T.S. Thakur, J.

1. In this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short " the"), the petitioner-claimant assails the validity of an award dated 11th November, 2003, made by Sh. Shyam Sunder, the sole arbitrator.

2. The facts giving rise to the making of the award and the challenge to its validity may be summarised thus:

3. The petitioner-claimant is a civil contractor. Earth work excavation required in connection with the expansion of the existing cargo complex at IGI Airport, New Delhi was awarded to the petitioner by the respondent-Corporation, in terms of a work order, issued in July, 1988. The estimated value of the work was Rs. 9,48,263.50/-. The petitioner's case is that the execution of the work in question was satisfactorily completed by it on 28th January, 1989. Its further case is that a final bill was submitted to the respondent in December, 1996, which the respondent refused to process, forcing the petitioner to invoke the arbitration clause in the agreement executed between the parties. Since no arbitrator was appointed, the petitioner had to approach this Court in a petition under the Arbitration and Conciliation Act, 1996, which was allowed by this Court's order dated 5th March, 1998 with a direction to the respondent to make an appointment within a period four weeks. The matters in dispute were, accordingly, referred to the sole arbitration of Sh. R. Sen Gupta upon whose resignation Sh. Shyam Sunder was appointed as the sole arbitrator in the case. Before the arbitrator, the petitioner made the following seven claims:

Claim No. 1: Claimant claims a sum of Rs. 2,25,000/- (Rupees two lacs twenty five thousand only) being pending payment.

Claim No. 2: Claimant claim a sum of Rs. 7,680/- (Rupees seven thousand six hundred eighty only) being loss or damages due to under utilisation of staff.

Claim No. 3: Claimant claim a sum of Rs. 1,00,000/- (Rupees one lacs only) being loss or damages due to rent of dumpers and machinery used at site.

Claim No. 4: Claimant claim a sum of Rs. 2,00,000/- (Rupees two lacs only) being cost of interest on dues @24% calculated upto 15.10.1993.

Claim No. 5: Claimant claim a sum of Rs. 67,000/- (Rupees sixty seven thousand only) being loss of profit.

Claim No. 6: Claimant claim interest pre suit, pendente lite and future @ 24%.

Claim No. 7: Claimant claim a sum of Rs. 30,000/- (Rupees thirty thousand only) being the cost of Arbitration.

4. In the course of the arbitration proceedings, a preliminary objection was taken by the respondent-Corporation to the maintainability of the claims on the ground of limitation. It was argued that the claims made by the petitioner-claimant were governed by Article 113 of the Schedule to the Limitation Act, which provided a period of three years to the claimant to make the same reckoned from the date the right to sue accrued in its favour. According to the respondent, the right to sue had accrued to the petitioner on 23rd November, 1989, when the claimant admitted the preparation of a final bill and the quantification of its claim. Invocation of the arbitration Clause in January, 1997 and the appointment of an arbitrator in March, 1998 was, therefore, much beyond the period of limitation prescribed under Article 113 (supra) contended the respondent.

5. On behalf of the petitioner, it was, on the other hand, contended before the arbitrator that the respondent was not entitled to raise the plea of limitation as it had failed to urge any such plea before this Court in the proceedings earlier instituted by the petitioner. It was also submitted that the petitioner's account was not finalised by the respondent-Corporation at any stage till the reference of the disputes to the arbitrator or even thereafter. The right to sue in regard to the claims made by the petitioner, therefore, did not accrue to the petitioner nor could the period of limitation start running against it.

6. By the award, impugned in this petition, the Arbitrator has accepted the contention urged on behalf of the respondent and held that the claims made before him are indeed barred by limitation. While doing so, the arbitrator rejected the prayer made by the petitioner for a direction to the respondent to file a copy of the final bill, allegedly prepared by the respondent, on the ground that the filing of the original bill or its copy was wholly unnecessary. Aggrieved the petitioner has assailed the correctness of the view taken by the arbitrator and the validity of the award made by him in the present proceedings, as noticed earlier.

