- (1.) FACTS : On perusal of the pleadings as well as documents disclosed in the proceedings before the arbitrator as well as before the learned Single Judge and included in paper book it appears that the parties agreed to have a business transaction under which the appellant would supply to the respondent wire required for telecommunication purpose. The facts reveal that the respondent issued a purchase order on December 5 1985 as would appear from page 55 onwards of the paper book. The appellant contended before us that the agreement dated December 5 1985 was the parent agreement under which different purchase orders were issued being one on December 5 1985 followed by three others dated September 1 1986 May 27 1987 and March 7 1988 respectively. The respondent however contended that all those four purchase orders were distinct and would constitute a separate agreement and had no connection with the first agreement dated December 5 1985. Under the contract the main raw material being the steel was to be arranged by the respondent from various steel plants belonging to the Central Government. Facts remain that such arrangement could not be done and there had been some difficulty on the part of the parties to work on such terms being manufacture of the wires out of the steel to be supplied by SAIL. It was the case of the appellant that they had to purchase steel from open market resulting in substantial involvement of financial resource which could not be anticipated. According to the appellant it was an additional burden upon them. Supplies were made by the appellant from time to time. Payments were made by the respondent from time to time. Last of such payment was made on August 13 1991. The respondent contended it was related to the third agreement/purchase order dated May 27 1987 whereas the appellant contended that there was only one parent agreement under which the payments were made from time to time last of which was received by them on August 13 1991. Dispute arose when the appellant demanded additional sums as and by way of compensation on two counts - i) reimbursement of the additional sums which they incurred by purchasing steel from open market in view of the respondent 's inability to supply the same through SAIL. ii) interest on delayed payment. In the backdrop as discussed above the appellant vide letter dated February 1 1994 appearing at page 228231 of the paper book invoked the arbitration clause contained 4 in the agreement and demanded arbitration in terms of the agreement. Plain reading of the said letter reveals that the appellant claimed a sum of Rs.13.32 crores approximately out of which Rs.92 lakhs approximately was claimed on account of excess cost incurred by them on purchase of wire rods from market and the balance towards interest and damages suffered by them. The respondent initially vide letter dated February 17 1994 appearing at page 233 informed the appellant that the said letter was ''under examination''. Vide letter dated May6 20 1994 appearing at pages 234238 the respondents denied the claim and refused to refer the dispute to arbitration. Being aggrieved by the said reply of the respondent the appellant filed a writ petition before the learned single Judge of this Court on January 11 1995 inter alia praying for a direction upon the respondents to consider the claim of the appellant. The learned single Judge vide judgment and order December 12 1995 appearing at page 435 asked the respondent to appoint an arbitrator in terms of the arbitration clause and refer the dispute for adjudication. Being aggrieved by the said order the respondent preferred an appeal before the Division Bench. The Division Bench vide judgment and order dated February 19 1997 appearing at pages 436441 set aside the said judgment and order and granted liberty to the appellant to move the arbitration Court. Their Lordships observed '' ... ... ... ... it will be open to the forum before which any application under Section 20 may be filed to consider the issue independently of any observation of this Court''. The Division Bench further observed ''this decision however should not be taken to have prejudged any issue with regard to the rights of the parties inter se relating to the enforcement of any arbitration agreement between them''. When the issue was pending before the Division Bench vide ordinance dated January 26 1996 the Arbitration Act of 1940 was repealed and the Arbitration and Conciliation Act 1996 came into force. The said ordinance was transformed into a regular statute with effect from August 22 1996. On or about April 16 1997 the appellant filed an application under Section 11 of the said Act of 1996 before the learned single Judge inter lia praying for appointment of arbitrator pursuant to the liberty granted by the Division Bench. The learned single Judge allowed the application and directed the Chief General Manager Telecommunication Department either to adjudicate the dispute as arbitrator or to nominate any other person to act as arbitrator in terms of the Arbitration Agreement. The learned single Judge passed the said order of reference vide order dated December 3 1908 appearing at pages 442444. The Chief General Manager appointed the General Manager (Finance) Smt. S. Purokayastha as arbitrator. The arbitrator upon hearing the rival contentions of the parties published a reasoned award appearing at pages 500516 of the paper book. The arbitrator awarded a sum of Rs.4823819/ and Rs.811486/ as and by way of principal claim and Rs.48151180/ and Rs.6969857/ as and by way of interest calculated at the rate of 18.5 per cent per annum on quarterly compounded basis. Being aggrieved by the said award the respondent filed an application for setting aside of the award before the learned single Judge. Although various points were urged before His Lordship perusal of the judgment of His Lordship reveals that three major issues were considered by the learned Judge on being invited by the parties : i) The Division Bench granted specific liberty to the appellant to move under the old arbitration law whereas the appellant proceeded under the new law and as such the very reference was bad. ii) The learned Judge could not have directed adjudication of the dispute through arbitration on the basis of a claim that was hopelessly barred by law of limitation. iii) Assuming the appellant had a claim they could not have claimed any interest which was specifically barred under the agreement specially Clause 17 thereof. The learned single Judge found favour with the contention of the respondents and set aside the award. Being aggrieved by the judgment and order by the learned single Judge dated October 15 2004 appearing at pages 621 to 640 the appellant preferred the instant appeal which was heard by us on the above mentioned dates.
