Delhi High Court
Mahanagar Telephone Nigam Ltd. vs Siemens Public Communication Network ... on 25 February, 2005
Equivalent citations: 2005(1)ARBLR369(DELHI), 118(2005)DLT293, 2005(80)DRJ584
Author: R.C. Jain
Bench: R.C. Jain
JUDGMENT R.C. Jain, J.
1. This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996, ( in short the "Act) praying for setting aside the Award dated 28.11.2002. In fact, what is sought to be set aside is an undated majority Award rendered by the two Arbitrators namely Justice D. R. Khanna (Retd.) and Justice M. H. Kania (Retd.) because the petitioner herein actually supports the Award rendered by Mr. Justice R. C. Srivastava (Retd.) on 28.11.2000.
2. This petition presents a rare and somewhat piquant situation arising out of the arbitral proceedings and the Award, therefore, it is necessary to recapitulate them in some greater details than which is generally noted while disposing of an application/objections under Section 34 of the Act in normal cases. The undisputed facts are that in the month of May, 1993, the petitioner-Mahanagar Telephone Nigam Ltd. (MTNL) floated a Tender, bearing Tender Enquiry No.MTNL/20-95(5), 93-MM, dated 25.5.1993 for supply of 105 Nos. of 565 Mbps and 155 Nos. of 140 Mbps Optical Fibre Systems & 1672 Kms of 12 Fibre Optical Cable with jointing material and accessories. The equipments to be supplied were inter alia against the TEC Specifications for various equipments. In response to the aforesaid tender enquiry, various tenders were received from different parties including the respondent-Siemens Public Communication Network Ltd. Some of the tenderers sought clarification with regard to the tender enquiry. The petitioner issued a vendor clarification on 20.7.1993. The technical bids of the parties were open on 3.8.1993 and financial bills were open on 14.2.1994. After evaluation of the respective bids, the petitioner issued its counter offer by issuing a Letter of Intent (hereinafter LoI) to the respondent on 29.4.1994 for supply of various equipments forming 565 Mbps Optical Fibre system in (1+0) configuration including equipments at both the ends as per the detailed material list. The prices of the same were offered on provisional basis. The respondent accepted the said LoI in totality by their letter dated 16.5.1994 and thereafter, the petitioner issued a Purchased order No. MTNL/20-95(5)/94-MM/SIEMENS/94-95/119 on 24.10.1994. The said purchase order reiterated the terms and conditions of LoI as also the technical specifications set out in the tender enquiry. The supplies were, however, not made in time and on request of the respondent, the petitioner extended the delivery period up to 28.6.1995 for completion of supplies.
3. The respondent-company had part supplied the materials against which the petitioner made a payment of Rs.5,49,58,989/- calculated on the basis of the prices fixed under the purchase order. The case of the petitioner is that out of 14 systems to be supplied by the respondent, only 13 systems were supplied and that too beyond the stipulated delivery period entitling the petitioner to claim and recover the liquidated damages in terms of Clause 16.1 and 16.2 of the General Conditions of the Contract and also for compensation for non-supply of one system. The disputes/differences arose between the parties which were referred to arbitration in terms of the Arbitration Agreement to the Indian Council of Arbitration, New Delhi, and the Indian Council of Arbitration referred the disputes to an Arbitral Tribunal comprising three learned Arbitrators namely Mr. Justice M. H. Kania a former Chief Justice of the Supreme Court, Mr. Justice D. R. Khanna (Retd.) and Mr. Justice R. C. Srivastava (Retd.). The Arbitrators appointed Justice D.R. Khanna as the presiding arbitrator. Before the arbitrators, the respondent filed its statement of claim inter alia claiming Rs.5,55,23,464/- representing the balance price in terms of the purchase order along with interest @ 24% per annum w.e.f. 27.6.1995 i.e. the date of issuance of invoice. The respondent also claimed for the refund of Rs. 68,73,817/- which had been deducted by the petitioner on account of liquidated damages for delay in supply of the equipment plus interest thereon. The respondent also made a counter claim for the sum of Rs.42,86,376/- being 10% of the price of the equipment to be paid by the MTNL and retained by them as security till the successful commissioning of the systems supplied to MTNL. The Arbitral tribunal framed the following issues:
(a) What is the true scope and interpretation of Clause 8.6 (ii) of the Purchase Order?
