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2018 Supreme(Del) 522
IN THE HIGH COURT OF DELHI AT NEW DELHI
GITA MITTAL, C. HARI SHANKAR, JJ.
Food Corporation of India - Appellant
Versus
M/S Grewal Rice & General Mills & Anr. - Respondents
FAO(OS) 272 of 2017 & CM APPL. 37538 of 2017
Decided On : 16-03-2018
For the Appellant : Mr. Rajeev Sharma, Adv.
For the Respondent: Mr. Kumar Dushyant Singh with Mr. Siddharth Dutta, Advs. Mrs. Bharathi Raju, CGSC with Ms. Saakshi Agrawal, Advs
The main legal point established in the judgment is the application of Section 37 of the Arbitration and Conciliation Act, 1996 in challenging an order related to arbitration proceedings.
Headnote:
Arbitration - Challenge to Order - Arbitration and Conciliation Act, 1996 - Section 37 - [STORAGE-CUM-MILLING AGREEMENT, ARBITRATION PROCEEDINGS, CROSS-EXAMINATION] - The court discussed the application of Section 37 of the Arbitration and Conciliation Act, 1996 in challenging an order related to arbitration proceedings. The key legal provisions of Section 37 and its interpretation influenced the court's decision in dismissing the appeal.
Fact of the Case:
The appellant entered into an agreement with the respondent for storage-cum-milling of paddy. After a legal notice and subsequent arbitration proceedings, the sole arbitrator passed an award rejecting the claim petition of the appellant. The award was set aside by the court and remanded back to the sole arbitrator for deciding the claims of the appellant on merits. The respondent then moved an application before the sole arbitrator for permission to cross-examine the appellant's witness and to produce original documents for cross-examination.
Finding of the Court:
The court dismissed the appeal challenging the order allowing the respondent to make a prayer for permission to cross-examine the appellant's witness and for issuance of a direction to produce the original documents. The court clarified that the order merely opened the door for the respondent to make the said prayers, leaving it entirely in the discretion of the learned sole arbitrator to take a view thereon.
Issues: The issues included the validity of the settlement, the jurisdiction of the sole arbitrator, and the right to cross-examine the appellant's witness.
Ratio Decidendi: The court clarified that the order allowed the respondent to make the prayers before the learned sole arbitrator, who would have to decide the same on merits. The court emphasized the limited nature of the impugned order and the necessity for the learned sole arbitrator to reconsider his decision.
Final Decision: The court dismissed the appeal, emphasizing the unnecessary delay caused by such appeals and the need for prompt and expeditious resolution of disputes by the arbitral mechanism.
C. HARI SHANKAR, J.
1. We had, vide our order dated 16th March, 2018, dismissed the present appeal, stating that the reasons for dismissal would follow. This judgment proceeds to record the said reasons.
2. The appellant seeks, by means of the present appeal, filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”), to challenge an order dated 19th July, 2017 passed by the learned Single Judge in IA 7953/2017, preferred by the appellant in OMP 690/2012 (in which the present appellant was the petitioner).
3. Inasmuch as the impugned order is brief, it may be reproduced, in extenso, as under:
“This application is filed by the respondent for direction to the learned Arbitrator that the order dated 30.01.2015 passed by this Court be implemented regarding leading of evidence and permission of cross-examination etc. Earlier the learned Arbitrator had passed the Award on 26.4.2012. In a challenge to the Award before this court, this court on 30.1.2015 set aside the Award and remitted the matter back to the learned Arbitrator for deciding the claims filed by the petitioner on merits, in accordance with law.
The grievance of the applicant/respondent appears to be that when the matter was taken up afresh by the learned Arbitrator an application filed by the respondent seeking cross-examination of the claimant’s witness and application for bringing the entire original documents was dismissed. A perusal of paragraph 6 of the order passed by the learned Arbitrator dated 28.4.2017 dismissing the application filed by the respondent seeking cross-examination of the claimant’s witnesses would show that the learned Arbitrator has taken a view that implicit in the order of this court dated 30.1.2015 is the direction that the matter has been remitted back for the limited purpose of passing a fresh Award on merits on the basis of the existing record. Hence, a view was taken that directions of this court do not warrant any further evidence being recorded.
I dispose of this application with a clarification that it would be for the learned Arbitrator to take a decision regarding any request made for additional evidence/cross-examination and a bar to the same cannot be read in the order passed by this court dated 30.1.2015.
Application stands disposed of.
Dasti. ”
4. The controversy in the present case being limited, an equally limited recital, of the factual matrix wherein it arises, would suffice.
4.1 On 7th October, 1994, the appellant entered into an agreement with the respondent, for storage-cum-milling of paddy. The period of performance of the agreement was up till 28th February, 1995. On 6th November, 1997, a legal notice was issued, by the appellant to the respondent, alleging that, despite extension, of the period of performance, by the appellant, till 31st May, 1995, the respondent had failed to complete milling of the paddy by the said date, resulting in liability, on the respondent, to pay an amount of Rs. 52,45,943.09/-. No response being forthcoming from the respondent thereto, the appellant, on 20th February, 1998, approached the Indian Council of Arbitration (ICA) for appointment of an arbitrator, in accordance with the arbitration clause contained in the agreement aforesaid. The ICA, however, refused to appoint an arbitrator, stating that the arbitration clause in the agreement was not in terms of the clauses governing the ICA. The appellant, thereupon filed OMP 173/1999 before this Court, under Section 11(6) of the 1996 Act, which was dismissed, by this Court, vide order dated 10th February, 2000. The appellant moved the Supreme Court, there against, by way of Civil Appeal 4655-4809/2003, which was allowed vide judgment dated 17th July, 2003, with a direction, to the ICA , to nominate an arbitrator, as sought by the appellant.
4.2 In compliance therewith, a sole arbitrator was appointed, by the ICA, to arbitrate on the dispute between the appellant and the respondent. Statement
