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Modern Neon Signs Vs. Union of India and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 790A of 1975
Judge
Reported inILR1978Delhi568
ActsArbitration Act, 1940 - Sections 14(2)
AppellantModern Neon Signs
RespondentUnion of India and anr.
Advocates: M.S. Vohra,; D.R. Sharma and; K.N. Kataria, Advs
Excerpt:
.....award. in other words, the court cannot pass decree in stages.; further that the decision of the arbitrator on the claim of interest would be final subject to the decision of the court. accordingly, the court, at this stage, cannot decree interest, when the arbitrator has not awarded it. - - by now it appears to be a settled law that if an objectionable provision in the award is not separable from the rest, then the award will be altogether bad, but if the invalid part of the award is severable from the valid part then the court will pass judgment regarding the valid part of the award. i would like to observe that. the issue as framed does not clearly bring out the controversy. i feel there is n,o need to re-cast the issue for the parties understood clearly the point that is in issue......issue, it will be useful to set out the relevant part (xf the award and it reads as follows :- 1. claimant claims a sum of rs.l234.00 as bal- the claim is justified for an ance payment due including the amount of amount of rs. 1435.00 admit- the security deposit, ted by the respondent. 2. claimant claims a sum of rs. 15,167.00 as the claim is justified for an payment for the work executed and installed amount of rs. 3600.00 . during the extended period of the execution. 3. claimant claims a sum of rs. 5,000.00 for the claim is justified for an hire .charges for 16 weeks for the circular amount of rs. 2,000.00 .. 'neon signs on the main gate. 4. claimant claims a sum of rs. 4,000.00 for the claim is not justified. hire charges for special type of neon sign installed on gate no. 1 for 18.....
Judgment:

R.N. Aggarwal, J.

(1) Messrs Modern Neon Signs, petitioner herein, entered info a contract with the Central Public Works Department (C.P.W.D.), New Delhi on August 30, 1958 for providing decorative lights in the entire area of the Exhibition Grounds, situate on the Mathura Road, in connection with the Exhibition (India)--1958. The agreement contained an arbitration clause. Disputes arose between the parties and they were referred to the arbitration of Mr. M.K. Koundinya. The arbitrator gave his award on November 7, 1975.

The petitioner had raised several claims. The arbitrator allowed a sum of Rs. 8,336 as against the claim of Rs. 1,16,748.

(2) To appreciate the point in issue, it will be useful to set out the relevant part (xf the award and it reads as follows :-

1. Claimant claims a sum of Rs.l234.00 as bal- The claim is justified for an ance payment due including the amount of amount of Rs. 1435.00 admit- the security deposit, ted by the respondent. 2. Claimant claims a sum of Rs. 15,167.00 as The claim is justified for an payment for the work executed and installed amount of Rs. 3600.00 . during the extended period of the execution. 3. Claimant claims a sum of Rs. 5,000.00 for The claim is justified for an hire .charges for 16 weeks for the circular amount of Rs. 2,000.00 .. 'Neon signs on the main gate. 4. Claimant claims a sum of Rs. 4,000.00 for The claim is not justified. hire charges for special type of Neon sign installed on gate No. 1 for 18 weeks. 5. Claimant claims a sum of Rs. 31,373.00 as No award is made against this hire charges from 1.10.58 to 11.2.1969 for claim as this work. was not Neon signs on theatre, covered under this agreement and the payment for the same was a matter of separate work order. 6. Claimant claims a sum of Rs. l,000.00 for The claim is justified for an providing back boards to cover metaled amount of Rs. 1,000.00 . structure on the pylons. 7. Claimant claims a sum of Rs. 300.00 for The claim is justified for an dismantling and reinstalling neon sign on amount of Rs. 300.00 . pylon near the railway track. 8. Claimant claims a sum of Rs. 300.00 on The claim is not considered for account of fixing sign at gate No.4 from the the same reason as in claim dismantled sign. above. 9. Claimant claims a sum of Rs. 58,374.00 as The claim is not justified. interest at bank rates for the amount due.

(3) The petitioner filed an application under section 14(2) of the Arbitration Act for a direction to the arbitrator to file the award in the Court. Pursuant to an order dated December 4, 1975, of this Court, the arbitrator filed the award in the Court. The petitioner has filed objections under sections 30 and 33 of the Arbitration Act, 1940. In the objection petition, the petitioner has accepted the award in respect of the claims Nos. 1, 6 and 7, and challenged the validity of the remainder. The petitioner has prayed that the award in respect of the claims No. 1, 6 and 7 amounting to Rs. 2,735 be made a rule of the Court and interest be allowed at the rate of 12 per cent per annum from the date of the reference till the decretal amount is paid; and the remainder of the award be remitted to the arbitrator for re-consideration. The respondent in reply has pleaded that the award is just, legal and valid. The respondent has further pleaded that the award is not severable and it should be made a rule of the Court. On the pleas of the parties, the court framed the following preliminary issue:-

'WHETHER the award can be made a rule of the Court in part and the remainder be set aside ?'

