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2024 Supreme(Kar) 497

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
K.SOMASHEKAR, CHILLAKUR SUMALATHA, JJ.
Mysore Lamp Works Limited – Appellant
Versus
S.V. Engineers And Contractors - Respondent
Miscellaneous First Appeal No. 9430 of 2018 (AA) Connected With Miscellaneous First Appeal No. 9429 of 2018 (AA)
Decided on : 27-09-2024

Advocates:
Advocate Appeared:
For the Appellant :SRI. SAJI P JOHN -ADVOCATE
For the Respondent:SRI. B RAJA SUBRAMANYA BHAT -ADVOCATE

IMPORTANT POINT
The arbitrator cannot re-adjudicate claims once an award is made, and the court upheld the validity of the arbitration awards as justified and within jurisdiction.

Headnote:

(A) Arbitration and Conciliation Act, 1996 - Sections 34 and 37 - Appeals against dismissal of suits challenging arbitration awards - The court confirmed the awards passed by the sole arbitrator, finding no illegality or absurdity in the reasoning provided. The appellant's claims were deemed to have been adequately addressed in previous arbitration proceedings. (Paras 1-5, 12-13, 28-30)

(B) Function of Arbitrator - The arbitrator becomes functus officio after passing an award, and cannot re-adjudicate the same claims unless permitted by the arbitration agreement. (Paras 6, 16, 36)

Facts of the case:

The appellant challenged two arbitration awards concerning contracts for lighting installation projects, asserting that the arbitrator exceeded jurisdiction and re-adjudicated claims already settled. The claims were limited and amended during proceedings. (Paras 5-6)

Findings of Court:

The court found that the arbitrator acted within jurisdiction and that the claims were distinct, thus confirming the awards. (Paras 28-30)

Issues: Whether the arbitrator exceeded jurisdiction by re-adjudicating claims and whether the claims were barred under Order II Rule 2 of CPC. (Paras 8, 10)

Ratio Decidendi: The court held that the arbitrator's awards were justified and that the appellant's claims were adequately addressed in prior proceedings, affirming the principle that an arbitrator cannot re-adjudicate claims once an award is made. (Paras 12-13, 36)

Result: Appeals dismissed.

JUDGMENT :

(PER: THE HON'BLE MR JUSTICE K.SOMASHEKAR) MFA No.9429/2018 is filed by the appellant challenging the judgment and award rendered by the IV Addl.City Civil and Sessions Judge at Mayo Hall Unit, Bengaluru in A.S.No.15001/2005 dated 30.07.2018 wherein the suit filed under Section 37 of the Arbitration and Conciliation Act, 1996 came to be dismissed and consequently, Award passed by the sole Arbitrator in CMP No.76/2001 dated 14.10.2004 was confirmed.

2. MFA No.9430/2018 is filed by the appellant challenging the judgment and award rendered by the IV Addl.City Civil and Sessions Judge at Mayo Hall Unit, Bengaluru in A.S.No.25001/2011 dated 30.07.2018 wherein the suit filed under Section 34 of the Arbitration and Conciliation Act, 1996 came to be dismissed and consequently, Award passed by the sole Arbitrator in CMP No.21/2003 dated 04.12.2010 was confirmed.

3. Heard Sri Saji P.John, learned counsel for the appellant and Sri B.Raja Subramanya Bhat, learned counsel for respondent No.1 in both these appeals. Notice to respondent No.2 is dispensed with vide order dated 25.10.2019. Perused the impugned judgment rendered by the Court below and so also, award rendered by the sole Arbitrator in both these appeals.

4. These appeals are heard together and disposed of through this common judgment since the issues arise out of similar claim but two CMP proceedings.

5. The brief facts of the case is that the appellant – The Mysore Lamp Works Limited is a company incorporated under the Indian Companies Act, 1913 and engaged in providing lighting solutions and manufacturing and selling of bulbs, tube-lights etc. The then Karnataka Electricity Board (KEB) had entrusted the project sub-station at Yelahanka for providing lighting installation to ancillary units to its DG Plant project. Similarly, the Karnataka Power Transmission Corporation Limited (KPTCL) entrusted the project at Raichur Thermal Power Station. Respondent No.1 – S.V.Engineers and Contractors was entrusted with sub-contract by the appellant for supply of material and installation and erecting electric post etc. This proceeding is an extended proceeding held by respondent No.2 subsequent to disposal of the original arbitration proceedings. Whereas the original arbitration proceedings arose out of an agreement for providing certain materials and lighting services by the respondent at two different location as a subcontract to the appellant. It is stated that there are two projects, one at Yelahanka and another at Raichur which were handled by Appellant and the lighting installation work and materials, procurements was sub-contracted to Respondent No.1. It is stated that the transactions of Yelahanka project pertained to period commencing from November 1991 and finally concluded in December 1997. Similarly, Raichur project was during the period of August 1993 to December 1997. The claim of Respondent No.1 was that the appellant made an ad-hoc payment on 04.12.1997 in respect of Yelahanka Project. Thereafter, a claim was made with the General Manager Administration who was named as the Arbitrator on 04.12.2000 and on 23.07.2001 respectively. Since, no proceeding was initiated, respondent No.1 filed CMP No.76/2001 before this Court. At that juncture the claim amount was Rs.25,90,843/-. The said petition came to be disposed of vide order dated 18.08.2001 directing the General Manager Administration to proceed with the matter and to decide the disputes in between the parties. In the meanwhile, since the appellant company became sick company, all its employees were offered with VRS and thus, the post of General Manager Administration stood vacated. Thus, the earlier order dated 18.08.2001 came to be modified vide order dated 07.06.2002 and Respondent No.2 was appointed as Sole Arbitrator. Due to non-receipt of entire payment of the bills such as non-repayment of the retention amou

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