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Chhattisgarh High Court Upholds Rejection of Bid to Overturn Arbitral Award on Limitation and Fabrication Grounds

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Case title: The Superintending Engineer, National Highway Circle, Public Works Department, Government of Chhattisgarh at Pension Bada, Raipur 492001, Chhattisgarh. VS ECI-Keystone (JV) through its Managing Director, H.No. 8-2-338/6, Road No.3, Panchavati Colony, Banjara Hills, Hyderabad 500034.

Case no.: ARBA No.51 of 2023

Dated on: 10th JUNE 2024

Quorum: HON’BLE MR JUSTICE Goutam Bhaduri and HON’BLE MR JUSTICE Sanjay S. Agrawal

FACTS OF THE CASE

The joint venture company namely; ECI-KEYSTONE was entered into a contract agreement for construction of two-lane road at certain different distances from Bhopalapatnam to Jagdalpur under the LWE scheme. The contract price was ₹ 184,54,47,686.69. Admittedly, the extension was granted to the respondent up till 30-6-2019. During the course of execution of the contract, certain dispute arose between the parties which led to appointment of the Arbitrator as per clause 25.3 (a) of the contract. The respondent invoked the arbitration clause under special condition of contract. The appellant Department also acceded to such appointment, consequently, the Sole Arbitrator was appointed. Subsequently, the Department was advised by the Ministry of Road that since high stakes were involved in the project, therefore, in accordance with the provisions of clause 25.3 the arbitration should be conducted by a panel of three Arbitrators. Consequently, an application was moved and initial consent though was withdrawn by the Department on 16-8 2021, but the proceeding by the time conducted before the Sole Arbitrator and the award was passed on 2-9-2022 (Annexure – A/2). The said arbitral award was assailed by the appellant before the Commercial Court (District Level), Naya Raipur, Chhattisgarh, by filing an application under Section 34 of the Act, 1996 along with the application under Section 36 (3) for grant of stay and application under Section 34 (3) for condonation of delay with a prayer to set aside the award on the ground that the appellant was not permitted to present the case and the prayer was made to set aside the ex parte award. According to the appellant, the arbitral award was not signed and received by the appellant and only received a photocopy of the award lately.

 ISSUES

  • Whether the signed copy of the arbitral award was duly delivered to the appellant as mandated under Section 31(5) of the Arbitration and Conciliation Act, 1996.
  • Whether the appellant’s application to set aside the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, was filed within the prescribed limitation period.
  • Whether the conduct of the appellant regarding the receipt and acknowledgment of the arbitral award demonstrated any attempt to fabricate facts or create a misleading narrative.
  • Whether the order of the Commercial Court, Nava Raipur, dismissing the appellant’s application on the ground of limitation was justified and warranted any interference by the higher court.
  • Whether the procedure for the removal of the Sole Arbitrator was appropriately followed by the appellant.

LEGAL PROVISINS

Arbitration and Conciliation Act, 1996:

Section 31(5) – Form and Contents of Arbitral Award: This section mandates that the signed copy of the arbitral award must be delivered to each party. It is crucial in this case since the appellant contends that they did not receive a signed copy of the award, which affects the timeline for challenging the award.

Section 34 – Application for Setting Aside Arbitral Award:

Section 34(1): Allows a party to apply to the court to set aside the arbitral award.

Section 34(3): Specifies the time limit for making an application to set aside the award. It states that such an application must be made within three months from the date on which the party making the application had received the arbitral award. It also provides an additional 30 days if the court is satisfied that the party was prevented by sufficient cause from making the application within the three-month period, but not thereafter.

Section 34(3) Proviso: Emphasizes that no further extension of time is permitted beyond the additional 30 days.

Section 36(3) – Enforcement of Arbitral Award: This section deals with the enforcement of arbitral awards and allows the court to grant a stay on the enforcement if an application under Section 34 is filed.

