Skip to content


U.P. State Sugar Corporation Ltd. Vs. the State Trading Corporation - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberOriginal Miscellaneous Petition Appeal No. 114 of 1981
Judge
Reported in21(1982)DLT374; 1982RLR459
ActsArbitration Act, 1940 - Sections 28
AppellantU.P. State Sugar Corporation Ltd.
RespondentThe State Trading Corporation
Advocates: F.S. Nariman,; A.T. Patra,; T.K. Ganju,;
Excerpt:
.....never forwarded to the respondent and that there was, thereforee, neither any reference of these disputes to arbitration nor did the arbitrator enter upon the reference in respect of these claims. (8) if all that, thereforee, had happened was an application to the council for a reference of the matter to arbitration under the rules, which was not followed by submission of any claim, and there was neither any reference to arbitration by the council nor did any arbitrator enter upon the reference, i fail to see how it is possible for this court to exercise any power under section 28 of the arbitration act, to enlarge the time for making the award. if no reference of the dispute was made to the arbitrator and he never entered upon the reference and none of the conditions of the clause are..........parties shall be settled by arbitration in accordance with the rules of arbitration of the indian council of arbitration, for short 'the council', and the award made pursuant to it shall be binding on the parties. by their joint letter of march 6, 1979 the association and the federation the disputes between the respondent and the various sugar mills, mentioned in the list enclosed with that letter were referred to the council for arbitration, which was requested to constitute a court with a panel of arbitrators to go into the disputes and give their award. the names of the petitioners and/or of the units of the petitioners to which the petitions relate appear in this list. in the last para of the letter, it was mentioned that on hearing from the council, 'the requisite fee payable, for.....
Judgment:

H.L. Anand, J.

(1) By this petition, and connected petitions O.M.P. No. 115 to 118/81, 135, 141 to 146/81 and 159 to 161/81 under Sections 28 of the Arbitration Act, certain sugar mills seek enlargement of time for making the Award by the Sole Arbitration said to have been appointed in the disputes between certain sugar mills and the State Trading Corporation of India Ltd., respondent arising out of the alleged failure of the respondent to lift certain stocks of sugar agreed to be sold to it for export. The petitions have been made in the backdrop of the following facts and circumstances.

(2) It appears that by an agreement of March 23, 1977, entered into between the National Federation of Coroperative Sugar Factories Ltd., New Delhi, representing the Co-operative Sugar Factories of India, for short 'the Federation' and the Indian Sugar Mills' Association, New Delhi, representing the privately owned or limited sugar companies, for short 'the Association' on the one hand, and the respondent herein, on the other, the respondent agreed to buy 1,25,000 tons of sugar from the various sugar factories represented by these two bodies for purposes of export. Pursuant to the aforesaid agreement individual agreements arc said to have been entered into by the various sugar factories, including the petitioners in these petitions, with the respondent's representative and agent i.e. Indian Sugar Industry Export Corporation Ltd., New Delhi, for short, 'the Corporation', for a certain quantity of sugar to be supplied by each of them individually to make up the total quantity of sugar contracted for under the first above mentioned agreement. It further appears that the disputes arose between the respondent and the various sugar factories as a result of the alleged failure of the respondent to take delivery of the whole or part of the contracted quantity of sugar, which is said to have resulted in a loss to the sugar factories. According to the petitioners, they suffered loss of different amounts on account of the aforesaid failure of the respondent and claimed the amount with interest from it which it failed or neglected to pay and disputed its liability. It further appears that the agreement of March 23, 1977 and the further agreements entered into by the individual sugar mills and the Corporation contained an identical arbitration clause to the effect that the disputes arising between the parties shall be settled by arbitration in accordance with the rules of arbitration of the Indian Council of Arbitration, for short 'the Council', and the Award made pursuant to it shall be binding on the parties. By their joint letter of March 6, 1979 the Association and the Federation the disputes between the respondent and the various sugar mills, mentioned in the list enclosed with that letter were referred to the council for arbitration, which was requested to constitute a Court with a panel of arbitrators to go into the disputes and give their Award. The names of the petitioners and/or of the units of the petitioners to which the petitions relate appear in this list. In the last para of the letter, it was mentioned that on hearing from the Council, 'the requisite fee payable, for the Tribunal as also the documents required in the above case', would be forwarded to the Council. Large number of sugar inills sent their claims pursuant to this reference and Justice V. Bhargava, a former Judge of the Supreme Court, who was appointed as the sole Arbitrator by consent of parties, to enter upon the reference and adjudicate the disputes between the parties, has since made individual Awards in the cases of the various sugar mills directing the respondent to pay the sugar mills different amounts with interest @12% p.a. These Awards were made by the Sole Arbitrator on June 10, 1981. The Arbitrator apparently neither entered upon the reference nor made any Awards in respect of the disputes between the petitioners and the respondent probably because, on account of inadvertence, as claimed by the petitioners, or otherwise, the petitioners did not file their statements of claim either with the Council or before the said Arbitrator. According to the petitioners, they were all along under a bona fide belief that they could file their claims only after receiving notices from the Arbitrator. The petitioners contend that no claims were filed .by them as no notices were received from the Arbitrator. It is in these circumstances that the petitioners pray that the time for making the Award having since expired, the same may be suitably enlarged to enable the said Arbitrator to make the Award in the claims of the petitioners. There is no indication if the claims have since been forwarded by the petitioners to the Council.

