has been
denied, the fact of the partnership deed qua Alka Cinema has
not been denied. It is also clear that the cinema was under the
complete and effective control of Subhash Chander and is now
under the control of his legal representatives and that nothing
has been paid to Kai lash Rani on account of the income of the
G partnership. It has been submitted by Mr. Ranjeet Kumar that
Subhash Chander had not appeared before the arbitrator as
the documents referred to in the statement of claim had not
been supplied despite several requests. Some facts, however,
bear re-capitulation and they woul~ be best put as in the award
H wherein the arbitrator observed as under: ·
-
-
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 471
[HARJIT SINGH BEDI, J.]
"In pursuance of the Arbitration Clause, Smt. Kailash A -
Rani Dang, since she was aggrieved by the acts and
omissions of Shri S.C. Aneja referred the matter to the
Arbitration of Shri Hans Raj Dang who refused to arbitrate
due to his illness and other personal reasons by means
of his letter dated 7.7.1999. B
Accordingly, Smt. Kailash Rani Dang, referred the
matter to my arbitration by means of letter dated 12.7.99.
-~
I, there upon entered into the reference and by
means of letter dated 17.7.99 called upon Smt. Kailash
c
- Rani Dang to send or to file a detailed statement of her
claims before me latest by 25.7.99 and send a copy thereof
to Shri S.C. Aneja through registered post. Shri S.C. Aneja
was also called upon to send or file the reply of statement
of the claim by 2.8.99. I also fixed 8.8.99 as the date of
hearing at 11 A.M. at the following address: D

---: . KH-219, New Kavi Nagar,
• Ghaziabad (U.P.).
Smt. Kailash Rani Dang filed her statement of claim
in time and sent a copy thereof to Shri S.C. Aneja by E
registered post.
However, Shri S.C. Aneja did not send any reply to
the statement of claim. By means of letter dated 29.7.99
addressed to Smt. Kailash Rani Dang along with copy
endorsed to me, Shri S.C. An'eja acknowledged the F
~
receipts of the letters regarding statement of claim etc., but
• requested Smt. Kailash Rani Dang to send him the
Photostat certified copies of the family arrangement and
the partnership deed to him as well as to his wife,
Later on by means of letter dated 7.8.99 Mis. Sen G
& Sen Advocates on behalf of their client S.C. Aneja
-l requested to supply t~e documents to their client while
_. acknowledging 8th Aug.99 ,as the date of hearing aml'
requested to refer the arbitration proceeding till the
documents are received by their client. H

-
472 SUPREME COURT REPORTS [2008] 17 S.C.R.

A It will not be out of place to mention here that by
means of letter dated 2.8.99 sent through speed post
addressed to Shri S.C. Aneja and copy endorsed to me,
Smt. Kailash Rani Dang informed that the documents shall
be produced before the Arbitrator and that Shri S.C. Aneja
B is free to inspect and get the copies from Dr. Amar Nath
Kumar on that date i.e. 8.8.99 accordingly.
lnspite of the full infqrmation and knowledge about
the date fixed hearing i.e. 8.8.99 Shri S.C. Aneja remained
absent on the date and did not appear to participate in the
c proceeding or to obtain copies of the documents Smt.
Kailash Rani Dang remained present on that date, I also
waited upto 2 p.m., but in vain.
To give one more opportunity to Shri S.C. Aneja I
fixed another date i.e. 25.8.99 as the next date of hearing
D
specially mentioning therei.n that Smt. Kailash Rani Dang
has offered to supply to Shri S.C. Aneja copies of the
documents relied upon by her on the next date of hearing
i.e. 25.8.99 in my presence as Arbitrator. By means of
letter dated 8.8.99 sent through Speed Post. And I also
E fixed the following Venue as the place of hearing at 11 a.m.
on 25.8.99:-
14, Old Navyug Market,
Ghaziabad (U.P.).
F A copy of the said letter was also sent to Sen & Sen
Advocates and Consultants.• B-12, Nizamuddin West, New
Delhi with reference to their letter dated 7.8.99.
On 25.8.99 Smt. Kailash Rani Dang appeared and
filed the following documents in support of her claim:
G 1. Partnership deed in original d~ted 7 .6.1995.
2. Family arrangemen~ in original dated 21.7.1998

H
3.

4.
Copy of affidavit filed by Shri S.C. Aneja in the High
Court.
Copy of letter of reference dated 2.7.99 to Shri
-
-
KAILASH RANI DANG v. RAKESH BALA ANEJA & ANR. 473
[HARJIT SINGH BEDI, J.]

Hans Raj Dang. A
( '1 5. Copy of letter of Shri Hans Raj Dang dated 7.7.99
expressing his inability to arbitrate.
I waited upto 2 p.m. on 25.8.99 for Shri S.C. Aneja
to appear but nobody appeared on his behalf. Thus, it is
B
established that Shri S.C. Aneja only wanted to delay the
proceedings and he deliberately absented himself in the
hearing and accordingly, I was left with no option but to
-~
proceed/continue with the arbitration proceedings in his
absence."
c
Nothing more needs be said about Subhash Chander's
conduct in the face of these serious indictments by the
arbitrator.
9. In view of the above observations, and the fact that no
Iii· misconduct has been alleged against the arbitrator, we must D
take it as proved that Subhash Chander had deliberately
---( stayed away from the arbitration proceedings in order to
• frustrate and delay the claim of Kailash Rani.
10. Mr. Ranjeet Kumar, as already indicated above, has
also challenged the very appointment of the arbitrator and has E
referred us to the family arrangement under which Shri Hans
Raj Dang had been named as the sole arbitrator and on his
•
i refusal Dr. Amar Nath Kumar, to suggest that as no request had
been made to Shri Hans Raj Dang and as there was no refusal
on his part, the appointment of the alternate arbitrator was not F
.. f justified. This matter has been dealt with by the arbitrator in his
award, but we have re-examined the matter ourselves. We find
from the record that Kailash Rani had addressed a letter dated
~ 2nd July 1999 to Shri Hans Raj Dang to arbitrat~ in the dispute
and, he had, by his letter dated 7th July 199Q,- refused to G
-( accede to the request because of ill health and_ that a copy of
this letter had also been endorsed to Subhash Chander. Faced
~
-t with this situation, Kailash Rani had written letter dated 12th July . _
1999 requesting Dr. Amar Nath Kumar to act as the arbitrator
which request had been accepted. The facts stated above have H
474 SUPREME COURT REPORTS [2008) 17 S.C.R.

A not been deniedby Subhash dhand~rat any stage. It must,
therefore, be taken that the aforesaid communications had ""'" ,
indeed been exchanged. Morebver, even assuming that the
family arrangement dated 21st July 1998 had not been
executed and a dispute on facts had to be raised, Subhash
B Chander ought to have done so beiore the arbitrator and a
boycott of the proceedings was ~njustified. We, therefore, find
no flaw whatsoever in the conduct of the arbitration proceedings
by Shri Amar Nath Kumar. ~-
11. The judgment of the High Court cannot, to our mind,
C be sustained. We, accordingly, allow Civil Appeal No.7258 of
2008 arising out of SLP(c) No. 1958 of 2008, set aside the
judgment of the High Court and restore that of the Executing
Court dated 31st October 2006. Civil Appeal No. 7257 of _2008
arising out of SLP(c) No. 1957 of 2008 is rendered infructuous.
,. -0 There will be no order as to costs.
I'
R.P. Appeal No. 7258 of 2008 allowed.
Appeal No. 7257 of 2008 infructuous.