(b) Whether the "Exactly Similar Configuration" mentioned in clause 8.6 (ii) regarding the materials under the Purchase Order of MTNL and the materials under the 1993 Tender of DOT, is not an agreed fact between the parties? If not then what is the effect thereof?
(c) Whether the equipment ordered by MTNL on Siemens under the Purchase Order No. MTNL/20-95(5)/94-MM/SIEMENS/94-95.119 dated 24.10.1994 are not of " Exactly Similar Configuration" as the equipment for which the rates were finalised by DOT under their Tender Enquiry No.80-305/93/MMC?
(d) Whether the contract with Siemens was for supply of only 565 mbps systems?
(e) Whether in respect of Digital Distribution frame (DDF), the rates finalised by DOT can be applied to the present case?
(f) Whether MTNL is not entitled to claim liquidated damages for delayed supply of 13 systems as per the provision of the Contract?
(g) Whether stores were short supplied by Siemens as set out in paragraph 5 of the Counter Claim and if it is so what may be the consequence?
(h) Whether parties are liable to pay interest on the amount awarded and at what rate and at what period?
(i) What is the effect and implication of the letter dated 20th July, 1993 issued by the MTNL?
(j) Costs, if any?"
4. Parties led documentary and oral evidence and on a consideration of the same and hearing the submissions of both sides, the arbitral tribunal made its Award. The two Arbitrators namely Mr. Justice M. H. Kania (Retd.) and Mr. Justice D. R. Khanna (Retd.) made a joint undated Award sometimes towards the end of August, 2000, while Mr. Justice R. C. Srivastava made a separate dissenting Award dated 28.11.2000. Vide a communication dated 1.12.2000, the Indian Council of Arbitration forwarded the undated majority Award, the minority dissenting Award of Mr. Justice Srivastava dated 28.11.2000, the note and the correspondence exchanged amongst the Arbitrators and a note of Justice D. R. Khanna (Retd.) mentioning therein that the Award constituted of composite papers all of which comprised and constitute as integral part of the Award. Vide further communication dated 12.1.2001, the Indian Council of Arbitration (ICA) furnished the schedule containing the details of the awarded amount signed by Justice D. R. Khanna and vide another communication/letter dated 24.1.2001, I.C.A forwarded schedule B containing the details of arbitration cost etc.
5. The aforesaid Award of the arbitral tribunal is stated to be erroneous on the face of the record and contrary to law and record and is sought to be assailed inter alia on the grounds;
(i) it is wholly arbitrary, misconceived and liable to be set aside because it is in violation of Section 31(2) and hit by Section 34(2)(a) of the Arbitration and Conciliation Act, 1996,
(ii) It has illegally awarded the sum of Rs.91,99,600/- as the DDF along with 18% interest in favor of the respondent as the respondent had not raised any claim towards the price of DDF in the statement of claim;
(iii) the award suffers from errors apparent on the face of the record.
(iv) The Award is arbitrary and misconceived because the Arbitrators erred in rejecting the counter claim of the petitioner towards liquidated damages for delayed supply of equipments in terms of the purchase order;
(v) the Award suffers from apparent inconsistencies and;
(vi) There is legal misconduct on the part of the arbitrators because the schedule to the said Award had been prepared on 14.12.2000 after the dissenting Award was made by the third Arbitrator on 28.11.2000.
6. The petition has been opposed on behalf of the respondent and a reply filed raising preliminary objections about the petition being barred by time having being made beyond the period of limitation as provided under Section 34 of the Act; the objections are without jurisdiction and beyond the scope of the Act as no ground for interfering with the Award under Section 34 of the Act has been made out. It is denied that the Arbitrators have illegally allowed the claim of the respondent or has rejected the claim of the petitioner. Various grounds on which the Award is sought to be challenged are controverter.
7. I have heard Mr. K. N. Bhat, learned senior counsel representing the petitioner-MTNL and Mr. Arun Jaitley and Mr. A. S. Chandhiok, learned senior counsel representing the respondent at great length and have given my thoughtful consideration to their respective submission.
