M/S. Nalini Singh Associates vs M/S. Prime Time-Ip Media Services ...
2008 Latest Caselaw 1597 Del

OMP NO.351/2003                     Page No.1


                                                           REPORTABLE

*                  IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       O.M.P. NO. 351 OF 2003

%                         Date of Decision : September 10th , 2008.

M/S. NALINI SINGH ASSOCIATES                          ....Petitioner.

                        Through Mr. A.J. Bhambani, Ms.Ranjita and
                        Ms.Lakshita, Advocates.

                               VERSUS


M/S. PRIME TIME - IP MEDIA SERVICES LTD. .... Respondent.

Through Mr.Shridhar Y.Chitale and Mr.Shankar N., Advocates

CORAM:

HON'BLE MR. JUSTICE SANJIV KHANNA

1. Whether Reporters of local papers may be

allowed to see the judgment?

2. To be referred to the Reporter or not ? YES

3. Whether the judgment should be reported

in the Digest ? YES

SANJIV KHANNA, J:

1. The present Petition under Section 34 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as the Act, for short) is

filed by M/s.Nalini Singh Associates (hereinafter referred to as the OMP NO.351/2003 Page No.2

Objector, for short) challenging the interim Award dated 31st May,

2003.

2. The Objector is engaged in production of news and current

affairs related television programmes and had entered into a

business relationship with M/s.Prime Time-IP Media Services

Limited (hereinafter referred to as the respondent, for short). By

Memorandum of Understanding dated 1st November, 1996, the

respondent was appointed as an exclusive agent for sale of

advertisement time also known as „free commercial time‟ for news

based programme titled Aankhon Dekhi on Doordarshan channel.

Subsequently, the respondent was also appointed as an exclusive

agent for selling advertisements or free commercial time for the

news programme called Dopahar Aankhon Dekhi.

3. The Memorandum of Understanding dated 1st November,

1996 contained an arbitration clause. The Objector invoked the said

arbitration clause and in consequence thereof, Mr. Justice Avadh

Behari Rohtagi (retd), former Judge of this Court was appointed as

the sole Arbitrator.

4. The Objector had made a claim of Rs.1,96,47,954/- against

the respondent on account of minimum guarantee charges for the

period between 2000 and 30th April, 2001.

5. The respondent, on the other hand, had submitted that w.e.f.

2000 they found it difficult to sell air time on the two programmes

and payment of minimum guarantee amount became commercially OMP NO.351/2003 Page No.3

unviable. It was stated that the respondent was suffering loss of

Rs.16 lakhs per month and the commercial prospects of the

programmes were bleak. There was settlement in terms of the

letters dated 15th March 2001, 16th March 2001 and 9th May 2001

and Rs. 26.81 lacs was payable towards minimum guarantee

charges. The Memorandum of Understanding had a termination

clause and by notice dated 24th April, 2001, the respondent gave

two weeks time to terminate the agreement for marketing of the two

programmes.

6. It is an admitted case that letter dated 15th March, 2001 was

written by the respondent to the Objector and states that there was

a protracted correspondence of commercial viability of the two

programmes. It also records that there was a meeting and mutual

agreement was arrived at on 14th March, 2001. The letter thereafter

purports to record, the mutual agreement. As per the said letter, the

respondent was to pay Rs.50 lakhs to the Objector in case the

programmes were given PSB status by Doordarshan w.e.f. 4th

September, 2000 and in case PSB status was not granted, the

respondent would be liable to pay Rs.26.81 lakhs to the Objector.

7. Letter dated 16th March, 2001 is addressed by the Chartered

Accountant of the Objector to the respondent. It records that the

sum offered was a small portion of Rs.105 lakhs that was due. It

was stated that the Objector expects that the amount would be

revised to a reasonable figure keeping in view totality of the OMP NO.351/2003 Page No.4

situation. It was further stated that in view of continued business

relationship and spirit of discussion and coordination, the Objector

expects the respondent to offer a more reasonable amount and

better terms and conditions. It was also pointed out that the Objector

was under grave financial burden which was causing mental

pressure and agony to the proprietor.

8. After exchange of these two letters dated 15th March, 2001

and 16th March, 2001, for about two months the matter continued to

fester though there was exchange of correspondence between the

parties. On 24th April, 2001 the respondent wrote a letter stating,

inter alia, that in spite of their best efforts and due to prevalent

Doordarshan policies and market conditions, they were not in a

position to continue with marketing of the two television

programmes. Accordingly, the respondent gave two weeks notice to

terminate the agreement for marketing of the two programmes. The

letter further states that the respondent would like to discuss

payment flow schedule keeping in view the letter dated 16th March,

2001 written by the respondent. This letter was acknowledged by

the Objector in their letter dated 8th May, 2001. In this letter the

Objector recalled the efforts put in by them in increasing production

capacity specially in view of the new election related programmes

which were shot in West Bengal and other States. In this letter it is

also mentioned by the Objector as under:-

OMP NO.351/2003 Page No.5

"In the mean time we are available to settle all matters concerning the total amount/compensation payable by you towards the period relating to the payment/terms and date of payment for the same."

