Case BriefsHigh Courts

Sikkim High Court: Jitendra Kumar Maheshwari, CJ. allowed a writ petition which was filed assailing the updated Award passed by the Lok Adalat though signed on 26-06-2015.

The facts were that petitioner 1 was the wife of Defendant 1 in the suit and petitioners 2 and 3 were his sons. It was their grievance that they were deserted by defendant 1 and the suit property in which they were residing had been partitioned without joining, noticing them and affording opportunity in violation of the principle of natural justice.

In the said partition suit, a compromise deed dated 22-06-2015 was filed and the respondents only had entered into the compromise partitioning the entire property by collusion and fraud, which originally belonged to Late Kashi Nath Prasad. It was urged by the counsel of respondent that the suit was filed merely to partition of the property which is recorded in the joint name, however, in such a case the claim of the petitioner is through defendant no.1, which is clearly protected by virtue of settlement arrived between the parties of the suit. The Award of the Lok Adalat does not warrant any interference in this petition, therefore, maintaining the Award, the Writ Petition may be dismissed.

The Court after perusing the records and hearing the parties concluded that the issue involved in the present case was squarely decided by the judgment of the Bhargavi constructions v. Kothakapu Murthyam Reddy, Civil appeal no.11345 of 2017 decided on 07-09-2017 and State of Punjab v. Jalour Singh, (2008) 2 SCC 660 the petition under Articles 226 and/or 227 of Constitution of India challenging the Award of the Lok Adalat was tenable. The Court observed that there is no cable of doubt that the Award of the Lok Adalat can be assailed by way of petition under Articles 226 and/or 227 of the Constitution of India.

The Court held that in place of accepting the plea that the compromise by virtue of collusion and fraud and the Award so passed in the same fashion; but in view of the observation so made it is suffice to observe the Award so passed by the Lok Adalat in view of the pleadings of the suit without joining all the parties and without affording an opportunity is not proper. Writ Petition was allowed, the Award passed by the Lok Adalat was set aside.[Munni Devi v. Dul Dul Prasad, 2021 SCC OnLine Sikk 82, decided on 02-07-2021]


Suchita Shukla, Editorial Assistant has reported this brief.


Appearance:

For Petitioners: Mr Nayan Nepal

For Respondents: Mr J.B. Pradhan, Sr. Advocate Mr D.K. Siwakoti, Ms Prarthana Ghataney, Ms Ranjeeta Kumar

Case BriefsHigh Courts

Delhi High Court: V. Kameswar Rao, J., refused to interfere with the award passed by the Arbitrator and dismissed a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996.

Instant petition was filed under Section 34 of the Arbitration and Conciliation Act.

Chronology of Events

Present petition was filed before the District Court and vide Order dated 3-01-2017 the Additional District Judge directed the parties to appear before the District and Sessions Judge.

Petitioner sought adjournment before the District and Sessions Judge on the ground that a Transfer Petition was pending adjudication before this Court. The Transfer Petition was disposed of as infructuous vide order December 5, 2017.

District Judge noted the respondent’s counsel that the petitioner has not conducted the matter with due diligence and good faith and noted that the question of due diligence not being within the jurisdiction of the said Court placed this matter before the Registrar General of this Court.

Factual Matrix

Petitioner and respondent entered into a non-exclusive Distributorship Agreement. Subsequently, parties entered into annual agreements for the years 2007, 2008 and 2009, and in terms of the said agreement, petitioner placed purchase orders on the respondent for the supply of goods, which in turn were sold by petitioner to its customers.

What led to the invocation of arbitration and adjudication of disputes?

Respondent stated that it had supplied goods to the petitioner against various purchase orders and raised invoices accordingly and further claimed that the petitioner had failed and neglected to make payments against invoices for sums aggregating Rs 54, 14, 934, which became due and payable.

Petitioner in view of the above, issued 9 cheques, however, the said cheques were dishonoured on presentation.

Cheques for security?

According to the petitioner the said cheques were issued at the instance of the respondent only as a security for any payment that may become due. In addition to the claim for unpaid invoices, the respondent also raised claims for non-supply of ‘C’ Forms and the consequent liability of sales tax before the Arbitrator.

Petitioner submitted that parties were having good business relations for the last 14-15 years, however, the petitioner started receiving complaints from its buyers regarding breakage of soft ferrite components. Even though the respondent assured to replace the broken goods with new ones, it failed to do so.

Petitioner’s stance on cheques being dishonoured

It was stated that the cheques were provided on the request of the General Manager (Marketing) of the respondent on June 26, 2009, for depicting the same in the books of Accounts for quarterly ending for security purposes as to cover the exposure limit as per Distributorship Agreement and on the assurance that they shall not be presented without consent of the petitioner. The cheques were not returned even after repeated requests of the petitioner, thereby forcing the petitioner to write a letter to its Bank, not to honor the said cheques.

Arbitrator concluded that a sum of ₹54,14,934/- was recoverable by the respondent/claimant from the petitioner against its outstanding dues.

The arbitrator held that a net amount of ₹36,92,423/- was recoverable by the respondent/claimant from the petitioner plus a sum of Rs.1,85,000/- towards the arbitration fee and actual expenses) along with interest @ 12.25% p.a. on Rs 1, 85, 000/-.

Analysis, Law and Decision

Firstly, the Court dealt with the contentions of petitioner’s Advocate Rohit Goel, that the award passed by the Arbitrator was liable to be set aside as it was in violation of Chapter XI of the CPC; it doesn’t bear signatures on each and every page and the award was typed in 3 different fonts on 3 different types of sheets.

Bench for the above submission stated that the reference made to Chapter XI was an error. Reference was intended to Part I of the CPC wherein Section 33 refers to a Judgment and a Decree. With regard to the award being typed in different fonts, the same shall not make the award invalid and the same was not supported by any rule/law.

Competency of Authorised representative of respondent – Laxmi Dutt Sharma (L.D. Sharma) sign, verify and file the claim petition in absence of any resolution was concerned, Bench referred to the reasons given by Arbitrator to determine the competency of the representative.

Petitioner’s counsel did not make any submission to contradict the arbitrator’s conclusion for the above-stated.