(3) The petitions are opposed by the respondent on the ground that the disputes between the petitioners and the respondent were never referred to arbitration and that a batch of individual claims made by some sugar factories were referred for arbitration, but no claim was preferred by the petitioners and that there was, thereforee, no question of extension of time for making the Award. It is contended that the petitions have been filed with a view to get the benefit of Awards made in the case of the other sugar mills even though no claim had been made by the petitioners within the period of limitation. The respondent denies that any reference was made to the Council on March 6, 1979 and contend that from the letter of the Council dated February 14, 1980, received by the respondent it appeared that only 157 cases were referred to the Arbitrator and the petitioners do not figure as claimants in the list annexed to the said letter, apparently because no claim had, in fact, been preferred by the petitioners. It is further pointed out that from the list annexed to the said letter, it would appear that some of the petitioners had preferred claims in respect of some of their units, which have since been adjudicated by the said Arbitrator.

(4) At the bearing of these petitions, it was not disputed that Joint letter of March 6, 1979 of the Federation and the Association to the Council referred to the disputes that had arisen between the members of the two bodies and the respondent and the hat enclosed with that letter was a comprehensive list of all the sugar mills, on whose behalf the agreement of March 23, 1977 had been entered into, including the petitioners and/or the units of the petitioners to which the petitions relate. It was also not disputed that the letter purported to invoke the arbitration clause and referred the matters to the Council for arbitration, requesting the Council to constitute a Court with a panel of arbitrators to go into the various matters. It was also not disputed that the petitioners did not take any steps pursuant to this communication and neither sent their claims to the two bodies representing them nor to the Council nor to the Arbitrator, who was eventually appointed to decide the disputes. It was also not disputed that the respondent was notified by the Council of such of the claims as were preferred by the sugar mills before the Councilor the Arbitrator and that the list of 157 cases, enclosed with the letter of February 14, 1980, from the Council to the respondent did not contain the names of the petitioners or the units of some of the petitioners) to which the present petitions relate. It was also not disputed that none of the petitioners received any notice either from the Council or from the Arbitrator pursuant to the communication of March 6, 1979. It was also not disputed that if the disputes between the petitioners and the respondent were never referred to arbitration, any reference now would be beyond time.