7. Appearing for the petitioner-Claimant, Mr. Joy Basu, strenuously argued that the arbitrator had fallen in a palpable error in holding that the right to sue had accrued to the petitioner in the year 1989 since a final bill in relation to the work done by the petitioner had been prepared in the said year. He submitted that the preparation of the final bill was a fact not admitted by the petitioner. Reliance by the respondents as also the arbitrator upon the contents of some communications exchanged between the parties by reading the same out of context was not, according to learned counsel a substitute for the production of the final bill or a copy thereof by the respondent. Respondent had, however, not only withheld the so called final bill but even opposed the application seeking a direction for its production. The withholding of the final bill which was crucial for the determination of the question of limitation raised by the respondent could therefore, give rise to an inference adverse to the respondent that either no such final bill had been prepared or that production of the so called bill would go against the version of the respondent. Mr. Basu placed reliance upon R.P. Souza & Co. by its Partners Vs The Chief Engineer, P.W.D. & Ors., 1999 (3) Arb. LR 495 (Bombay), E.N. Veeka Construction Co. Vs. Delhi Development Authority & Anr., 1999 (1) Arb. LR 298, Pandit Munshi Ram & Associates (Pvt.) Ltd. Vs. Delhi Development Authority & Anr., 2002 (Suppl.) Arb. LR 659 (Delhi), Shri Ram Pitta Mal Vs. Food Corporation of India, 1987 (2) Arb. LR. 73 & M.L. Dalmiya & Co. Vs. Union of India, AIR 1963 Cal. 277 [LQ/CalHC/1961/67] in support of his submission that right to sue for payments outstanding on the basis of a contract between the parties could accrue only upon the finalisation of the account by the respondent.

8. On behalf of the respondent-Corporation, it was, on the other hand, argued by Mr. Dholakia that the scope of interference by the Court under Section 34 of thewith an arbitral award was very limited. He urged that it is not just an error of law but a patent error of law which could justify the intervention of the Court. He submitted that while the line of reasoning adopted by the arbitrator did not articulately bring the case under one or the other Articles in the Schedule to the Limitation Act, the conclusion of the arbitrator that the claim was barred by limitation could be justified before this Court even in the absence of any such articulation. In support of that submission Mr. Dholakia relied upon Article 18 of the Schedule to contend that the claim in the instant case fell under the said Article. Alternatively he urged that Article 55 was applicable to the claims in question. Lastly he submitted that whatever may have been the Article applicable, the fact that a final bill had been prepared five years before the invocation of the arbitration clause was in itself sufficient to throw out the claims as barred by limitation.

9. A careful reading of the award made by the arbitrator reveals that the respondent had placed reliance upon Articles 55 and 113 of the Limitation Act in support of their contention that the claims were barred by limitation. The arbitrator has not, however, recorded any finding as to which out of the two Articles was in the facts and circumstances of the case applicable to the claims presented before him. That, in my opinion, was absolutely essential for a proper determination of the issue regarding limitation. The first and the foremost concern of a Court or the Arbitrator before whom a plea of limitation is raised is to identify the Article in the Schedule to the Limitation Act, that is, applicable to the case before them. This is necessary because the commencement of the period of limitation varies from Article to Article. The language employed in the three Articles upon which the respondent places reliance in the instant case amply demonstrates the difference. The Articles reads as under:

It is noteworthy that while all the three Articles extracted above prescribe a uniform period of three years limitation, the date or the event by reference to which the said period has to be reckoned is different under each Article. For cases falling under Article 18 three years period has to be reckoned from the date when the work is done. In cases falling under Article 55, the said period has to be reckoned from the date when the contract is broken and in case there are successive breach, when the breach under which the suit is instituted occurs or where the breach is recurring from the date when it ceases. The period of three years prescribed under Article 113, however, commences from the date when the right to sue accrues. The fact that the same period is stipulated under all the three Articles, therefore, looses significance. What holds the key to a correct application of the period of limitation is the date from which the period prescribed starts running, which date is different in all the three cases as is amply demonstrated above.

