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2000 Supreme(Del) 595

High Court Of Delhi
AYUB ALI - Appellant
Versus
UNION OF INDIA - Respondent
Suit 2267-A of 1995
Decided On : 07/28/2000

Advocates Appeared:
SANJIV SAHAY, T.R.KAKKAR

The main legal point established in the judgment is the entitlement of a party to seek the remission of an award for re-consideration and the grounds for setting aside an Arbitrator's award based on the application and interpretation of legal principles established in previous cases.

Headnote:

Arbitration - Award - Claims - Prag Distilled Water case - M/s. A. T. Brij Paul Singh and Bros. v. State of Gujarat - Remission of award for re-consideration - Interest - S. K. Jain v. DDA and Am. - [CLAIM NO. 10, CLAIM NO. 3] - The court discussed the law laid down in Prag Distilled Water case and M/s. A. T. Brij Paul Singh and Bros. v. State of Gujarat, and distinguished their application in the present case. The court found that the petitioner was entitled to seek the remission of the award for re-consideration in respect of Claim No. 10. Additionally, the court found that the petitioner had good grounds for setting aside the Arbitrator's award in respect of Claim Nos. 3 and 10, and remitted the award to the Arbitrator for readjudication on these claims.

Fact of the Case:

The petitioner objected to the award delivered by the Arbitrator, claiming that Claim No. 10 was completely omitted and that the petitioner was entitled to seek the setting aside of the award at least qua Claim No. 10. The petitioner also challenged the award in respect of Claim No. 3, claiming entitlement to claim loss of profits on the balance amount of the contract due to premature closure by the respondent.

Finding of the Court:

The court found that the petitioner was entitled to seek the remission of the award for re-consideration in respect of Claim No. 10. Additionally, the court found that the petitioner had good grounds for setting aside the Arbitrator's award in respect of Claim Nos. 3 and 10, and remitted the award to the Arbitrator for readjudication on these claims.

Issues: The issues included the omission of Claim No. 10 in the award, the entitlement to claim loss of profits on the balance amount of the contract due to premature closure, and the rate and quantum of interest payable to the claimant/petitioner.

Ratio Decidendi: The court applied the law laid down in Prag Distilled Water case and M/s. A. T. Brij Paul Singh and Bros. v. State of Gujarat to determine the entitlement of the petitioner to seek the remission of the award for re-consideration in respect of Claim No. 10 and the grounds for setting aside the Arbitrator's award in respect of Claim Nos. 3 and 10.

Final Decision: The court remitted the award to the Arbitrator for readjudication on Claim Nos. 3 and 10, and directed the parties to appear before the Arbitrator for the same.

Mukul Mudgal, J.

( 1 ) MUKUL Mudgal, J.-These are the objections to the award dated 28th August, 1995 delivered by the Arbitrator, Mr. I. V. Nainani, who had been appointed as Sole Arbitrator by the Chief Engineer, PWD Zone-1, New Delhi on 27th January, 1994. Sixteen claims, 2 additional claims and one counter claim were referred to the Arbitrator for adjudication. The petitioner s claim is that every claim was set out by the Arbitrator but he completely omitted to even refer to or adjudicate Claim No. 10. It is also stated by the petitioner/objector that in contrast there are several claims such as Claim No. 5, Claim No. 6, Claim No. 8 and Claim No. 12 which have been discussed and rejected by the Arbitrator by giving a nil award qua these claims. He submits that thus the award has failed to even notice Claim No. 10 entitling him to seek the setting aside of the award at least qua Claim No. 10 and thereof for redetermination.

( 2 ) THE learned Counsel for the respondent has submitted that in view of the law laid down by this Court in M/s. Prag Distilled Water and Ice Factory v. Municipal Corporation of Delhi and Another, reported as AIR 1988 Delhi 37, the omission to mention a claim amounts to its rejection. This judgment has been sought to be distinguished by the learned Counsel for the petitioner by submitting that this view of the law laid down would not apply in case where other claims which have been rejected have been mentioned and in such facts the omission would obviously amount to a failure to take note and/or cognizance of Claim No. 10. The law laid down by this Court in paragraph 4 of the aforesaid judgment in Prag Distilled Water case reads as follows: "it is dear from a reading of the disputes formulated in para 6 that in sum and substance, they related to fixation of fuel adjustment charges and their demand from time-to-time in accordance with the Tariff for the year in question. This dispute has been squarely determined by the Arbitrator in his award. Some additional differences are mentioned in para 6. They are not referred or included as contentions in the written arguments before the Arbitrator. The Arbitrator has not dealt with them in his award. We, therefore, agree with the learned Single Judge that the other points of disputes were either given up or not pressed before the Arbitrator during the proceedings. If an award is silent on a particular item of dispute then the law is that the claim in respect of such item should be taken as rejected by the Arbitrator. "

( 3 ) THE aforesaid judgment is mainly based on the premise that the additional differences as mentioned in para 6 were not referred to or included in the written arguments before the Arbitrator. In these circumstances the Division Bench of this Court held that since the award is silent on the particular item of dispute then it is deeined to have been rejected by the Arbitrator. In my view the submission of the petitioner has force. In the aforesaid judgment of the Division Bench of this Court relied upon by the learned Counsel for the petitioner, insofar as non-consideration of a claim was concerned the facts were different as reflected in the preceding paragraph. In the aforesaid judgment the non-considered disputes were neither referred to nor included as contentions in the written arguments. However in the present case before me several other claims such as Claim Nos. 5,6,8 and 12 each of which led to a nil award were specifically mentioned and rejected. In these circumstances, in my view, the aforesaid judgment of this Court in Prag Distilled Water s case would not apply and consequently the petitioner is entitled to seek the remission of the award for re-consideration insofar as Claim No. 10 raised by the petitioner is concerned.

( 4 ) THE second plea qua the award in respect of Claim No. 3 is that the petitioner had claimed a sum of Rs. 2/52/000. 00 as loss of profit @ 10% on the balance work which could not be executed due to the premature





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