CONTENTIONS OF THE APPELLANT

The Learned Advocate General appearing for the appellant would submit that as per Section 31(5) of the Act, 1996 it is incumbent upon the Arbitrator to deliver signed copy of the award to each party. He would submit that the appellant was not served with the signed copy of the award. According to him, the Department received the photocopy of award along with the execution application on 10-2-2023 and immediately on 11-3-2023, a request letter was sent to supply signed copy of the award. Learned counsel would submit that the Arbitrator has stated that he has already sent signed copy of the award by registered post, but having not been received by the Department again a communication was made on 17-3-2023 and requested for supply of signed copy of award. He would submit that even the copy of the award was sought for, it was refused by the Arbitrator on the ground that it has already been sent by the registered post. Learned counsel would submit that since signed copy of award is not served under Section 31(5) of the Act, 1996, no cause of action accrues to prefer the application under Section 34 of the Act, 1996. Learned counsel would place reliance upon the decision rendered by the Supreme Court in the matter of State of Maharashtra and others v ARK Builders Private Limited1 to submit that the Supreme Court in this case has categorically laid down that the signed copy is required to be delivered to the party in a manner prescribed by law. He would further place reliance upon the decision rendered by the Supreme Court in the matter of Union of India v TECCO Trichy Engineers & Contractors2 to submit that who are the necessary party and receipt of order even by some of the Clerk would not amount to sending a copy. He would place reliance upon the decision rendered by the Supreme Court in the matter of Dakshin Haryana Bijli Vitran Nigam Limited v Navigant Technologies Private Limited3 to submit that Section 31(1) is couched in mandatory terms and signed copy of order is required to be delivered to the parties. Learned counsel would further submit that he has not pressed upon the issue, at this stage, as to the legality and validity of the arbitral award and confined his arguments only in respect of receipt of signed copy of the arbitral award and limitation since the challenge is with respect to dismissal of application on the ground of limitation, it is submitted that presently the other issue about correctness of award is required to be raised before the Commercial Court.

 CONTENTIONS OF THE RESPONDENTS

The Learned counsel appearing for the respondent, per contra, would vehemently oppose the arguments advanced by the appellant and would submit that service of arbitral award is not at all in issue as initially on 2-9-2022 passing of the award was informed by e mail and thereafter, the original copy of the signed award was sent through registered post. Signed copy of the award was received by the Department on 7-9-2022. He would submit that again the award was served by way of e-mail dated 8-9-2022 and the printout of attachment of e-mail dated 2-9-2022 served by the representative of the respondent on 7-9-2022 by hand. He would also submit that statement of the then Superintending Engineer Nagesh Kumar Jayanth, in affidavit, would show that some third person has served him with the copy of the award dated 7-9-2022. From the said fact, it is manifest that the department was very well in know of the fact that the award has been passed and was holding the same. Learned counsel would submit that the appellant took a different stand as related to the service of the copy of award and also tried to fabricate the facts and different stand has been taken in an application under Section 34 of the Act, 1996. It is stated that the truth came to fore when the affidavits were called upon by the Commercial Court, which shows the copy of award was delivered. He would submit that the Department has received the original arbitral award dated 2-9-2022 by registered post on 7-9-2022 and by e-mail on 8-9-2022 and subsequently copy of the award was received by hand at their office. Placing reliance upon the decision rendered by the Bombay High Court in the matter of Rahul v Akola Janta7, learned counsel would submit that only the party should be made aware of existence of award and effect and import of the award. He would submit that the appellant has not filed any documents along with the application e.g. copy of reply of the respondent to the application of the appellant under Section 34(3); copy of  affidavit of Shri Surender Kumar Manji along with photocopies of documents, which were filed before the Commercial Court; and copy of the complete set of documents filed by the respondent along with the copy of affidavit shows the fact otherwise Learned counsel would submit that the important document having been deliberately held back would show that wrong contentions have been made and in order to divert the issue an invert register was placed, thereby the appellant tried to create the camouflage, which should not be acceptable. He would submit that having send copy of the award by registered post and the same having been received it cannot be stated that the signed copy of the award has not been received. The letter of the Sole Arbitrator along with postal receipts would carry a presumptive value and by the statement it has not been rebutted. Thus, the Commercial Court taking into the conduct of the appellant dismissed the application at the threshold, which is well merited and warrants no interference of this Court.