(5) On the admitted hypothesis, the first question that arises is as to whether the disputes between the petitioners and the respondent have ever been referred to the Council for arbitration under its Rules. On the material on record this question has to be answered in the affirmative. Disputes had admittedly arisen between the petitioners and the respondent and the two bodies, representing the various sugar mills, including the petitioners, made a reference of all these disputes to the council by their letter of March 6, 1979. By this letter the two bodies sought to enforce the arbitration clause and invoked Rule 15 of the Rules, of Arbitration of the Council. This is how Rules 15, 16 and 17 run :-

'15. In every case where a dispute or difference has arisen between parties who have agreed that such dispute or difference shall be referred to decision under these Rules, an application for arbitration together with such particulars as are desired may be addressed by either party or any of the parties to the Registrar. The party applying for arbitration (applicant) shall along with the application submitting the claim pay the registration fee and furnish to the Registrar a statement containing: (a) the names in full of the parties to the dispute and their addresses, (b) full details of the applicant's case, (e) original (or photostat copies) of the arbitration agreement, any contract or agreement out of or in connection with which the dispute has arisen and such other documents and information relevant or relied upon. 16. If any Court makes an order directing that an arbitration be held under these Rules, in addition to the documents listed in Rule 15 of these Rules, the order of that Court or a copy thereof shall accompany the application for arbitration. 17. On receipt of an application for arbitration, the Registrar shall have absolute discretion to accept or reject the said application. The Registrar is not bound to give reasons for the exercise of his discretion. If the Registrar has rejected the application for arbitration, the party who made it may apply to the Court for suitable directions. Before deciding on the application for arbitration, the Registrar may ask the parties for further information and in particular for a short description of their claims, if such description has not been supplied already.'

(6) While the Council pursued the various claims which were filed by the various sugar mills pursuant to this reference, it did not take any further step in initiating the process of arbitration in the case of sugar mills, which failed to submit any claim. The Council nevertheless neither asked these mills for particulars of their claims nor apparently rejected the application in relation to them as the Council is empowered to do under Rule 17. When once the Council rejects the application, the applicants would be entitled to take the matter to an appropriate Court for suitable directions as envisaged in the Rule. The respondent's contention is well-founded when it says that the claim of the petitioners were never forwarded to the respondent and that there was, thereforee, neither any reference of these disputes to arbitration nor did the arbitrator enter upon the reference in respect of these claims. The Council would nevertheless be still seized of the application in relation to the petitioners unless it has already rejected the application, expressly or impliedly, so far as it related to the petitioners. The initial reference having been made to the Council of all the disputes, including the disputes between the petitioners and the respondent for arbitration in accordance with the aforesaid Rules, it is for the petitioners to pursue the application directly or through the Federation or the Association and to ask the Council to take further steps in accordance with the Rules. I should not, however, be taken as having expressed any opinion if the application has been expressly or impliredly rejected. That question may arise only after the petitioners purse the matter with the Council. I also express no opinion if the application to the Council for arbitration under the Rules of the council was tantamount in law or in terms of the Rules to reference to arbitration.

(7) The reference of the disputes to the Council by the Federation and the Association under Rule 15, however, does not necessarily imply that, as in the case of the other sugar mills, the disputes were referred to the Sole Arbitrator or that the Sole Arbitrator entered upon the reference. The petitioners never submitted their claims with the result that it was never referred by the Council to any panel of Arbitrator or any of the bench of Arbitrator to the Sole Arbitrator and that being so the Sole Arbitrator could not have possibly entered upon the reference in ralation to these disputes.

(8) If all that, thereforee, had happened was an application to the Council for a reference of the matter to arbitration under the Rules, which was not followed by submission of any claim, and there was neither any reference to arbitration by the Council nor did any arbitrator enter upon the reference, I fail to see how it is possible for this Court to exercise any power under Section 28 of the Arbitration Act, to enlarge the time for making the Award. Clause (3) of the First Schedule to the Act, one of the implied con dition of an arbitration agreement, provides that the arbitrators shall make their award within four months 'after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement'. Section 28 envisages that the Arbitrator, seized of the reference, had entered upon it and whether or not Award has been made, the time for making the Award has expired. If no reference of the dispute was made to the arbitrator and he never entered upon the reference and none of the conditions of the clause are satisfied, the time could not be said to have started running. The way I have looked at the reference to the Council and the stage at which the reference remains at present, because of the failure of the petitioners to take steps pursuant to it, the petitions are premature. The petitions accordingly fail and are hereby dismissed, leaving the parties in the peculiar circumstances of this case, to bear their respective costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //