Holding

The court may, at its discretion under s.28(1) of the Arbitration Act, extend the time for making an award, and such extension validates an award rendered after the statutory period.

Summary

The State of Punjab entered into a contract with Sri Hardyal for construction of bridges, containing an arbitration clause appointing the Superintending Engineer as arbitrator but fixing no time for the award. Under the Arbitration Act, 1940, the award was required within four months, a period that elapsed before the arbitrator rendered his decision. Hardyal participated in the arbitration proceedings after the statutory period and challenged the award under s.30, but the trial court upheld it; the High Court division bench set aside the award, holding that participation did not estop a challenge and that only the court could extend the time. On appeal, the Supreme Court held that s.28(1) gives the court wide discretion to extend the time for an award and that such extension, exercised judiciously, renders the award valid even if made after the statutory period. Consequently, the Court extended the time, deemed the award given in time, allowed the appeal in part, and remanded the matter to the High Court to decide the remaining issues.

Issues considered

Whether an award made after the expiry of the statutory four‑month period, without a court order extending time, is invalid.
Whether a party’s participation in arbitration proceedings after the expiry of the statutory period amounts to a waiver or estoppel, thereby extending the time under s.28.
Whether the court has exclusive power under s.28(1) to extend the time for making an award and the effect of s.28(2) on any contractual provision allowing the arbitrator to extend time.
Whether the other objections raised (misconduct of arbitrator, denial of natural justice) should be decided by the High Court.

Legislation cited

Arbitration Act, 1940s. 28(1), s. 28(2), s. 3
Constitution of Indias. Article 133(1)(c)

Subjects

ArbitrationAwardStatutory time limitExtension of timeSection 28 Arbitration ActWaiverEstoppelCourt discretionConstruction contract

Judgment

... 649
A

'

... STATE OF PUNJAB
B
rr v.
' SRI HARDYAL
" '•:1

April 10, 1985
.,
c)
~ [0.CHINNAPPA REDDY AND R.B. MISRA, JJ]

Arbitration Act 1940, section! 3 and 28 (I) and (2) and clause 3 of the First
Schedule-Written agreement-:-Containlng arbitration clause-No period, fixed
for giving award-Statutory period-Applicability of-Parties participating in the·
proceedin¥s afte_r the expiry ofpre~cribed period-Whether amounts to_ ~xten~ion of
time. for -making award-Extension of time for making award-{urisdicllon of .
arbitrator-Court's exercise of discretion in extension OJ time-Doctrine of '
waiver and estoppel whether apl!licable.

·" By a written agreement,· the reFpondent agr'eed to construct bridges and
culverts for State Govl!rnment. The agreement contained an arbitration clause,
the Arbitrator being the Superintcndiog Eogineer. However, no period was
fixed for giving the award and• therefore-, :the statutory period of .four months El
for giving the award prescribed in clause 3 of the First Schedule to the Arbitra-
tion Act was applicable.
'
"
A dispute arose between the parties, The respondent sent a notice to the
Arbitrator requestiag him to accept his claim an~ give his award•. The respon-
dent c:airhCd compensation on two counts, namely, (1) that the Sub-Divisional
I
Officer got certain bridges demolished which had been construed strictly in-, F
terms of the agreemi!nt, and (2) that,,the _re"pondent bad also been.directed io
stop the work.

The Arbitrator g~vC his award _against the respondent after the expiry of
the prescribed period, the respondent having participated perio"d,in the proceed-
ings before the Arbitrator even after the expirJ of the statutory period. The
respOndent cha11enged ihe ·award but the trial Court overruled the objec'tiori and
upheld the a·ward. ·
I •,
r' _t, ,
On appeal to the Hi~h Court, a Single Judge referred .two points for
decision l?Y a Division Bench, (l}Whethei: . the aWafd given after the expiry of
the.pres~ribed period without extension of. time by the·Cowrt was iOvalid ? and.
(2) W. hether the pariicip~tion ·il'l the &rbitrafion -proce·edings eveQ ·after the H
,· '·
,, 650 SUPREME COURTS REPORTS (1982] 3 s.c.a.

