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2004 Supreme(Cal) 157

High Court Of Calcutta
J. K. BISWAS
SARASWAT TRADING AGENCY, AWARD-HOLDER - Appellant
Versus
UNION OF INDIA - Respondent
G. A.  3903  Of  2003
Decided On : 03/04/2004

Advocates Appeared:
BIMAL SINGH, D.K.Singh, DHRUVA GHOSH, L.K.CHATTERJI

A decree passed on an award made on an invalid reference is a nullity and not executable.

Headnote:

ARBITRATION - NULLITY OF DECREE - AWARD MADE ON INVALID REFERENCE - EXECUTABILITY OF DECREE - DECREE PASSED ON AN AWARD MADE ON AN INVALID REFERENCE IS A NULLITY AND NOT EXECUTABLE.

Fact of the Case:

The judgment-debtor (Union of India) filed an application under section 47 of the Code of Civil Procedure, 1908, challenging the executability of a decree passed on an award made by an arbitrator. The award was made in respect of disputes arising out of a contract between the judgment-debtor and the award-holder (a contractor). The judgment-debtor contended that the disputes were not arbitrable as the award-holder had already submitted a no claim certificate and withdrawn the security deposit in terms of the contract.

Finding of the Court:

The court held that the reference to arbitration was made for adjudication of disputes which were not arbitrable at all in terms of the contract. The bar imposed by the contract had come into operation before the decree-holder raised the disputes and sought the reference. This being the position, the award made by the arbitrator was clearly a nullity. Consequentially, the decree was also a nullity and not executable.

Issues: 1. Whether the disputes were arbitrable in terms of the contract? 2. Whether the award made by the arbitrator was a nullity? 3. Whether the decree passed on the award was executable?

Ratio Decidendi: 1. The court held that the disputes were not arbitrable in terms of the contract as the award-holder had already submitted a no claim certificate and withdrawn the security deposit. 2. The court held that the award made by the arbitrator was a nullity as it was made on an invalid reference. 3. The court held that the decree passed on the award was not executable as it was a nullity.

Final Decision: The court allowed the application filed by the judgment-debtor under section 47 of the Code of Civil Procedure, 1908, and dismissed the execution proceeding initiated by the decree-holder.

J. K. BISWAS, J.


( 1 ) THIS is an application under s. 47 of the code of civil procedure, 1908 (hereinafter referred to as "the cpc. " ). The judgment-debtor (union of india, through the general manager, south eastern railway. Garden reach) has filed this application.

( 2 ) BRIEFLY stated, the facts relevant for disposal of this application are these. In terms of a contract executed between the judgment-debtor and the award-holder on february 25th, 1886 the award-holder was engaged for handling goods, parcels and luggage booked at itwari, kamptee, kanhan bhandara road, tumsar road and tirora stations. Clause 24 (b) of the contract provided as follows :"24 (B ). The contractor/contractors is/are required to give a no claim certificate before the security deposit is refunded to him/ them. The right to claiming any amount or disputing any decision shall be deemed to have been waived as soon as the security deposit is received back by the contractor/ contractors on submission of the no claim certificate. If, however, the contractor/contractors has/have any dispute or difference he/they should submit a list of such disputed items and the amount claimed against each for final settlement. The provision of cl. 32 of this agreement will be limited to the disputes/differences mentioned in this list submitted by the contractor. The railway administration will be at liberty to withhold refund of the security deposit till finalisation of the disputes and the contractor shall have no claim for compensation or otherwise for the delay for refund of the security amount. "

( 3 ) THE contract, in its cl. 32 (a), contained the following arbitration agreement :"32 (A ). If any dispute, difference or question shall arise between the railway administration and the contractor as to the respective rights, duties and obligations of the parties hereto or as to the construction or interpretation of any of the terms and conditions of this agreement or as to its application (except in matter the decision whereof is herein expressly provided for and also excepting the matters regarding which the contractor has submitted no claim certificate), then the same shall be referred to the sole arbitrator of the general manager of the south eastern railway or if he be unable or unwilling to act then to the sole arbitrator of any person appointed by him on his behalf and the decision of the general manager or of the person so appointed shall be final and binding on the parties hereto under the provisions of the arbitration act. "

( 4 ) THE award-holder claimed certain amounts. It approached the authority for referring the disputes to arbitration. The general manager by his letter dated april 19th, 1993 referred the disputes to the sole arbitrator appointed by him. The arbitrator made his award on august 25th, 1993. As against the claim of the award-holder (rs. 29,66,099/-), the arbitrator award rs. 27,72,346/ -. The award was made under the arbitration act, 1940. It was filed before this court. The judgment-debtor filed an application for setting aside the award. The award was set aside by the learned single judge. In appeal preferred by the award-holder, by judgment and order dated september 4th. 2001 the division bench of this court made the award rule of court. Before the award was made rule of court, and after the award was made and published by the arbitrator, the judgment-debtor paid rs. 18,44,639/ -. Hence, the decree was passed for rs. 9,27,707/ -. This sum (rs. 9,27,707/-) was also paid by the judgment-debtor. While paying this sum the judgment-debtor paid interest in terms of the award for the period from september 4th, 2001 till the date of payment. On the sum of rs. 9,27,707/- no interest was paid to the award-holder for the period from august 25th, 1993 (the date of the award) to september 4th. 2001 (the date of the decree ). Claiming a sum of rs. 8,93,925. 69p. On account of interest of this period on the sum of rs. 9,27,707/-, the present execution pr











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