UNION OF INDIA Vs. M/S CENTRAL INDIA MACHINERY MFRS. CO. LTD
LAWS(DLH)-2007-1-195
HIGH COURT OF DELHI
Decided on January 11,2007

UNION OF INDIA Appellant
VERSUS
M/s Central India Machinery Mfrs. Co. Ltd. Respondents

JUDGEMENT

S.L. Bhayana, J. - (1.) THIS is an appeal arising out of the order of learned Additional District & Sessions Judge, Delhi dated 13.02.1984 whereby the learned Additional District & Sessions Judge dismissed the suit of the appellant. The brief facts of the case are that a tender was floated by the appellant/Union of India on 19.12.1968 for supply of 600 numbers of guide on bogie frames. Various parties submitted tenders including the respondent but the tender of respondent was accepted by the appellant for supply of the said material. The respondent agreed to supply the material @ Rs. 146/ - per piece. The contract entered into between the parties was governed by the conditions contained in Form -68 of DGSND (revised) as amended upto date. Some letters were exchanged between both the parties on the point of supply of raw material but ultimately the respondent did not perform its part of the contract. The appellant served a notice on the respondent to supply the material by 15.11.1974 failing which the contract shall be cancelled at the risk and cost of the respondent. Despite service of the said notice, the respondent failed to make any supply of the material to the appellant. Ultimately, the contract between the parties was cancelled at the risk and cost of the respondent. The appellant readvertised the tender and a risk -purchase contract was entered into with M/s Uma Engineering Works, Howrah. As a result of this risk -purchase contract, the appellant suffered a loss of Rs. 40,812/ -. The appellant claimed this amount from the respondent. The appellant was also entitled to recover Rs. 1,421.85 from the respondent on the difference of freight charges. The appellant claimed interest @ 12% per annum on the said amount which comes to Rs. 37,165/ - The appellant claimed a total amount of Rs. 79,398.85 from the respondent in the said suit filed by the appellant against the respondent.
(2.) WRITTEN Statement was filed by the respondent in which it claimed that there was an arbitration clause in the agreement entered into between the parties. The said arbitration clause was invoked by the appellant and the matter was referred to the sole arbitrator Dr. Bakshish Singh to resolve the dispute between the parties. Dr. Bakshish Singh held the arbitration proceedings but the appellant failed to submit any claim before him and the arbitrator closed the case for non -prosecution and made an award. It is submitted that the present suit is, therefore, not maintainable. We have heard learned counsel for the parties and perused the record carefully. Learned counsel for the appellant has stated that admittedly there was an arbitration clause in the agreement entered into between the parties. He also admitted that the dispute was referred to Dr. Bakshish Singh, the sole arbitrator, under the agreement. He has also admitted that the arbitrator held the arbitration proceedings on certain dates. On 21.06.1977, the arbitrator closed the case of the appellant for non -prosecution as the appellant failed to file any claim/statement before the arbitrator. Thereafter, a petition u/s 28 of Arbitration & Conciliation Act seeking extension of time before the arbitrator, was moved by the appellant/UOI before the court but the said petition was also dismissed on 01.05.1978 by the learned Additional District & Sessions Judge. The learned court held that as no reference was pending before the arbitrator, the question of extension of time did not arise. Learned counsel for the appellant has further submitted that thereafter appellant appointed Shri P.S. Kaicker as arbitrator which was challenged by the respondent before the court of learned Additional District & Sessions Judge. The respondent filed a petition u/s 33 of the Arbitration & Conciliation Act and Challenged the said appointment. The said petition of the respondent u/s 33 of Arbitration & Conciliation Act was also allowed by the learned Additional District & Sessions Judge on 20.08.1980. The learned Additional District & Sessions Judge observed in the said order that the arbitration stood exhausted and the appellant was not entitled to invoke the arbitration clause any further. Thereafter, the appellant/UOI filed the present suit. Learned counsel for the appellant has submitted that the appellant has no other option but to file the present suit as the learned court of Additional District & Sessions Judge did not extend the time of the arbitrator for making an award. He further contended that even the appointment of Shri P.S. Kaicker as an arbitrator was turned down by the court of learned Additional District & Sessions Judge. So, the appellant was compelled to file the present suit. He has further stated that the suit of the appellant is maintainable and it should be adjudicated upon by the learned trial court. He has further submitted that the learned trial court has erred in dismissing the suit of the appellant. Learned trial court failed to appreciate that the appellant had no other efficacious remedy except to file the present suit to recover the amount of Rs. 79,398.85 against the respondent. He has further stated that the impugned order dismissing the suit of the appellant may be set aside and the appeal of the appellant may be allowed.
(3.) ON the other hand, learned counsel for the respondent has submitted that there is an arbitration clause in the agreement which was entered into between both the parties. Under the said arbitration agreement, the appellant had appointed Dr. Bakshish Singh as the sole arbitrator to reslove the disputes between the parties .Dr. Bakshish Singh held the arbitration proceedings on various dates. The said arbitration on 21.06.1977 held that the appellant/UOI has not filed its claim/statement. The case was closed for non -prosecution. The counsel for the respondent further submitted that once the reference is made to the arbitrator, then it is the arbitrator who has jurisdiction to decide the point in controversy and the court cannot assume jurisdiction to decide the same. In this case also, the dispute was referred to Dr. Bakshish Singh, the sole arbitrator who ultimately closed the case for non -prosecution as the appellant had failed to file its claim before the said arbitrator. He has further submitted that thereafter the appellant had moved the court for extension of time of the arbitrator to adjudicate upon the reference and the said petition was also dismissed by the court of learned Additional District & Session Judge. Thereafter, the appellant had appointed another arbitrator Shri P.S. Kaicker to enter upon the reference. Even that appointment was challenged by the respondent u/s 33 of the Arbitration & Conciliation Act and the court of learned Additional District & Sessions Judge struck down the appointment of the new arbitrator, Shri P.S. Kaicker as it was done illegally by the appellant. Learned counsel for the respondent has further submitted that once an award has been passed by the arbitrator, the court has no jurisdiction to assume jurisdiction over the matter and the court cannot decide the point in controversy as the court does not have the power to do the same under the law.;


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