(2.) CONTENTION OF THE APPELLANT : Mr. Jayantra Mitra learned senior counsel appearing for the appellant argued on the three principles issued referred to above. According to Mr. Mitra the Act of 1940 stood repealed by the ordinance dated January 26 1996 which was substituted by a regular statute being the said Act of 1996 that came into force with effect from August 22 1996. The appellant demanded arbitration in 1994. The respondent refused such prayer. Having no other alternative the appellant approached the writ Court. The writ Court vide order dated December 12 1995 directed resolution of dispute through arbitration. Till that date the said Act of 1940 was in force. The respondent approached the Division Bench. The Division Bench vide judgment and order dated February 19 1997 set aside the order of the Single Bench holding that the said order was bad as it was passed in a wrong proceeding. The Division Bench granted liberty to the appellant to approach the arbitration Court being the proper forum. While doing so the Division Bench possibly overlooked the fact that the old law had since been repealed and the new law by that time came into effect. Hence the observation of the Division Bench should be construed as a liberty to approach the arbitration Court in accordance with law. As and by way of an alternative submission Mr. Mitra contended that assuming the Division Bench directed application to be filed under Section 20 of the old law such direction must be construed as a direction to approach for identical relief under the appropriate law being the new law as the old law stood substituted by the new law. Hence according to Mr. Mitra the new law was applicable and the learned Judge was wrong in holding otherwise. On the issue of limitation Mr. Mitra contended that the parent agreement was executed on December 5 1985. The subsequent purchase orders were issued under the parent agreement. There was no separate agreement entered into for the second third and fourth purchase order. Hence the payments received under all the four purchase orders should be construed as payment under the parent contract dated December 5 1985. The last of such payment was received on August 13 1991 whereas the demand for arbitration was made on February 1 1994. Hence the claim was well within the period of limitation. Elaborating his argument on the point Mr. Mitra contended that the demand for arbitration was made within three years from the date of last payment. The respondents vide letter dated May 20 1994 denied arbitration. Within a few months the appellant approached the writ Court. The Writ Court passed an order on December 12 1995 that was set aside by the Division Bench vide order dated February 19 1997 granting liberty to the appellant to approach the arbitration Court within two months being April 16 1997. The appellant approached the arbitration Court and filed application under Section 11 of the said Act of 1996. Hence the claim was not in any way barred by limitation. According to Mr. Mitra the learned Judge went on a wrong perception as would appear from page 634 to 637. On the issue of interest Mr. Mitra contended that the claim made in arbitration was principally on account of difference of price which the appellant had to incur purchasing steel from open market. Such amount was paid by the appellant contemporaneously during the period 1985 to 1988 when supplies were made by the appellant to the respondent after manufacturing the wire. The said amount was not paid despite repeated reminders. Hence the claimant was entitled to interest on the unpaid outstanding. Mr. Mitra further contended that because of blockage of such capital the appellant had to pay interest to its banker at the usual bank lending rate and that too compounded on quarterly rate. Hence the claimant was entitled to have reimbursement of such interest which the claimant/appellant had to pay to its banker. According to Mr. Mitra the learned Judge possibly overlooked such issue. On a query made by the Court Mr. Mitra submitted that even if the interest was calculated at the rate of 8% per annum (flat) a sum of Rs.6762366/ would become payable for the period of February 1994 to