REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  3313   OF 2018 (Arising out of SLP(C) No.15668 of 2012)

ANILKUMAR JINABHAI PATEL (D) THR. LRs.                 …Appellants

Versus

PRAVINCHANDRA JINABHAI PATEL AND ORS.            ...Respondents

WITH

CIVIL APPEAL NO. 3314  OF 2018 (Arising out of SLP(C) No.15741 of 2012)

J U D G M E N T

R. BANUMATHI, J.

Leave granted.

2. Appellants  have  filed  these  appeals  challenging  the  judgment

dated 27.03.2012 of the High Court of Judicature at Bombay Bench at

Aurangabad in W.P. No. 4669 of 2011 in and by which the High Court

held that  challenge to  the arbitral  award dated 07.07.1996 was time

barred  under  the  provisions  of  Section  34  of  the  Arbitration  and

Conciliation Act, 1996 (for short "the Act").

3. The facts of the case are that the appellant No.1/Anilkumar Patel

and respondent No.1/Pravinchandra Patel are real brothers and sons of

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Jinabhai. They had three other brothers who were already separated.

So far as the parties before us, they are related as under:-

Jinabhai

         Pravinchandra Jinabhai Patel (R1)                  Anilkumar Jinabhai Patel (A1)          =Savitaben P. Patel/wife (R2)             =Geetaben A. Patel/wife (A1(a))*

         Kalpita Dilipkumar Patel    Alpita Jayesh Soni          Trupti P. Patel  (R3)       (R4)         (R5)

      Darshan A. Patel (A1(b))*               Chetan A. Patel                 Vikram A.Patel    =Monika Darshan Patel/wife (R10)          (A1(c))*                 (A1(d))*

[*Respondent Nos. 6 to 9 have been deleted as respondents and added as LRs of the appellant vide order dated 30.04.2015 in the SLP]  

Pravinchandra Patel and Anilkumar Patel together started the business

of fertilizer manufacturing, chemical and real estate at Jalgaon. In the

course of business, they set up number of companies and partnership

concerns and acquired numerous immovable and movable properties.

Pravinchandra Patel has three daughters, who are married and settled

outside Jalgaon. Anilkumar Patel has three sons, who are residing with

him at Jalgaon. As children of Pravinchandra Patel and Anilkumar Patel

grew up and in order to avoid any possible litigation, both the brothers

and their family members decided to make division of the assets of the

family.   For  this  purpose,  they  approached  Latikaben  (respondent

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No.12)  and  Bhikhalal  Nathalal  Patel  (respondent  No.11)  who  is  the

sister  and brother-in-law of  Pravinchandra Patel  and Anilkumar Patel

and parties have agreed to appoint them as arbitrators. It  culminated

into  an  MOU dated  21.05.1996  appointing  Latikaben  and  Bhikhalal

Nathalal Patel as arbitrators which was signed by all the members of the

family that is the appellants and respondents.  

4. While arbitrators were away to Rajkot  due to emergency work,

both Pravinchandra Patel and Anilkumar Patel decided to streamline the

ongoing business of firms and companies by signing of an interim MOU

on 29.06.1996  (IMOU).  The covenants of  the said  IMOU covered the

matters relating to bank accounts and withdrawal power, NPK allocation

etc. The said IMOU was signed by Pravinchandra Patel for himself and

on behalf of his family members.  Similarly, Anilkumar Patel signed in

the IMOU for himself and also as a power of attorney holder for his wife,

his all sons and daughter-in-law.

5. The arbitrators arrived at Jalgaon on 04.07.1996 and continued

with the arbitration proceeding and passed the award on 07.07.1996

(with  a  mention  of  IMOU dated  29.06.1996)  under  which  certain

properties  were  given  to  Pravinchandra  Patel  and  Anilkumar  Patel

whereas some other assets were kept undivided with equal rights and

interest  thereon  of  both  groups.  The  award  was  written  in  Gujarati

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language by hand by the arbitrators and signed by the arbitrators. The

copy  of  the  award was  given to  Pravinchandra  Patel  and Anilkumar

Patel by arbitrators in person which was duly acknowledged by them.