COURT’S ANALYSIS AND JUDGEMENT

We have heard learned counsel for the parties and perused the documents. As per the records the contract was executed between the parties on 1-12-2012 for construction of two-lane road at different intervening places. The parties to the contract were the Superintending Engineer, National Highway Circle, PWD, Government of Chhattisgarh, being the grantee and ECI Keystone Joint Venture was the contractor. The contract was extended from time to time. When the dispute arose, invocation of arbitration was made on 13 7-2020. The award shows the respondent therein (appellant herein) appointed the Arbitrator by its letter dated 10-8-2020 recording the mutual consent of both the parties. The first hearing was held on 8-9-2020 and the appellant sought for time for filing statement of defence. Eventually, the statement of defence was not filed. The award further reflects that thereafter, the appellant sought for cancellation of appointment of Arbitrator on various grounds. Para 39 of the award would reflect that the said objection was made after a period of 22 months on the ground that the Ministry of Road Transport & Highways, New Delhi, has not appointed Officer-in charge, therefore, the cancellation of appointment of Arbitrator was sought for. The said contention of the appellant was not accepted and the Arbitrator though was appointed, which was not objected and the appellant sought time to file its reply, but instead of filing reply unilaterally removal of Arbitrator was sought for. It is a settled principle that Arbitrator was required to be removed in accordance with the procedure prescribed under the provisions of the Act, 1996, but the same was not adopted by the appellant as the cancellation procedure for appointment of Arbitrator was not adhered to. Since the Sole Arbitrator was already in hold of arbitral proceedings, he proceeded with the same and eventually the award was passed on 2-9-2022. The issue in the present appeal arose, when an application was filed by the appellant herein to set aside the said award before the Commercial Court, Nava Raipur, and the same was dismissed on the ground of limitation. As per Section 34(3) from date of award when received the limitation starts and it is initially as three months. The proviso to the Section further gives a liberty for a period of thirty days apart from three months above but not thereafter. When specific limitation period is prescribed under statute is maximum for four months in the relevant case no further extension of time can be provided by the Court to challenge an award under the Act, 1996. It is the trite law that merely because Government authorities is involved, a different yardstick for condonation of delay cannot be laid down. The Arbitrator initially vide e-amil dated 2-9-2022 intimated the Superintending Engineer about passing of such award. The communication sent by e-mail would show that apart from the intimation of such award it was also averred that the award is sent through Registered Post with Acknowledgment Due to both the parties and the proof dispatch was also enclosed with the covering letter. Since the said award was sent by Registered Post, under the RTI Act subsequently the respondent obtained the information about service of such letter from the Department of Post India, which shows that the appellant Superintending Engineer, National Highway Circle, PWD, Raipur, has received the assignment. The e-mail dated 8-9-2022 sent by the Arbitrator would show that it was informed by him that hard copy of the award has been sent through the Registered Post to both the parties and since the additional request was made by the claimant to get a soft copy, the soft copy of the award sent to both the parties in the PDF format. Nagesh Kumar Jayant, working as Chief Engineer, the then Superintending Engineer in between 13-6-2022 to 17-10-2022 in his affidavit filed before the Commercial Court, has made a statement that on 7-9-2022 a third person who was not working in the office of the Superintending Engineer had handed over a photocopy of the award to him by hand. He did not give any receipt to the same and marked the said photocopy and gave it to one Mithilesh Kumar Sahu for keeping. Before this Court, a reference is made to a communication dated 17-3-2023 (Annexure-R/59), which purports that the explanation has been sought for from the concerned Receipt Clerk about receipt of registered post and the enquiry was going on. Applying the well settled principles of law and for the reasons stated hereinabove, we are of the view that the award was duly signed by the Arbitrator and sent & delivered the same to the appellant in terms of Section 31(5) of the Act, 1996, but contradictory statements were made and different stand was taken by the appellant to set aside the award on false grounds. In view of aforesaid discussion, we find that the impugned order passed by the learned Commercial Court, Nava Raipur, is just and proper, warranting no interference of this Court. As a sequel, the present appeal (ARBA No.51 of 2023), sans substratum, is liable to be and is hereby dismissed, leaving the parties to bear their own cost(s).

