Superintending Engineer, ... vs R.K. Engineering on 25 November, 2003

    Superintending Engineer, N.S.R.C. vs R.K. Engineering on 25/11/2003

ORDER

   P.S. Narayana, J.

   1. The Superintending Engineer, N.S.R.C. Circle, Peliru Camp, Ongole,
Prakasam District, had preferred these Revisions under Article 227 of the
Constitution of India as against M/s. R.K. Engineering, 142, R.P. Road,
Secunderabad, having been aggrieved by the orders dated 8-8-2003 made in Case
No. 29/3/0/1009 and Case No. 29/3/0/892 respectively.

   2. M/s. R.K. Engineering, R.P. Road, Secunderabad, filed claim petitions
before the A.P. Industrial Facilitation Council, hereinafter referred to as
"Council" in short, and the Revision petitioner herein as respondent in the said
cases referred to supra, raised preliminary objections before the council that
the said claims are barred by limitation and further there is no arbitrable
dispute referred to the said Council in the absence of any arbitration clause
between the parties since copies of the agreements clearly indicate that claims
over and above Rs. 50,000 shall be decided by a competent Civil Court having
jurisdiction over the matter and hence the Council has no jurisdiction to
entertain the claim in the absence of a valid and subsisting agreement to refer
the matter to arbitration.

   3. After hearing both the Counsels representing the respective parties, the
Council aforesaid made the following order:

     "1. This claimants application is with in the clause of limitation as per
the parliamentary enactment.

     2. The terms and agreements between the petitioner claimant and respondent
is internal which cannot dictates the parliamentary enactment 32/1993, amendment
23/1998 and establishment of the councils for arbitration.

     Further after going through the pre-conditions fulfilled by the claimant
and merits of the case and also as per the powers delegated in Act and as per
Clause 16(5) of the competence of arbitral rules on its jurisdiction the council
hereby rejected the plea of the respondent and decided to continue with the
Arbitral proceedings."

   The said orders, as already aforesaid, are impugned in these Civil Revision
Petitions by the Superintending Engineer, N.S.R.C. Circle, Peliru, Ongole,
Prakasam District under Article 227 of the Constitution of India.

   4. Sri Ramesh Ranganathan, the learned Additional Advocate General, while
making elaborate submissions had explained different provisions of Interest on
Delayed Payment of Small Scale and Ancillary Industrial Undertakings Act, 1993,
in short hereinafter referred to as "Act", and also the Rules framed thereunder
and had contended that the Council aforesaid is expected to discharge judicial
functions or at any rate quasi-judicial functions and when a statutory body is
vested with such powers, definitely such body would answer the test of a
"Tribunal". The learned Additional Advocate General also had taken this Court
through several decisions laying down the tests to be satisfied while deciding
whether an authority is a "Tribunal" or not. The learned Additional Advocate
General also had taken this Court through Sections 6, 7A and 7B of the Act. The
A.P. Industry Facilitation Council (Arbitration) Rules, 1999, in short
hereinafter referred to as "Rules" for the purpose of convenience, in general
and Rules 2, 6, 8, 9, 10 and 12 of the said Rules in particular, and also
Section 28 of the Arbitration and Conciliation Act, 1996. The learned Additional
Advocate General also had explained the relevant provisions under the
Arbitration and Conciliation Act, 1996, Sections 6, 7, 16, 34 and 43 of the Act
and had commented that though detailed submissions were made, both written and
oral, and though the Council is duty bound to record the reasons while ejecting
the objections raised by the Revision petitioner, the Council had not recorded
reasons at all and made a cryptic order and hence the impugned orders are not
sustainable. At any rate, the learned Counsel submitted, once this Court is
satisfied that the Council satisfies the test of a "Tribunal", inasmuch as
reasons had not been recorded at all while rejecting the objections raised by
the Revision petitioner, the orders impugned are liable to be set aside.

