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B.M. Advani Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberI.A. No. 4031 and Suit No. 782-A of 1977
Judge
Reported inAIR1979Delhi165
ActsArbitration Act, 1940 - Sections 16 and 17
AppellantB.M. Advani
RespondentUnion of India
Appellant Advocate J.K. Hiranandani, Adv
Respondent Advocate Daljit Singh, Adv.
Cases ReferredBearcy v. Kemp
Excerpt:
.....that was remitted back for re consideration of a single issue decided by the arbitrator - the decision on the issue was reversed after remission without affecting the award and simultaneously on the decisions on other issues in the first award - it was held that the procedure would be amalgamation of two awards and accordingly the decree would be drawn - section 13: [altamas kabir & cyriac joseph,jj] custody of child - welfare of child vis--vis comity of courts - the minor girl child of 3 1/2 years was brought to india by her mother. the minor girl was a citizen of u.k. being born in u.k. her parents had set up their matrimonial home in u.k. and had acquired status of permanent residents of u.k. the child with her mother was supposed to return to u.k. but the mother cancelled..........(1855) 24 ljqb 310, which are stated to be as the leading cases on what happens when the whole award is remitted back or a portion of the award is remitted back. it was held in bearcy v. kemp, (1855) 24 ljqb 310 that the second award is the effective award if the whole, matter is remitted back. none of these cases appears to say what has to happen when a part of the award is remitted back and comes after decision. does the court have to draw up a consolidated award ?10. this brings me to an analysis of what should happen now when both awards are before the court. firstly, i think this matter stands on a parallel with a decision in a suit when part of the judgment is remitted back for reconsideration. in such a case a report is received back and then the court has to pass a judgment......
Judgment:

1. This suit is in the form of a petition under S. 17 of the Arbitration Act, 1940. An award was filed along with this petition. The facts of the case are set out in the application. Previously there was an award dated 30th Oct. 1971, which was considered by this Court in Suit No. 446/71. Objections to that award were filed by the present petitioner. They were decided by B. C. Misra J. as per judgment dated 14th Dec. 1975. The award was upheld on all ponts except on issue No. 2. Acting under the provisions of the Arbitration Act, 1940, the award was remitted back by the Court for a decision on Issue No. 2. This issue was regarding some additional amount to be paid to the contractor on account of evaluation. The facts are set out in detail in the aforementioned judgment delivered by B. C. Misra, J. which I have before me. It was held by the arbitrator in the first award that the additional amount was not payable because the additional amount had been promised to the contractor without any consideration. This was held to be an error of law and hence the award was remitted back only on this point. Now an award has come allowing an additional amount to the contractor on account of de-valuation payment. In addition to the present award, the previous award is also sought to be made a rule of the Court. In short, the petitioner prays that both the awards be made a rule of the Court.

2. As it happens, both the awards are before the Court, but as regards Issue No. 2, they are inconsistent with each other, because this is the very Issue which was decided against the contractor in the first award and hag been allowed in favor of the contractor in the second award which has now been filed. thereforee, even if this Court upholds the second award, the Court will have to reconcile the two awards and make an order in this behalf. I will say more on this question shortly,

3. The objections which have been filed to the second award in the present case are mainly concerned with the correctness of the procedure followed by the arbitrator and also the correctness of the decision recorded by him I have examined the award and at first I found it difficult to understand the reasoning and the conclusion. However, after going through the previous judgment of this Court recorded in Suit No. 446-A/71, and also after going through the contents of the previous award, it has now become clear that the question involved in the second award was quite a simple one and can easily be understood in the light of the other two documents I have just referred to.

4. The contract between the parties was for supply of radio equipment called Trans Receivers which had to be imported from abroad. It appears that shortly after the contract was made and before the equipment was received, the Rupee was devalued by about 57.5%, This meant that the contractor was obliged to make some further payment in Rupee currency on account of the additional cost of foreign exchange. To meet this additional cost, the terms of' the acceptance of tender were amended so as to increase the amount payable to the contractor. The first increase was by amendment letter dated 1st Jan., 1968 which was followed by a subsequent amendment letter dated 4th April, 1968. It appears from the award that the amount actually in dispute regarding additional payment was Rs. 2,52,906/- at the time the award was considered after being remitted, It also appears that in the last amendment letter, there was a condition that a Chartered Accountant's certificate should be produced showing that the amount had not been remitted to the foreign principals before the de-valuation date which was 6th June, 1966. It also appears that such a certificate was also furnished. Thus, judging from the certificate and other circumstances, it would appear that the contractor had to pay for the foreign exchange after de-valuation and thus had to incur additional rupee payment.

