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2010 Supreme(Bom) 1638

High Court of Judicature at Bombay
P.B. MAJMUDAR & ANOOP V. MOHTA
Biwater Penstocks Ltd.
Versus
Municipal Corporation of Greater Bombay & Another
APPEAL NO. 457 OF 2002 WITH NOTICE OF MOTION NO. 1466 OF 2002 IN
ARBITRATION PETITION NO. 124 OF 1994 IN AWARD NO. 67 OF 1994
Decided on : 24-11-2010

Advocates Appeared:
For the Appellant:S.U. Kamdar, Senior Advocate, with D. Mehta, Snehal Shah & Smt. Pooja Patil, instructed by M/s. Dhruve Liladhar & Co., Advocates.
For the Respondents:K. Setelwad with R.D. Dhanuka, H.C. Pimple & Sirsikar, Advocates.

Headnote:Arbitration Act, 1940 - Section 15-Powers of Arbitrator- Enlargement of scope of reference-Arbitrator has jurisdiction to enlarge scope of reference-Arbitrator empowered to determine claim de novo.-It is open to the parties to enlarge the scope of reference by inclusion of fresh disputes and they must be held to have done so where they filed their statements putting forward claims not covered by the original reference. In view of the same, Court does not find any substance in the objection raised that the Arbitrator had no jurisdiction to enlarge the scope of reference.

       Even otherwise, looking to the arbitration clause provided in the agreement, the Arbitrator has been given power to determine the claim even de novo.

       Arbitration Act, 1940 - Sections 30 and 33-Arbitral Award -Non-speaking award-Rules of natural justice cannot be ignored by Arbitrator- Even if Award, a non-speaking order, it must be in consonance with principles of natural justice-Award not being so liable to be set aside for non-application of mind.- The Arbitrator is not bound by the technical rules of procedure but he cannot ignore rules of natural justice. Even if the award is a non-speaking order, it must be in accordance with law and in consonance with the principles of natural justice. In the present case, the documents which were not proved were admitted in evidence in spite of serious objections raised by the respondent. In Court’s view, the single Judge was right in holding that the said award suffers from non-application of mind and deserves to be set aside on the aforesaid ground.

Judgment

P.B. Majmudar, J.

This appeal is directed against the judgment and order dated 14th February, 2002 passed by the learned single Judge in Arbitration Petition No. 124 of 1994 by which the learned single Judge remitted the matter to the Arbitrator for de novo consideration.

2. The facts in a nutshell are as under.

3. A contract was entered into between the appellant and the first respondent (hereinafter ‘the respondent”) for carrying out the work of manufacture, supply and delivery of 171 sluice gates and for supervision of erection and commissioning of the said gates at sites. Subsequently certain disputes arose between the parties. As per the terms of the contract, when a dispute arises, firstly a claim is required to be made before the Chief Engineer and thereafter the matter is to be sent to the Commissioner and subsequently a reference can be made to the Arbitrator. A sole Arbitrator was appointed in connection with the dispute in question and statement of claim was filed before the Arbitrator. The statement of claims contains the claims made by the appellant on 25 counts. Out of the 25 claims, an objection was raised on behalf of the respondent about 17 claims on the ground that the said claims were never made by the appellants before the Chief Engineer or before the Commissioner of the Corporation and, therefore, the said claims cannot be decided by the Arbitrator in terms of contract between the parties. The respondent Corporation initially had filed a petition before this Court in connection with the said aspect and in the said proceedings the parties agreed to refer the dispute to the sole Arbitrator for deciding 17 claims including the question as to whether in terms of the contract those 17 claims can be said to be within the jurisdiction of the Arbitrator or not. So far as remaining 8 claims are concerned, the same were decided by the sole Arbitrator and the Arbitrator after hearing the parties made an Award directing the respondent Corporation to pay to the appellant an amount of U.K. Pounds 3,77,252.91 plus Rs. 1,67,164.96. The Arbitrator allowed the interest on the basis of the claim in U.S. Pounds as well as claim in Rupees. The Arbitrator has not given reasons for giving an award which award is a non-speaking award. The award of the Arbitrator was challenged before the learned single Judge by way of Arbitration Petition being Arbitration Petition No. 124 of 1994.

4. The learned single Judge held that the Arbitrator has committed an error in coming to the conclusion that he has jurisdiction to decide the eight claims as the Arbitrator had no jurisdiction to entertain the claims in excess of the amount claimed before the Chief Engineer and the Commissioner. The learned single Judge found that the Arbitrator has decided the jurisdictional fact by ignoring the relevant material on record. Accordingly, the learned single Judge held that the award is required to be set aside on the said ground. The learned single Judge also found that the Arbitrator has followed strange procedure by admitting two letters on record to prove the claim that the claimants had operated overdraft account during the period between 1st January, 1985 and 31st July, 1987 without examining the author of the documents and without there being any oral evidence to prove the said documents. The learned single Judge found that the Award of the Arbitrator is not in accordance with the principles of natural justice and it is an error of jurisdiction. Accordingly, the Arbitration Petition was allowed by the learned single Judge in part and remitted the matter to the learned arbitrator for de novo consideration. Since the learned Arbitrator died at the time when the said order was passed, the matter was ultimately remitted to the arbitration of Justice H. Suresh to whom 17 claims were already referred earlier. It is the aforesaid order of the learned single Judge which is impugned at the instance of the appellant.

5. Mr. Kamdar, learned senio







































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