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2002(4) Supreme 165
SUPREME COURT OF INDIA
(From Mumbai High Court)
R.C. Lahoti and B.N. Agrawal, JJ.
Sangamne Bhag Sahakari Karkhana Ltd. -Appellant
versus
M/s. Krupp Industries Ltd. -Respondent
Civil Appeal Nos. 3365-66 of 2002
(Arising out of SLP (C) Nos. 6182-6183 of 2001)
Decided on 7-5-2002
Counsel for the Parties :
For the Appellant : R.F. Nariman, Sr. Advocate, R.N. Dhorde, P.R. Malpani, S.K. Verma and Shivaji M. Jadhav, Advocates.
For the Respondent : P.M. Amin, Sr. Advocate, Ketan Parikh, Atul Desai, Pratap Venugopal, P.S. Sudhir and K.J. John, Advocates.
Held : We find that the claim for Rs.107.54 lacs and the interest thereon raised by the appellant against the respondent was very much before the arbitrators and the parties also proceeded on the assumption that this dispute was before the arbitrators and liable to the adjudicated upon by them. (Para 7)
We have carefully perused the arbitration clause and the disputes referred and adjudicated upon by the arbitrators. We find it difficult to sustain the finding of the High Court that the arbitrators had determined an issue which was beyond the scope of reference to the arbitration. The disputes did arise out of the contract between the parties and the arbitrators were seized of the disputes within the scope of reference to them. The parties have also joined in the contest before the arbitrators having understood the scope of controversy, as already stated hereinabove. (Para 9)
In our opinion no fault can be found with the discretion exercised by the learned Civil Judge, Senior Division. The High Court has erroneously formed an opinion that part of the award was beyond the jurisdiction of the arbitrators. For the foregoing reasons the appeals are allowed. The judgment of the High Court is set aside and that of the learned Civil Judge, Senior Division is restored. The award shall stand remitted to the arbitrators in the terms as directed by the learned Civil Judge, Senior Division. However, the time of six months appointed for giving the award shall run from the date of communication of this order to the arbitrators. The appeals stand disposed of in the terms abovesaid. No order as to the costs. (Paras 10, 11 & 12)
JUDGMENT
R.C. Lahoti, J.-Leave granted in both petitions.
2 The appellant is a co-operative sugar factory manufacturing sugar from sugarcane. On 17.11.1992 an agreement was entered into between the appellant and the respondent for design, manufacture, procurement and supply of machinery and equipments for modernisation with continuous fermentation process based on "Encillium Process", developed and patented by Council for Scientific and Industrial Research, New Delhi and National Chemical Laboratory, Pune. Disputes arose between the parties The agreement dated 17.11.1992 contained an arbitration clause pursuant whereto the disputes were referred for arbitration by two arbitrators, one appointed by each of the parties. By their award dated 20th June, 1999, the learned Arbitrators directed an amount of Rs.151.97 lacs to be paid by the respondent to the appellant in full and final settlement of all claims by and between the parties.
3. The award was filed in the Court of the Civil Judge, Senior Division, Sangamner Both the parties preferred objections against the award. After hearing the learned counsel for the parties, by its judgment dated 6.5.2000 the learned Civil Judge directed the award to be remitted back to the learned arbitrators for rendering a fresh award consistently with the directions given by the learned Civil Judge. The appellant preferred a revision laying challenge to the direction of the Court remitting the award while the respondent preferred an appeal submitting that on the view taken by the learned Civil Judge, Senior Division the award itself should have been set aside and there was no occasion for remitting the award to the arbitrators. The learned Single Judge of the High Court heard the revision and the appeal together. By the impugned order the learned Judge has dismissed the civil revision and allowed the appeal. As a result the order of the learned Civil Judge, Senior Division remitting the award to the arbitrators has been set aside and the award to the extent of Rs.107.54 lacs and the interest thereon in the sum of Rs. 28.74 lacs has been set aside. The rest of the award has been made a rule of the Court. Feeling aggrieved by the impugned judgment of the High Court these petitions have been filed by the appellants seeking leave to file appeals by special leave.
4. We have heard the learned counsel for the parties at length who have apart from making legal submissions carried the Court through the pleadings, the relevant correspondence between the parties, several documents and the proceedings before the arbitrators. However, it is not necessary for us to deal with the same in very many details as we have formed an opinion that the impugned judgment of the High Court deserves to be set aside and the older of the learned Civil Judge deserves to be restored.
5. A perusal of the judgment of the learned Civil Judge, Senior Division shows the learned Judge having formed an opinion that the award suffered from an error apparent on its face. There was an omission on the part of the learned arbitrators to consider a few relevant documents available on record which in the opinion of the learned Civil Judge if taken into consideration the finding of the arbitrators would not have been what it is. The learned Civil Judge also formed an opinion that there was a violation of the principles of natural justice inasmuch as the parties were not afforded a hearing on the issue on which the learned arbitrators had based their decision. The learned Civil Judge was of the opinion that on totality of the facts and circumstances of the case instead of setting aside the award the same deserved to be remitted to the arbitrators with the request to render the award afresh. The High Court has however formed an opinion that to the extent to which the award has been set aside by the High Court it was beyond the scope of reference to the arbitration and hence there was no question of the parties being afforded an opportunity of r
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