Copy of  the award bears  signature of  both Pravinchandra Patel  and

Anilkumar Patel with recital that they and their family members will act

as per the award and will give effect to the same. Then by an award

dated 03.11.1996, the issues between appellants and respondents were

finally decided taking note of earlier awards. According to Pravinchandra

Patel, Anilkumar Patel accepted and acted upon the awards on more

than one occasion.

6. However, Anilkumar Patel and his family members (appellant Nos.

1(a) to 1(d) and respondent No.10) filed an arbitration petition No.202 of

2005 under Section 34 of the Act before the District Judge, Jalgaon on

29.11.2005  challenging  the  award  dated  07.07.1996  contending  that

they learnt about the arbitral award only on 11.08.2005 when they were

served with the notice of execution petition filed by Pravinchandra Patel

alongwith the xerox of the award dated 07.07.1996. Therefore, as per

the  appellant-Anilkumar  Patel,  period  of  limitation  starts  only  from

11.08.2005, from the date of their receipt of copy of the award. It was

further alleged that, appellant Nos. 1(a) to 1(d) and respondent No.10

were  not  included  as  party  in  the  award  dated  07.07.1996  and  the

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award is not  binding on them. They have,  inter alia,  alleged that the

award is a false and fraudulent document.  They also emphasized that

the  signature  of  Anilkumar  Patel  in  the  arbitral  award  showing  his

acknowledgement was forged and therefore, could not be acted upon.

7. Later on, an application came to be filed by Anilkumar Patel for

himself and on behalf of his family members for an amendment under

Order VI Rule 17 C.P.C. stating that the arbitration petition No.202 of

2005  filed  initially,  did  not  contain  the  challenge  to  award  dated

03.11.1996 and hence, by an amendment sought to challenge award

dated  03.11.1996  as  well.  The  said  application  was  dismissed  on

30.06.2006 by the District Court on the ground of limitation which was

further challenged through W.P. No.5502 of 2006 before the High Court.

The  same  was  remanded  to  the  District  Judge  on  21.08.2006  for

consideration of the matter afresh. After remand, the District Judge by

order dated 28.09.2006 again dismissed the amendment application on

the ground of  limitation.  The said order dated 28.09.2006 was again

challenged by Anilkumar Patel under W.P. No.7614 of 2006. The High

Court vide order dated 13.11.2006 dismissed the writ petition observing

that Anilkumar Patel is adopting tactics of approbate and reprobate and

Anilkumar  Patel  is  acting  as  per  his  convenience  by  denying  the

knowledge  of  award  dated  03.11.1996  in  some  court  proceedings

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though in some other proceedings, he has relied on the said award and

sought to take advantage on the basis of the said award.  

8. Insofar  as  the  challenge  to  the  award  dated  07.07.1996,  the

District  Judge  vide  order  dated  14.02.2011  allowed  the  application

under Section 34 of the Act inter alia, holding that the period of limitation

prescribed under Section 34(3) of the Act is to be computed from the

point of time when the party concerned received the copy of the arbitral

award.  The District Judge set aside the award holding that number of

serious issues have been raised in application under Section 34 and

there is  nothing to show that  Anilkumar Patel  was authorised by the

other applicants to receive a copy of the award on their behalf and it

cannot be said that the appellant Nos.1(a) to 1(d) and respondent No.10

had received the award in terms of Section 31(5) of the Act.