Arbitrator rightly relied upon the decision of Supreme Court in United Bank of India v. Naresh Kumar, (1996) 6 SCC 660, wherein it was held that on a reading of Order VI Rule 14 together with Order XXIX Rule 1 CPC, it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order XXIX by virtue of the office which he holds, can sign and verify the pleadings on behalf of the corporation. Additionally, de hors Order XXIX Rule 1 of CPC, a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf, which would be regarded as compliance with the provisions of Order VI Rule 14 CPC.

Supreme Court also held that there is a presumption of valid institution of a Suit once the same is prosecuted for a number of years.

Bench also found the Supreme Court’s decision laid above to be satisfying in the present case as the litigation between the parties had commenced in the year 2010 and already 6 years had already elapsed on the date of award.

High Court reiterated that Arbitrator was justified in his conclusion on the competency of L.D. Sharma to file the claim petition on behalf of the respondent company.

Absence of a complete, authenticated and duly stamped statement of account

Petitioner’s counsel as per the above-stated reason submitted that the arbitrator could not have granted the amount.

Bench stated that respondent had submitted that soft ferrite were supplied for which the amount was not paid by the petitioner. When the petitioner was informed that no supply would be made in the future if previous dues were not cleared, petitioner issued 9 cheques towards discharge of their part liability and the said cheques were dishonoured and returned.

Further, the Court noted that witness did not deny the purchase orders; invoices and cargo receipts. Arbitrator was right in relying upon Ex. R-66, which was a communication of the respondent as per which an amount of Rs 54,14,934 was payable and after adjustment of TOD, commission, the amount payable by the petitioner was Rs 40,95,221.

Arbitrator was justified in holding that the said amount was recoverable towards outstanding dues and after adjustment of certain amounts in favour of the petitioner, granted a sum of Rs.36,92,423/- to the respondent herein.

Whether respondent was justified in terminating the Distributorship Agreement?

Clause 8.1of the Distributorship Agreement also reads as under:

The Company reserves the right to terminate the agreement at any time at its discretion without assigning any reason therefor.”

Respondent had a justifiable reason for the respondent to terminate the Agreement in as such as that no payment of invoices worth Rs 54,14,934 was forthcoming from petitioner.

Petitioner, in an email, had itself expressed that it was not possible to continue to associate itself with the respondent.

Hence there was justification for the termination of the Distributorship Agreement by the respondent.

Further, L.D.  Sharma, CW-1 had stated during his cross-examination that the goods found defective were replaced, the defect in quality was of component T-10 due to reasons of saturation and variation in AL. Petitioner had suffered no loss.

Nothing on record was brought to show that the petitioner had to pay the amount claimed as damages to its customers.

High Court found Advocate Bharat Chugh’s reliance on Associate Builders  v. Delhi Development Authority, (2015) 3 SCC 49  justified.

Bench also stated that Supreme Court followed the test of judicial review as laid down in Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49, in a plethora of judgments and the recent one being Anglo American Metallurgical Coal Pty. Ltd v. MMTC Ltd.,  (2021) 3 SCC 308.

In view of the above discussion, the petition was dismissed.[Pragya Electronics (P) Ltd. v. Cosmo Ferrites Ltd., 2021 SCC OnLine Del 3428, decided on 23-06-2021]


Advocates before the Court:

For the petitioner: Mr. Rohit Goel Advocate

For the Respondents: Mr. Bharat Chugh & Mr. Sujoy Sur, Advocates

Case BriefsHigh Courts

Madras High Court: The Division Bench of Pushpa Sathyanaryana and S. Kannammal, JJ., revised the amount of compensation awarded to the claimant in a motor accident claim and enhanced it from Rs 30,89,430 to Rs 83,35,000.

Instant appeal was preferred challenging the decision and decree of the Motor Accident Claims Tribunal.

Deceased was proceeding in a two-wheeler, driver of the lorry drove the vehicle in a rash and negligent manner, dashed against two-wheeler. Due to the said impact, the deceased sustained injuries and died.

In view of the above, legal heirs – appellants/claimant of the deceased filed claim petition.

Insurance Company submitted that the accident occurred due to the carelessness and negligence on the part of the deceased and the deceased had not possessed any valid driving licence.

Tribunal, after considering the oral and documentary evidence, held that the accident had occurred due to the drunken driving of the deceased and also because of the rash and negligent driving of the driver of the first respondent and fixed the liability at 50:50.

Analysis, Law and Decision

High Court noted that in the post-mortem report no mention about the presence of alcohol was there.

Court added that having failed to prove that the accident occurred due to the drunken driving of the deceased, contributory negligence of 50% could not be attributed to the deceased.

From the sketch placed on the investigation report, it represented that the deceased was going from South to North on the left extreme of the road and the offending vehicle, namely, the lorry which was coming in the opposite direction hit the deceased and he died. Therefore, even on that ground, negligence cannot be attributed to the deceased.

For proving an offence under Section 185 of the Motor Vehicles Act, 1988, breath test is mandatory as per Section 203 of the MV Act.

Since the above was not satisfied, it was concluded that the deceased was not in a drunken state.

10% was deducted from the compensation on the ground that the deceased did not possess the valid driving licence

For the above contention, it was stated that he had only a learners licence. It is not the case of the second respondent that a person having LLR cannot ride on the road.

Though it is stated that a person having LLR and riding or driving should have an Instructor with them, it does not disqualify a person from riding a vehicle.

Award of the Tribunal was enhanced to Rs 83,35,000 from 30,89,430.[Kuralvani v. Kathirvelan, 2021 SCC OnLine Mad 2232, decided on 31-03-2021]


For Advocates before the Court:

For Appellants: Mr.I.Pinaygash

For R – 2 : Mr.B.Rajesh Saravanan

Case BriefsSupreme Court

Supreme Court: The bench of Indu Malhotra* and Ajay Rastogi, JJ was posed with the question as to whether the period of limitation for filing the Petition under Section 34 of the Arbitration and Conciliation Act, 1996 would commence from the date on which the draft award is circulated to the parties, or the date on which the signed copy of the award is provided. Going with the latter, the Court held that the period of limitation for filing objections would have to be reckoned from the date on which the signed copy of the award was made available to the parties.

