1. Construction contract — Non-payment of bills — Arbitration award — Challenge under Section 34 and appeal under Section 37, Arbitration and Conciliation Act. (Para 4 , 5 , 6 , 7 , 8 , 9 )
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2017 Supreme(SC) 998
SUPREME COURT OF INDIA
ABHAY MANOHAR SAPRE, R. BHANUMATHI, JJ.
The Navnirman Development Consultants (I) Pvt. Ltd. - Appellant
Versus
The Divisional Commissioner & President District Sports Complex Executive Committee - Respondent
CIVIL APPEAL Nos. 8408-09 OF 2017
Decided on : 05-07-2017
Advocates:
Advocate Appeared:
For the Petitioner: Ms. Suruchii Aggarwal, Adv.
Advocate Appeared:
For the Petitioner: Ms. Suruchii Aggarwal, Adv.
The main legal point established in the judgment is the requirement for the court to properly address the factual and legal controversy involved in a case and to provide reasoned findings, especially when deciding an appeal.
Headnote:
Arbitration - Construction Contract - Arbitration and Conciliation Act, 1996 - Section 11(6), Section 34, Section 37 - The court remanded the case to the High Court for deciding the appeal afresh on merits due to the failure of the High Court to properly address the factual and legal controversy involved in the case.
Fact of the Case:
The appellant-Company completed construction work for a 'sports complex' in Pune as per the agreement but faced non-payment issues. The agreement contained an arbitration clause, and the appellant filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the High Court for the appointment of an Arbitral Tribunal. The Tribunal passed an award in favor of the appellant, which was challenged by the respondent before the District Judge and subsequently before the High Court.
Finding of the Court:
The court found that the High Court failed to properly address the factual and legal controversy involved in the case, and thus remanded the case to the High Court for deciding the appeal afresh on merits.
Issues: Failure of the High Court to address the factual and legal controversy properly, absence of both parties during the High Court's decision, and the High Court's dismissal of the appeal under Order 41 Rule 17 without recording any reasoned finding.
Ratio Decidendi: The High Court's failure to address the factual and legal controversy properly and its dismissal of the appeal without recording any reasoned finding led to the court's decision to remand the case for fresh consideration.
Final Decision: The court allowed the appeals, set aside the impugned order, and remanded the case to the High Court for deciding the appeal afresh on merits.
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Table of Contents
2. Appellant contested the High Court's summary dismissal of the appeal against the modification of an arbitral award by the District Court. (Para 9 )
3. The High Court issued a cryptic order lacking factual detail and reasoned findings, failing to address the grounds of appeal or the parties' submissions. (Para 13 , 14 , 16 , 19 , 20 )
4. Appellate orders must contain factual summaries, grounds of challenge, and reasoned findings to allow superior courts to review the legality of the decision. (Para 14 , 15 , 19 )
5. Impugned order set aside and matter remanded to the High Court for fresh adjudication on merits. (Para 11 , 20 , 22 )
6. What are the essential requirements for a valid appellate order?
An order deciding a dispute should contain brief facts, the grounds of the challenge, the stands and submissions of the parties, applicable legal provisions, and reasoned findings explaining why the case of one party was accepted or rejected. (Para 14 )
7. How should a court proceed when neither party appears during an appeal hearing?
The court should take recourse to Order 41 Rule 17 of the Civil Procedure Code, 1908. The explanation to this rule clarifies that the court is not empowered to dismiss the appeal on merits solely due to the non-appearance of the parties. (Para 16 , 17 )
8. What is the appropriate remedy for a party whose appeal was dismissed due to non-appearance?
The aggrieved party should file an application under Order 41 Rule 19 of the Civil Procedure Code, 1908, praying for the readmission of their appeal by demonstrating sufficient cause for their non-appearance on the date of the hearing. (Para 18 )
JUDGMENT :
Abhay Manohar Sapre, J.
1. Leave granted.
2. These appeals are filed against the final judgments and orders dated 13.09.2013 in Arbitration Appeal No.9 of 2008 and dated 04.09.2008 in Review Petition No.1 of 2014 passed by the High Court of Judicature at Bombay whereby the Arbitration Appeal and the Review Petition were respectively dismissed.
3. Brief facts need mention to appreciate the controversy involved in these appeals.
4. The respondent-a Government agency at Pune invited tenders for construction of "sports complex” at Pune. The appellant-Company was one of the tenderers whose tender was accepted and accordingly the appellant-Company was awarded contract for the said work.
5. According to the appellant, they completed the work in terms of the Agreement dated 26.05.2003 and submitted the bills for the work done but the amount claimed in the bills was not paid by the respondent. This led to rising of the disputes between the appellant and the respondent regarding the non-payment of some bills of the appellant.
6. Since the Agreement contained an arbitration clause for resolving all kinds of disputes arising between the parties in relation to the agreement and hence the appellant served the notices to the respondent and called upon them to appoint the Arbitral Tribunal as provided in clause 3.8 of the Agreement and refer the disputes regarding non-payment of their bills to the Tribunal for its adjudication. The respondent, despite demand made by the appellant, failed to constitute the Arbitral Tribunal and, therefore, the appellant was constrained to file an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) before the High Court praying therein for appointment of Arbitral Tribunal for deciding the disputes which had arisen between the parties.
7. By order dated 12.08.2005, the High Court allowed the appellant’s application and appointed Arbitral Tribunal as per Clause 3.8 of the Agreement for deciding the disputes which had arisen between the parties. The Tribunal then embarked upon the reference and on 03.11.2006 passed an award in favour of the appellant and against the respondent for a total sum of Rs.25,64,490/-with interest payable at the rate of 18% p.a. This was followed by one corrigendum issued by the Tribunal in relation to the award to correct some arithmetical errors, which had crept in the award.
8. Felt aggrieved, the respondent challenged the award before the District Judge, Pune by filing objections under Section 34 of the Act being Civil Misc. Application No 36 of 2007. The District Judge, by order dated 16.11.2007, allowed the respondent's application in part and modified the award by reducing the awarded sum from Rs.25,64,490/-to Rs.7,15,544/- and in so modifying also gave some directions.
9. Felt aggrieved, the appellant filed appeal under Section 37 of the Act before the High Court. By impugned order, the learned single Judge dismissed the appeal giving rise to first filing of the review petition by the appellant and consequent upon the dismissal of review, it gave rise to the filing of these appeals by way of special leave by the appellant(claimant) against the main order and review order.
10. Heard learned counsel for the appellant. None appeared for the respondent though served.
11. Having heard learned counsel for the appellant and on perusal of the record of the case, we are constrained to allow the appeals, set aside the impugned order and remand the case to the High Court for deciding the appeal afresh on merits.
12. The impugned order reads as under:
“1. The award has been passed on 3rd November, 2006 in favour of the appellant for Rs.25.64 lacs. The appeal under Section 36 has been partly allowed on 16th November, 2007. Only the award for the amount of Rs.11.90 lacs under bill No. 1 has been set aside and the respondent herein has been directed to pay the appellant Rs.7.14 lacs instead constituting 75% of that amount. The amount