9. In response the respondent wrote a letter dated 8th May, 2001

in which it was stated as under:-

"Dear Nalini,

This is in response to your letter dated today, asking us to extend the notice period by another 3 days.

The matters concerning the total amount/compensation payable to you was confirmed vide our letter dated 15th March‟01 and your confirmation vide letter dated 16th March‟01. This reflects the amount payable as per our mutual discussions and agreement.

Please acknowledge and accept this letter and we will as per your request extend the notice period by 3 days."

10. Thereafter on 9th May, 2001, the Objector wrote a letter

to the respondent which is reproduced below:-

"Dear Mr. Rai,

Thank you for providing a fax copy of your letter dated 15.3.2001 which arrived in my office 5-minutes ago. Despite our best efforts to convince you of our inability to bear such heavy losses, you have kindly decided to stand by your terms contained in your letter of 15.3.‟01 (and our letter dated 16.3.‟01). I accept the terms stated in your letter dated 15.3.‟01 and our letter dated 16.3.‟01, and request you to continue with the programme.

Kindly schedule a meeting to discuss the cash OMP NO.351/2003 Page No.6

flow to our organization which has been rendered bankrupt due to starvation of funds. We cannot survive another day without funds owed to us for the period 27th July 2000 onward."

11. Learned arbitrator after examining the correspondence

in form of the three letters came to the conclusion that the letter

dated 9th May, 2001 records a binding settlement between the

parties and as per the said settlement, the Objector is entitled to

Rs.26.81 lakhs from the respondent and nothing more. The said

finding is purely factual. Learned Arbitrator has examined the

question of intention of the parties and on consideration thereof has

decided the said aspects in favour of the respondent.

12. The findings given by the learned Arbitrator are as

under:-

1) The third letter dated 9th May, 2001 addressed by the

Objector to the respondent constitutes an Agreement

between the parties and settles their claim and

disputes in respect of minimum guarantee charges

upto the period 1st March, 2001. He has observed

and held that the intention of the parties was to

square up and settle their claims by the said

correspondence i.e. letters dated 15th March, 2001,

16th March, 2001 and 9th May, 2001.

 OMP NO.351/2003                         Page No.7


      2) The      petitioner   cannot     rely      upon   the   original

memorandum of understanding and base her claim

upon the said memorandum in view of the binding

settlement in letters dated 15th March, 2001, 16th

March, 2001 and 9th May, 2001.

3) The binding settlement in terms of the three letters did

not have a penal clause so as to make the

respondent liable to pay any penal sum other than the

amounts specified in the letters dated 15th March,

2001, 16th March, 2001 and 9th May, 2001. There is

no penalty clause in the binding settlement. The

settlement was final and binding and the petitioner

cannot rely upon and base her claim upon the original

memorandum of settlement.

4) The Objector has accepted part performance of the

mutual settlement by encashing the two cheques

dated 11th May, 2001 and 28th May, 2001 both for

Rs.6,71,250/- on 30th July, 2001 after month of June

had expired. The said cheques were paid pursuant to

the settlement and the two cheques and settlement

were inseparable. The Objector having accepted part

payment cannot wriggle out and claim that there was

no settlement.

OMP NO.351/2003 Page No.8

5) It was further observed that time of payment in terms

of the three letters was not essence of contract. Even

if third and fourth installments were paid belatedly, the

settlement did not fall through, so as to resurrect and

permit the Objector to raise original claim on the basis

of the Memorandum of Understanding. Further the

respondent was ready and willing to pay the third and

the fourth installments though belatedly. The

Objector, however, was trying to ignore the said

settlement and wriggle out of the same. The Objector

can be compensated by way of interest on the delay

in payment and payment of interest @ 18% p.a. of

Rs.13,38,250/- between the period July 2001 and

31st March, 2003 of Rs.3,81,401/- plus cost of Rs.2

lakhs would be just and adequate.

6) Depending upon programmes‟ commercial viability,

the minimum guarantee was increased from

Rs.35,000/- per episode in 1996 first to Rs.42,000/--

48,000/- in 1997 and then to Rs.52,000/- on 30th

March, 1998 but was reduced to Rs.35,000/- w.e.f. 8th

September, 1998. The commercial viability of the

programmes had come down subsequently.