“There is only one date recognised by law i.e. the date on which a signed copy of the final award is received by the parties, from which the period of limitation for filing objections would start ticking. There can be no finality in the award, except after it is signed, because signing of the award gives legal effect and finality to the award.”

Below are the key points highlighted by the Court:

  • Section 31 (1) is couched in mandatory terms, and provides that an arbitral award shall be made in writing and signed by all the members of the arbitral tribunal.

“If the arbitral tribunal comprises of more than one arbitrator, the award is made when the arbitrators acting together finally express their decision in writing, and is authenticated by their signatures.”

  • An award takes legal effect only after it is signed by the arbitrators, which gives it authentication. There can be no finality of the award, except after it is signed, since signing of the award gives legal effect and validity to it.
  • The making and delivery of the award are different stages of an arbitration proceeding. An award is made when it is authenticated by the person who makes it. The statute makes it obligatory for each of the members of the tribunal to sign the award, to make it a valid award. The usage of the term “shall” makes it a mandatory requirement. It is not merely a ministerial act, or an empty formality which can be dispensed with.
  • The legal requirement under sub-section (5) of Section 31 is the delivery of a copy of the award signed by the members of the arbitral tribunal / arbitrator, and not any copy of the award. On a harmonious construction of Section 31(5) read with Section 34(3), the period of limitation prescribed for filing objections would commence only from the date when the signed copy of the award is delivered to the party making the application for setting aside the award.

“If the law prescribes that a copy of the award is to be communicated, delivered, dispatched, forwarded, rendered, or sent to the parties concerned in a particular way, and since the law sets a period of limitation for challenging the award in question by the aggrieved party, then the period of limitation can only commence from the date on which the award was received by the concerned party in the manner prescribed by law.”

  • In an arbitral tribunal comprising of a panel of three members, if one of the members gives a dissenting opinion, it must be delivered contemporaneously on the same date as the final award, and not on a subsequent date, as the tribunal becomes functus officio upon the passing of the final award. The period for rendering the award and dissenting opinion must be within the period prescribed by Section 29A of the Act.
    • The dissenting opinion of a minority arbitrator can be relied upon by the party seeking to set aside the award to buttress its submissions in the proceedings under Section 34.
    • At the stage of judicial scrutiny by the Court under Section 34, the Court is not precluded from considering the findings and conclusions of the dissenting opinion of the minority member of the tribunal
  • The date on which the signed award is provided to the parties is a crucial date in arbitration proceedings under the Arbitration and Conciliation Act, 1996. It is from this date that:

(a) the period of 30 days’ for filing an application under Section 33 for correction and interpretation of the award, or additional award may be filed;

(b) the arbitral proceedings would terminate as provided by Section 32(1) of the Act;

(c) the period of limitation for filing objections to the award under Section 34 commences.

  • Section 34(3) provides a specific time limit of three months from the date of “receipt” of the award, and a further period of thirty days, if the Court is satisfied that the party was prevented by sufficient cause from making the application within the said period, but not thereafter

“If the objections are not filed within the period prescribed by Section 34, the award holder is entitled to move for enforcement of the arbitral award as a deemed decree of the Court u/S. 36 of the Act.”

[DAKSHIN HARYANA BIJLI VITRAN NIGAM LTD. v. NAVIGANT TECHNOLOGIES PVT. LTD., 2021 SCC OnLine SC 157 , decided on 02.03.2021]


*Judgment by: Justice Indu Malhotra

Case BriefsHigh Courts

Delhi High Court: Vibhu Bakhru, J. held that an order of the arbitrators terminating the arbitral proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 (“A&C Act”) is NOT an “award”; and therefore a challenge to such order under Section 14(1)(a) is maintainable.

Facts and Issue

The petitioner, a Joint Venture constituted by Progressive Construction Ltd. and SUNCON Construction Berhard, Malaysia,  filed the present petition, inter alia, impugning an order passed by the two arbitrators terminating the arbitral proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996. The present application was filed under Section 14(1)(a) read with Section 15 of the Act.

The arbitral proceedings were terminated because the arbitrator nominated by the petitioner had resigned and the petitioner had not taken steps to nominate another arbitrator in his place. Consequently, the arbitral proceedings could not proceed and the remaining two arbitrators constituting the Arbitral Tribunal concluded that it was impossible to continue the proceedings and, accordingly, terminated the same. The petitioner claimed that there was a communication gap and the petitioner was not aware that the arbitrator appointed by it had resigned. The Arbitral Tribunal had not issued any notice to the petitioner in this regard prior to terminating the arbitral proceedings.

The respondent, National Highways Authority of India (“NHAI”), contests the maintainability of the present petition as well as contends that the impugned order cannot be faulted.

Analysis

The foremost question addressed by the High Court was: Whether the impugned order constitutes an award?

The contention of the NHAI that the present petition was not maintainable and the only recourse available to the petitioner was to file an application under Section 34 of the A&C Act was founded on the assumption that the impugned order is an award. Notably, recourse to a Court against an award is available only under Section 34 of the A&C Act.

The High Court analysed that the term “award” is defined under clause (c) of sub-section (1) of Section 2 of the A&C Act and noted that”

It is now well settled that an award constitutes a final determination of a particular issue or a claim in arbitration.

It was also noted that Section 32 of the A&C Act also draws a clear distinction between a final arbitral award and orders passed by an Arbitral Tribunal. In terms of Sub-section (1) of Section 32 of the A&C Act, arbitral proceedings stand terminated by a final award or by such orders as are specified under Sub-section (2) of the said A&C Act.

The Court made reference to its earlier decision in Rhiti Sports Management (P) Ltd. v. Power Play Sports & Events Ltd, 2018 SCC OnLine Del 8678 wherein the Court had noted various decisions on the question as to what constitutes an award.

Relying on the Supreme Court decision in IFFCO Ltd. v. Bhadra Products, (2018) 2 SCC 534, the High Court noted that in order for a decision of the Arbitral Tribunal to qualify as an award, the same must finally decide a point at which the parties are at issue. In cases where the same is dispositive of the entire dispute referred to the Arbitral Tribunal, the said award would be a final award, which would result in termination of the arbitral proceedings.