September 2000 being the period when the arbitration was demanded and the award was published. A calculation sheet to the said extent was also handed over to Court by Mr. Mitra. In support of his contentions Mr. Mitra cited the following decisions: i) (Ebrahim Kassam vs. N.I Oil Industries, 1951 AIR(CAL) 230 ) ii) (Saha & Co. vs. Ishar Singh Kripal Singh & Co., 1956 AIR(CAL) 321) iii) (Shapoor Fredoom Mazda vs. Durga Prosad Chamaria & Ors., 1961 AIR(SC) 1236) iv) (M/s. Lakshmiratan Cotton Mills Co. Ltd. vs. The Aluminium Corporation of India Ltd., 1971 AIR(SC) 1482) v) (Municipal Corporation of Delhi vs. M/s. Jagan Nath Ashok Kumar and Another, 1987 AIR(SC) 2316 ) vi) (Secretary to Government of Orissa and Others vs. G.C. Roy, 1992 AIR(SC) 732 ) vii) Renusagar Power Co. Ltd. vs. General Electric Co., 1994 AIR(SC) 860 ) viii) Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd., 1999 AIR(SC) 3923 ) ix) (Union of India vs. Popular Construction Co., 2001 8 SCC 470) x) (Delhi Transport Corporation Ltd. vs. Rose Advertising, 2003 6 SCC 36) xi) (SBP & Co. vs. Patel Engineering Ltd. & Another, 2005 8 SCC 618)
(3.) CONTENTION OF THE RESPONDENT : Opposing the appeal Mr. Debabrata Saha Roy learned counsel appearing for the respondent contended that the Division Bench categorically granted liberty to approach the Court under the old Act. Hence without any clarification being obtained from Division Bench the appellant could not have proceeded under the new Act. The order passed thereunder and the subsequent proceedings were thus vitiated by illegality. As and by way of an alternative submission Mr. Saha Roy contended that if Section 21 of the said Act of 1996 could be read along with Section 85(2) thereof it would appear that although the old law stood repealed the proceeding commenced under the old Act was permitted to continue to be governed by the old law and the new law would have no application. On the commencement Mr. Saha Roy contended that the day when the arbitration was demanded by the appellant the ball started rolling and that should be the relevant date for the purpose of commencement of the arbitration proceeding. Hence the new law would have no application. On the plea of limitation Mr. Saha Roy contended that the contract dated December 5 1985 would relate to the first purchase order. In this regard he referred to page 366 of the paper book wherein the appellant requested for further orders. According to Mr. Saha Roy considering such request the respondents issued the second third and fourth purchase orders appearing at pages 158 164 and 166 respectively. The 13 payment received on August 13 1991 related to the fourth purchase order. Hence the claims made under other three purchase orders were barred by limitation and could not be saved by virtue of last payment dated August 13 1991. On the issue of interest Mr. Saha Roy contended that there could not have been any claim on principal amount. Hence the claim for interest had no basis. According to Mr. Saha Roy the first purcahse order was given on December 5 1985. No complaint was made contemporaneously as would appear from page 148. The appellant on the other hand made request for issue of further order as would appear from page 366. Had there been any such additional claim made by the appellant contemporaneously the respondents would not have issued the second third and fourth purchase orders. Hence the principal claim was without any basis and the interest claim made thereunder had no basis. In this regard he relied on the Apex Court decision reported in (State of Jammu and Kashmir and Another vs. Dev Dutt Pandit, 1999 AIR(SC) 3196). In support of his contention on the issue of old lawnew law controversy and limitation Mr. Saha Roy relied on the following decisions : 14 i) (Municipal Corporation of Delhi vs. M/s. Jagan Nath Ashok Kumar and Another, 1987 AIR(SC) 2316 ) ii) (Shetty 's Constructions Co. Pvt. Ltd. vs. Konkan Railway Construction & Another, 1998 5 SCC 599) iii) Thyssen Stahlunion GMBH vs. Steel Authority of India Ltd., 1999 9 SCC 334) iv) (Milkfood Ltd. vs. GMC Ice Cream (P) Ltd., 2004 7 SCC 288) v) (Neeraj Munjal & Others (III) vs. Atul Grover & Another, 2005 5 SCC 404) ;