9. Being aggrieved, Pravinchandra Patel filed W.P. No.4669 of 2011.

The High Court by the impugned judgment dated 27.03.2012 set aside

the order of the District Judge holding that the petition filed in the year

2005 under Section 34 of the Act was time barred. The High Court held

that sofaras the award dated 03.11.1996, the findings in W.P.No.7614 of

2006 have attained finality which has foreclosed the right of Anilkumar

Patel  to  challenge  the  award  dated  07.07.1996.  The  High  Court

enumerated various circumstances to hold that Anilkumar Patel and his

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family members were well aware of the award dated 07.07.1996. The

High  Court  also  relied  upon  various  correspondence  between  the

parties, legal proceedings etc. (O.A. No.298A/2001 etc.) to arrive at the

conclusion that Anilkumar Patel received the award dated 07.07.1996.

On those findings, the High Court held that the petition filed in the year

2005 under Section 34 of the Act is time barred and the petition filed

under Section 34 of  the Act challenging the award dated 07.07.1996

came to be dismissed.

10.  On behalf of legal heirs of Anilkumar Patel, it was contended that

as  contemplated under  Section  31(5)  of  the  Act,  copy  of  the  award

dated  07.07.1996  was  not  served  upon  the  family  members  of

Anilkumar Patel and mere knowledge as to the existence of the award

would  not  in  any  manner  result  in  the  commencement  of  period  of

limitation.  The learned senior counsel for the appellants contended that

the limitation period can be computed only from the day on which the

original signed copy of the arbitral award is received under the provision

of Section 31(5) of the Arbitration and Conciliation Act, 1996.

11. Per contra, learned senior counsel for the respondents has drawn

our attention to number of documents to refute appellant's contention

wherein appellant-Anilkumar Patel himself admitted many times that the

arbitral  award was within his  knowledge and used the awards dated

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07.07.1996  and  03.11.1996  on  number  of  occasions  including  legal

proceedings.  Further  contention  of  Pravinchandra  Patel  is  that

arbitrators who were none other than their sister Latikaben (respondent

No.12)  and  Bhikhalal  Nathalal  Patel  (respondent  No.11)  husband  of

Latikaben  who  came  from  Rajkot  to  Jalgaon  to  settle  the  matter

amicably between two brothers which was at the instance of both the

parties and while so, the award cannot be assailed as fabricated or a

biased one.

12. On the aforesaid rival contentions advanced on behalf of both the

parties  and  upon  perusal  of  the  impugned  judgment  and  materials

placed on record, the following points arise for consideration:-

(1) Whether Anilkumar Patel represented his family in the

arbitration  proceedings  and whether  respondents  are

right  in  contending  that  receipt  of  copy  of  award  by

Anilkumar Patel  was for himself  and on behalf  of  his

family members?

(2) Whether the High Court was right in holding that  the

application  under  Section  34  of  the  Arbitration  and

Conciliation Act, 1996 for setting aside the award was

barred by limitation?

13. Section 34 of the Act provides for filing of an application for setting

aside an arbitral award. Sub-section (3) of Section 34 of the Act lays

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down the period of limitation for making the application.  Section 34(3)

of the Arbitration and Conciliation Act, 1996, reads as follows:-

34. Application for setting aside arbitral award.-(1) Recourse to

a  Court  against  an  arbitral  award  may  be  made  only  by  an

application for setting aside such award in accordance with sub-

section (2) and sub-section (3).

(2) .........

(3) An application for setting aside may not be made after three

months have elapsed from the date on which the party making that

application had received the arbitral award or, if a request had been

made under Section 33, from the date on which that request had

been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was

prevented by sufficient cause from making the application within the

said period of three months it may entertain the application within a

further period of thirty days, but not thereafter.

14. Section  34(3)  provides  that  an  application  for  setting  aside an

award shall  not  be entertained by the court  if  it  is  made after  three

months have elapsed from the date on which the applicant had received

the arbitral award.  The proviso to Section 34 further provides that if the

court is satisfied that the applicant was prevented by sufficient cause

from making the application within the prescribed time, it may entertain

the application within a further period of thirty days 'but not thereafter'.

(vide State of Arunachal Pradesh v. Damini Construction Co. (2007) 10

SCC 742). The words 'but not thereafter' in the proviso are of mandatory

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nature,  and couched in  the  negative,  and  leave no  room for  doubt.