Viewed in this context, the Court concluded:

“It is clear that an order, which terminates the arbitral proceedings as the Arbitral Tribunal finds it impossible or unnecessary to continue the arbitral proceedings, would not be an award. This is so because it does not answer any issue in dispute in arbitration between the parties; but is an expression of the decision of the Arbitral Tribunal not to proceed with the proceedings.”

The Court also stated that an order terminating the proceedings on failure of the claimant to file its Statement of Claims within the stipulated time, is also in the nature of an order under Sub-section (2) of Section 32 of the A&C Act and not an arbitral award because such an order does not decide any of the points on which the parties are in issue in the arbitration.

Decision

In the present case, the impugned order passed by the arbitrators expressly stated that the arbitral proceedings were terminated under Section 32(2)(c) as in their view, it had become impossible to continue the said proceedings. Indisputably, an order terminating the proceedings under Section 32(2)(c) can be impugned under Section 14(2) of the A&C Act.

It was contended on behalf of NHAI that even though an application under Section 14(2) may be filed, the present application which was under Section 14(1)(a) and Section 15 was not maintainable. This contention, according to the High Court, was unpersuasive:

“A plain reading of sub-section (2) of Section 14 of the A&C Act indicates that unless otherwise agreed by parties, a party could apply to a Court to decide on the question of termination of the mandate if a controversy remains concerning any of the grounds referred to in Sub-section 14(1)(a) of the A&C Act.”

It was also noted that the impugned order was an expression of the view of the arbitrators that they were unable to continue with the proceedings on account of the default on the part of the petitioner to fill the vacancy caused by the resignation of their arbitrator. Even though NHAI had preferred certain counterclaims, it too did not take any steps to ensure that the said vacancy was filled. It was also open for NHAI to apply to the Court for the appointment of an arbitrator, however, NHAI also chose not to do so.

Further, although the arbitrators had passed the impugned order, it was not disputed that a notice that they were contemplating the termination of the proceedings was not issued to the petitioner, prior to passing of the impugned order.

However, said the Court that, it could not be denied that the petitioner was responsible for the delay in the proceedings as it had inordinately delayed the appointment of an arbitrator. Whilst the Court was of the view that the petitioner ought not be rendered remediless to urge its claims, NHAI‘s contention that the petitioner must be visited with costs was merited.

Accordingly, the High Court set aside the impugned order, albeit, subject to payment of costs of Rs 25000 by the petitioner.

Further, now the petitioner had already nominated an arbitrator. It was directed that the Arbitral Tribunal will resume the arbitration proceedings at the stage obtaining on the date on which the arbitral proceedings were terminated. [PCL Suncon v. NHAI, 2021 SCC OnLine Del 313, dated 12-1-2020]

Case BriefsHigh Courts

Bombay High Court: B.U. Debadwar, J., observed the difference between Sections 28 and 34 of the Land Acquisition Act, 1894 in determining the award to be granted to a person, in the absence of an exact date of possession.

Respondent–claimant was the exclusive owner in possession of the lands situated to village leet, Taluka Bhoom, Osmanabad.

Appellant-State acquired two lands for the Dokewadi Medium Project. Preliminary notification under Section 4(1) of the Land Acquisition Act, 1894 was published on 13-04-1990. Possession of both the lands was also taken in the same year.

Award

On 31-12-1994, Special Land Acquisition Officer, after following due process, passed the award thereby determining the compensation at the rate of 15,000 per acre and separately awarded compensation as well.

Section 18 of the Land Acquisition Act

Reference application was moved under Section 18 of the Land Acquisition Act, 1894 for enhancement of compensation after accepting the award under protest.

Civil Judge, Senior Division, Osmanabad allowed the reference partly and enhanced the compensation to Rs 30,000 per acre with statutory benefits.

Appellant–State preferred the present appeal on being aggrieved by the aforestated judgment and award passed by the Joint Civil Judge, Osmanabad and respondent — claimant filed a cross objection under Order 41 Rule 22 of the Code of Civil Procedure, 1908.

Analysis and Decision

On perusal of the impugned Judgment, Court noted that Joint Civil Judge, Senior Division, Osmanabad treated the acquired lands as fertile ‘jirayat lands’ and awarded compensation at the rate of Rs 30,000 per acre.

The Joint Civil Judge appeared to have discarded the evidence of claimant on the aspect of nature of acquired land i.e. ‘bagayat land’, only for the reason that it is not supported by pleadings raised in reference application.

It is pertinent to note that State has awarded separate compensation of various trees, well and taal (dike) situated in acquired land, to the respondent – claimant.

When the appellant – State has awarded separate compensation of well, the question of denying the existence of well in acquired land does not arise.

Having regard to the area of land covered by sale instance proved by the respondent — claimant, area of lands under acquisition by owned by him, nature of acquired lands, i.e. seasonally irrigated lands, source of irrigation, Court held that the compensation determined by the reference Court is not adequate and just compensation.

Further, the Court added that the compensation needs to be raised to Rs 50,000 per acre from Rs 30,000 per acre. Hence, the respondent-claimant is entitled to compensation at the rate of Rs 50,000 per acre.

In the absence of the date of taking possession of lands under acquisition, it is difficult to know whether possession of lands under acquisition was taken prior to publication of the preliminary notification under Section 4(1) of the Land Acquisition Act, 1894, or after the publication of the same.

Though it is clear that possession of acquired lands was taken prior to the passing of award i.e. prior to 31-12-1994.

Section 16 of the Land Acquisition Act, 1894 deals with the power to take possession. According to this provision, when the Collector has made an award and under Section 11 he may take the possession of the land, which shall thereupon absolutely vests in the Government, free from encumbrances.

Whereas, Section 17 of the Land Acquisition Act, 1894, speaks about special powers in case of urgency. According to this provision, in case of urgency, wherever appropriate Government directs the Collector, though no such award has been made, may, on expiration from 15 days from the publication of notice mentioned in Section 9 Sub-Section (1), take possession of any land needed for a public purpose. Such land shall thereupon vest absolutely in the Government free from encumbrances.