A expiry of the period of limitation prescribed would by necessary implication
amount to extending the time under s. 28 of the Arbitration Act by the
Court 7

The Division Bench· allowed the objection of the respondent regarding
• delay in giving the award, holding that a party to an arbitration agreement is:
B
not (estopped from challenging the "award on the ground of delay merely be-
cause it had participated in the arbitration proce~dings even after the expiry
of the prescribed period without any demur, that mere dismissal of the objection
regarding delay in the award does not amount an ex.tension of time by the
Court under s. 28 (I) of the Arbitration Act, and that time can be extended by
the Court by the exercise of sound judicial discretion. The appeal wasa Uow~d
c and the case remanded to the trial Court for ·deciding whether it f/BS a fit case
for condoning the delay in giving the award by the Arbitrator.

Allowing the Appeal of the State in part, •
..
0
HELD : I. The provisions of ss. 3 and 28 (I) and (2) and clause 3 of
D First Schedule to the Act indicate that it is open to_ the parties to ·an arbitration
agreerrient to fix: the time Within which the Arbitrator must give his award, but ii
has to be so stated in the agreement itself. If per chance no ·timC has been- speci..:
fled by the parties in the arbitration agreement. then by virtue of operatiOn of
s.3 with read clause 3 of the First .Sc edule the award must be given within four
months of the arbitrator entering on the r~ference or after having been called
upon to act by notice in writing from any party to the arbitr11tion agreement or,1 •
E within such extended time as the Court may allow. [654A-B]

2. Sub-section (I) of s.28 is very wide and confers full discretion on the
Court to enlarge time for the award at any time, which should, however, be
exercised' judiciously. Sub-section (2) of s. 28 makei: it evident that the Court
alone has the power to extend time. it further provides that a clause in the .
F arbitration agreement giving the Arbitrator power to enlarge time shall be void
and of no clfect except when all the parties corisent to such enlargement. It is
not open to Arbitrators ~at their own pleasure withoi.Jt the consent of parties to
the agreement to enlarge: tin1e for making the award.[655 A-BJ

H.K. Watta/ v V.N. Pandya [1974] I SCR 259, followed.

G1 3. Once the law precldes parties from extending time " after the matter
has been referred to the Arbitrator, it will be contradiction to hold that tho
same result can be brought about by the conduct of the parties. There can be
no estoppel against a statute. The time to be fixeJ for making the award was
initiaJly one of agreement between the parties but ·it does not follow, that in the
face of a clear prObibition by law that the time fixed under clcluse 3 of the
said Schedule can only be extended by the Court and not by the parties at any
H, stage. It still remains a matter of agreement ·and the rule of estoppel operates.
The Act has injuncted the J\rbitrator to ~ive an ~war4 witbiothe prescrib~4
PUNJAB v. HARDYAL (Misra, J.) 651 A
period of four months u·aless the same is extended by the Court. The Arbi- I
trator has no jurisdiction to make an award after the fixed time. If the award.
made beyond the time b invalid the parties are not estopped by their conduet
from chatlenging the award on the ground that it was made beyond time
merely because of their having participated in the proceedings before the Ar1li·
trator after the expiry or the prescribed period. (6~6H; 657 ~·CJ
B
Shambbu Nath v Surja Devi, AIR 1961 All. 180; Shiv/al v. Union of India
AIR 1975 M.P.40; and Ga11esh Chandra v, Artafrana AIR 1965 Orissa 17 over·
ruled .

. 4. The policy of law seems to be that the arbitration proceedings should
not be unduly prolonged. The Arbitrator, therefore, has to give the award
within time prescribed or such extended time as the Court connerned may in its C,
discretion extend and the Court alone has been given the power to extend time
for giving the award. The Court has got the power to extend time even' after
the award has been given or after the expiry of the period prescribed for the
award. But th~ Court has to exercise its discretion in a judicial manner. In the
instant case, the High Court was justified in taking the view that it did. This
power can be exercised even by the appellate court. In view of the policy of
law and in view of the fact that the parties have been. taking willing part in the o.
proceedings before the Arbitrator without a demur, this will be a fit case for
the extension of time. The time for giving the award is extended and the
award will rhe deemed to have been given in time. The case is however,
remanded to the High Court for decision on the other issues involved.
[657 E..Q; 6581

CIVIL APPELLATB JURISDICTIOS : Civil Appeal No. 1980 of .E
1970.

From the judgment and order dated 16.11.69 ofthe High
Court of Punjab & Haryana in F.A.O. No. 120/62.

