Back
SUPREME COURT OF INDIA
N.V. RAMANA, MOHAN M. SHANTANAGOUDAR, AJAY RASTOGI, JJ.
M/s. Dyna Technologies Pvt. Ltd. – Appellant
Versus
M/s. Crompton Greaves Ltd. – Respondent
Civil Appeal No. 2153 of 2010
Decided On : 18-12-2019
(a) Arbitration and Conciliation Act, 1996 - Section 34 - Arbitral award should not be interfered with unless perverse and such perversity goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award - Section 34 cannot be equated with normal appellate jurisdiction - Mandate under Section 34 is to respect finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum. (Para 26)
(b) Arbitration and Conciliation Act, 1996 - Section 31(3) - Providing reasons for the award - Award should have proper, intelligible and adequate reasoning which can in appropriate cases be even implied by the Courts from a fair reading of the award and documents referred to thereunder - Award suffering from impropriety or perversity in reasoning can be challenged strictly on the grounds provided under Section 34 - Unintelligible award would be equivalent of providing no reasons at all - In case of challenge on adequacy of reasons, the Court is required to adjudicate on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration and documents filed by the parties and the contentions raised - Distinction between inadequacy of reasons in an award and unintelligible awards should be drawn carefully. (Para 35, 36)
(c) Arbitration and Conciliation Act, 1996 - Section 34(4) - Award challenged on ground of curable defects like absence of reasoning - Tribunal has to be given opportunity by way of remand to cure the defects - Court cannot straightway proceed further to determine the issue on merits. (Para 37, 38)
(d) Arbitration and Conciliation Act, 1996 - Section 34 - Instantly award confusing and has jumbled the contentions, facts and reasoning, without appropriate distinction - Needs legal supplement - However, complexity of the subject matter not allowing supplementing such legal reasoning - Award cannot be sustained. (Para 40, 41, 43)
Facts of the case:
A contract was entered into between DCM Shriram Aqua Foods Limited and M/s. Crompton Greaves Limited for an aquaculture unit to be set up by such Principal, namely, DCM. CGL invited tenders for carrying out certain works for construction of ponds, channels, drains and associated works. The appellant M/s Dyna Technologies Pvt. Ltd. gave its proposal, estimate and quotation for carrying out the work. Thereafter, the respondent CGL placed a letter of intent and amended the contract as suggested by the appellant company. Thereafter, CGL issued work order
After commencement of the work, the respondent CGL instructed the employees of the appellant company to stop the work.
The appellant company claimed compensation for such premature termination of the contract and ultimately the dispute was referred to Arbitral Tribunal consisting of three Arbitrators. Appellant Company raised three claims before the arbitral tribunal.
The only objection is in reference to claim no. 2, i.e., losses due to unproductive use of machineries which was accepted by the Arbitral Tribunal for a sum of Rs. 27,78,125/- with interest @ 18% p.a. vide its award dated 30th April, 1998 and Correction to award dated 5th May, 1998.
Aggrieved by the award passed by the Tribunal, an original petition was filed before the Single Judge of the High Court questioning the award by the respondent. The Single Judge upheld the award of the Tribunal.
The division Bench partly allowed the appeal.
Finding of the Court:
The award cannot be sustained in its present form.
Result: Appeal disposed of.
JUDGMENT :
N. V. RAMANA, J.
1. The question involved herein revolves around the requirement of reasoned award and the cautionary tale for the parties and arbitrators to have a clear award, rather than to have an award which is muddled in form and implied in its content, which inevitably leads to wastage of time and resources of the parties to get clarity, and in some cases, frustrate the very reason for going for an arbitration.
2. This appeal is filed against the final order and judgment dated 27.04.2007, passed by the High Court of Judicature at Madras whereby the High Court partly allowed the appeal filed by the respondent and set aside the award of Arbitral Tribunal relating to claim no. 2 for payment of compensation for the losses suffered due to unproductive use of machineries.
3. Brief facts of the case are that a contract was entered into between DCM Shriram Aqua Foods Limited (hereinafter referred to as ‘DCM’ in short) and M/s. Crompton Greaves Limited (hereinafter referred to as “CGL” in short) for an aquaculture unit to be set up by such Principal, namely, DCM. CGL invited tenders for carrying out certain works for construction of ponds, channels, drains and associated works. The appellant M/s Dyna Technologies Pvt. Ltd. gave its proposal, estimate and quotation for carrying out the work. Thereafter, the respondent CGL placed a letter of intent dated 25th July, 1994, relevant portions of which are as under:
“10. In the event that you are forced to keep your equipment and manpower idle due to non availability of work fronts due to reasons attributable to DCM or due to legal disturbances not connected with you, you shall be compensated as follows:
(i) Maximum seven days of stoppage of work without any compensation.
(ii) CGL reserves the right to advice you to demobilize partially or fully in lieu of paying compensation for such delays. Under such circumstances, you shall be paid such compensation towards transportation of equipment to Site at mutually agreed rates.
(iii) Suitable time extension shall be given to complete the work to compensate the delay caused due to the stoppage of work.
11. Storage & Security: you will be responsible to provide necessary stores, office and labour camps for your staff at site. Only open area for construction of above will be given to you. Electricity will be provided at one point on chargeable basis at actuals. You will be responsible to tap the same to your required place.
A format work order will be charged subsequently which will cover other General Terms and Conditions. Labour rules, Workmen Compensation etc. which may not be covered by this LOI and the same shall also be part of this LOI.”
4. The appellant made certain queries and clarifications, and by letter dated 10th October, 1994, CGL amended the contract as suggested by the appellant company. Thereafter, CGL issued work order on 15th November, 1994 setting out the terms and conditions of the work, material portions of which are stated as under:
“2. Termination of contract:
The Company reserves the right to terminate this work at any stage without payment of compensation due to any of the following reasons:
a. If the original contract between the client and the company is terminated/suspended.
b. The company is unable to proceed with the work due to reasons like nonavailability of work fronts, delay in availability of materials or delay in receipt of payments from clients etc.
c. If the contractor is not able to carry out work to the satisfaction of the company’s clients representatives.
d. If the contractor is unable to ensure adequate progress as required by the company and their purchaser.
e. Upon termination of this contract/work order, all rights and obligation of the parties, shall cease provided that the termination shall not relieve the contractor of any of his obligations which may have accrued upto the date of termination
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
