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2010 Supreme(Bom) 1041
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J.VAZIFDAR, J.
M/s. Associated Constructions - Applicants
vs.
Mormugoa Port Trust - Respondents
ARBITRATION APPLICATION NO.18 OF 2007
Decided on : JULY 29, 2010
Adovocate Appeared :
Mr.Shraddhanand Bhutada along with Mr. Parineet Saratkar i/b M/s. SSP Legal for the Applicants Mr. Umesh Shetty a/w Ms Geeta Channe i/b M/s.Mulla and Mulla & C.B.& C. For the Respondents
Headnote:Arbitration & Conciliation Act, 1996 - Section 11 - Appointment of Arbitrator - Application for - Earlier award set aside by Court in entirety as three of items of reference not decided on merits - Held - Arbitrator can be appointed for these items - But Arbitrator cannot deal with other items already decided on merits - Application allowed - Arbitrator appointed. - In the present case the entire award except as to one claim, was set aside for reasons other than on merits. This is clear from the fact that although the award in respect of only three items/claims was set aside, the entire award was set aside. The claims, other than those referred to in the judgment, were not considered or even referred to. In any event, as noted earlier, at least the claim in respect of a sum of Rs. 1,50,000/- was set aside, not on merits but on the ground that no reasons were furnished. This was obviously in view of the judgments which held that under the 1996 Act an award cannot be segregated and therefore even if a part thereof is liable to be set aside the entire award must be set aside. The applicants are therefore entitled to begin the arbitration again.
It is clarified that in the event of the applicant filing an appeal against the order and judgment dated 11.10.2005 and in the event of the award being upheld in appeal in respect of any of the claims in the reference pursuant to this order, the Arbitral Tribunal shall not be entitled to deal with such claims. Nor will the Arbitral Tribunal be entitled to deal with the claim for refund of liquidated damages for the award granting that claim was set aside by the judgment dated 11.10.2005 on merits. The applicant must pursue any other remedy regarding this claim. With these clarifications the arbitration application must be allowed.
1 This is an application under section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an Arbitrator.
2 There is no dispute that the parties had entered into an agreement which contains an arbitration clause and that the disputes raised by the Applicant fall within the purview thereof.
3 The only contention raised on behalf of the Respondents is that the arbitration clause ceased to have any effect as pursuant to an earlier invocation thereof an award had been made but was set aside. It is necessary therefore to state only a few facts.
4 The parties had entered into a construction contract dated 8th October 1996. An Arbitral Tribunal, consisting of three learned Arbitrators, was appointed by the parties in accordance with the arbitration clause contained therein read with the said Act. The Arbitral Tribunal made and published an Award dated 24th September 2004. The award grants four claims, two of which pertain to interest. One is in the nature of damages and the other is towards the final bill. The amount in respect of the final bill in turn comprises of various items. The Arbitral Tribunal awarded an aggregate sum of Rs.42,86,135/- to be payable by the Respondents to the Applicant after adjusting the amount paid.
The Respondents challenged the Award by filing Arbitration Petition no.197 of 2005. By a judgment and order dated 11th October 2005, the Award was set aside.
5 It is important to note that in the judgment dated 11/10/2005 only three items in the Award were referred to. The learned Judge held that the amount in respect of these three items are contrary to law. The learned Judge however set aside the entire Award.
6 The claim in respect of damages in the sum of Rs.1,50,000/- was set aside on the ground that the Arbitral Tribunal failed to state the reasons upon which the Award was passed and was therefore violative of the mandatory statutory requirement of the said Act.
7 Thus, the Award in this respect was not set aside on merits.
8 The learned Judge also set aside the Award insofar as it awarded an amount of Rs.4,62,485/- for the construction of 452 sq meter of extra built up area. This part of the Award was set aside on the ground of non- application of mind and, as being violative of the principles of natural justice. In the claim the Applicant took into consideration 132 sq. ft. as extra built up area, whereas the Award, relying upon the Commissioner's report took into consideration the actual constructed area of 452 sq. feet. The learned Judge, therefore, set aside the Award in respect of the entire claim in this regard although it could have been bifurcated. This, presumably, was on the basis of the law as it then stood in view of the judgments of this Court in various cases including the judgment of a Division Bench of this court in Pushpa Mulchandani Vs. Admiral Radhakrishnan Tahliani reported in 2008 (7) L.J.Soft 161, where it was held that an Award cannot be modified even by segregating that part which can be upheld once it is found that even a part of the award is liable to be set aside. Those judgments are now overruled by the judgment of a Full Bench of this Court in the case of R.S.Jiwani vs. Ircon International Ltd. 2010 (1) Bom. C.R. 529. Thus, this part of the Award was also not set aside on merits.
9 The Arbitral Tribunal awarded the claim for the refund of liquidated damages and for delay. The learned Judge, however, held the Award in this regard to be totally unfounded on merits. The learned Judge came to the conclusion inter alia on the basis of the judgment of the Supreme Court in the case of Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd.[2003] 5 SCC 705.
10 In the result, on the basis of the finding that the award in respect of the three items was liable to be set aside, the entire award was set aside. This again was obviously on the basis of the judgments of this Court which held that under the said Act an award cannot be modified and can only be either u