Mrs. Urmi/a Kapur and S.K. IJagga for the Appellant.
F
The Judgment of the Court .was delivered by

MISRA, J. Hardyal, the respondent, entered into a contract
with the State of Punjab, Public Works Department (Buildings and
Roads Branch) for the construction of certain bridges and culverts
on the Mukerian-Naushehra Road. The agreement between the G
parties was evidenced by a writing. The written agreement contained
an arbitration clause whiCh provided that dispute, if any, between
the parties would be referred to the Superintending Engineer, Public
Works Department .(Buildings and Roads), Jullundur Circle. It H
appears that no period was fixed in the agreement of reference for
giving the award and therefore Period of four ·months as prescribed
654 SUPREME COURT REPORTS (1985] 3 S.C.R.
'
A in clause 3 of the First Schedule attached to the Arbitration ,Act
would be the statutory period for giving the award.

Some dispute did arise between the parties. The res·pondent,
therefore, sent a notice on January 7, 196(1 to the Superintending
Engineer requesting him to accept his claim to the tune of Rs. 7,568
and give his award accordingly. The respondent claimed this
B
amount of compensation broadly on two counts : (I) that the sub-
Divisional Officer had got certain bridges demolished which accor-
ding to the respondent had been constructed strictly in terms of the
agreement, and (2) that the respondent had also been directed to
stop the work.
C'
The arbitrator gave his award against the respondent on April·
28, i 96.I, but after the expiry of the prescribed period. It is, how-
ever, admitted by the respondent that he proticipated in the pro-
--
I

ceedings before the arbitrator even after the expiry of the statutory.
period. The respondent challenged the a ward by filing an objec-
D tion under s. 30 of the A~bitration Act on a number of grounds. On
the p.leas taken by the respondent the Senior Sub-Judge framed the
following four issues : (I) whether the objections were premature,
(2) whether the arbitrator had misconducted himself or the proceeJ-
ings, (3) whether the award was against natural justice, and (4)
whether the award was made after inordinate delay.
E
The learned Judge overruled all the objections and t'tphold the
award. Issue No. I was not pressed before him. The contention
of the respondent that reasonable opportunity had not beei'l afforded
to him to adduce evidence, by the arbitrator, was also repelled by
the learned Judge. He observed :

"One of the grounds taken up for setting aside the
award as stated in the application was that the petitioner
was not afforded a reasonable opportunity to adduce evi-
dence. But the record of the proceedings dated 24th !'f,
April, !961 shows that the parties did not want to say any-.
thing further and the hearing of the case was, therefore,
closed under such circumstances."
"
The plea regarding misconduct on the part of the arbitrator
was also overruled and dealin$ with this point the learned Jud$e
ff observed ;
PUNJAB v. HARDYAL (Misra, J.) 653
"Nothing has been pointei out to me in the court A
durlng the course of the arguments as to how the arbitrator
has misconducted himself and the proceedings."

The plea regarding delay in giving the award was rejected on
the ground that the respondent had been participating in the procee-
B
dings before the arbitrator even after the expiry of the prescribed
period of limitation.

The respondent took the matter in appeal to the High Court.
When the matter came up before a learned Single Judge he referred
the following two points for decision by a Division- Bench on C
~'- account of the importance of the question involved. in the case and
also on account of confl.ict of judicial opinion on the point :·

1. Whether the award given after the expiry of the pres-
cribed period without extension of time by the court
was invalid ? D

2, Whether the rejection of the objection regarding delay
in giving the award on the ground that the objector
had participated in the arbitration proceedings even
after the expiry of the period of limitation prescribed
would by necessary implication amount to extending E
the time under s. 28 of the Arbitration Act by the
Court?

The Division Bench allowed the objection of the respondent
regarding delay in giving the award holding that a party to an arbi-
tration agreement is not estopped from challenging the award on the 11
ground of delay merely because it has participated in the arbitration
proceedings even after the expiry of the prescribed period without
any demur. On the second point the High Court held that mere
dismissal of the ob!ection regarding delay in the award does not
amount' to extension of time by the court .under s. 28(1) of the
Arbitration Act and indeed time can be extended by the Court by G
the exercise of sound judicial discretion. Accordingly the appeal
was allowed, the order of the Senior Sub-Judge was set aside and·the
case was sent back to the trial court for deciding afresh whether it
was a fit case for condoning the delay in giving the award by the
arbitrator after affording opportunity to the p1rtie' to adduce evi-
dence, H
654 SUPREME COURT REPORTS (1985) 3 S.C.R.
·The State has now come up in appeal on a certificate granted
A
by the High Court under Art. 133(l)(c:) of the Constitution, as it
then stood.