   5. Per contra, Sri Jagadish, the learned Counsel representing the respondent
had explained elaborately the object of the Act and also the different
provisions of the Act and the meaning of deemed acceptance. The learned Counsel
had made elaborate submissions relating to different provisions of the Act and
the Rules and also the different provisions of the Arbitration and Conciliation
Act, 1996, in general and Sections 16(5), 16(6) and Section 34 of the
Arbitration and Conciliation Act, 1996, in particular. The learned Counsel also
had explained in detail how the question of limitation would not arise at all.
The learned Counsel with all emphasis contended that the Council aforesaid
cannot be deemed to be a "Tribunal" since there is no adjudicatory power vested
in the Council and at the most it can be said to be a statutory body or an
administrative authority empowered to pass orders on administrative side to
implement the provisions of the Act and hence the remedy if any available to the
petitioner is elsewhere and definitely not by filing these Civil Revision
Petitions under Article 227 of the Constitution of India.

   6. Heard both the Counsels at length and also perused the reasons, which had
been recorded in the impugned orders by the Council, in these Civil Revision
Petitions.

   7. M/s. R.K. Engineering, the respondent in these Civil Revision Petitions,
moved applications C.M.P. No. 21712/2003 in C.R.P. No. 4021/2003 and C.M.P. No.
23051/2003 in C.R.P. No. 4022/2003 to vacate the interim stay granted by this
Court and at that stage both the learned Counsel - the learned Additional
Advocate General Sri Ramesh Ranganathan and also Sri Jagadish, made a request to
dispose of the main Civil Revision Petitions at the stage of hearing of the
vacate applications and that is how the Civil Revision Petitions are being
disposed of finally.

   8. The respondent herein moved the claim petitions before the Council wherein
the Revision petitioner had raised preliminary objections before the Council
relating to bar of limitation and also relating to the jurisdiction and the
Council had rejected the same and had decided to continue the arbitral
proceedings and aggrieved by the said orders, the present Civil Revision
Petitions are filed. This Court while admitting the Civil Revision Petitions had
granted interim stay on 22-8-2003 and applications as aforesaid are filed to
vacate the said orders.

   9. The Act - Act 32 of 1993, is an Act to provide for and regulate the
payment of interest on delayed payment to Small Scale and Ancillary Industrial
Undertakings and matters connected therewith or incidental thereto. Section 2(b)
of the Act defines "appointed day" as:

     "(b) appointed day means the day following immediately after the expiry of
the period of thirty days from the day of acceptance or the day of deemed
acceptance of any goods or any services by a buyer from a supplier;

     Explanation--For the purposes of this clause,--

     (i) "the day of acceptance" means,--

     (a) the day of the actual delivery of goods or the rendering of services;
or

     (b) where any objection is made in writing by the buyer regarding
acceptance of goods or services within thirty days from the day of delivery of
goods or the rendering of services, the day on which such objection is removed
by the supplier;

     (II) "the day of deemed acceptance" means, where no objection is made in
writing by the buyer regarding acceptance of goods or services within thirty
days from the day of the delivery of goods or the rendering of services, the day
of the actual delivery of goods or the rendering of services;"

   10. Section 3 of the Act deals with Liability of buyer to make payment.
Section 4 of the Act deals with the Date from which and rate at which interest
is payable. Likewise, Section 5 of the Act deals with Liability of the buyer to
pay compound interest. Section 6 of the Act dealing with Recovery of amount due
reads as hereunder:

     1. The amount due from a buyer, together with the amount of interest
calculated in accordance with the provisions of Sections 4 and 5, shall be
recoverable by the supplier from the buyer by way of a suit or other proceeding
under any law for the time being in force.

     2. Notwithstanding anything contained in Sub-section (1), any party to a
dispute may make a reference to the Industry Facilitation Council for acting as
an arbitrator or conciliator in respect of the matters referred to in that sub-
section and the provisions of the Arbitration and Conciliation Act, 1996 (26 of
1996) shall apply to such disputes as the arbitration or conciliation were
pursuant to an arbitration agreement referred to in Sub-section (1) of Section 7
of that Act.

   11. Section 7 of the Act deals with Appeal. Section 7A of the Act dealing
with Establishment of Industry Facilitation Council reads:

     "The State Government may, by notification in the Official Gazette,
establish one or more Industry Facilitation Councils at such places exercising
such jurisdiction and for such areas, as may be specified in the notification."