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Judgement Reviewed by – HARIRAGHAVA JP

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Chhattisgarh High Court Upholds Anganwadi Workers’ Recruitment Process Discretion, Rejects Age Limit Challenge

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Case title: Smt. Padmavati Sahu & ORS VS State of Chhattisgarh Through Secretary Department of Women and Child Development & ORS

Case no.: WPS No. 803 of 2022

Dated on: 09th MAY 2024

Quorum: HON’BLE MR JUSTICE Ramesh Sinha and HON’BLE Mrs JUSTICE Rajani Dubey.

FACTS OF THE CASE

According to Mr. Mirza Hafeez Baig, learned counsel for the petitioners, the petitioners are Anganwadi Workers working since 1999, 2006, 2007 and 2010. An advertisement was issued by the Directorate of Women and Child Development, Chhattisgarh, wherein total 200 posts of Anganwadi Supervisors were advertised on 30.11.2021. Out of these 200 posts, 100 posts are to be illed up by direct recruitment and 100 posts by way of limited direct recruitment for which the Anganwadi Workers having 10 years of experience are eligible to apply. However, in the limited direct recruitment, the maximum age of the Anganwadi Workers has been limited to 45 years by the impugned amendment dated 28.07.2008 to the Chhattisgarh Civil Service (Special Provision for Appointment of Women) Rules, 1997 (for short, the Rules of 1997). The post of Anganwadi Supervisor was lastly advertised in the year 2018 and after lapse of 8 years, the instant recruitment is being carried out and as such, many of the Anganwadi Workers have turned more than 45 years of age and as such, are ineligible for participating in the limited direct recruitment. The petitioners also challenge Rule 12(3) of the Chhattisgarh Women and Child Development Department Executive Class III (Non-Gazetted) Service Recruitment Rules, 2008 (for short, the Rules of 2008) which also prescribes that the maximum age of an Anganwadi worker shall not exceed 45 years on the first day of January of the year of commencement of the examination/selection. It shall not be relax able on any ground. As per Ms. Renu Kochar, learned counsel for the petitioners, the petitioners herein are also Anganwadi Workers. They are also aggrieved by the amendment dated 28.07.2008 to Rule 4 of the Rules of 1997 and Rule 8(1)(j) and 8(2) of the Chhattisgarh Women and Child Development Department, Executive Class III (Non-Gazette) Service Recruitment Rules 2023 (for short, the Rules of 2023). In the present case, the respondents have advertised 440 posts of Supervisor Grade III on 04.07.2023 out of which 220 posts were to be illed through open direct recruitment and remaining 220 posts through limited direct recruitment. Clause 3.3 of the advertisement provides that the maximum age limit for the limited direct recruitment would be 45 years and since the petitioners have crossed the age of 45 years, they are now ineligible for participating in the said recruitment process which is unconstitutional. petitioner herein challenges Rule 6(1)(b) of the Rules of 2023 and also seeks quashing of the advertisement dated 02.08.2023 (Annexure P/2) by which 220 posts of Supervisor have been advertised for illing up through limited direct recruitment process and to issue a direction to the respondents to amend the Rules of 2023 in accordance with the guidelines of the Union of India dated 15.09.2015 (Annexure P/4). The petitioner herein is aged about 46 years and is working on the post of Anganwadi Worker and posted at Ganjhutoli, Tehsil Kansabel, in the District of Jashpur. She was appointed on 02.03.2006. The Director, Integrated Child Development Service Scheme (for short, the ICDS) had issued guidelines to all the Secretaries of States and Union Territories by reviewing the previous guidelines for promotion and appointment of Anganwadi Workers to the posts of Supervisors in supersession of earlier guidelines. The letter dated 15.09.2015 also stated that the States/UTs may amend related Recruitment Rules for the posts of Supervisors as per the guidelines therein on urgent basis and copy of such Recruitment Rules, after being notified, may be sent to the ministry i.e. respondent No. 2. Even after framing of the above-mentioned guidelines the State of Chhattisgarh did not amend the recruitment rules and continued the recruitment and appointment to the post of Supervisor under the old Rules of 2008 which did not conform to the guidelines issued by the ICDS. In the erstwhile state of Madhya Pradesh, the Anganwadi Workers were promoted to the post of Supervisors. On date 30.03.1999, the voice of District Collector, District-Dhar (M.P.), (in pursuance of order of Directorate, Women and Child Development dated 26.03.1999) issued promotion order of 2 Anganwadi Workers. Similarly, the voice of District Panchayat, District- Khargone also issued promotion list of Anganwadi Workers to the post of Supervisors by order dated 15.06.1999. On 14.03.2018, the Ministry of Women & Child Development, Government of India issued another letter to the Principal Secretaries/Secretaries in-charge of Women and Child Development/Social Welfare Department (Anganwadi Services) in all. The facts in the present case is identical to that of WPS No. 5595/2023 except the fact that the date of appointment of appointment and place of posting of the petitioners, who are also the Anganwadi Workers, is different.