In the present matter, there is absolutely no evidence about taking possession of lands under acquisition by invoking special powers contemplated under Section 17 of the Land Acquisition Act, 1894.

In view of the decision of State of Maharashtra v. Kailash Shiva Rangari,2016 SCC OnLine Bom 2236 the respondent-claimant would be entitled to interest under Section 34 of the Land Acquisition Act, 1894 from the date of passing of an award under Section 11 of the Land Acquisition Act, 1894 i.e. 31-12-1994 and not from 1990 when possession of acquired lands were taken.

Further, the Court added that the Section under which interest is awarded is neither mentioned in the body of the judgment nor in the operative part.

However, looking to the operative part in its entirety it appears that interest awarded in clause (4) is awarded either under Section 28 or Section 34 of the Land Acquisition Act, 1894 and interest awarded in clause (6) is in the form of rental compensation.

Hence, the claimant is entitled to interest under both Sections of the Land Acquisition Act, 1894 i.e. Section 28 and Section 34 and that has to be awarded from the date of award till realisation of the compensation amount.

Therefore, Joint Civil Judge in Clause 96 of the operative part of the impugned judgment committed a mistake in awarding rental compensation in the form of interest covered under Sections 28 and 34 of the Land Acquisition Act, 1894.

Court partly allowed the appeal and cross objection in the present matter. [State of Maharashtra v. Laxman, 2020 SCC OnLine Bom 894, decided on 04-09-2020]

Case BriefsCOVID 19High Courts

Allahabad High Court: A Division Bench of Govind Mathur, CJ and Siddhartha Verma, J. had issued certain direction earlier in order to meet the eventualities occurring as a consequence to lockdown.

Bench has further directed that in view of the above that,

the period of twelve months for requiring the award to be made under Arbitration and Conciliation Act, 1996 other than in International Commercial Arbitration is to be extended.

Thus the bench stated that,

Accordingly, it is directed that if in any arbitral proceedings the pleadings under sub-section (4) of Section 23 of the Act have been completed and the period of twelve months has expired or is going to be expired on or after 25th March, 2020 then the same stands extended upto 25th May, 2020.

Further the Court also noted that that prior to lockdown several release orders were granted but due to non-availability of sureties they have not been released. Therefore, looking at the same, Bench stated that,

“…all the accused-applicants whose bail applications came to be allowed on or after 15th March, 2020 but have not been released due to non-availability of sureties as a consequence to lockdown may be released on executing personal bond as ordered by the Court or to the satisfaction of the jail authorities where such accused is imprisoned, provided the accused-applicants undertakes to furnish required sureties within a period of one month from the date of his/her actual release.” [In re  State of U.P. (Suo Motu), 2020 SCC OnLine All 300 , decided on 06-04-2020]

Case BriefsHigh Courts

Karnataka High Court: The Division Bench of Alok Aradhe and P.G.M. Patil, JJ. while allowing the appeal set aside the award of the Commissioner as he committed an error of law in applying the provisions of the Act, which was already repealed.

In the instant case, the appeal under Section 30 of the Workmen’s Compensation Act, 2009 was filed to assail the validity of the award of the Commissioner for Workmen’s Compensation. The commissioner had allowed the claim in part and awarded compensation to the tune of Rs 8,61,120.

Prashant (deceased) was working as an Assistant Manager in a factory when at on 02.08.2011 he fell inside the water pit and sustained injuries and thereafter died of it in the hospital. The deceased was 26 and was drawing a salary of Rs 41,062 per month.

Counsel for the appellant, Sangram S. Kulkarni submitted that the Commissioner erred in assessing the compensation as per the provisions of Workmen’s Compensation Act, which was already repealed.

The substantial question of law before the Court was that whether Commissioner committed an error of law in deciding the claim of the appellant in view of the fact that the provisions of Employee’s Compensation Act, 1923, came into force with effect from 18.01.2010 and the accident took place on 02.08.2011.

The Court after considering the facts and circumstances of the case observed that provisions of Employees Compensation Act, 1923, came into force with effect from 18.01.2010 and the accident took place on 02.08.2011. Therefore, the computation of compensation has to be made under the Employee’s Compensation Act, 1923 not under Workmen’s Compensation Act, which was already repealed.

Taking half of the net salary payable to the deceased which comes to Rs 16, 463 and after applying the factor of 215.28, the amount of compensation comes to Rs 35,44,154. The enhanced amount shall carry interest at the rate of 12% per annum from the date of death, till its realization. [B. Basappa v. J.S.W. Steel Ltd., 2019 SCC OnLine Kar 2185, decided on 06-11-2019]

Case BriefsHigh Courts

Jharkhand High Court: Rajesh Kumar, J. allowed the petition of the appellant hereby remanding the matter to the Tribunal for fresh adjudication.

The facts of the present case are that Bokaro Steel Plant (SAIL) dismissed the workman from his services for long absenteeism. The industrial dispute was raised against the order of dismissal under Reference No. 75 of 2014 before the Central Government Industrial Tribunal (No. 1), Dhanbad. The Tribunal awarded fresh employment to the workman.

The Counsel for the appellant relied upon the decision of Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496 and stated that award is an unreasoned one as there is no discussion of the material available on the record and further argument and pleading of the parties.

In view of the above, the Court held that the award is indeed has been passed on sympathy, therefore, an unreasoned one and hence the matter is remanded to the tribunal for a fresh decision.[Employer, In re, Management of Bokaro Steel Plant v. State of Jharkhand, 2019 SCC OnLine Jhar 976, decided on 25-07-2019]

Case BriefsHigh Courts

Jharkhand High Court: Rajesh Kumar, J., modified the order passed by the tribunal to the extent that relief granted by the Tribunal is unauthorized and out of jurisdiction as Tribunal went beyond the terms of reference to pass the Award.