   12. Section 7B of the Act dealing with Composition of Industry Facilitation
Council reads as hereunder:

     (1) The Industry Facilitation Council shall consist of one or more members
to be appointed from amongst the following categories:--

     (i) Director of Industries by whatever name called or any other officer not
below the rank of such Director, of the State Government;

     (ii) representatives of banks and financial institutions;

     (iii) office bearers or representatives of State Industry Associations; and

     (iv) persons having special knowledge in the field of Industry, Finance,
Law, Trade and Commerce.

     (2) The person appointed under Clause (i) of Sub-section (1) shall be the
Chairperson of the Industry Facilitation Council.

     (3) The composition of the Industry Facilitation Council, the manner of
filling vacancies among, and the procedure to be followed in the discharge of
their functions by, the members shall be such as may be prescribed by the State
Government."

   13. Section 7C of the Act deals with Laying of rules before State
Legislature. Section 10 of the Act dealing with Overriding effect reads:

     "The provisions of this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the time being in force."

   14. Section 2(e) of the Rules specifies:

     "Council" means any Industry Facilitation Council established by the State
Government under Section 7A of the Act having jurisdiction to arbitrate over the
dispute and every such Council shall be an arbitral Tribunal for the purposes of
the Arbitration and Conciliation Act, 1996."

   15. Rules 6 to 10 of the Rules read:

     "6. Reference to be by statement of claim--(1) A reference to the Council
shall be made by way of a statement of claim in Form 1 accompanied by such
documents and facts supporting his claim enclosing the requisite number of
copies together with an initial share deposit towards costs of an amount of
rupees five hundred by way of a demand draft in the name of the Council.

     (2) If any reference contains any claim in respect of the matters other
than those referred to in Sub-section (1) of Section 6 of the Act, the Council
shall return the claim to the claimant for deletion of the matters extraneous to
that section.

     Provided that if the claimant does not comply within thirty days of such
return, the Council may terminate the proceedings without prejudice to the right
of the claimant to make any fresh reference if he is otherwise entitled so to
do.

     (3) The Council may require any claimant to paid any better statement on
particulars of claim or any further documents in support of the claim as it may
consider necessary for the purpose of the proceedings and if the claimant fails
or omits to do so within thirty days of the receipt of such communication or
within such further time as the Council may, for sufficient cause, allow, the
Council to terminate the proceedings without prejudice to the right of the
claimant to make any fresh reference if he is otherwise entitled so to do.

     7. Challenge of member.--(1) On receipt of a statement of claim every
member shall disclose in writing any circumstances likely to give rise to
justifiable doubts as to his independence or impartiality and any such
disclosure shall be sent to the parties along with the notices in Form 2 calling
for a statement of defence and thereafter the requirements of Sub-section (2) of
Section 12 of the Arbitration and Conciliation Act shall apply.

     (2) The grounds for challenge of a member and the procedure for challenge
shall be in accordance with Sections 12 and 13 of the Arbitration and
Conciliation Act.

     (3) On a successful challenge, the Council shall cease to proceed with the
reference and transfer the case to such other Council having alternate or
concurrent jurisdiction over the dispute and such other Council shall thereafter
proceed with the reference afresh or as it may deem fit having regard to the
stage of proceedings completed in the former Council.

     8. Statement of defence.--(1) The Council shall if it is satisfied that, on
the facts stated therein, it has jurisdiction to proceed with the reference and
that the claimant is entitled under the Act to make a reference, cause a copy of
the statement of claim to be sent by registered post to the respondent along
with copies of the attached documents and issue notice in Form 2 to the
respondent asking him to furnish within thirty days a statement of defence in
Form 3 with such documents and facts in support of his defence or having a
bearing on the matter under reference together with his half share of deposit
for costs in such manner as may be specified therein and within the time allowed
to the respondent for furnishing his statement of defence.

     (2) A copy of the notice in Form 2 shall also be sent by registered post to
the claimant along with a notice in Form 4 calling upon the claimant to pay a
further amount after adjusting the initial deposit made by him towards his share
of deposit for costs in such manner as may be specified therein and within the
time allowed to the respondent for furnishing his statement of defence.