8. It may be stated at the very outset that referring to the document which is said to be majority award rendered by Justice M. H. Kania and Justice D. R. Khanna, the note and correspondence exchanged amongst the Arbitrators which is stated to be an integral part of the Award, Mr.Bhatt made a legal submission in regard to the very existence of a majority award and, in any case, about its legality as an Award. In this connection, he has in extentio referred to the contents of undated document signed by the two arbitrators namely Justice M. H. Kania and Justice D. R. Khanna note dated 24.8.2000 which emanated from Justice Srivastava, a letter dated 25.8.2000 written by Justice Khanna to Justice Kania, reply of Justice Kania dated 12.9.2000 addressed to Justice Khanna and note of Justice Khanna dated 26.11.2000 which have great bearing on the whole issue. It may be noted at once that the so called majority Award which bears the names of all the three arbitrators at the bottom bears signatures of only two arbitrators viz Justice M.H. Kania and Justice D.R. Khanna and is not signed by the third Arbitrator Justice R.C. Srivastava. The contents of the note of Justice R.C. Srivastava dated 24.8.2000 are important and are extracted below:
"I, have gone through the proposed tentative draft of the award which was circulated to the learned co-arbitrators. According to me, it had postulated considerable allowance/ compensation to the SPCN for DDF price although the tender submitted by the SPCN was for consolidated amount for each of the system/equipment including the DDF as mentioned in para 11 of the draft award. There was no separate price mentioned for DDF nor it was claimed in the claim petition by SPCN which was specially disallowed in para 22 of the proposed draft.
Subsequently in para 48 as equitable measure and in order to maintain balancing impact separate claim for DDF has been allowed which was neither claimed nor was legally tenable. The proposed draft is thus mutually conflicting and does not stand reasons.
On 19th and 20th August, 2000, all the three Arbitrators assembled at Hotel Taj where the Chief Justice M.H. Kania was staying, no reference or mention of any other claim was mentioned. However, in the evening of 20th August, 2000, I was informed on telephone, by Justice D.R. Khanna (Presiding Arbitrator) that he had received a call from Justice Kania to further substantive claims of over Rs.84 lacs (as then newly introduced in paras 53 and 54 of the draft) be allowed. It, as such, was introduced in the draft award. I have seen that part only today.
Before submitting this note, I brought these aspects to the notice of the Presiding Arbitrator with whom I had a detailed discussion as well who has been pleased to concur with me after considering the material.
I hope and trust that a meeting of Arbitral Board may be called immediately and the signing pronouncement/delivery of Award be deferred till final conclusion of legal award."
A letter dated 25.8.2000 written by Justice Khanna to Justice Kania is to the following effect:
"Justice Srivastava on being provided the proposed award has written an elaborate note, (copies of which have been sent to us) bringing out certain significant errors of fact and law which I too on careful deliberations feel may result in grave miscarriage of justice. Since the award is still at formative stage, the third member has yet to sign that and it has not yet been signed by all nor signed copies given to the parties. I too feel that its finalization be withheld till we have another sitting, and if need be hearing provided to the parties.
Firstly as pointed out by Justice Srivasatava, there is a patent conflict in the proposed award about the price of DDF. We have specifically disallowed that in Para 22 on the ground that the contract was composite whole of the systems with no separate price for DDF, it had also not been claimed in the claim Statement. To have still allowed that in Para 48 in a round about manner is an outright contradiction, apart from being inferential and without any evidence on record. The respondent is thereby being unwarrantly saddled with the present liability of about two Crores.
I have therefore as well felt the desirability of withholding of the pronouncement of award till these conflicting and stirring aspects receive due consideration. It is never too late to set an error right in the interest of Justice.
I may before concluding add that nothing in this be considered as an expression of final opinion. I have only referred to them so as to highlight somewhat emphatic nature of what brother Srivastava has discussed with me.
I sincerely regret the unfortunate development and do feel that my signatures on the formative award be taken as withdrawn. "
Reply of Justice Kania dated 12.9.2000 addressed to Justice Khanna is equally important and reads as under:
" Dear Justice Khanna, I received your letter of August 25, 2000 some days ago and I was surprised to read the same. As you know, you brought the engrossed copy of the Award on Stamp Paper and we both signed it on August 27, 2000. It is true that the award was signed in a hurry because you were intending to leave for Australia at the end of August, 2000, and you were anxious that the award should be declared and published before that. On the previous day, I had given you the figures which appear to be the undisputed figures of the amount retained by MTNL and the balance of payment to be made by the MTNL.
