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1999 Supreme(Del) 304
High Court Of Delhi
ITC LIMITED - Appellant
Versus
PRADEEP ANAND - Respondent
Interim Application 7558 of 1998
Decided On : 04/22/1999
A.B.DIWAN, DIPA RATHORE, G.L.SANGHI, K.J.MATHEW, MANOJ JAIN, P.P.MALHOTRA, PUNITA SINGH, RATNESH KUMAR, RINA BARNE, ROMY CHACKO, S.GANESH RAO, SOHAIL DUTT, V.P.Singh
The Court held that the petitioner had a prima facie case and the balance of convenience was also in its favor. The Court also found that the impugned partial award was time-barred and further proceedings of arbitration were also beyond limitation; that the Co-operative Agreement relating to which the arbitration dispute was there was null and void; that in any case, whatever terms of reference were there before the Arbitrator have fully been dealt with and nothing is left for the Arbitrator to do in any further arbitration proceedings; that the learned Arbitrator has become functus officio; that the terms of reference do not speak of quantification of damages for which there should be further arbitration proceedings; that the claim in the claim petition given in the year 1993 never asked for a quantified damages and, therefore, there is no question of taking up further arbitration proceedings to quantify the damages and when the partial award which is a declaratory award, has itself been challenged, the learned Arbitrator should be stopped from proceeding further to quantify the damages on the basis of the declaratory award.
Headnote:
ARBITRATION - STAY OF PROCEEDINGS - PARTIAL AWARD - VALIDITY OF CO-OPERATION AGREEMENT - JURISDICTION OF ARBITRATOR - BALANCE OF CONVENIENCE - IRREPARABLE LOSS.
Fact of the Case:
Petitioner ITC Ltd. moved an application under Order XXXIX, Rules 1 and 2 read with Section 151 of the Code of Civil Procedure and read with Section 41 (b) of the Indian Arbitration Act, 1940, seeking interim order of stay of any further proceedings before the Arbitrator pursuant to the partial award dated 24.4.1998 in ICC Arbitration No. 808 (1/bgd/olg till hearing and final disposal of OMP No. 197/98. Respondent No. 1 only opposed this application.
Finding of the Court:
The Court found that the petitioner had a prima facie case and the balance of convenience was also in its favor. The Court also found that the impugned partial award was time-barred and further proceedings of arbitration were also beyond limitation; that the Co-operative Agreement relating to which the arbitration dispute was there was null and void; that in any case, whatever terms of reference were there before the Arbitrator have fully been dealt with and nothing is left for the Arbitrator to do in any further arbitration proceedings; that the learned Arbitrator has become functus officio; that the terms of reference do not speak of quantification of damages for which there should be further arbitration proceedings; that the claim in the claim petition given in the year 1993 never asked for a quantified damages and, therefore, there is no question of taking up further arbitration proceedings to quantify the damages and when the partial award which is a declaratory award, has itself been challenged, the learned Arbitrator should be stopped from proceeding further to quantify the damages on the basis of the declaratory award.
Issues: 1. Whether the petitioner had a prima facie case and the balance of convenience was also in its favor? 2. Whether the impugned partial award was time-barred and further proceedings of arbitration were also beyond limitation? 3. Whether the Co-operative Agreement relating to which the arbitration dispute was there was null and void? 4. Whether the learned Arbitrator has become functus officio? 5. Whether the terms of reference do not speak of quantification of damages for which there should be further arbitration proceedings?
Ratio Decidendi: 1. The Court held that the petitioner had a prima facie case as, prima facie, the grounds of challenge to the impugned partial award were not, on the face of the same, devoid of merits. Rather the same appear to have substance and require to be heard and decided in proper proceedings. 2. The Court held that the impugned partial award was time-barred and further proceedings of arbitration were also beyond limitation. 3. The Court held that the Co-operative Agreement relating to which the arbitration dispute was there was null and void. 4. The Court held that the learned Arbitrator has become functus officio. 5. The Court held that the terms of reference do not speak of quantification of damages for which there should be further arbitration proceedings.