     (3) The Council may, on an application made by the respondent showing
sufficient cause, allow such further time for the statement of defence as it may
consider fit, but not exceeding sixty days from the date of receipt by the
respondent of the notice under Sub-rule (1).

     9. Hearings and written proceedings.--(1) On receipt of the statement of
defence and if the amount of deposits be paid by the parties, the Council shall
send a copy of the statement of defence to the claimant and fix a date for
appearance and hearing of the parties and issue notice by registered post in
Form 5.

     (2) If the respondent fail or omit to send a statement of defence within
the time allowed to him, the Council shall proceed to fix a date for the
appearance and hearing of the parties and issue notice by registered post in
Form 5.

     Provided that if the respondent has failed or omitted to pay his share of
the deposit, the Council shall call upon the claimant to pay that share also
within fifteen days of receipt of the notice;

     Provided further that if the claimant has not paid the aforesaid share, the
Council may suspend or terminate the proceedings.

     (3) At the first hearing, the Council shall not proceed to enter upon the
merits of the subject-matter in dispute, till it has decided on any challenge to
jurisdiction or any challenge to any of its members.

     (4) The Council shall decide whether to hold oral hearings for the
presentation of evidence or for total argument, or without proceedings shall be
conducted on the basis of documents and other materials:

     Provided that the Council shall hold oral hearings at an appropriate stage
of the proceedings, on request by a party, unless the parties have agreed that
no oral hearing shall be held.

     (5) The parties shall be given sufficient advance notice of any hearing and
of any meeting of the Council for the purposes of inspection of documents, goods
or other property.

     (6) All statements, documents or other information supplied to, or
applications made to the Council by one party shall be communicated to the other
party, and any expert report or evidentiary document on which the Council may
rely in making its decision shall be communicated to the parties."

     (7) Where, without cause,--

     (a) the claimant fails to communicate his statement of claim in accordance
with these rules and Section 23(1) of the Arbitration and Conciliation Act, the
Council shall terminate the proceedings;

     (b) the respondent fails to communicate his statement of defence in
accordance with these rules and Section 23(1) of the Arbitration and
Conciliation Act, the Council shall continue the proceedings without treating
that failure in itself as an admission of the allegations by the claimant;

     (c) a party fails to appear at an oral hearing or to produce documentary
evidence, the Council may continue the proceedings and make the arbitral award
on the evidence before it.

     (8) The Council may, appoint one or more experts in terms of Section 26 of
the Arbitration and Conciliation Act.

     (9) The Council, or a party with the approval of the Council, may apply to
Court under Section 27 of the Arbitration and Conciliation Act for assistance in
taking evidence.

     (10) The Council may with the agreement of the parties, at any time during
the proceedings, use mediation, conciliation or other procedures to encourage
settlement of the dispute under Section 30 of the Arbitration and Conciliation
Act.

     (11) The Council shall conduct its proceedings at such place as the
Government may specify in the notification.

     (12) The Council, on such terms as it may think fit at any stage for
reasonable or sufficient cause, adjourn the hearing from time to time but it
shall so conduct the proceedings that the decision is given, as far as possible,
within ninety days of the first date of hearing.

     (13) At any stage of the proceedings if the parties jointly apply to the
Council that the proceedings be terminated, the Council shall terminate the
proceedings.

     10. Decision by Council--(1) Where the Council is composed of three
members, any decision of the Council shall be by a majority of all its members;

     (2) Notwithstanding anything contained in Sub-rule (1), if authorized by
the parties or all the members of the Council, questions of procedure may be
decided by the Chairperson.

     Likewise, Rule 12 of the Rules reads as hereunder:

     Arbitral Award.--(1) The Council shall make an arbitral award in accordance
with Section 31 of the Arbitration and Conciliation Act;

     (2) The Arbitral award shall be stamped in accordance with the relevant law
in force.