Proviso to Section 34 gives discretion to the court to condone the delay

for a sufficient cause, but that discretion cannot be extended beyond the

period  of  thirty  days,  which  is  made exclusively  clear  by  use of  the

words 'but not thereafter'.   

15. In  Union  of  India  v.  Tecco  Trichy  Engineers  and  Contractors

(2005) 4 SCC 239, a three Judge Bench of this Court, in respect to the

issue of limitation for filing application under Section 34 of the Act for

setting aside the arbitral award, held that the period of limitation would

commence only after a valid delivery of an arbitral award takes place

under Section 31(5) of the Act.  In para (8), this Court held as under:-

"8. The  delivery  of  an  arbitral  award  under  sub-section  (5)  of Section  31  is  not  a  matter  of  mere  formality.  It  is  a  matter  of substance. It is only after the stage under Section 31 has passed that  the  stage  of  termination  of  arbitral  proceedings  within  the meaning of Section 32 of the Act arises. The delivery of  arbitral award to the party, to be effective, has to be “received” by the party. This delivery by the Arbitral Tribunal and receipt by the party of the award  sets  in  motion  several  periods  of  limitation  such  as  an application for correction and interpretation of an award within 30 days under Section 33(1), an application for making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date,  the delivery of  the copy of  award by the Tribunal  and the receipt thereof by each party constitutes an important stage in the arbitral proceedings."

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16. In State of Maharashtra and Ors. v. Ark Builders Pvt. Ltd., (2011) 4

SCC 616, while following the judgment in Tecco Trichy Engineers case,

held that the expression "...party making that application had received

the  arbitral  award..."  cannot  be  read  in  isolation  and  it  must  be

understood that Section 31(5) of the Act requires a signed copy of the

award to be delivered to each party. By cumulative reading of Section

34(3) and Section 31(5) of the Act, it is clear that the limitation period

prescribed under Section 34(3) of the Act would commence only from

the date of signed copy of the award delivered to the party making the

application for setting it aside.  

17. Contention  of  the  appellants  is  that  the  other  members  of

Anilkumar's  family  viz.,  appellant  Nos.  1(a)  to  1(d)  and  respondent

No.10, appellant No.1(d) and respondent No.10 did not receive the copy

of the award and that they had knowledge of the award only when the

execution petition was filed and when they received the notice in the

execution  petition.   Contention  of  appellant  Nos.  1(a)  to  1(d)  and

respondent No.10 is that in terms of Section 31(5) of the Act, copy of the

award to be delivered to each party to enable them to challenge the

award and since the copy of the award not individually served to them,

the period of limitation would start only from the date when they got the

copy of the award.   

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18 As pointed out earlier, Anilkumar Patel has signed the award and

received the copy of the award with the following endorsement:-  

"For myself and on behalf of my family members".

Whether the receipt  of  the award by Anilkumar Patel  with the above

endorsement  could be construed as the receipt  of  the award by his

family members- appellant Nos.1(a) to 1(d) and respondent No.10, is

the point falling for consideration.  

19. In  MOU dated  21.05.1996,  Pravinchandra  Patel  and  Anilkumar

Patel have appointed their sister Latikaben and her husband Bhikhalal

Nathalal Patel for effecting partition between the two families and both

the families  have consented for  the same.  The  MOU was signed by

Pravinchandra Patel and his wife and daughters (respondents No.1 to

5)  and  Anilkumar  Patel  and  his  wife  and  his  three  sons  and  one

daughter-in-law (appellant No.1 (dead) and appellant Nos. 1(a) to 1(d)

and respondent  No.10).  The  MOU appointing arbitrators (21.05.1996)

stipulates that: (i) the award to be in writing; and (ii) to furnish copy of

the award to each of the members of the families. The relevant portion

of MOU reads as under:-

".....The arbitrators shall write down the particulars of the partition as well as the terms and conditions for effecting the partition and the  arbitrators  shall  sign  it.  The  arbitrators  shall  make as  many copies of it as there are members and shall give each member a copy  of  it.  And  after  that  both  the  families  shall  act  as  per  the

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particulars  of  partition  given  by  the  arbitrators  and  get  the properties and business properties partitioned...."

