The principles of natural justice require that parties to an arbitration proceeding be given an opportunity to be heard and to present their case before an interim award is published.

PINAKI CHANDRA GHOSE, J

This appeal is directed against an order and/or judgment dated 11th February, 2010 passed by the Honble First Court where His Lordship was pleased to set aside the interim award published by the learned Arbitrator on 12th May, 2008.

The facts of the case briefly are as follows:

Pursuant to tenders invited by the Union of India through the Ministry of Railways in the year 1987-1989, the petitioner was the lowest bidder and successful tenderer for supply of store items.

It is the further case of the appellant is that during the period commencing from 1987-1989 when supplies were made of such store items, those were duly received by the respondent herein and used beneficially. Respective bills were raised for such purchase orders aggregating to Rs.48,51,675.19. After making payment of a sum of Rs.11,16,528.80, the respondent failed, neglected and/or refused to make any further payment of the 124 bills submitted by the appellant/petitioner. The respondent had admittedly withheld payment of 108 bills. To recover such money due and payable to it, the petitioner/appellant had instituted various proceedings including the writ petition and filed a suit before this Honble Court by appointing an Arbitrator to resolve the disputes between the parties herein on 16th February, 2004.

The case of the appellant is that the arbitral reference commenced on 24th August, 2007 and the statement of claim was filed by the petitioner/appellant herein on 3rd September, 2007 and on 14th April, 2007, the appellant also filed an application for an interim order where the respondent filed objection in respect thereof. The counter-claim was also filed by the respondent.

The learned Arbitrator on 12th May, 2008 published an interim award of Rs.25 lacs in favour of the appellant. The respondent challenged the said interim award under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said Act). The said application was allowed and the interim award was set aside by the Honble First Court.

Being aggrieved, this appeal has been filed.

Mr. Reetobrata Mitra, learned Advocate appearing on behalf of the appellant contended that the Honble Judge considered each and every ground raised by the respondent before the Honble First Court and His Lordship on each and every ground held against the respondent. In fact, it was further held by His Lordship that the learned Arbitrator gave the railways an opportunity to produce further documents. In spite thereof the railways did not produce any further evidence. Such facts would be evident from the documents appearing at page 385 of the Paper Book.

Mr. Mitra further contended that the Honble First Court held that there is no doubt that the conduct of the railways in the reference has been far from exemplary. It is apparent from the minutes of the meeting relied upon by the railways that from 2007 the Railways has failed to produce any materials despite the indulgence shown by the Arbitrator.

Mr. Mitra further contended that the only ground which impressed His Lordship was that there was no indication to the parties that an interim award was forthcoming and had there been any such prior notice, the interim award was otherwise perfectly justified. He further submitted that there is no requirement under the statute for a prior notice to be given before the passing of the interim award. However, he drew our attention to page 420 of the Paper Book and submitted that prior notice of the interim award dated 12th May, 2008 was expressed in the presence of both the parties. Hence, he submitted that the parties were aware of the fact that an interim award was forthcoming. He contended that the other grounds raised by the respondent herein were considered and rejected by the learned Trial Court.

He further submitted that the written objection which was filed by the respondent was duly considered by the learned Arbitrator and he drew our attention to 2nd paragr