   16. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996), is an Act to
consolidate and amend the law relating to domestic arbitration, international
commercial arbitration and enforcement of foreign arbitral awards as also to
define the law relating to conciliation and for matters connected therewith or
incidental thereto. Section 2 of the Arbitration and Conciliation Act, 1996
deals with Definitions and Section 2(c) defines "arbitral award" as:

     "arbitral award includes an interim award"

   Section 2(4) of the Arbitration and Conciliation Act, 1996 reads :

     "This part except Sub-section (1) of Section 40, Sections 41 and 43 shall
apply to every arbitration under any other enactment for the time being in
force, as if the arbitration were pursuant to an arbitration agreement and as if
that other enactment were an arbitration agreement, except in so far as the
provisions of this Part are inconsistent with that other enactment or with any
rules made thereunder."

   17. Section 7 deals with Arbitration agreement and the said provision reads
as hereunder:

     (1) In this Part, "arbitration agreement" means an agreement by the parties
to submit to arbitration all or certain disputes which have arisen or which may
arise between them in respect of a defined legal relationship, whether
contractual or not.

     (2) An arbitration agreement may be in the form of an arbitration clause in
a contract or in the form of a separate agreement.

     (3) An arbitration agreement shall be in writing.

     (4) An arbitration agreement is in writing if it is contained in,--

     (a) a document signed by the parties;

     (b) an exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement; or

     (c) an exchange of statements of claim and defence in which the existence
of the agreement is alleged by one party and not defined by the other.

     (5) The reference in a contract to a document containing an arbitration
clause constitutes an arbitration agreement if the contract is in writing and
the reference is such as to make that arbitration clause part of the contract.

   18. Chapter IV of the Arbitration and Conciliation Act, 1996 deals with
Jurisdiction of Arbitral Tribunals and Section 16 deals with Competence of
arbitral Tribunal to rule on its jurisdiction. Sub-section (5) and Sub-section
(6) of Section 16 read :

     (5) The arbitral Tribunal shall decide on a plea referred to in Sub-section
(2) or Sub-section (3) and, where the arbitral Tribunal takes a decision
rejecting the plea, continue with the arbitral proceedings and make an arbitral
award.

     (6) A party aggrieved by such an arbitral award may make an application for
setting aside such an arbitral award in accordance with Section 34.

   Sub-section (2) and Sub-section (3) of Section 16 read :

     (2) A plea that the arbitral Tribunal does not have jurisdiction shall be
raised not later than the submission of the statement of defence; however, a
party shall not be precluded from raising such a plea merely because that he has
appointed, or participated in the appointment of, an arbitrator.

     (3) A plea that the arbitral Tribunal is exceeding the scope of its
authority shall be raised as soon as the matter alleged to be beyond the scope
of its authority is raised during the arbitral proceedings.

   19. Section 28 of the said Act deals with Rules applicable to substance of
dispute and Sub-section(3) of Section 28 reads as hereunder:

     "In all cases, the arbitral Tribunal shall decide in accordance with the
terms of the contract and shall take into account the usages of the trade
applicable to the transaction."

   20. Section 31 of the Arbitration and Conciliation Act, 1996 deals with Form
and contents of arbitral award and the said provision reads as hereunder:

     (1) An arbitral award shall be made in writing and shall be signed by the
members of the arbitral Tribunal.

     (2) For the purposes of Sub-section (1), in arbitral proceedings with more
than one arbitrator, the signatures of the majority of all the members of the
arbitral Tribunal shall be sufficient so long as the reason for any omitted
signature is stated.

     (3) The arbitral award shall state the reasons upon which it is based,
unless,--

     (a) the parties have agreed that no reasons are to be given; or

     (b) the award is an arbitral award on agreed terms under Section 30.

     (4) The arbitral award shall state its date and the place of arbitration as
determined in accordance with Section 20 and the award shall be deemed to have
been made at that place.

     (5) After the arbitral award is made, a signed copy shall be delivered to
each party.

     (6) The arbitral Tribunal may, at any time during the arbitral proceedings,
make an interim arbitral award on any matter with respect to which it may make a
final arbitral award.