OMP NO.351/2003 Page No.9

Ultimately the agreement between the parties was

terminated.

13. Learned counsel for the Objector has impugned the said

Award on the following grounds:-

(i) Learned Arbitrator has misinterpreted the letters dated

15th March, 2001, 16th March, 2001 and 9th May, 2001

and there was no concluded contract.

(ii) The respondent had failed to abide by the terms and

conditions mentioned in the three letters dated 15th

March, 2001, 16th March,2001 and 9th May, 2001 as

payments of third and fourth installments (total

Rs.13,42,250/-) were not made in the month of June

2001 and therefore the Objector is entitled to the original

minimum guarantee amount specified under the

Memorandum of Understanding.

(iii) The alleged contract of one time settlement of Rs.26.81

lakhs is vitiated on the ground of force and coercion as it

is inconceivable that a party who had a claim of Rs.1.96

crore founded on a written contract would agree to a full

and final settlement of her claims on payment of

Rs.26.81 lakhs only.

(iv) Principle of accord and satisfaction is not applicable as

the so called settlement was without consideration in OMP NO.351/2003 Page No.10

form of additional benefit or possibility of additional

benefit. Reliance in this regard was placed in the case of

D&C. Builders Ltd versus Rees reported in 1965 (3)

All.ER 837 and decision of the Calcutta High Court in

New Standard Bank Ltd versus Prabodh Chandra

Chakraborty reported in AIR 1942 Cal. 87. Reference

was also made to paragraphs 7 and 9 of the judgment of

the Supreme Court in United Bank of India versus

Ram Das Mahadev Prasad reported in (2004) 1 SCC

252.

14. Scope of review under Section 34 of the Act is limited

and not as wide as that of an Appellate Court. This Court cannot

reappraise and re-examine finding of facts laid and found by the

learned Arbitrator. Learned Arbitrator in paras 23 and 25 of the

impugned Award has referred to and quoted the three letters dated

15th March, 2001, 16th March, 2001 and 9th May, 2001. It is trite law

that a the scope of judicial intervention in an award is limited. (Refer

M/S Associated Construction versus Pawanhans Helicopters

Pvt. Ltd. reported in (2008) AIR SCW 4893). The arbitrator in the

instant case has made findings of fact, to the effect that the letters

dated 15th March, 2001, 16th March, 2001 and 9th May, 2001

resulted in novation of the earlier contract, the learned arbitrator has

also noted that there was no clause in the said new contract that OMP NO.351/2003 Page No.11

would result in the revival of the earlier contract. His decision is

based on facts, intention and conduct of the parties. The Court

cannot go into the merits and demerits of the factual findings by the

arbitrator, unless the findings are perverse. Even in case of

interpretation of contractual clauses, there is limited scope and

ground to interfere. In the case of McDermott International Inc. v.

Burn Standard Co. Ltd., reported in (2006) 11 SCC 181; the

Supreme dealt with issue of the arbitartor‟s power of interpreting the

terms of the contract, the Court referred to the decision in the earlier

cases of Pure Helium (P) Ltd. versus Oil & Natural Gas

Commission reported in (2003 8 SCC 593 and D. D Sharma

versus Union of India reported in (2004) 5 SCC 325 and it was

held that that the interpretation of a contract is a matter for the

arbitrator to determine even if the said act gives rise to the

determination of a question of law. The Court held as under:

112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of OMP NO.351/2003 Page No.12

law. (See Pure Helium India (P) Ltd. v. ONGC and D.D. Sharma v. Union of India.)

15. Faced with this factual and legal position the learned

counsel for the Objector drew my attention to para 75 of the decision

of the Supreme Court in the case of Oil & Natural Gas Corporation

Limited versus Saw Pipes Ltd. reported in (2003) 5 SCC 705 and

submitted that the Award in question suffers from patent illegality. In

this regard, reference was also made to paragraphs 14 and 31 of

the said judgment and it was submitted that illegality which goes to

the root of the matter would vitiate and make an Award contrary to

public policy. It was further stated that when reference is made to an

arbitrator and the arbitrator on the face of it misconstrues and

erroneously misinterprets terms of a contract, or wrongly applies

principles of law, he commits patent illegality. Reliance was placed

on paragraph 56 in the case of O.N.G.C. (supra) wherein it was held

that if an award is erroneous on the face of record with regard to the

proposition of law or its application, Courts have jurisdiction to set

aside an award under Section 34 of the Act.

16. In this connection, learned counsel for the Objector had

also referred to the decision of the Court of Appeal in the case of

D&C. Builders Ltd. (supra) and Calcutta High Court P.C.