The same points have been reiterated before this Court. Before
to
dealing with the points involved it will be convenient refer to the
B relevant provisions of the Arbitration Act. Section 3 reads ;

''3. An arbitration agreement, unless a different inten-
tion is expressed therein, shall be deemed to include the
provisions set out in the First Schedule in so far as they
are applicable to the reference."
c
Section 28 reads :

"28. (!) The court may, if it thinks fit, whether the
time for making the award has expired or not and: whether
the award bas been made or not, enlarge from time to time
D the time for making the award.

(2) Any provision in an arbitration agreement whereby
the arbitrators or umpire may, except with the consent of
all the parties to the agreement, enlarge the time for mak·
ing the award, shalJ be void and of no effect."
E
Clause 3 of First Schedule provides :

"3. The arbitrators shall make their award within
four months after entering on the reference or after having
been called upon to act by notice in writing from any
F party to the arbitration agreement or within such extended
time as the court may allow."

A perusal of these provisions indicates that it is open to the
parties to an arbitration agreement to fix the time within which the
G arbitrator must give award, but it has to be so stated in the agree-
ment itself. If per chance no time has been specified by the parties
in the arbitration agreement, then by virtue of operation of s. 3
read with cl. 3 of the First Schedule the award must be given within
four months of the arbitrator entering on the reference or after
having been called upon to act by notice in writing from any party
to the arbitration agreement or within such extended time as the
H
court may allow.
PUNJAB v. HARDYAL'(Misra, J.) 655
•
Sub-section ( l) of s. 28 is very wide and confers full discretion A
on the court to enlarge time for making the award at any time. The
discretion under sub-s. (I) of s. 28 should, however, be exercised
judiciously.· Sub-section (2) of s. 28 also makes it evident that the
court alone has. the power to extend time. It further provides that a
clause in the arbitration agreement giving the arbitrator power to en-
large time shall be void and of no effect except when all the parties B
consent to such enlargement. It is not open to arbitrators at their
own pleasure without consent of the parties to the agreement to
enlarge time for making the award. · .
In H.K. Wattal v. V.N. Pandya(') dealing withs. 28(1) of the
~-Arbitration Act this Court observed : c
"There is no doubt that the arbitrator is expected to
make his award within four months of his entering on the
reference or on his being called upon to act or within such
extended time. as the court may allow. Reading clause 3
of the Schedule along with section 28 one finds that the D
power to enlarge the time is vested in tlie court and not in
the arbitrator. Clause 3 and section 28(1) exclude by neces-
sary implication the power of the arbitrator. to enlarge the
time. This is emphasised by section 28(2) which provides
that even when such a provision giving the arbitrator power
to enlarge the time is contained in the agreement, that pro- E
vision shall be void and of no effect, The headnote of
section 28 brings out the force of this position in law by
providing that the power is of the court only to enlarge
time for making the award.

Sub-section (2) of section 28, however, indicates one F
exception to the above rule that the· arbitrator cannot en-
large the time, and that is when the parties agree to such
an enlargement. The occasion for the arbitrator to enlarge
the time occurs only after he is called upon to proceed
with the arbitration or he enters upon the ~eference. Hence
it is clear that if the parties agree to the enlargement of G
time after the arbitrator has entered on the reference, the
arbitrator has the power to enlarge it in accordance with
the mutual agreement or consent of the parties. That such
a consent must be a post-reference consent, is also clear
from section 28(2) which renders null and void a provision
ff
\. [1974] l SCR 259.
656 SUPREME COURTS REPORTS (1985] 3 S .C.R

A in the original agreement to that efiect. In a sense where
a provision is made in the original agreement that the arbi
trator may enlarge the time, such a provision always implies
mutual consent for enlargement but such mutual consent
initially expressed in the original agreement does not save
the provision from being void. It is, therefore, clear that
B the arbitrator gets the jurisdiction to enlarge the time for
making the award only in a case where after entering
on then arbitration the parties to the arbitration agreement
consent to such enlargement of time."