     (7)(a) Unless otherwise agreed by the parties, where and insofar as an
arbitral award is for the payment of money, the arbitral Tribunal may include in
the sum for which the award is made interest, at such rate as it deems
reasonable, on the whole or any part of the money, for the whole or any part of
the period between the date on which the cause of action arose and the date on
which the award is made.

     (b) A sum directed to be paid by an arbitral award shall, unless the award
otherwise directs, carry interest at the rate of eighteen per centum per annum
from the date of the award to the date of payment.

     (8) Unless otherwise agreed by the parties,--

     (a) the costs of an arbitration shall be fixed by the arbitral Tribunal;

     (b) the arbitral Tribunal shall specify,--

     (i) the party entitled to costs;

     (ii) the party who shall pay the costs;

     (iii) the amount of costs or method of determining that amount; and

     (iv) the manner in which the costs shall be paid.

     Explanation,--For the purpose of Clause (a), "costs" means reasonable costs
relating to,--

     (i) the fees and expenses of the arbitrators and witnesses;

     (ii) legal fees and expenses;

     (iii) any administration fees of the institution supervising the
arbitration; and

     (iv) any other expenses incurred in connection with the arbitral
proceedings and the arbitral award.

   21. Sub-section (3) of Section 31 specifies that the arbitral award shall
state reasons upon which it is based unless the parties have agreed that no
reasons are to be given or the award is an arbitral award on agreed terms under
Section 30. Section 30 of the Arbitration and Conciliation Act, 1996 deals with
settlement. Section 34 of the Arbitration and Conciliation Act, 1996 deals with
application for setting aside arbitral award. Section 43 of the Arbitration and
Conciliation Act, 1996 deals with Limitations and the said provisions reads as
hereunder :

     (1) The Limitation Act, 1963 (36 of 1963) shall apply to arbitrations as it
applies to proceedings in Court.

     (2) For the purposes of this section and the Limitation Act, 1963 (36 of
1963), an arbitration shall be deemed to have commenced on the date referred in
Section 21.

     (3) Where an arbitration agreement to submit future disputes to arbitration
provides that any claim to which the agreement applies shall be barred unless
some step to commence arbitral proceedings is taken within a time fixed by the
agreement, and a dispute arises to which the agreement applies, the Court, if it
is of the opinion that in the circumstances of the case undue hardship would
otherwise be caused, and notwithstanding that the time so fixed has expired, may
on such terms, if any, as the justice of the case may require, extend the time
for such period as it thinks proper.

     (4) Where the Court orders that an arbitral award be set aside, the period
between the commencement of the arbitration and the date of the order of the
Court shall be excluded in computing the time prescribed by the Limitation Act,
1963 (36 of 1963), for the commencement of the proceedings (including
arbitration) with respect to the dispute so submitted.

   22. Sub-section (1) of the Indian Evidence Act, 1872, no doubt specifically
excludes the applicability of its provisions to the proceedings before an
arbitrator. Elaborate submissions were made on the buyer and supplier
relationship and the meaning of deemed acceptance and over-riding effect of the
Act and the remedy under Section 34 of the Arbitration and Conciliation Act,
1996. Section 16(5) of the Arbitration and Conciliation Act, 1996 simply says
"...continue with the arbitral proceedings and make an arbitral award".
Likewise, Sub-section (6) of Section 16 of the Arbitration and Conciliation Act,
1996 specifies :

     "A party aggrieved by such an arbitral award may make an application for
setting aside such an arbitral award in accordance with Section 34."

   Suffice to state that a careful reading of the different provisions of the
Act would definitely go to show that the Council is not a mere administrative
authority, but a body vested with quasi-judicial functions and, hence, I have no
hesitation in holding that it is a "Tribunal" within the meaning of Article 227
of the Constitution of India amenable to the supervisory jurisdiction of this
Court. Strong emphasis was laid on the contention that inasmuch as the Council
is discharging quasi-judicial functions, when objections relating to
jurisdiction and limitation are taken as preliminary objections and when
elaborate submissions were made and several decisions were cited and written
arguments were submitted, non-recording of reasons definitely would be bad in
law. Reliance was placed on Engineering Mazdoor Sabha v. Hind Cycles Ltd. ,
Jaswant Sugar Mills Ltd. v. Lakshmichand AIR 1963 SC 617, Indo-China Steam
Navigation Co. Ltd. v. Jasjit Singh , A.C. Companies v. P.N. Sharma , Manmohan
Singhv. U.T. Chandigarh

