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2025 Supreme(Del) 287
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, SHALINDER KAUR, JJ.
Aptec Advanced Protective Technologies Ag - Appellant
Versus
Union Of India - Respondent
FAO (OS) (COMM) 227 of 2024 & CM APPL. 59210 of 2024
Decided on : 13-01-2025
For the Appellant : Mr. Ashish Dholakia, Sr. Adv. with Mr. Akash Panwar, Mr. Subhoday Banerjee, Ms. Ananya Narain & Mr. Rohan Chawla, Advs.
For the Respondent: Mr. Vikram Jetly, CGSC with Ms. Shreya Jetly, Adv.
An arbitrator's decision that conclusively determines substantive issues between parties qualifies as an interim award under the Arbitration and Conciliation Act, making it subject to challenge.
Headnote:(A) Commercial Courts Act, 2015 - Section 13(1A) - Arbitration and Conciliation Act, 1996 - Section 34 - Appeal against dismissal of petition challenging arbitrator's decision - The learned Single Judge dismissed the petition, ruling that the arbitrator's decision was not an 'Award' and thus not subject to challenge under Section 34. (Paras 1, 2, 13, 30)
(B) Definition of 'Arbitral Award' - The court clarified that an interim award must conclusively determine some issues between the parties, and the arbitrator's findings on the compatibility of Crampons with boots constituted an interim award. (Paras 11, 30)
Facts of the case:
The appellant, a Swiss company, supplied boots to the Defence Forces under a contract but faced issues regarding payments and alleged defects in the boots. The arbitrator dismissed applications for document discovery, leading to the appeal.
Findings of Court:
The court found that the arbitrator's decision on the compatibility of Crampons was an interim award and thus challengeable under Section 34.
Issues: The main issue was whether the arbitrator's decision constituted an 'Award' under the A&C Act.
Ratio Decidendi: The court held that the arbitrator's findings on the compatibility of Crampons were substantive and final, qualifying as an interim award.
Result: The appeal was allowed, and the impugned judgment was set aside.
JUDGMENT :
NAVIN CHAWLA, J.
1. This appeal has been filed by the appellant under Section 13(1A) of the Commercial Courts, Act, 2015 read with 37 of the Arbitration and Conciliation Act, 1996 (in short "A&C Act") challenging the Judgment dated 20.08.2024 (hereinafter referred to as "Impugned Judgment") passed by the learned Single Judge of this Court in O.M.P. (COMM) 216/2020 titled APTEC Advanced Protective Technologies Ag v. Union Of India (hereinafter referred to as "Section 34 Petition") whereby, the learned Single Judge has dismissed the petition filed under Section 34 of A&C Act by the appellant herein, holding that the decision dated 18.11.2010 of the learned Sole Arbitrator dismissing the four applications, bearing no. Nos. 1, 2, 3 and 4 of 2009, filed by the appellant herein inter alia seeking discovery of certain additional documents from the respondent, was not an "Award" and therefore, petition filed under Section 34 of the A&C Act to challenge the same was not maintainable.
2. The appellant had challenged the decision dated 18.11.2010 of the learned Sole Arbitrator vide Section 34 Petition before the learned Single Judge of this Court, contending therein that the decision dated 18.11.2010 of the learned Sole Arbitrator is an interim Award and hence subject to the challenge under Section 34 of the A&C Act.
3. The learned Single Judge, vide the Impugned Judgment, dismissed Section 34 Petition filed by the appellant herein by observing that the decision dated 18.11.2010 of the learned arbitrator is not an interim Award, but is only an order on the applications that it disposes of, and therefore, not subject to challenge under Section 34 of the A&C Act.
Brief background of facts:
4. To understand the controversy involved, a brief background of facts, shorn of details, is given as under:
4.1 The appellant herein, a company incorporated in Switzerland, is engaged in the business of developing, manufacturing and marketing Mountaineering Boots.
4.2 The appellant received an Order for supply of boots for the Defence Forces from the respondent herein through Contract Purchase Order bearing No. 21(4)/98 - D(0-I) dated 01.07.1999 (hereinafter referred to as "CPO").
4.3 It is the case of the appellant that the appellant supplied 12,000 pairs of Model- A Boots and 5700 pairs of Model-B Boots, in five consignments, to the Respondent's nominated agent at Graz Airport, Austria, on 30.09.1999, 08.10.1999, 27.10.1999, 04.11.1999 and 12.11.1999. Each of the consignments was inspected by the Inspectors of the Ministry of Defence / AHQ within 30 days of arrival, in terms of Clause 6 of Annexure III of the CPO, and on being satisfied that the boots met the qualitative requirement specified in Annexure V of the CPO, the respondent made payments to the tune of 90% of the the invoices raised by appellant herein, however, did not make any payment qua the remaining 10% of the invoice amount.
4.4 The respondent, vide Letter dated 09.11.2000, issued a “Provisional Warranty Claim-cum-Performance Notice” on the appellant, alleging that the Model-A Boots supplied by the appellant herein had been found to be of substandard and defective. The appellant herein denied the aforesaid claim of the respondent and called upon the respondent to produce one pair of Model-A Boots for scientific testing.
4.5 On 26.02.2001, the respondent encashed the “Warranty Guarantee” furnished by the appellant. The appellant protested against the said encashment and demanded that the losses caused due to non-payment/ delayed payment of balance 10% of the invoice value and wrongful encashment of bank guarantee be immediately compensated.
4.6 The appellant, thereafter, invoked arbitration by serving upon the respondent the notice invoking arbitration.
4.7 The Supreme Court vide its order dated 29.08.2006 passed in Arb. Petition 5 of 2006 titled Aptec Advanced Tech.Protective Tech. AG v. Union of India Th. Secretary, M/O Defence, appointed the learned Sole Arbitrator to adjudicate