In the first place, I have some doubt to as to whether once we both have signed the Award, we can go back on the award. In this regard, I would like to draw you attention to the decision of the Supreme Court in the Satwant Singh Sodhi v. State of Punjab reported in 1993 (3) SCC 487 and particularly to the observations in paragraph 11 of that judgment. I would also like to draw your attention to the observations of the Supreme Court in paragraph 6 of the judgment in the case of Rikkabhdass v Ballabhdas . You may also see the decision in the case of Juggilal v General Fibre Dealers , where it is said that, generally speaking, an arbitrator is functus officio after he has made the award, and that no power is left in the arbitrator to make any change of substance in the award that he had made.
A note of Justice Khanna dated 26.11.2000 is extracted below:
" I have perused the dissenting award of Justice R.C. Srivastava. In my note addressed to the other Arbitrators attached by Justice Srivastava as mark "Y", I found considerable substance in his observations. It was as such that we held some sittings to arrive at consensus as far as possible. I may of course here mention that the urgency of my going abroad and endeavor to finalise the same before that in haste, and for that end going to Taj Hotel the morning when Justice Kania was leaving for Mumbai and both signing the same before showing the entire draft to Justice Srivastava and obtaining his comments and suggestions/modifications has also not been favorably looked at by him. Justice Kania's note is marked "Z".
I had also felt initially that the non-dating of the award, non-preparation of the schedules and giving of the signed copies to the parties could render the same as not final. Moreover, in terms of section 31(2) of the Arbitration and Conciliation Act, 1996, the " Signatures of majority of all the members of the Arbitral Tribunal shall be sufficient so long as the reasons for any omitted signature is stated" was mandatory. Since reasons for absence of signatures of Justice Srivastava had not been stated the award could not treated as final.
9. Mr. Bhatt, learned counsel representing the petitioner on the strength of the above exchange of views/correspondence which had taken place amongst the members of the arbitral tribunal has emphatically urged that the award is opposed to Section 34(2)(a) of the Act because it has not been made in accordance with part I of the Act. In this connection, he has referred to the provisions of Section 31 of the Act. Sub-section 1 of Section 31 of the Act provides that an arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. Sub-section 2 of Section 31 states that in arbitral proceedings with more than one arbitrator, the signature of majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated. Further Section 31(4) mandates that the arbitral award shall state its date and place of arbitration as determined in accordance with Section 20 and the Award shall be deemed to have been made at that place.
10. In the case in hand, the Award is signed only by two arbitrators and the reason for not affixing the signature of the third arbitrator has not been stated. The so called award of the majority also does not contain the date. Therefore, the important question is as to whether the so called award of the majority meets the requirement of the "Award" or not. The definition of the " Arbitral Award" appearing in Section 2(1)(c) of the Act simply states that the arbitral award includes an interim award, therefore, it is not of much help to determine this question. In support of his contention that the so called majority award is not an award within the meaning of Section 31, Mr. Bhatt has placed reliance upon the Supreme Court decision in the case of Oil & Natural Gas Corporation Ltd. v Saw Pipes Ltd. . In that case the Supreme Court had the occasion to more fully consider the grounds on which the Court can set aside the arbitral award under Section 34(2) of the Act and in that context it has focused its attention as to when an Award can be said to have not been made in accordance with Part-I of the Act and when it can be said to be in conflict with the public policy of India. In paragraphs 5, 11, 12 and 15 of the said judgment, the Apex Court held that an Award which does not comply with Section 32 will be illegal and liable to be set aside under Section 34(2)(a)(v). One of the conclusions in the above case was that if the Award passed by the arbitral tribunal is in contravention of the provisions of the Act or is contrary to any of the substantive law governing the parties or is against the contract, the Court can set aside the Award under Section 34(2). The Award was set aside in the said case on the above grounds. It is, however, pertinent to note that in the case before the Supreme Court, there existed no such situation like the one we are confronted in the present case in regard to the so called Award being undated and the award not giving the reason for the omitted signature of the third Arbitrator. Therefore, we are again back to the same question whether non-dating of the Award and non-stating the reasons for the absence of the signature of the third arbitrator is hit by the provisions of Section 31(2) and 31(4) of the Act and is so grave that the said document cannot be called an Award or a legal Award.