20. As pointed out earlier, while arbitrators were away to Rajkot due

to  emergency  work,  both  Pravinchandra  Patel  and  Anilkumar  Patel

decided to streamline the ongoing business of firms and companies by

signing an interim  MOU on 29.06.1996 (IMOU).  The covenants of the

said IMOU covered the matters relating to bank account and withdrawal

of  power,  NPK  allocation  etc.  The  said  IMOU was  signed  by

Pravinchandra Patel with the following endorsement:-

"P.J.  Patel  (Group No.1)  for  self  and also as  Power  of  Attorney Holder for wife and all daughters".  

Similarly in the said  IMOU, Anilkumar Patel signed for himself and on

behalf of his family members, as seen from the following endorsement:-

"A.J. Patel (Group No.2) for Self and also as Power of Attorney Holder for wife, all sons and daughter-in-law."

21. The award dated 07.07.1996 was signed by both the arbitrators.

The  award  was  also  signed  by  Pravinchandra  Patel  and  Anilkumar

Patel.  Both of them have undertaken to implement the award with their

free will and pleasure, as seen from the following:-

"As per this Arbitration "Award", both the groups and their family members  have  to  honestly,  wholeheartedly  and  faithfully  act  in accordance with and implement the transaction of the property, the IMOU which is now considered as MOU and the accounting chart in respect of the companies and the firms.  ........

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The aforesaid Arbitration Award I agreed to and approved of by and our descendant guardian and heirs.  We undertake to implement the same with free-will and pleasure."   

After  their  signature  in  the  award  which  is  in  Gujarati  language  for

having  received  the  copy  of  the  award,  Pravinchandra  Patel  and

Anilkumar Patel have stated as under:-

"....For ourselves and on behalf of our family members."

It  is  pertinent  to  note  that  the  award  also  referred  to  IMOU dated

29.06.1996 in  and by  which  the  members  of  the  respective  families

have  authorized  Pravinchandra  Patel  and  Anilkumar  Patel  to  act  on

behalf of their family members.  

22. The  award  dated  03.11.1996  also  refers  to  the  award  dated

07.07.1996.  The  award  dated  03.11.1996  was  also  signed  by

Pravinchandra  Patel  and  Anilkumar  Patel  and  both  of  them  have

undertaken that the arbitration award is duly agreed and approved by

them  and  their  family  members  and  further  undertaken  to  act  in

accordance with the award and to give effect to the same.  The said

endorsement in the award dated 03.11.1996 reads as under:-

"The  aforesaid  arbitration  award  is  duly  agreed  to  and approved of by me and my family members, descendants heirs and other.

My  family  members  and  I  absolutely  assure  to  act  in accordance with the award and to give effect to same."

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As discussed earlier, Anilkumar Patel was unsuccessful in his attempt to

challenge  the  award dated  03.11.1996  which  has  attained  finality  in

terms  of  the  findings  in  W.P.No.7614  of  2006.  Anilkumar  Patel's

undertaking  in  the  award  dated  03.11.1996  that  he  and  his  family

members agreed and approved the award shows that Anilkumar Patel

was acting for himself and on behalf of his family members.

23. Award  dated  07.07.1996  was  received  by  Anilkumar  Patel  for

himself  and on behalf  of his family members.  In interim MOU dated

29.06.1996, Anilkumar Patel signed for self and as a power of attorney

holder for his wife and his all sons and daughter-in-law.  Challenging the

award dated 07.07.1996, Anilkumar Patel and his family members have

filed a single petition under Section 34 of the Act. Likewise they have

also filed a single petition for amending the arbitration petition No.202 of

2005.   Anilkumar  Patel,  being the  head of  his  family,  was a person

directly connected with and involved in the proceeding and was also in

control of the proceeding.  Being head of the family, Anilkumar Patel

would  have been the best  person to  understand and appreciate the

arbitral award and take a decision as to whether an application under

Section 34 of the Act was required to be filed or not.  In such facts and

circumstances,  in  our  considered  view,  service  of  arbitral  award  on

Anilkumar Patel amounts to service on the other appellant Nos.1(a) to

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1(d) and respondent No.10 and they cannot plead non-compliance of

Section 31(5) of the Act.    