(4) Mr. M. S. Vohra on behalf of the petitioner contended that the award in respect of the claims 1, 6 and 7 can be made a rule of the court without waiting for the determination of the disputed portion of the award. The counsel in support of his contention relied upon Order 12 Rule 6 of the Code of Civil Procedure

(5) Before adverting to the arguments of the learned counsel, it would be useful to refer briefly to the relevant Section of the Arbitration Act. Section 14 provides for the signing and the filing of the award in court. Section 15 gives power to the court to modify the award. Section 16 provides for the remission of the award to the arbitrator or umpire for re-consideration. Section 17 provides that where the court sees no cause to remit the award or any of the matters referred to arbitration for re-consideration or to set aside the award, the court shall pass judgment in terms of the award. Section 18 gives power to the court to pass interim orders after the award has been filed in the court. Section 30 provides that the award shall not be set aside except on the grounds mentioned therein. Section 33 provides that any party to the arbitration agreement or any person olaiming under him can apply to the court to challenge the existance or validity of an arbitration agreement or an award or to have the effect of either determined. S. 41 provides that subject to the provisions of the Act and rules made therein, the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings in the Court and to all appeals under the Act.

(6) A study of the Arbitration Act would show that it is a self- contained Code. After an, award is filed in the Court, the parties can, within the prescribed time, impeach the award on the grounds mentioned in section 30 and they can also challenge the existence or validity of the arbitration agreement or the award under section 33. If the court rejects the objections made to the award, it hag to proceed under section 17 and pass a judgment in terms of the award. If the court is of the view that the award requires to be modified or corrected or remitted for re-consideration to the arbitrator, it can proceed under sections 15 and 16 of the Act. There is no provision in, the Arbitration Act similar to Order 12 Rule 6. Section 41 makes only the procedural rules of the Code of Civil Procedure applicable to the proceedings in court under the Arbitration Act. The substantive provision of Order 12 Rule 6 of the same Code will not be applicable.

(7) In the case Mattapalli Chelamayya (Supra) relied upon by the counsel for the petitioner, it was held :-

'IT is true that judgment should be pronounced according to the award, but that does not bar giving effect to the sever- able part of the award if it could be justly done. Departure from the award or a part of the award is barred only in those cases where the award or a severable part of it is lawful and capable of being giving effect to.'

(8) There can be no quarrel with the above stated proposition of law. By now it appears to be a settled law that if an objectionable provision in the award is not separable from the rest, then the award will be altogether bad, but if the invalid part of the award is severable from the valid part then the court will pass judgment regarding the valid part of the award. But in the case in hand the point in issue is different. What the petitioner has asked is that the award in respect of claims 1, 6 and 7 be made a rule of the Court and the rest be set aside and remitted to the arbitrator for reconsideration,. This, in my view, is not permissible. There is no provision in the Arbitration Act to deal with an award piecemeal. The petitioner had claimed interest at bank rate for the amount due. This claim was rejected by the arbitrator. In the prayer clause the petitioner has prayed that the Court may pass judgment in respect of claims 1, 6 .and 7 with interest at the rate of 12 per cent per annum from the date of the reference till the decretal amount is paid. The Court can grant interest only from the date of the decree (see section 29 of the Arbitration Act). The decision of the arbitrator on the claim of interest would be final subject to the decision of the Court. Accordingly, the Court, at this stage, cannot decree interest when the arbitartor has not awarded it. The counsel for the parties have not cited any authority having direct bearing on the point. The matter appears to be rest integra. My finding on the preliminary issue is that the Court cannot pass judgment in, respect. of claims 1,6 and 7 without determining the validity of the disputed portion of the award. In other words the Court cannot pass decrees in stages. I would like to observe that. the issue as framed does not clearly bring out the controversy. There is no controversy that the Court can pass judgment regarding the valid part of the award and set aside the. invalid part provided the two parts are severable. The real controversy, as already stated, is whether the Court can pass judgment regarding a part of the award without waiting for the determination of the disputed portion of the award. I feel there is n,o need to re-cast the issue for the parties understood clearly the point that is in issue.

(9) For the reasons stated the preliminary issue is decided against the petitioner. The costs shall be costs in the cause.

The parties shall now appear before the Deputy Registrar (0) on, 29th August 1977 for further directions.


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