11. Mr. Arun Jaitley, learned counsel representing the respondent with all the vehemence at his command argued that the majority award could not have been dated for the reasons that the Award had not been signed by Justice Srivastava, the third arbitrator who had certain reservations/dissent to the Award recorded by the two arbitrators and later wrote a dissenting award which was dated 28.11.2000. According to him, the Award could only be dated only after Justice Srivastava had given his award. According to him in the above situation, the date of dissenting award has to be taken as the date of the Award. He tried to illustrate by submitting that this position was akin to a situation where a Judge does not agree with the majority of the judges of the Bench and passes a dissenting judgment and it is only on the writing/ signing of the dissenting judgment which is later in point of time that the said date would be considered the date of decision. In this connection, he has also pointed out that it may not be possible for all members of the arbitral tribunal to assemble, and sit together, write, sign and date the award, on the same day and at the same place. He also pointed out that the letter of the Indian Council of Arbitration dated 1.12.2000 gives the date of the Award as 28.11.2000, which is the date on which the arbitral tribunal has sent the Award to Indian Council of Arbitration (ICA), therefore, it would not be correct to say that the Award of the two Arbitrators is undated or there is a non-compliance of the mandatory provisions of Section 31(4). So far as the non-stating of reasons qua the absence of the signature of the third arbitrator is concerned, it is stated that there is no mandatory requirement for assigning the same because the third arbitrator has given and signed the dissenting award which by itself is the reason for the signing of the majority award by two arbitrators and omission of the signature of third Arbitrator.
12. Mr. Jaitley, has further urged that the Award became complete only when Justice Srivastava appended his signature on the dissenting Award and, therefore, the Award is in full compliance of Section 31(2) of the Act. It was also contended by him that in any event, if at all there is any irregularity in the Award with regard to the same being not dated and not giving the reason for non-signing of the majority award by the third arbitrator, the same is a technical and procedural irregularity of trivial nature which does not affect the award containing adjudication on merits. According to him, the non-compliance of the procedural requirement in the matter of signing of judgment has been held to be, at best, a curable irregularity. In support of his contention, he has placed reliance on the views expressed in the book of Russel on Arbitration, 21st edition at 6-049, page No. 271 and at 5-235. In regard to the dating of the Award Russel states as under:
Dating of the award. Section 52(5) of the Arbitration Act, 1996, provides that the award must state the date on which it is made. This will be of assistance in calculating interest due on the award and in determining whether a contractual time limit for the making of the award has been complied with. The time limit for any challenge or appeal also runs from the date of the award. Under section 54 of the Arbitration Act, 1996, the tribunal may decide when an award is to be taken as made, subject to agreement in writing otherwise by the parties. If the tribunal does not fix the date of the award, it may be taken as being the date on which it is signed by the sole arbitrator or by the final member of the tribunal to sign. Alternatively, of course the award my be challenged and remitted to the tribunal for clarification of the date on which it was made.
13. Reliance is also placed on a few High Court decisions in the following cases:
1. Srichran Bhandari V. Makhan Lal Bhandari- AIR 1919 Cal 42 The arbitral award was inter-alia challenged on the ground that out of nine arbitrators only eight have signed the award. Court held that though only 8 signed, the proceedings were taken in the presence of all 9. That being so the omission of one of the arbitrators to sign does not vitiate the award.
2. Johara Bibi V. Mohammad Sadak Thambhi Marakayar-
Held that mere non-signing of the awards by one of the arbitrators who has been throughout a party to the making of the award cannot vitiate the award. (Para 4) Court further held that if the majority signs it will not be open to question the award that it is not the unanimous decision of all the arbitrators.
3. Ramtaran Das V. Adhar Chandra Das-
Court held " The fact therefore, indicates the final award embodies a decision by the arbitrators as a whole. The question, therefore, is whether the mere fact that one of the arbitrators did not sign the final awards rendered the award invalid. The question has been considered in number of cases and has been answered in the negative."
4. Deo Narain Singh V. Siabar Singh-.
Held " It is true that the award need not be signed by all the arbitrators if some of them refuse to sign it. What is, however, essential is to find out whether or not all the arbitrators have deliberated together and then come to a certain decision, and if after due deliberation is has been arrived at with which some of the arbitrators have disagreed. It will not materially affect the award where the parties have to be governed by the decision of the majority.