10. The above aspect of the matter appears to have gone out of the focus before the Arbitrator, who has applied the period of three years without first identifying the Article under which the case before him fell. The confusion resulting from the award gets compounded by Mr. Dholakia's submission that the claim could as well fall under Article 18 even though that submission does not appear to have been urged before the arbitrator. Suffice it to say that the entire approach adopted by the arbitrator to the question of limitation has been defective. Such being the position, the reckoning of the period of limitation from the date the alleged final bill was prepared may be wholly erroneous. I say so because if Article 18 were to apply, as was contended by Mr. Dholakia, the preparation of the final bill may have no relevance whatsoever to the claim being within or beyond the time prescribed. So also the preparation of the final bill was wholly irrelevant if the claims were to be governed by Article 55. It is not the preparation of the final bill which commences limitation under the said Article but the breach of the contract or in the cases involving continuing breaches, the day when the said breach ceases. The assumption that the date of preparation of the final bill is the date from which the period has to be reckoned regardless of which Article is applicable is, therefore, legally incorrect rendering the award unsustainable.

11. Even in regard to the preparation of the final bill, the arbitrator appears to have adopted an approach which has not commended itself to me. Although the arbitrator has not held so yet assuming for the sake of an argument that the case in hand fell under Article 113 of the Schedule to the Limitation Act, the next question would be as to when did the right to sue accrue to the petitioner. The petitioner's case was that its account had not been finalised and the final payment under the same had not been made to it. The respondent's contention that a final settlement of accounts had taken place with the preparation and payment of a final bill could be made good by it only by producing the said final bill and evidence regarding payment, if any, made to the petitioner on the basis thereof. The final bill as also evidence regarding payment of the bill amount to the petitioner was admittedly in possession of the respondent, which it should have produced in support of the contention that the accounts stood finalised as early as 1989. The respondent did not, however, do so. It not only withheld the final bill allegedly prepared but also opposed an application by which the petitioner sought its production in the Court. This attitude of the respondent defies logic. If a party is in possession of the best evidence to prove a fact, it cannot withhold the said evidence without incurring the risk of an adverse inference being drawn against it. There was no question of the arbitrator relying upon words and sentences in communications addressed by the opposite party to draw a conclusion that the state of facts alleged by the respondent did in fact exist. The arbitrator could not legally decline a direction to the respondent to produce the final bill before him and in case the same was not produced, he was bound to draw an adverse inference that no such bill exists or that the so called bill was not in fact a final bill. The arbitrator has instead of doing so proceeded to rely upon what can at best be said to be secondary evidence regarding the existence of a final bill and drawn an inference that such a bill did exist and was duly signed and accepted by the petitioner so as to give him the right to sue for the reliefs now claimed from the date the same was signed and accepted. There is no gain said that the mere preparation of a bill may also be wholly inconsequential in as much as unless the bill is communicated to the petitioner, it cannot be said that any right to sue for any further relief had accrued to the petitioner.

12. That brings him to the question as to whether the impugned award can be interfered with under Section 34 of thein a fact situation like the one in the present case. According to Mr. Dholakia, the jurisdiction of the Court is limited making interference with awards rare and only in cases where the same suffer from a patent illegality. The present does not, according to learned counsel, qualify for any such interference.

13. The scope of the Courts' powers under Section 34 (supra) has been explained at considerable length by the Supreme Court in Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., (2003) 5 SCC 705 [LQ/SC/2003/517] . Three aspects of the said pronouncements are significant for the present case. The first is that if the award made by the arbitrator is in contravention of the provisions of the Arbitration and Conciliation Act, 1996 in as much as the Tribunal has not followed the mandatory procedure prescribed under the same the award can be said to be patently illegal and would, therefore, be liable to be set aside under Section 34. The second aspect is that where the award is contrary to the substantive provisions of law and against the terms of the contract it would be patently illegal and can, therefore, be interfered with under Section 34. The third aspect of the pronouncement is that while the phrase "public policy of India" occurring in Section 34(2)(b) is not defined in the, the same must be given a wider meaning so that patently illegal awards passed by the Arbitral Tribunal could be set aside. Their Lordships have upon a review of the earlier pronouncements enumerated the circumstances in which an award could be set aside in the following words:

