2002 Supreme(Bom) 763

IN THE HIGH COURT OF BOMBAY
Dr. D.Y. Chandrachud, J.
Oil Narural Gas Corporation Ltd. .... Petitioner.
Versus
Saw Pipes Ltd..... Respondent.
Arbitration Petition No. 110 of 2002, decided on 30-7-2002.
Advocates appeared :
D.R. Zaiwala, Sr.A. with C.S. Balsara i/b. M. Dhruve Co., for petitioner.
Virendra V. Tulzapurkar, Sr.A. with Ketan Parikh i/b. Thakore Jariwala Associates, for respondent.

Headnote:Admission Rules for Post-graduate Courses - - Sections 28 and 34(2)(iv) - Arbitral award - Allegedly contrary to provisions of - Contract and in violation of Section 28 of Act - Contract for supply of materials to petitioners - Dispute in respect of foreign exchange components of payment which were made in pursuance of contract - Held - Dispute falling within con- tract - Within purview of arbitration - Arbitrators considered objections on merits - No interference required in judicial review. - Both the submissions have been duly considered in the award of the learned arbitrators. The award refers to the correspondence between the parties and construes the provisions of the contract. As regards the first submission, the award notes that there was no merit in the contention of the petitioners that the respondent had accepted the determination of the rate of exchange of Rs. 26/- per U.S. Dollar as fixed by the petitioner. The arbitral award refers to the fact that in a letter marked in evidence as Exhibit C-23 the petitioner had decided to make payment at an ad hoc rate of Rs. 26/- per U.S. Dollar on the basis of the prevailing rate as of 26th November, 1991. The petitioner had sought unconditional acceptance by the respondent before effecting payment at the aforesaid rate. The respondent had by its communications dated 8th February, 1993 (Exhibit C-30), 15th February (Exhibit C-33) and 2nd March, 1993 (Exhibit C-36) clearly sated that while it was accepting the conditions stipulated by the petitioner for payment of the foreign exchange fluctuation, this was without prejudice to its rights under the conditions of contract dated 22nd, 1992. In that view of the matter, the learned arbitrators, after considering the correspondence between the parties, came to the conclusion that there was no express consent given by the respondent agreeing to the proposal made by the petitioner. In fact, correspondence showed the absence of an unconditional acceptance on the part of the respondent of the proposal which had been made by the petitioner. On the second submission which was urged before them, the learned arbitrators concluded that there was nothing in the agreement which would prohibit the respondent from securing credit facilities in respect of the payments which were made to foreign suppliers and this did not disentitle the respondent, to receive payment under the foreign exchange component. The findings of the learned arbitrators on the two submissions which were urged before them on this point are based on adequate reasons, founded upon the documentary evidence and on a construction of the contract which commends itself for acceptance. The Court would allow the view of the arbitrators to pass muster even if it were a possible view. In the present case, it is a correct view. In my view, this is also an area where the interference of this Court in the award of the learned arbitrators is not warranted in the least, having regard to the well-settled limitations upon the exercise of the jurisdiction in considering a challenge to an award under the Act of 1996.

       Admission Rules for Post-graduate Courses - - Section 34 - Partnership Act, 1932, Section 69 - Contract for supply - Members of consortium - Partnership without registration - Invocation of arbitration - Held - Relevant component for a partnership in contract is missing - It cannot be termed as partnership - Registration of partnership not required for invoking arbitration. - The members of the consortium must be regarded as having entered into a partnership and that in the absence of the registration of the partnership under the Indian Partnership Act, 1932, the claim is not main- tainable. This submission has also been considered by the learned arbitrators. The arbitral award records that there are three essential ingredients under Section 4 of the Partnership Act for there to be a partnership, these being (i) There must be an agreement entered into by two or more persons; (ii) The agreement must be to share the profits of a business; and (iii) The business must be carried on by all or any of them acting for all. The last two ingredients were found to be missing, in that there was no agreement between the parties to share profits, nor was there any mutual agency between the parties by which each partner would act both as a principal and as an agent for the other. The relevant provisions of the contract between the parties have already been adverted to earlier and these have been duly considered by the learned arbitrators. The award takes due note of the fact that under modified arrangement that was entered into between the parties, payments were to be separately made to the respondent and to PJPVL. Moreover, separate roles have been assigned to the two members of the consortium. In that view of the matter, there was no question of the members of the consortium having entered into a partnership.

       Admission Rules for Post-graduate Courses - - Section 34 - Non-joinder of parties - Award - Setting aside of - Contract for supply of goods by consortium of two parties not disputed - Only one party to consortium raising dispute about foreign exchange component of payment - Other party not joined - Held - Since there is no dispute as to supply or payment of other party - Hence res- pondent rightly pursuing claim as to foreign exchange component without joining other party to arbitration - Award not liable to be set aside. - The position therefore as it obtains was that the claim in the arbitral proceedings was restricted to the claim which the respondent alone had against the petitioner in respect of the non-payment of the foreign exchange component on supplies exclusively effected by the respondent. No part of the claim related to any amount which was alleged to be due and outstanding to PJPVL. Moreover, it would be material to note that the petitioner has neither a counter claim, nor a plea that any amount which is found to be due and owing should be set off against any amount outstanding to the petitioner. The learned counsel for the petitioner stated that the petitioner has no claim against the respondent or against PJPVL.

       The claim in the arbitral proceedings is not liable to fail by the non-joinder of PJPVL. The obligations of the two contracting members of the consortium were separate and identified separately. True, each of the two members, was jointly and severally liable to the petitioners for any breach that may be committed by either of them. That issue does not arise in the present case, since the petitioner has no claim or outstanding. The view which has been taken by the learned arbitrators is based on the provisions of the contract. The view in fact commends itself as a correct view. I am of the view that there is no scope for the interference for this Court and the first submission which has been urged lacks merit.