14. In the opinion of this Court, the view taken in the above authorities cannot be applied to the case in hand firstly because the observations in the book of Russel on Arbitration, 21st edition were in regard to the UK Arbitration Act 1996 and deal with the provisions of a particular statute and, therefore, not relevant in the present case as the parties here are bound by the Indian statute namely Arbitration and Conciliation Act, 1996 which govern the entire gamut of arbitral proceedings.
15. In the case in hand as noticed at the threshold, the so called majority award is an undated award and it does not give out the reasons for the omitted signature of the third arbitrator namely Justice R.C. Srivastava. The non-dating of the Award by the two arbitrators does not appear to be due to any inadvertence or for the reason suggested by Mr. Jaitley that the third arbitrator had not rendered his Award by the date the two arbitrators made their award. Rather it appears for the reasons which are not difficult to understand. From a perusal of the record of the arbitral proceedings brought on record and the correspondence/notes exchanged amongst the arbitrators, it would appear that even though Justice M. H. Kania, Justice D.R. Khanna were not clear as on what date the documents said to be termed as a majority award was signed by the two members, the letter of Justice Kania dated 12.9.2000 addressed to Justice Khanna would indicate that both of them signed the Award on 27.8.2000. It is pertinent to note that before the said date Justice D.R. Khanna had written to Justice Kania on 25.8.2000 in regard to the note sent by Justice Srivastava clearly stating that he deemed the document as a proposed award.
16. On 26.11.2000, Justice D.R. Khanna wrote a note that in view of the constraint of time due to his impending trip, he along with Justice Kania signed the Award showing the entire draft of Justice Srivastava after obtaining his comments and suggestions. He also referred to Section 31(2) of the Arbitration Act, 1996, which makes it mandatory to state the reason for not fixing the signature of the third Arbitrator but in view of the decision of the Supreme Court reported in 1993(3) SCC 487 brought to his notice by Justice Kania, Justice Khanna felt compelled to accept the view of Justice Kania on the alleged theory of he having become functous officio after signing of the document.
17. From the sequence of events which took place in the later part of August, 2000, it is clear that there had not been any effective deliberation amongst the three Arbitrators and no consensus could be reached as to the proposed Award. It appears that at later stage/crucial stage the deliberations were confined between the two arbitrators namely Justice Kania and Justice Khanna only. After such deliberations, they had prepared a draft of the Award for the perusal and consideration of the third Arbitrator namely Justice R.C. Srivastava. The said draft of the Award was also signed by Justice Khanna and Justice Kania in anticipation of its approval/concurrence by Justice Srivastava because Justice Khanna was proceeding abroad and Justice Kania who was staying in Hotel Taj was to return to Bombay. From the tenor of the note of Justice Srivastava and that of Justice Khanna dated 25.8.2000, it is apparent that they treated the so called Award as the proposed or formative Award. Merely because the proposed draft came to be signed by the two Arbitrators, will not alter the nature of the document and convert it into an " Award" within the meaning of the term because it is the intention of the arbitrators which has to be seen rather than going by a mere coincidence of the draft award bearing the signature of the two arbitrators.
18. On the face of the facts and circumstances of the case, there was no question of the theory of the two arbitrators having become "functus officio" soon after the signing of the Award being attracted because Justice Khanna though the signatory to the document treated the said document as a draft award/proposed award. As per Justice Khanna, the document which he forwarded to Justice Srivastava was a proposed draft which had been prepared without any deliberations with Justice Srivastava in anticipation of his approval. Justice Khanna, reiterated this position even in his last note but under certain erroneous belief wrote a note where he stuck to his earlier view that the Award for a sum of Rs.91,99,600/- with interest towards DDF was not justified but once he has signed the Award, he felt helpless in the matter. It is not uncommon for the authors of certain orders/documents to sign or initial the draft of the document so as to make it authentic draft emanating from a particular person. This incidence alone cannot be used to term the draft as final award. It is the intention of the author coupled with the circumstances which needs to be taken into account.