Final Decision: The Court allowed the application and directed that further arbitration proceedings for making final award shall remain stayed till the impugned partial award is made rule of the Court.
( 1 ) THIS application has been moved on behalf of ITC Ltd. under Order XXXIX, Rules I and 2 read with Section 151 of the Code of Civil Procedure and read with Section 41 (b) of the Indian Arbitration Act, 1940 (for short the Arbitration Act ). By this application the petitioner seeks interim order of stay of any further proceedings before the Arbitrator being respondent No. 5 (Mr. Datuk George K. S. Seah) pursuant to the partial award dated 24. 4. 1998 in ICC Arbitration No. 808 (1/bgd/olg till hearing and final disposal of OMP No. 197/98. Respondent No. I only has opposed this application. Respondents 2 and 3 are with the petitioner.
( 2 ) THE facts of the case as appear to be from the record are that a Co-operation Agreement dated 11. 9. 1990 was entered into between Toshiba Corporation, Toshiba Battery Company Limited, ITC Limited, Toshiba Anand Batteries Ltd. and Shri C. L. Anand. It contained an arbitration clause. Certain disputes arose and Pradeep Anand s/o late Shri C. L. Anand sought reference of the disputes to arbitration and consequently in accordance with rules applicable Shri Datuk George K. S. Seah (respondent No. 5 in the main petition) was appointed as Sole Arbitrator. Learned Arbitrator gave his partial award (which the petitioner asserts as final award) on 24. 4. 1998. An original copy of the said award was received by the petitioner on 6. 5. 1998. The petitioner ITC Ltd. moved an application undersection 14 (2) of the Arbitration Act in this Court on 22. 5. 1998 with a request that the learned Arbitrator be directed by this Court to file in this Court the said partial award dated 24. 4. 1998 made and issued by him. This petition was taken up by the cocerned Joint Registraron 27. 5. 1998 and notice was issued to respondent No. 5 (the learned Arbitrator) to file the said award alongwith the proceedings.
( 3 ) OMP No. 197/98, in which this application for interim stay has been moved, was filed on 12. 9. 1998. By that time the said award had not been filed by the learned Arbitrator in Suit No. 1084a/98. On perusal of the order-sheets of said suit it is to be found that the original partial award dated 24. 41998 was filed by the learned Arbitrator as late as some time in the month of February, 1999. On 26. 2. 19991 passed orders in the said suit (which is also pending before me) that original partial award dated 24. 4. 1998 had been filed and notice of filing of the award be issued to the parties and it was directed that they may file objections, if any, within the statutory period.
( 4 ) IN OMP No. 197/98, the aforesaid partial award has been challenged and it has been sought that the same bedeclared without jurisdiction, bad in law and null and void. In the petition it has also been sought that the said Co-operation Agreement dated 11. 9. 1990 be also declared void ab initio and it be also declared that the arbitration clause forming partthere of has also perished there with. Thegroundsofattack,inter alia,are that the Co-operartion Agreement contravened the provisions of Section 13 (B) of the MRTP Act, Section 16 of the Securities Contract (Regulation) Act and Section 372 of the Companies Act; that the learned Arbitrator had given a final award but the same was converted into a partial award by International Court of Arbitration without affording any opportunity of hearing to the petitioner; that the said Co-operation Agreement is ex fade vague and uncertain and incapable of being made certain and thus is null and void as provisions of Section 29 of the Indian Contract Act, 1872; that the said Co-operation Agreement is also vitiated bymutual mistake and the parties could not be at consensus ad idem; that the learned Arbitrator completely misconstrued and misunderstood Article I of the said Co-operation Agreement; that the said Co-operation Ageement was signed by D. P. Barua purportedly on behalf of petitioner ITC Ltd. without any resolution of the Board of Directors of the ITC Ltd. and a