5. It was contended before the arbitrator that actually the additional amount had not been sent to the foreign principals and the contractor should be required to prove that the amount was sent after de-valuation before the amount could be awarded. This contention was rejected by the arbitrator. In view of the fact that B. C. Misra, J. has in his judgment accepted the legality of the change in price, and in view of the conclusion that the arbitrator has given that the certificate which was the only condition necessary, had been given, I cannot say that there is an error of law in the award made after it was remitted. It is a different matter that the award in question does not fully explain the position. There is little doubt that no legal error appears on the face of it. I am, thereforee, of the view that the second award has to be supplied.

6. This brings me to a consideration of what is now to take place in this case. The original award as filed in Suit No. 446-A/71 was remitted but only on a single question, namely the decision on Issue No. 2. The award remained unchanged with regard to the other Issues. The award as has now come only deals with Issue No. 2 and does not deal with the other Issues. If the present award is made a rule of the Court, then what is to happen to the decision qua the other Issues which are contained in the previous award?

7. The situation being both unusual and uncertain, I have heard learned counsel for the parties at some length on this question. The matter is one of procedure and I had considered sending back the award to the arbitrator for making one consolidated award. Learned counsel for the contractor has persuaded me that the proper procedure to be followed in such cases is by amalgamating the two awards to make a single decree. I find that also leads to some confusion because the decision in the first award which was made by Shri Ramchandani decides Issue No. 2 against the contractor whereas the second award which was made by Shri Gauri Shanker Murthy on 22nd Aug., 1977, decides issue No. 2 in favor of the contractor and awards a sum of Rupees 2,52,000/- odd to the contractor. If both the awards are made a rule of the Court simultaneously, they will be contradictory. This conundrum regarding the procedure to be followed puzzled me.

8. Learned counsel for the contractor has referred to a decision of the Calcutta High Court in Brahma Swaroop Gupta v. Diwan Chand Minotra : AIR1963Cal583 where a similar problem arose. There was also an award which was remitted back on some point and a second award was given on the remitted dispute and then a single decree was passed on the two awards. The problem which has arisen in this case did not actually arise in the Calcutta case. The remitted portion of the award was in respect of some point other than the one which was dealt with in the original award. thereforee in that case two awards could stand together. In the present case, there is a contradiction between the first award and the second award, because what has happened is that the decision on one of the Issues has been reversed after remission and a new judgment has been given on Issue No. 2 thus leading to a contradiction between the two awards,

9. In the judgment of Bachawat, J. delivered in the Calcutta case I have just referred to a reference was made to the cases of Johnson v. Latham, (1851) 20 Ljqb 236 and Bearcy v. Kemp, (1855) 24 Ljqb 310, which are stated to be as the leading cases on what happens when the whole award is remitted back or a portion of the award is remitted back. It was held in Bearcy v. Kemp, (1855) 24 Ljqb 310 that the second award is the effective award if the whole, matter is remitted back. None of these cases appears to say what has to happen when a part of the award is remitted back and comes after decision. Does the Court have to draw up a consolidated award ?

10. This brings me to an analysis of what should happen now when both awards are before the Court. Firstly, I think this matter stands on a parallel with a decision in a suit when part of the judgment is remitted back for reconsideration. In such a case a report is received back and then the Court has to pass a judgment. The difficulty which remains is how to pass a second judgment without there being any provision in the Arbitration Act regarding the same. Section 17 which gives power of the Court merely states that if objections are dismissed, the Court is to proceed to pronounce judgment according to the award. There are now two awards and hence the Court has to pronounce judgment in accordance with both these awards. As one of the awards has been remitted back on one question, it will mean that part of that award will have to be eliminated in passing judgment.

11. To my mind, the simplest course that I can adopt is that I pronounce judgment in terms of the second award dated 22nd Aug., 1977. A decree will be drawn up making that award a part thereof. I also pronounce judgment at the same time on the first award but excluding the portion which deals with Issue No. 2. The composite judgment pronounced by this Court consists, thereforee, of the first award minus its decision on Issue No. 2 and of the second award. The first award will also form a part of the decree to be drawn up by, this Court, but the decision on Issue No. 2 will not form part of that decree. I leave the parties to bear their own costs. The learned counsel for the contractor claims future interest as from today. I think, interest can be awarded in the light of the fact that it is a very old case, but in case the Union of India makes payment within 3 months, then no interest will be payable. In case the payment is not so made, the interest will be payable at the rate of 6 % per annum from today.

12. Order accordingly.


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