19. On a consideration of the matter, this Court is still at a loss to pinpoint the exact date of the majority Award. The above noted circumstances would lend credit to the theory that the document purported to be a majority award was not a final award of the two members of the tribunal but it was only "draft" of the award or a formative award. The correspondence exchanged between the three arbitrators clearly points out that Justice Khanna was convinced of the reasons given by Justice Srivastava in regard to the Award for a sum of Rs.91,99,600/- with interest @ 18% from 28.6.1995 because it appears that the three arbitrators on a deliberation have already taken a view in paragraph 22 of the Award that the respondent had not filed any claim in regard to the price of DDF in the claim petition which appeared to be a afterthought and, therefore, separate claims towards the said items were unsustainable. Strangely enough and unfortunately Justice Khanna endorsed the view of Justice Kania in regard to, or for that reason the two arbitrators having become functous officio after signing the Award in view of the Supreme Court decision in the case of Satwant Singh Sodhi v State of Punjab & Ors. and that in the case of Rikhabdass v Ballabhdas and in the case of Juggilal Kamlapat v General Fibre Dealers Ltd.
20. Taking into account the totality of the facts, circumstances and the material brought on record and the manner in which the arbitral proceedings were conducted by the two arbitrators at the stage of making the award, this Court has no hesitation in holding that the document purported to be a majority award cannot be termed as an award within the meaning of the term or the Act and it is violative of Section 31(2) and Section 31(4) of the Act and is hit by the provisions of Section 34(2)(a)(v) of the Act.
The Award is, therefore, liable to be set aside on this ground alone.
21. Once I have found that the Award is liable to be set aside on the ground that it has not been made in accordance with the provisions of part 1 of the Act and is hit by the provisions of Section 31(2) and Section 31(4) of the Act, strictly speaking it is not necessary for this Court to deal with the other two grounds pressed on behalf of the petitioner for setting aside the Award. However, this Court with a view to decide the matter finally considers it desirable to refer other grounds as well. Mr. Bhatt, learned senior counsel for the petitioner has argued that the Award for a sum of Rs.91,99,600/- with interest of 18% from 28.6.1995 towards the price of DDF is not only contrary to the well-established proposition that a person is not entitled to a relief which is not claimed by him but the Award of this amount is wholly contrary to the view taken by the two arbitrators in paragraph 22 of the undated award. Para 22 and para 46 to 48 of the award are being reproduced below for the facility of reference:
22. So far as the separate claim set up by the Siemens during the course of arguments regarding the price of DDF, it may be mentioned that in the claim statement, no claim in this regard has been set up and it appears to be an afterthought considering the award which Himanchal Futuristic Communication has obtained on 18.9.1999. No analogy, can be drawn from the same as the systems to be supplied by the Siemens in the present case were to be complete including the DDF. As such, separate claim towards this item is unsustainable.
46. Where we find that relief is called for to Siemens is with regard to DDF. Although we have already above disallowed the separate claim for DDF as none such was claimed in Siemens statement of case and moreover systems ordered from Siemens were complete including the DDF and no separate price was payable towards them, still it is in a different context, that the Siemens is entitled to relief in this regard. It appears that the Dot when fixed price of he system, it did so taking into account that other dealers had not included DDF in their systems. They were allowed separate amounts for that. In other words, it has to be treated as if the payments made to Siemens were on the basis of the price fixed by DoT which did not include money payable for DDF. This gets more fortified from the circumstance that the MTNL has as well paid part price separately for DDF to Siemens.
47. Unfortunately, the MTNL did not produce the order of Dot or calculation arrived at by Dot in fixing the price. Only conclusion arrived at by Dot was communicated to Siemens. We have also been prevented from looking into how the price fixation were being determined, they were not given any hearing nor were communicated in what manner the Dot was arriving at its conclusion.
48. We, therefore, feel that the Siemens should be allowed relief for ignoring the price of DDF in the overall fixation of the price of their systems by Dot. MTNL has paid to Siemens Rs.1,08,000/- for systems by DDF. Their price according to the Siemens was Rs.7,64,400/- for each system. This was much less than Rs.12 lakh evaluated in the Award of Himnachal Futuristic. Thus deducting Rs.1,08,000/- already paid to Siemens from the price of Rs.7,64,400/- balance due would be Rs.6,56,400/-. This for the 14 systems would come to Rs.91,99,600/- which is held payable to Siemens by MTNL we therefore, order that the MTNL do pay to siemens Rs.91,99,600/- (Rupees ninety one lakh ninety nine thousand and six hundred only) with interest of 18% P.A. Thereon from 28.6.1995 till payment/realisation whichever is earlier.