24. The  High  Court  has  enumerated  various  circumstances  which

indicate  that  Anilkumar  Patel  was  well  aware  of  the  award  dated

07.07.1996 and also relied upon the award in internal communication

between the parties and various legal proceedings. "Inter Office Memo"

dated  22.07.1996,  sent  by  Anilkumar  Patel  to  Pravinchandra  Patel,

seeking for delivery of file of Gat No.266/2 of Bambhori, Taluka Brandol.

Anilkumar  Patel  has  stated  that  in  Gat  No.266/2  of  Bambhori,

agricultural  land has come to his  share and since some dispute has

been raised by the party  by whom the sale-deed is  to be executed,

Anilkumar Patel requested to handover the file maintained in connection

with the agricultural  land mentioned in Gat No.266/2.  The said Inter

Office Memo clearly shows that even on 22.07.1996, Anilkumar Patel

had acted upon the award dated 07.07.1996.

25. Central  Bank  of  India  has  filed  recovery  proceeding  in

O.A.No.298-A/2001  against  Pravinchandra  Patel,  M/s.  Patel

Narayandas Bhagwandas Fertilizers Private Limited and others.  In the

said  proceeding  before  DRT,  Anilkumar  Patel  has  referred  to  the

arbitration award passed in July, 1996 and that he has no interest in

M/s. Patel Narayandas Bhagwandas Fertilizers Private Limited.  Based

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on such stand taken by Anilkumar Patel  in O.A.No.298-A/2001, DRT

observed that Anilkumar Patel had resigned from the Directorship of the

said company and exonerated him from the liability  to the bank and

dismissed O.A.No.298-A/2001 against  Anilkumar Patel  and Atulkumar

Maganlal Patel.  The High Court referred to the said DRT proceedings

and various other circumstances in which Anilkumar Patel  had taken

advantage of arbitration award and the High Court held as under:-

"....The respondents, obviously, wherever it was possible for them, at several places, took advantage of the arbitration award and now since obligation  on their  part  is  to  be  complied  in  favour  of  the petitioner, have started challenging the award, after nine years....."  

Various circumstances brought on record clearly show that Anilkumar

Patel  was  authorized  by  other  appellant  Nos.  1(a)  to  1(d)  and

respondent No.10 to receive copy of the award and act on their behalf

and we find no reason to take a different view from that of the High

Court.   

26. As rightly observed by the High Court, Anilkumar Patel has gone

to  the  extent  of  even  disputing  his  signature  in  the  award  dated

07.07.1996  by  drafting  choreographed  petition.  Having  accepted  the

award through Anilkumar Patel, being the head of the family, appellant

Nos. 1(a) to 1(d) and respondent No.10 cannot turn round and contend

that they had not received the copy of the award.  The High Court rightly

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held that "....Receiving the copy by Anilkumar on behalf of himself and

respondent  nos.  2  to  6,  under  an  acknowledgment,  is  in  terms  of

compliance of Section 31(5) of the Act and Section 34(3) thereof....."

and that the application filed under Section 34 of the Act by Anilkumar

Patel and appellant Nos. 1(a) to 1(d) and respondent No.10 was barred

by limitation.   We do not  find  any good ground to  interfere with  the

impugned judgment.   

27. In the result, the appeals are dismissed. No costs.  

…….…………...………J.           [R.K. AGRAWAL]

…………….……………J.           [R. BANUMATHI]

New Delhi; March 27, 2018

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