The next question that crops up for consideration is what will~
c be the effect if a party to the arbitration took part in the proceedings 1

before the arbitrator even after the expiry of four months, that is,
the period prescribed for giving the award. Some High Courts have
taken the view that in such a situation the condition of four months
period will be deemed to have been waived. Such a view has been
D taken by the Allahabad High ;court in Shambhu Nath v. Surfa
Devi.(') A learned Single Judge of that High Court observed :

"A party to an arbitration agreement who voluntarily
takes part in the arbitration proceedings after the expiry
of four months will be deemed to have waived the implied
E condition as to time."

A similar view has been taken by the Madhya Pradesh High
Court in Shfrlal v. Union of lndia('). In Ganesh Chandra v.
Artatrana:'> a single Judge of the Orissa High Court observed :

F "Ifthe parties, after the expiry of four months, sub-
\...,...,,
r-
.
mit themselves to the jurisdiction of the arbitrators and
take part in the proceedings enabling them to pass an
award, it cannot be said that the arbitrators acted without
jurisdiction. In such a contingency, the principle of waiver
and estoppel would have full application .
.G
once we hold that the law precludes parties from extending
time after the matter has been referred to the arbitrator, it will be

(i) AIR 1961 All. 180 ..
(2) AIR 1975 M.P. 40.
(3) AIR 1965 Orissa 17.
H
• :i>ONJAil v. HARDYAL (Misra, i.) 657
contradiction in terms to hold that the same result can be brought
A
about by the conduct of the parties. The age long established prin·
ciple is that there can be no estoppel against a statute. It is true
that the time to be fixed for making the award was initially one of
agreement between the p_arties but it does not follow that in the
face of a clear prohibition by law that the time fixed under cl. 3 of
1' the Sche_dule can only be extended by the court and not by the B
parties at any stage, it still remains a matter of agreement and the
rule of estoppel operates. lt need be hardly emphasized that the
Act has injuncted the arbitrator to give an award within the pres-
cribed period of four· months unless the same is extended by the
1a._ court. The arbitrator has no jurisdiction to make an award after
. .,..--......the fixed time. If the award made beyond the time is invalid the ·c
parties art not estopped by their conduct from challenging the
award on the ground that it was made beyond time merely because
of their having participated in the proceedings before the arbitrator
after the expiry of the prescribed period. -D
,f

The policy of law seems to be that the arbitration proceedings
should not be unduly prolonged. The arbitrator therefore has to
give the a\vard within the time prescribed or such extended time·as
the court concerned may in its discretion extend and the court along
has been given the power to extend time for giving the award. As
observed earlier, the court has got -the power to extend time even
after the award has been given or after the expiry of the period
;.
prescribed for the ~ward. But the court has to exercise its discre-
tion in a ju~icial manner. The High Court in our opinion was jus-
tified in taking the view that it did. This power, however, can be
exercised even by the appeilate court. The present appeal has F
remained pending in this Court since 1970. No useful purpose will
be served in remanding the case to the trial court for deciding
whether the time should be enlarged in the circumstances of this
case. In view of the policy of law that the arbitration proceedings
should not be unduly prolonged and in view of the fact that the
parties have been taking willing part in the proceedi!J.gs before the G
arbitrator without a demur, this will be a fit case, in our opinion,
for the extension of time. We accordingly extend the time for
giving the award and the award will be deemed to have been given
in time.

The other questions involved in the case. however, have not
bOJn do1lt w1t'1 by the High Court and it rest content by making a H
6s8 SUPREME COURTS REPORTS (1985] 3 SC.R.

A bald observation that there is no other point to be decided in this
appeal. The objector-respondent had raised a number of pleas to
challenge the award giving rise to four issues. It was, therefore,
obligatory for the High Court to consider those points unless they
had been given up by the objector-respondent. There is nothing on
the record to suggest that the respondent had given up those
B grounds. The case will, therefore, have to be sent back to the 1"'
High Court for deciding· the other issues involved iii this case.

We accordingly allow the appeal in part and set aside that part
of the order by which the High Court remanded the case to the.
C trial court for deciding whether time should be extended. The case A
is sent back to the High Court for deciding other Issues involved.· ·
. In the circumstances of the case the parties shall bear their own
co~ts.

D

A.P.J. Appeal allowed.