23. From a perusal of the above paragraphs more particularly paragraph 22, it is apparent that the respondent made no separate claim for the price of DDF but the same was raised for the first time during the course of arguments, therefore, the tribunal has rightly taken a view that it was an afterthought attempt on the part of the respondent to get more amount on the basis of another award which was rendered in favor of Himanchal Futuristic. The tribunal not only noted this but had drawn a clear distinction between the two cases by returning a finding that the system to be supplied by the Siemens i.e. respondent in the present case were to be complete with DDF and, therefore, no separate claim towards the price of DDF was sustainable. Strangely , and for the reasons not easy to understand, the two arbitrators took a sommersalt and on a wholly untenable and non-existing grounds awarded a huge sum with interest to the respondent on that score. The two findings are not only mutually inconsistent/contrary but are self-destructive. Mr. Jaitley has strenuously argued that the claim in respect of the price of DDF was included in claim No.1 claiming the total price of the complete system which included the DDF. He argued that there is ample material on record to show that the DDF form part of the system that as per the terms and conditions of contract, the price of the equipment to be supplied by the respondent was to be fixed as per the Dot rates and as no breakup of equipment-wise cost had been provided by the petitioner, it was not possible for the respondent to claim payments of individual items that it was only during the course of arbitration proceedings when an Award pertaining to HFCL was filed by the petitioner itself, that the respondent came to know that DDF had never been procured by DOT and as such, the price fixed by DOT could not have been taken by the petitioner into consideration for fixing its price. Assuming for the sake of arguments that it was so still in view of the admitted position that in the statement of claim filed by the respondent no separate claim was made by the respondent in respect to the price of DDF, any question for consideration of such a claim did not arise. This in turn would mean that the two arbitrators had dealt with a dispute not contemplated or not falling within the terms of reference. The note of Justice R.C. Srivastava would clearly show that the paragraphs 46 to 48 did not exist in the formative draft award and had been subsequently added which seems to correct having regard to the earlier finding of the tribunal as contained in para 22 of the Award. One of the ground on which the Award of the arbitral tribunal can be set aside is that the arbitral award deals with a dispute not contemplated or not falling within the terms of the submissions to arbitration, or it contains a decision of matters beyond the scope of submission to arbitration. In the opinion of this Court, the so called award is also hit by the provisions of Section 34(a)(iv) of the Act.
24. Yet another ground pressed for setting aside the so called award is that the Award has disallowed the counter-claim of the petitioner-MTNL for liquidated damages amounting to Rs.41,91,352/- without assigning any reason, therefore, the award is opposed to the decision of the Supreme Court in the ONGC case. The so called majority award of the arbitrators has dealt with the question of counter claim in paragraph 30, 31, 33 and para 52 and 53 of the said document. It found that no deduction for liquidated damages will be made by the Siemens and, therefore, the claim of MTNL was disallowed and the amount was ordered to be refunded back to the respondent with interest @ 18%. On behalf of the respondent it was emphatically argued that the two arbitrators have rightly disallowed the claims of the petitioner-MTNL because the delay in supplies by the Siemens was attributable to MTNL in their extending the delivery period retrospectively, and, therefore, the question of damages for delay has become redundant and, therefore, were not beyond the supplies of the equipment and if there was any misplacement of some equipment, MTNL itself was responsible. These reasons are not born out from the award and once the arbitrators found that there was delay in supplies and the supplies were deficient in some respects there was no reason for not allowing the claim of the petitioner-MTNL in regard to liquidated damages which was strictly in accordance with the terms of the contract.
25. Thus looking at the matter from any angle, the inevitable conclusion is that the document referred to as the majority award is not an Award within the meaning of the term as the same has not been made in accordance with the provisions of Part-I, particularly Section 31 and 31(4) and, therefore, is hit by the provisions of Section 34(2)(a)(v) of the Act. It is also hit by provisions of Section 34(2)(9)(iv) of the Act because it has dealt with a dispute not contemplated or not falling within the terms of the arbitration and lastly it is illegal and erroneous as the two arbitrators has misinterpreted the law and the contract. The net result is that the Award is legally unsustainable and is liable to be set aside. One of the arbitrators namely Justice D.R. Khanna is no more alive and, therefore, it is not possible to remit the Award to the arbitral tribunal. Therefore, there is no option before the court except to set aside the award leaving the parties to such remedies as are open to them under law. Ordered accordingly.