The present writ petition had been filed against the Award dated 18-11-2013 passed in Reference No. 13 of 1991 by the Central Government Industrial Tribunal No. 2, Dhanbad whereby reference was in favour of the workmen. The factual matrix of the present case is that all three concerned workmen were an employee of the company. They were charged for misappropriation and after conducting a departmental enquiry, they were dismissed from service. Against the said order of dismissal, an Industrial Dispute was raised, referred to as Ref. No. 13/91. Since the management failed to justify the dismissal of the workmen, the Tribunal passed an order of reinstatement in favour of the employees, Suresh Ram and Sarda Shovel. As Sukhdeo Bhuian had died during the pendency of the reference case, he had been substituted by his son namely Santosh Kumar. The issue herein is with respect to the appointment of the dependant of the deceased employee.

The Court stated that “It is trite that Tribunal gets jurisdiction to pass the Award in terms of reference. Tribunal cannot go beyond the terms of reference to pass an Award.” Further, the Court observed that reference is only with regard to justification with the order of dismissal of three workmen and issue of appointment was not the subject matter of the reference. Hence, in the absence of such reference, relief granted by the concerned Tribunal is wholly unauthorized and beyond the jurisdiction. Hence, the Court modified the award to the extent that the appointment to the dependent of the deceased employee is quashed.[Employers In re, Management of Sendra Bansjora Colliery v. Workmen, WP (L) No. 4632 of 2014, decided on 22-07-2019]

Case BriefsHigh Courts

Himachal Pradesh High Court: The instant petition was related to Section 29-A of Arbitration and Conciliation Act, 1996 entertained by Jyotsna Rewal Dua, J. where the petitioner sought an extension of time.

Factual matrix of the case was that when the dispute arose between the parties the matter was referred to a sole arbitrator who was Superintending Engineer. The Tribunal was unable to conclude the proceedings within the stipulated time of one year. Therefore the period of the passing of award was delayed by six months, but the extension was not fruitful as the period expired and yet the case was undecided. It was further suggested by the Arbitrator to apply to a Competent Authority for further extension of time.

Hence both the parties requested the Authority for extension of time for a further period of six months. The Authority further directed the parties to take steps in accordance with the amended provisions of the Act, 1996.

Anil Jaiswal and Rameeta Rahi, counsels for the respondents submitted a letter dated 10-07-2019, addressed to the respondents by the Executive Engineer, to the effect that their office had no objection in case the mandate of learned Arbitrator if was extended by six months.

The Court observed that, Section 29-A (4) and (5) which provided that, if the award was not made within the period specified or within the extended period, the mandate of the arbitrator was to be terminated unless the Court, either prior to or after the expiry of the period so specified, extended the said period. It was further observed that the proceedings were at a final stage, hence, the Court allowed the petition. The parties, through learned counsel representing them, were directed to co-operate in the arbitral proceedings and not to seek unnecessary adjournments before the Arbitrator and an endeavor was made to complete the arbitral proceedings well before the time granted.[Devki Nand Thakur v. State of H.P., 2019 SCC OnLine HP 988, decided on 12-07-2019]

Case BriefsHigh Courts

Allahabad High Court: This petition was filed by petitioners before the Division Bench of Pankaj Kumar Jaiswal and Dr Yogendra Kumar Srivastava, JJ. praying for a direction to the respondent to decide the application of petitioner filed under Section 28-A of the Land Acquisition Act, 1894 and to re-determine compensation sought to be given to the petitioner.

Facts of the case were such that a notification was issued under Section 4(1) of the Act, 1894 where an award was passed by the Special Land Acquisition Officer, Ghaziabad in respect of certain land parcels. Petitioner did not challenge the aforementioned award under Section 18 of the Act but the same was challenged by other persons which gave rise to land acquisition references decided by District Judge thereby re-determining the compensation amount. It was against this judgment that the first appeal was filed which was decided with the re-determined compensation amount. Under the decision in the first appeal, the petitioner filed an application under Section 28-A of the Act to claim the benefit of the re-determined compensation. This application was rejected.

The question before Court was to decide if the application was time-barred under Section 28-A of the Act which mentioned about re-determination of the amount of compensation on the basis of the award of the Court within 3 months of its decision. Thereby leading to the second question from which Court’s decision the time period was to be calculated i.e. Reference Court or High Court first appeal. 

Krishna Mishra, learned counsel on behalf of petitioners, submitted that the time period for claiming the benefit of re-determined compensation amount was to begin after the decision in the first appeal and since their application was within that time period the application was validly made. Suresh Singh learned Addl. Chief Standing Counsel appearing on behalf of State respondents, submitted that the limitation period to file application was to be taken from the date of the award made by Reference Court which means that petitioner’s application was time-barred.

Under the Act, Court was defined to mean a principal Civil Court of original jurisdiction. Catena of cases were referred to concluding that limitation period should be computed from the date of award of Reference Court on basis of which re-determination was sought and not from the appeal which was filed against the award. Accordingly, the application thus filed was beyond the time period of 3 months if computed from the award of Reference Court. Further, proviso of the Section did not state any other reason for the extension of the time period than to obtain a copy of award.

High Court on the discussion above was of the view that petitioners could not have claimed the benefit of re-determined compensation as their application was time-barred. The application was to be filed within 3 months of the award passed by Reference Court and not after the decision of High Court in first appeal. Therefore, this petition was dismissed. [Tejpal Singh v. State of U.P., Writ C No. 7218 of 2019, Order dated 08-03-2019]

Case BriefsHigh Courts

Bombay High Court: Sunil K. Kotwal, J., allowed SBI Insurance Co. (insurer) to recover, from the owner of the offending bus (insurer), the amount paid to a third party claimant) under a policy which was cancelled by the insurer on account of non-payment of the premium amount by the insured.

An accident occurred between a motorcycle and the offending bus, as a result of which the driver of the motorcycle passed away. A claim petition was filed by the claimants under which an award was passed by the Motor Accident Claims Tribunal. The insurer paid the claim amount in the discharge of its liability towards the claimant. It, however, claimed to recover the said amount from the insured. Insurer’s case was that the insured issued a cheque in his favour towards payment of the insurance premium for the policy taken on 10-11-2015. The accident occurred on 19-11-2015. Pertinently, the cheque issued by the insured towards payment of premium got dishonoured by the bank and, therefore, the insurer cancelled the policy on 14-12-2015. As such, the insurer claimed recovery of the amount paid to the third party.