ISSUES

  • Whether the maximum age limit of 45 years for Anganwadi Workers to participate in the limited direct recruitment process for the post of Supervisor, as set by Rule 4 of the Chhattisgarh Civil Service (Special Provision for Appointment of Women) Rules, 1997 (amended on 28.07.2008), Rule 12(3) of the Chhattisgarh Women and Child Development Department Executive Class III (Non-Gazetted) Service Recruitment Rules, 2008, and Rules 6(1)(b) and 8(1)(j) of the Chhattisgarh Women and Child Development Department Executive Class III (Non-Gazetted) Service Recruitment Rules, 2023, is arbitrary, unconstitutional, and violative of Articles 14 and 16 of the Constitution of India.
  • Whether the delay of 8 years in conducting the recruitment process for the post of Supervisor, which resulted in many Anganwadi Workers crossing the maximum age limit of 45 years, is arbitrary and unjust, thereby denying them a fair opportunity to participate in the recruitment process.

LEGAL PROVISINS

Article 309 of the Constitution of India: Provides the authority to regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union or any State. The Governor of a state can makes rules regulating recruitment and service conditions.

Chhattisgarh Civil Service (Special Provision for Appointment of Women) Rules, 1997:

Rule 4 (amended on 28.07.2008): Introduced the age limit of 45 years for limited direct recruitment of Anganwadi Workers to the post of Supervisor. Chhattisgarh Women and Child Development Department Executive Class III (Non-Gazetted) Service Recruitment Rules, 2008:

Rule 12(3): Sets the maximum age limit of 45 years for Anganwadi Workers applying for the post of Supervisor through limited direct recruitment.

Chhattisgarh Women and Child Development Department, Executive Class III (Non-Gazetted) Service Recruitment Rules, 2023: Rule 6(1)(b) and Rule 8(1)(j): Pertains to the eligibility criteria and recruitment process for Supervisors, maintaining the maximum age limit of 45 years for limited direct recruitment from Anganwadi Workers.

CONTENTIONS OF THE APPELLANT

Mr. Ratnesh Kumar Agrawal, learned counsel for the petitioners submits that the petitioners herein are Anganwadi Workers who are aggrieved by Rule 8(2) of the Rules of 2023, which prescribes the age limit and eligibility criteria for appearing in the limited direct recruitment for the post of Supervisor. The age limit of 45 years for limited direct recruitment is arbitrary and unconstitutional as it deprives experienced Anganwadi Workers of promotional opportunities. The gap in conducting recruitment processes has unfairly disadvantaged them, making them ineligible due to the age limit. They seek amendments to the Rules to provide relaxation or bonus marks based on their long service. They argue that the State should implement the 2015 guidelines from the Ministry of Women and Child Development, which recommended promoting experienced Anganwadi Workers to Supervisor posts.