   , S.P. Subramanya Shetty v. Karnataka State Road Transport Corporation ,
Bharat Bank Ltd. v. Employees of Bharat Bank Ltd. , Durga Shanker Mehta v.
Thakur Raghu Raj Singh , Jaswant Sugar Milk Ltd.'s case (supra), Hari Vishnu
Kamath v. Syed Ahmad Ishaque , State of Bombay v. Hospital Mazdoor Sabha , D.N.
Banerji v. P.R. Mukherjee , A.V. D'costa Divisional Engineer, GIP Railway v.
B.C. Patel , Indira Sohan Lal v. Custodian of Evacuee Property , Nagendra Nath
Bora v. Commissioner of Hills Division & Appeals .

   23. It is no doubt true that Sub-section (3) of Section 31 is applicable in
the case of an arbitral award. It is needless to say that the Council which is
expected to discharge quasi-judicial functions is bound to record reasons and
bound to follow the principles of natural justice by recording reasons whenever
such objections of far reaching consequences relating to jurisdictional aspect
and limitation aspect are specifically raised. In the light of the definition of
the "arbitral award" it is clear that the impugned orders do not fall within the
meaning of "arbitral award", either interim or final, in view of Section 16(5)
read with Section 34 of the Arbitration and Conciliation Act, 1996 and hence
elaborate submissions made by the Counsel in this regard representing the
respondent cannot be accepted that an alternative remedy is available to the
Revision petitioner under Section 34 of the Arbitration and Conciliation Act,
1996. On the question of jurisdiction and limitation, reliance was placed on the
following decisions : State of Rajasthan v. Ram Kishan , Panchu Gopal Bose v.
Board of Trustees for Port of Calcutta , State of A.P. v. Tippireddy Channareddy
, M.V.V. Satyanarayana v. Union of India

   , Kolleri Constructions v. Neetar Laboratories Ltd. , G.V. Pratap Reddy v.
State of A.P. [1997] (2) ALD 713, Nellore Dist. Co-op. Central Bank Ltd. v.
President, The Nellore Dist Co-op. Central Bank Employees Association [2001] (2)
ALD 913, Kwality Construction Engineers v. University Engineer, Central
University of Hyderabad , Pandit Munshi Ram v. Delhi Development Authority and
Union of India v. Momin Construction Co. .

   24. In the light of the different provisions of the Act and the Rules framed
thereunder, since the Council is expected to decide the preliminary objection
raised relating to the question of jurisdiction and the question of limitation,
passing a cryptic order without recording reasons would be definitely bad in law
and the same is in violation of the principles of natural justice. It is also
pertinent to note that that the Council also had specifically observed that it
would further proceed with the arbitral proceedings, and when such opinion is
expressed by the Council it is too much on the part of the respondent to contend
that it would fall under the definition of "arbitral award" and the remedy is
only to invoke Section 34 of the Arbitration and Conciliation Act, 1996. Keeping
in view the different provisions of the Act and the Rules made thereunder and
also the Arbitration and Conciliation Act, 1996, I am of the considered opinion
that the Council which is bound to record the respective contentions and also
reasons thereto while considering the objections raised by the Revision
petitioner, since the Council being a quasi-judicial authority, had failed to do
so and hence the impugned orders in these Civil Revision Petitions cannot be
sustained and are liable to be set aside on this ground alone. No doubt, both
the Counsels had virtually argued the merits and demerits of the claims and it
is needless to say that these are all matters which may have to be decided by
the Council after affording opportunity to both the parties. But, however, when
preliminary objections are taken at the threshold, inasmuch as it is the bounden
duty of the Council to record reasons, the impugned orders are hereby set aside
and the matters are remitted to the Council to afford opportunity to both the
parties and pass appropriate orders, in accordance with law, in this regard.

   25. The Civil Revision Petitions are hereby allowed to the extent indicated
above. No order as to costs.