After perusing the authorities cited, the High Court was of the opinion that in such type of cases, if the policy is cancelled before the accident occurs, then the insurer is not liable to pay compensation to the claimant. However, if the policy is cancelled after the accident happens, then he is so liable. But, in the latter category of cases, the insurer is entitled to recover the amount so paid to the claimant from the insured. It was observed that a contract of insurance between an insurer and an owner of the offending vehicle includes reciprocal promised by both the parties. In such view of the matter, the owner of the offending bus (insured) was directed to pay back the amount of the award to the insurer along with interest thereon. [SBI Insurance Co. v. Madhubala, 2019 SCC OnLine Bom 639, decided on 15-04-2019]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Pratibha M. Singh, J., allowed a petition filed by the Food Corporation of India challenging the award passed by the Arbitrator whereby its claim was dismissed by a cryptic award.

The matter arose out of an agreement between the petitioner and the respondent whereby the respondent had agreed to store, mill and supply certain quantity of paddy to the petitioner. Due to default on the part of the respondent in the performance of terms of agreement, the petitioner incurred a huge loss. Consequently, in pursuance of the arbitration clause as contained in the agreement, the petitioner moved for arbitration. However, even after more than 30 hearings of the matter before the arbitrator, the respondent did not appear even once. Hence, the arbitrator, vide the award impugned, dismissed the claim of the petitioner observing that since the respondent did not appear, nothing remained to be adjudicated. Aggrieved thereby, the instant petition was filed.

The High Court, on perusal of the award impugned, held that it was unsustainable. It was noted that the petitioner had deposited, before the arbitrator, detailed accounts of dealings which formed the basis of its claim. The Court was of the view that the reasoning given by the arbitrator for dismissal was quite cryptic. Detailedaffidavit was filed by the petitioner, however, none of the facts were considered by the arbitrator. The Court observed that without giving any findings on the claim of the petitioner, the arbitration could not have been terminated. Non-appearance of a party-respondent cannot result in dismissal of claims. Such a course of action defies basic logic. A claimant cannot be punished for non-appearance of the respondent. An arbitrator has a duty to decide claims in accordance with law. Therefore, the petition was allowed and the award impugned set aside. [FCI, Ludhiana v. Gupta Rice & General Mills, Ludhiana,2018 SCC OnLine Del 11961, decided on 13-09-2018]

Case BriefsHigh Courts

Punjab and Haryana High Court: A Single Judge Bench comprising of Shekher Dhawan, J., dealt with a petition filed under Article 226 and 227 of the Constitution of India in nature of certiorari for modification of award passed by Industrial Tribunal where petitioner was denied continuity of services though reinstated.

Facts of the case are that petitioner’s services were terminated orally and no show cause notice was provided to petitioner or was paid any retrenchment compensation thereby violating Sections 25-F, 25-G and 25-H of the Industrial Disputes Act, 1947. An industrial dispute was referred to Tribunal.

Petitioner contended that he was accepted to be employed under respondent and was a workman under Section 2(s) of the Act who has duly completed 240 days of service. Whereas respondent argued that petitioner was not entitled to reinstatement as he was not a workman under the relevant provision and that 240 days in service was not completed.

The High Court was of the view that Tribunal was right in reinstating petitioner and not continuing the service as petitioner himself failed to show his employment for a continuous period of 240 days. Tribunal has rightly exercised its discretion, therefore, no merit in writ petition was found and the same was dismissed. [Jaibir v. Industrial Tribunal,2018 SCC OnLine P&H 1359, decided on 21-09-2018]

Case BriefsSupreme Court

Supreme Court: The bench of J. Chelameswar and SK Kaul, JJ held that the enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings.

Different High Courts had given different opinion on the question as to whether an award under the Arbitration & Conciliation Act, 1996 is required to be first filed in the court having jurisdiction over the arbitration proceedings for execution and then to obtain transfer of the decree or whether the award can be straightway filed and executed in the Court where the assets are located is required to be settled in the present appeal.

Delhi High Court, Kerala High Court, Madras High Court, Rajasthan High Court, Allahabad High Court, Punjab & Haryana High Court and Karnataka High Court were of the opinion:

“An award is to be enforced in accordance with the provisions of the said Code in the same manner as if it were a decree of the Court as per Section 36 of the said Act does not imply that the award is a decree of a particular court and it is only a fiction. Thus, the award can be filed for execution before the court where the assets of the judgment debtor are located.”

However, the Madhya Pradesh and Himachal Pradesh High Courts held:

“The transfer of decree should first be obtained before filing the execution petition before the Court where the assets are located.”

After discussing various provisions of the Act and the various orders of the High Courts at length, the Bench said:

“An award under Section 36 of the said Act, is equated to a decree of the Court for the purposes of execution and only for that purpose. Thus, it was rightly observed that while an award passed by the arbitral tribunal is deemed to be a decree under Section 36 of the said Act, there was no deeming fiction anywhere to hold that the Court within whose jurisdiction the arbitral award was passed should be taken to be the Court, which passed the decree. The said Act actually transcends all territorial barriers.”

It was, hence, held that the view taken by the Madhya Pradesh High Court and the Himachal Pradesh High Court is held to be not good in law while the views of Delhi High Court, Kerala High Court, Madras High Court, Rajasthan High Court, Allahabad High Court, Punjab & Haryana High Court and Karnataka High Court reflect the correct legal position. [Sundaram Finance Limited v. Abdul Samad, 2018 SCC OnLine SC 121, decided on 15.02.2018]

Case BriefsHigh Courts

High Court of Judicature at Madras: The Bench of V. M. Velumani, J. recently addressed a civil revision petition filed under Article 227 of the Constitution which challenged the decree order of the Small Causes Court, dated 28/10/2010.

The petitioner, also the claimant, had filed a case in the Motor Accident Claims Tribunal claiming compensation of Rs. 3,00,000 for the injuries sustained due to an accident. During the pendency of the case before the Lok Adalat, the petitioner and the second respondent, i.e., the insurance company came to a settlement wherein it was agreed upon that the second respondent would pay an amount of Rs. 1,55,000, in view of which the Lok Adalat passed an award directing the said amount to be paid for full withdrawal of the petitioner’s claim. The second respondent had deposited the amount. This was followed by the first respondent challenging the award and to stop issuance of the cheque and instead conducting the trial on merits. This was based on the contention of the first respondent, i.e., the owner of the vehicle that her vehicle was not the offending vehicle in the first place.