CONTENTIONS OF THE RESPONDENTS

Mr. Marhas, learned Additional Advocate General states that it is a settled principle laid down by catena of judgments passed by the Hon’ble Supreme Court, that the Rules made under the proviso to Article 309 of the Constitution of India being legislative in character cannot be struck down merely because the Courts think that they are not reasonable, they can be struck down only on the grounds upon which a legislative measure can be struck down. The only test that that such Rule has to pass is that of Articles 14 & 16 of the Constitution of India. Therefore, it cannot be said that the gap of 8 years in conducting recruitment process was arbitrary on the part of the State. It is further submitted that in the State, the promotion of an employee is governed by the Chhattisgarh Public Services (Promotion) Rules 2003 which further provides that the rule is only applicable for regular Government post. Herein, as discussed above, the post of Anganwadi Workers is purely a non-government post, therefore, even the Promotion Rules, 2003 could not be made applicable for them. In light of the above submission, it is clear that the Anganwadi Workers could not be promoted nor the provisions of promotion could be inserted in the Rules 2023. The age limit and other criteria set by the Rules are within the legislative authority granted by Article 309 of the Constitution. The recruitment process delays were due to administrative and policy reasons beyond the control of the respondents. The rules and amendments made are constitutional and reasonable, and there is no obligation to conduct recruitment every year. The guidelines issued by the Ministry of Women and Child Development are advisory and not binding on the State.

COURT’S ANALYSIS AND JUDGEMENT

The Rules of 2008 provides for 10 years’ experience on the post of Anganwadi Worker whereas the 2023 Rules provides for 5 years’ experience as Anganwadi worker to be promoted to the post of Supervisor. However, the maximum age limit in both the Rules is the same i.e. 45 years. So far as implementation of the guidelines issued by the Ministry of Women and Child Development, Government of India, on 15.09.2015, which provides that the respective State Governments/ Union Territories should frame rules with respect to filling up of the 50% of vacancies in the posts of Supervisors by promotion from amongst Anganwadi Workers with 10 years of experience as Anganwadi Workers and having the prescribed educational qualifications as per the Recruitment Rules. The aforesaid guidelines are advisory in nature and not mandatory. The State is free accept or reject or implement the same after suitable modifications as per its requirement but the same cannot be said to be binding on the State. Hence, the grievance of the petitioners with respect to non-adhering of the guidelines of the Central Government in this regard, also fails. The petitioners, in none of the case have been able to point out as to how the Rules restricting the maximum age limit to be 45 years, is ultra vires the Constitution, even though it may be limiting their promotional avenues. In the present case, the Rules of 2008 and 2023 as well as the amendment made to the Rules of 1997, all have been made in exercise of powers conferred by the provision to Article 309 of the Constitution of India. The amendment and the Rules have been made by the Governor exercising the power under Article 309 of the Constitution of India. Another grievance of the petitioners is with regard to the conducting of the recruitment process after a long gap of time because of which many of the petitioners had crossed the age of 45 years and thus, missed the chance of participating in the recruitment process. If the recruitment process is not initiated every year, that cannot be said to be arbitrary as there can be number of reasons and circumstances for not conducting recruitment process. A Division Bench judgment of Allahabad High Court in Sanjay Agarwal (supra), had observed that nobody can claim as a matter of right that recruitment on any post should be made every year. We are in agreement with the said proposition. Mere publication of the advertisement for recruitment at a belated stage cannot be a ground for grant of any bonus marks or relaxation in the maximum age limit. In view of the foregoing discussions, all these petitions are disposed of looking to the fact that the petitioners have dedicated a quite long period of time to the post of Anganwadi Worker and have crossed the age of 45 years which is restricting their eligibility to participate in the recruitment process for the post of Supervisor, this Court hopes and trusts that the State Government would formulate some suitable scheme or provide some relaxation in the relevant rules so as to afford an opportunity of participation in the recruitment process for the post of Supervisor, to those who lost their chance because of crossing of the age of 45 years, within a period of three months from today. The State Government, if so advised, may also take into consideration implementing the guidelines issued by the Central Government with regard to promoting the Anganwadi Workers on the post of Supervisors, as per its requirement. No order as to cost(s). There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid.

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Judgement Reviewed by – HARIRAGHAVA JP

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