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1995 Supreme(Del) 864

High Court Of Delhi
NAGINA ENTERPRISES - Appellant
Versus
UNION OF INDIA - Respondent
Suit 294 of 1991
Decided On : 11/08/1995

Advocates Appeared:
RAJIV MEHRA, SOHAIL DUTT

The court cannot act as an appellate authority in respect of an arbitration award and can only interfere if the award suffers from an error apparent on the face of the record or infirmity.

Headnote:

ARBITRATION ACT - SECTIONS 16, 30, 33 - AWARD - OBJECTIONS - VALIDITY - SCOPE OF JUDICIAL REVIEW - COURT CANNOT ACT AS AN APPELLATE AUTHORITY - AWARD DULY SUPPORTED WITH REASONS - NO ERROR APPARENT ON THE FACE OF THE RECORD - OBJECTIONS DISMISSED.

Fact of the Case:

The petitioner entered into a contract with the Union of India for the supply of soap cakes. The petitioner failed to deliver the goods within the stipulated time and the respondent invited a Stand By Tender and placed a risk purchase order. The petitioner challenged the risk purchase and the rejection of the goods. The matter was referred to arbitration and the arbitrator allowed the petitioner's claims and rejected the respondent's counterclaims.

Finding of the Court:

The court held that the objections to the award were not maintainable as they did not fall within the ambit of grounds specified in Section 30 of the Arbitration Act. The court further held that the award was duly supported with reasons and did not suffer from any error apparent on the face of the record or infirmity.

Issues: Whether the objections to the award were maintainable.

Ratio Decidendi: The court held that the objections to the award were not maintainable as they did not fall within the ambit of grounds specified in Section 30 of the Arbitration Act. The court further held that the award was duly supported with reasons and did not suffer from any error apparent on the face of the record or infirmity.

Final Decision: The court dismissed the objections to the award and made the award rule of the Court.

Manmohan Sarin

( 1 ) THE respondent Union of India, has filed its objection under Sections 16,30 and 33 of the Arbitration Act against the award dated 30. 3. 1990 made and published by Sh. Shiv prakash, sole Arbitrator. It was submitted by the Counsel for the parties that the arbitral proceedings be treated as evidence and apart from that no evidence was required to be led by any of the parties.

( 2 ) THE objections were therefore, taken up for hearing at the request of the parties. The facts in brief giving rise to the present objections are as under :- (i) The petitioner had entered into a contract with the Union of India through the Director General Supplies and disposal for supply of five lakhs soap cakes @ Rs. 2. 03 per lakh. The supplies were initially to be completed by 31. 12. 1984. The delivery period was extended at the request of the petitioner upto 12. 3. 1985. 2,10,000 soap cakes were offered for inspection on 11. 3. 1985, out of the above 1,80,000 soap cakes were accepted and 30,000 soap cakes were rejected as not being as per the specifications. The delivery date was thereafter again extended to 2. 11. 1985. The petitioner offered on 16. 10. 1985, 2,55,000 soap cakes, which were rejected on inspection as found to be containing certain glisteningforeign material. The petitioner again, offered for inspection 17,000 soap cakes which were inspected and accepted on 6. 3. 198^ ). As a result of the aforesaid inspections 2,50,000 soap cakes had been accepted. Thereafter, the time for the delivery was extended upto 31. 12. 1986. The petitioner again, offered 1,80,000 soap cakes, which were rejected by the respondent on the allegation that the stock rejected earlier had been reoffered for inspection. In these circumstances, the respondent invited a Stand By Tender on 3. 12. 1986. Pursuant to which a risk purchase order was placed on 24. 12. 1986. It is significant that the risk purchase Stand By Tender had been invited and order placed, while the delivery period under the contract in question had not expired, the same being 31. 12. 1986. (ii) Be it may, the petitioner again offered^n 30. 12. 1986, the balance quantity of soap cakes. These were rejected on 19. 5. 1987, on the ground that inspection facilities had not been provided by the petitioner. (iii) Disputes had arisen between the parties and the claims of the petitioner and counter claims of the respondent were referred to the arbitration of Shri Shiv Prakash Sole Arbitrator in accordance with the arbitration agreement. (iv) The claims of the petitioner were for the following items : (a ). Claimnos. I and2refundofsecuritydepositof Rs. 25,750. 00 and interest thereon. (b) Claim Nos. 3 and 4 Rs. 28,000. 00 balance price i. e. 5% of the stores supplied with interest thereon. (c) Claim Nos. 5 and 6 Rs. 1,40,394. 00 being the amount with held against admitted bills plus interest thereon. (d) Claim Nos. 7 and 8 Rs. 5,17,650. 00 on account of loss suffered due to illegal rejection of stores/supplies plus interest thereon. (e) Claim No. 9 Rs. 6,00,000. 00 towards loss of business and reputatioon. (f) Claim No. 10 Rs. 15,000. 00 towards costs. The respondent prefered the following counter claims :- Counter Claim No. I Rs. 1,26,500. 00 towards loss suffered in risk purchase of balance quantity of stock. Counter Claim No. 2 For adjustment of Rs. 25,750. 00 against the amount under counter Claim No. 1. Counter Claim No. 3 Costs of Rs. 15,000. 00

( 3 ) THE learned Arbitrator, who is the Additional Legal Advisor, Ministry of Law, after completion of pleading, adducing of documentary evidence and hearing the parties published the award on 30th day of March, 1990. The learned Arbitrator allowed Claim Nos. 1,3,7 and 8. Claim No. 7 was allowed subject to conditions as set out in award. Claim No. 8 for interest was allowed confined to reimbursement of actual interest paid. Interest claimed in respect of amounts of Claim Nos. 1,3 and 5 was disallowed. Claim No. 5 had been withdrawn. Cos




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