The counsel for the petitioner contended that an award of the Lok Adalat can be challenged only by initiating proceedings under Article 226 or 227 of the Constitution. He contended that the Tribunal failed to see that the matter was referred to the Lok Adalat on the application filed by the petitioner under Section 19 of the Legal Services Authorities Act and it was not correct to state that no notice was served on the first respondent. Despite the notice having been served, there had been no representation on behalf of the first respondent.

The Court held that the relief that was being seeked by the petitioner would not stand since it was already well settled in law by way of the judgment in Bharvagi Constructions v. Kothakapu Muthyam Reddy, 2017 (5) CTC 775 that an award of the Lok Adalat could only be challenged by initiating proceedings under Article 226 or 227 of the Constitution of India and that too only on limited grounds. Hence, it held that the Tribunal had committed an error and irregularity by allowing the petition filed by the first respondent. [N. Prabhuraj v. Josephine, 2017 SCC OnLine Mad 12290, order dated 6/12/2017]

Case BriefsHigh Courts

Kerala High Court: Deciding upon the validity of the awards passed by the Lok Adalat under Section 21 of the Legal Services Authorities Act, 1987 on a reference, the Court observed that the function of a Lok Adalat organised under Section 19 of the Legal Services Authority Act, 1987 is only to help the parties to the dispute arrive at a compromise or settlement, which is seen from Section 20(3) of the Act. The Adalat cannot enter a finding. It can only record the compromise or settlement between the parties.

The dispute between the parties to a partition suit was referred to the Lok Adalat which were settled and awards passed. However, the petitioner contended that the awards passed were not in terms of the settlement entered into.

Finding several shortcomings in the awards, the Bench of K. Abraham Mathew, J. observed that “When the award cannot be challenged in a suit or execution proceedings or even in appeal the Lok Adalat should make sure that its proceedings are transparent and not vitiated by procedural illegalities or irregularities. Its proceedings should inspire confidence in the public, failing which the very existence of the institution will be at peril. To ensure its credibility, the Lok Adalat shall comply with the procedure prescribed by the statues scrupulously.”

Regulation 17 of the National Legal Services Authority (Lok Adalats) Regulations, 2009 contains the procedure to be followed while drawing up an award. The Court observed that the impugned award neither contained the names and addresses of the parties to the proceedings, signature of the counsel or the settlement entered into and held that the impugned orders were not awards passed by the Lok Adalat in the eye of law since there was no means to ascertain whether the petitioner agreed to the terms recorded in it, which is the result of violation of mandatory provisions in the relevant statutes. The trial court was directed to proceed with the trial but to comply with the request of the parties if they wanted to refer the dispute to Lok Adalat again. [K.S. Sunil v. Sherly, 2016 SCC OnLine Ker 12168, decided on August 18, 2016]

Legislation Updates

On 21-04-2015, the Income Tax department was awarded the ‘Prime Minister Award for excellence in public administration’ for ‘Easy Tax Compliance through Quality Service’. The award has been conferred to the Income Tax Department for setting-up and successful implementation of end to end solution of core services which includes integrated e-governance initiatives viz. e-filing portal, Centralized Processing Cell (CPC-TDS) for processing of TDS statements, Centralized Processing Centre (CPC) for processing of Income Tax Returns and the Refund Banker. The projects have been conceptualized based on principles of USAGE – Uniform interpretation of tax laws, Simplification of forms, Easy Accessibility of services, Good tax governance and Empowerment of taxpayer with information. More USAGE prompts more Voluntary Compliance. The award is a recognition of the sustained efforts of officers of the Income Tax Department and their commitment towards achieving ‘Minimum Government and Maximum Governance’ in tax administration and to move towards a non-adversarial and tax-payer friendly regime.

 

-Ministry of Finance

Supreme Court

Supreme Court: In one of the prominent decisions of Supreme Court, the 3 judge bench  decided with a ratio of 2:1 that the decision given in  S.L. Arora Case, (2010) 3 SCC 690, was wrongly decided. The question before the Court was that whether the decision of Supreme Court in State of Haryana  v. S.L. Arora , wherein it was held that an award of interest on interest from the date of award is not permissible Section 31(7) of the Arbitration and Conciliation Act, 1996 , and is in consonance with earlier decisions of this Court. Abhay Manohar Sapre, J opined with the view given by S.A Bobde, J while H.L Dattu, CJ dissented with the majority.

It was decided in S.L Arora case that a  sum directed to be paid by an Arbitral Tribunal and the reference to the Award on the substantive claim does not refer to interest during the actual progress of law suit awarded on thesum directed to be paid upon Awardand that in the absence of any provision of interest upon interest in the contract, the Arbitral Tribunal does not have the power to award interest upon interest, or compound interest either for the pre-award period or for the post-award period.

In this view of the matter, S.A Bobde, J said that it is clear that the interest, the sum directed to be paid by the Arbitral Award under clause (b) of sub-section (7) of Section 31 of the Act is inclusive of interest during the actual progress of a law suit.Critical of the view taken by Supreme Court in S.L Arora case, S.A Bobde, J said that the Parliament has the undoubted power to legislate on the subject and provide that the Arbitral Tribunal may award interest on the sum directed to be paid by the Award, meaning a sum inclusive of principal sum adjudged and the interest, and this has been done by Parliament in plain language.

Dissenting from the majority, H.L Dattu, CJ concluded that the terminterest, appears to be distinct from the principal amount on which it is imposed. According to him, there was no infirmity with the S.L. Arora case, whereby it was held that if the arbitral award is silent about interest from the date of award till the date of payment, the person in whose favour the award is made will be entitled to interest at 18% per annum on the principal amount awarded, from the date of award till the date of payment.( HYDER CONSULTING (UK) LTD v. GOVERNOR, STATE OF ORISSA2014 SCC OnLine SC 940 Decided on-25/11/2014)