Delhi High Court
Union Of India vs Veekay Industries And Anr. on 21 September, 2001
Author: Mahmood Ali Khan
Bench: Mahmood Ali Khan
JUDGMENT Mahmood Ali Khan, J.
1. ADMIT.
2. Arguments were heard on the petition for final disposal on the request of the parties.
3. These two cross first appeals are directed against an order if an additional District Judge dated 17.7.1998 by which the award dated 27.2.1998 published by respondent No. 2 - Air, Vice Marshal, V.B. Batra, was made rule of the court.
4. Appellant Union of India, in FAO No. 34/1999 (hereinafter referred to as the first appellant) and Veekay Industries Limited, Appellant in FAO No. 123/1999 (hereinafter referred to as the second appellant) entered into a contract for supply of Jack Screw lifting 4 Tons Capacity for 12,400 Nos by the latter to the former by 26th March, 1994.
5. The second appellant supplied part of quantity numbering 2690. The contract for supply of the remaining articles was cancelled by the first appellant on 24.5.1994 for inordinate delay in the supply. The first appellant allegedly spent additional sum of Rs. 22,19,706 over and above the contracted amount on account of risk purchase at the cost of the second appellant. A dispute arose between the parties about the claim of this sum and also adjustment of a sum of Rs. 75,000/- which was adjusted by the first appellant by encashing the bank guarantee furnished by the second appellant by way of security. The first appellant also withheld 5% of the amount which was payable to the second appellant against its bills for the goods supplied which amounted to Rs. 62,405/-. The second appellant filed a petition under Section 20 of the Arbitration Act, 1940 bearing suit No. 1527/1994 for making reference of the dispute between the parties to an arbitrator. The court by order dated 14.1.1995 appointed Air Vice Marshal V.B. Batra - respondent No. 2 as Sole Arbitrator for arbitrating the dispute between the parties. The Arbitrator made and published its award on 27.2.1998. The second appellant then filed a petition bearing suit No. 200/1998 under Section 14 of the Arbitration Act, 1940 for directing the Arbitrator to file the award in the court. He also raised several objections against the award.
6. The Arbitrator filed the award before the Additional District Judge. Therefore, notice of the award was issued to the first appellant. It was served n 4.5.1998. The first appellant was required to file objections against the award within 30 days of the service of the notice. It was not filed. The case was listed on 14.7.1998 before the learned Additional District Judge but was adjourned to 17.7.1998 as learned Judge was on leave. On 17.7.1998 the learned Additional District Judge, by the order impugned in these two cross appeals, finding that objections having not been filed in time made the award rule of the court.
7. Both the parties are aggrieved and have filed these two appeals.
8. On behalf of second appellant its proprietor Shri Ramesh Chandra Kapoor has argued in person.
9. The argument of the counsel for Union of India is that the notice of the filling of the award in the Court was served on 4.5.1998. The objections against the award were to be filed within 30 days thereof. But due to administrative reasons objections could not be filed in time. Mrs. Veena Garg, Advocate was appointed on 13th July 1998 for filing the objections. It was proposed that time would be taken from the court on 14.7.1998 for filing the objections. The suit was adjourned on 14.7.1998 to 17.7.1998 as the Presiding Judge was on leave. The objections could not be prepared as the time was too short for it and it was proposed that on 17.7.1998 more time would be sought from the court to file the objections. Unfortunately, on 17.7.1998 counsel for the first appellant could not appear before the court. Mr. Mam Chand, Section Officer for the Ministry of defense, however, was present and he orally requested the court for some time to file the objections. His request was declined and by the impugned order the award was made rule of the court.
10. Learned counsel for the first appellant further submitted that substantial objections were to be raised against the award which opportunity has been denied by the learned Additional District Judge. He also stated that an application for condensation of delay in filing of the objections was also to be filed Along with the objections but since counsel for the first appellant could not appear and the objections were not ready, therefore, the application and the objections could not be presented for consideration of the court. It was submitted that even the second appellant had raised objections against the award and the learned trial Judge without considering the objections of the second appellant passed the impugned order making the award rule of the court. According to him, both the parties had objections against the award, therefore, it would be proper that the impugned order of the Additional District Judge was set aside and the case was remanded back to the trial court for fresh decision after consideration of the objections of the first appellant and his application for condensation of delay which is proposed to be filed and also the objections of the second appellant raised in the petition under Section 14 of the Arbitration Act, 1940.
11. Mr. Ramesh Chandra Kapoor, on the other hand, submitted that the impugned award is liable to be superseded or remitted back to the Arbitrator as the Arbitrator has given award only in respect of claim No. 4 of the second appellant i.e. for refund of security deposit of Rs. 75,000/- but has not given award in respect of claim No. 5 directing payment of 5% of the balance price of the goods supplied and further his claim for Rs. 62,405/- was not accepted and interest has also not been allowed @ 18% p.a., as claimed by him. He however does not support the argument of the counsel for the first appellant that the case be remanded back to the learned Additional District Judge allowing the first appellant to file objections against the award Along with an application for condensation of delay for consideration.
12. A perusal of the trial court record showed that the second appellant had raised objections against the award in his petition under Section 14 of the Arbitration Act, 1940 but the same were not considered by the learned Additional District Judge. The learned Judge made the award rule of the Court holding that none of the parties had filed objections against the award. This is factually incorrect. Objections of second appellant were already present on the file.
13. As regards the objection of the first appellant there is no dispute that it was not filed within 30 days of the service of the notice of the filing of the award in the court. Counsel for the first appellant has stated that Union of India intended to challenge the award by filling objections in the court since some of its claims were not considered and decided by the arbitrator. Rather, an observation of the Arbitrator made in the award in respect of the claim of first appellant for Rs. 22,19,706/- which the first appellant had to spend over and above the contracted amount on account of risk purchase made at the risk of the second appellant would cause irreparable loss of it. It was submitted that public interest will be prejudicially affected if the Union of India is not allowed an opportunity to challenge the award and the objections against the award are not entertained.
14. The first appellant wanted to file the objections Along with an application for condensation of delay. The question whether the delay in filing the objections could or could not be condoned in a matter to be decided by the trial court and not by this Court. The fact remains that the second appellant is also aggrieved that some of his claims have not been considered and decided by the Arbitrator before publishing the award. He has also requested this Court in his appeal that the award may be superseded or remitted back to the arbitration for decision on those claims. The learned Additional District Judge has not considered the objections raised by the second appellant against the award. The objections are required to be considered first by the trial court. For this reason it is necessary to remand the case back to the Additional District Judge for considering these objections and deciding them in accordance with law so that court has advantage of the views of the trial court.
15. The first appellant Union of India also deserves to be given an opportunity to file objections for condensation of delay in filing of the objections Along with the objections against the award. The application and the objections are to be decided by the trial court. The second appellant can be adequately compensated by cost.
16. Having regard to the above facts and circumstances the order of the learned Additional District Judge dated 17.7.1998 making the award of respondent No. 2 dated 27.2.1998 rule of the court is set aside and the case is remanded back to the learned Additional District Judge, Delhi for fresh decision in accordance with law after considering the objections of the second appellant against the award. Appellant No. 1 shall also file objections against the award Along with application for condensation of delay before the trial court. The trial court shall consider the objections and the application for condensation of delay, if any, in accordance with law. The first appellant shall pay Rs. 2000/- as cost to the second appellant. Parties shall appear before the Additional District Judge, Delhi on 3rd October 2001.