Therefore, the phrase "public policy of India" used in Section 34 in context is required to be given a wider meaning. The concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in addition to the narrower meaning given to the term "public policy" in Renusagar case, 1994 Supp (I) SCC 644 it has to be held that the award could be set aside if it is patently illegal. The result would be that an award could be set aside if it is contrary to:

(a) fundamental policy of Indian law; or

(b) the interest of India; or

(c) justice or-morality; or

(d) in addition, if it is patently illegal.

Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy.

Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such an award is opposed to public policy and is required to be adjudged void.

14. The above, in my opinion, provides a complete answer to the submission made by Mr. Dholakia. So long as an award is patently illegal or against justice or morality, the Court's powers under Section 34 of thecan be invoked to set aside the same. Dismissal of a claim on the ground that the same was barred by limitation by adoption of an approach Which does not focus properly on the legal provision governing the case is, in my opinion, a case of patent illegality. An award based on a misdirected approach of the arbitrator is no less illegal than an award where the approach is correct but the ultimate conclusion erroneous. As a matter of fact, cases where the very approach of the arbitrator is erroneous or fundamentally wrong in applying the law are more prone to judicial intervention than cases where the approach may be correct but the ultimate conclusion is different from what the Court would have arrived at.

15. The next question is whether the Court has the power to remit the matter back to the arbitrator for de novo hearing. According to Mr. Dholakia, the power to modify and remit the award to the arbitrator is not available to the Court under the new Act. This is, according to the learned counsel, a departure from the scheme of the old Act under which such a power was specifically conferred upon the Court. He submitted that the power to set aside the award does not include the power to remit the matter back to the arbitrator for a fresh hearing and disposal especially when Section 33 of thecould cover cases only of correction, interpretation or additions in the situations stipulated therein which are not admittedly applicable to the instant case.

16. Mr. Basu, on the other hand, submitted that the power to set aside the award was wide enough to include the power to remit the same back to the arbitrator. Relying upon Sub-section 4 of Section 34, Mr. Basu argued that the power of the Court to permit the Tribunal to resume arbitration proceedings signifies that the matter could go back to the arbitrator either during the pendency of these proceedings or on their conclusion.

17. Power to set aside an award when exercised by the Court would leave a vacuum if the said power was not understood to include the power to remand the matter back to the arbitrator. This is particularly, so when the does not provide for supersession of the reference upon setting aside of the award. The result is that if the award is set aside the reference may continue, which can be effectuated only if the matter is remitted back to the arbitrator for a fresh adjudication. The new Act is meant to be an improvement over the old enactment. Some of the provisions now made no doubt give a new dimension to the law of arbitration and adopt a new approach to the subject but the purpose and the scheme of the continues to be to promote alternative dispute resolution mechanism rather than to scuttle the same. The amendment to Section 89 of the Code of Civil Procedure providing for reference to arbitration even in suits where an element of settlement appears to the Court to be existing also gives a clear impression that the Legislation is intended to promote non litigative methods of resolution of conflicts outside the ordinary hierarchy of civil courts. An interpretation which promotes the purpose underlying the, should therefore, be preferred over others that defeat or impede the same. I have, in that view, no difficulty in holding that the setting aside of the award does not bring about a vacuum. The Court can, if considered just and proper, remit the matter back to the arbitrator to decide the same afresh. The present is, in my opinion, one such case, which needs to be remitted. I, accordingly, allow this petition; set aside the award made by the arbitrator and remit the same back to him for making a fresh award in accordance with law, keeping in view the observations made hereinabove. The parties are left; to bear their own costs.

18. The parties to appear before the Arbitrator for directions on 31st July, 2005.