Chakraborty (supra). Relying upon these decisions it was

submitted that Principle of Accord and Satisfaction as applicable to

an executed contract had been wrongly understood and applied by OMP NO.351/2003 Page No.13

the learned Arbitrator. It was submitted that accord and satisfaction

in an executed contract; requires additional benefit or legal

possibility of an additional benefit to the creditor to have a valid

agreement. Original consideration is not sufficient to have accord

and satisfaction. An agreement by a creditor to accept a smaller

sum in lieu of ascertained amount without any additional or new

benefit or possibility thereof is nudum pactum. It is only when there

is new or additional benefit that the subsequent agreement will be

valid and will satisfy requirement of law. An agreement to be binding

in law should have good and valuable consideration. Part payment

of money under the original contract is not a valuable consideration.

For accord and satisfaction, there should be a new contract and the

said contract should be supported by a new and valuable

consideration or at least possibility thereof.

17. The principal contention of the Objector overlooks the

distinction between the technical law of accord and satisfaction in

England and the statutory provisions of the Indian Contract Act,

1872, namely, Sections 62 and 63. In India in a given case, accord

and satisfaction may be based upon a mutual agreement or by

unilateral act and acceptance by the promissee. In both cases,

courts will have to examine whether conditions mentioned in

Sections 62 and 63 of the Contract Act are satisfied. It may also be

noted that the words "accord and satisfaction" have not been

specifically used in the two Sections and as these are statutory OMP NO.351/2003 Page No.14

provisions, on each occasion, the Court or the arbitrator will have to

examine whether the statutory requirements of the two Sections are

satisfied.

18. In India, law of contract is a codified law and the

provisions of the said Act govern and apply. Section 62 and 63 of

the Contract Act read as under:-

62. Effect of novation, rescission and alteration of contract.--If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.

63. Promisee may dispense with or remit performance of promise.--Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.

19. Section 62 of the Contract Act allows novation,

rescission, modification and alteration of an earlier contract with a

new agreement or even alteration of an earlier agreement. It gives

rights to parties to put a contract to an end or terminate it. Under

the new agreement or upon amendment of an earlier contract, prior

rights of the parties are extinguished and new rights and obligations

come into existence. Original contract is discharged or modified and

substituted by the new obligations under the new contract or as a

result of amendment. Unless the new contract is void or

unenforceable or the amended terms are unenforceable, a party

cannot revert back to the original contract. Original contract can get OMP NO.351/2003 Page No.15

revived in two cases : firstly, when the new contract is

unenforceable or void and secondly, when the terms of novation

itself provide that original contract can be revived and the said

clause becomes applicable. In case these two conditions are not

satisfied, the original contract gets obliterated or wiped out. It dies

and cannot confer any cause of action. Section 62 is based upon

the principle that a contract is the outcome of a mutual agreement

and it is equally open to the parties to mutually agree to bring the

said contract to an end, enter into a new contract or modify the

earlier contract. Contractual obligations can be modified by mutual

consent. Parties can vary the terms of the contract and absolve a

party from the original obligations. Once Section 62 of the Contract

Act applies, parties are bound by the terms and conditions

mentioned in the second contract or the amended terms and not by

the first contract. Breach of the subsequent contract will not revive

the original contract, unless intention of the parties is to the contrary.

The question is of intention of the parties, when they enter into

second contract or modify earlier terms.

20. Section 62 of the Contract Act does not require

additional or new consideration or possibility thereof by any party,

to be a valid and enforceable contract. Discharge of the original

contract is regarded as consideration in the new contract. Release

from the past consideration is a good consideration to enter into a

new contract. No further consideration is required. Privy Council way OMP NO.351/2003 Page No.16

back in 1943 in Gauri Dutt Ganesh Lal versus Madho Prasad

reported in AIR 1943 PC 147 has held that novation constitutes

good consideration for the fresh/new contract and a compromise

between a creditor and a debtor operates as satisfaction of debts

and affords an answer to an action of the creditor based on original

liability.

21. Some Courts have drawn a distinction between

executed and executary contracts for application of Section 62 of

the Act. However, majority of the courts and the Law Commission

have favoured the approach that Section 62 of the Contract Act will

apply to both executed and executory contracts. I may have gone

into this question in greater depth and detail but I find that the said

issue was not specifically raised before the learned Arbitrator. The

Objector did not draw any distinction between the executed and

executory contract and raise the contention that Section 62 of the

Contract Act did not apply. The Objector cannot be permitted and

allowed to raise this plea in oral arguments under Section 34 of the

Act.

22. Section 63 of the Contract Act applies when a creditor or a

promisee by his unilateral act discharges or partly discharges the

promisor. Unlike Section 62 of the Act which requires mutual

agreement between both the parties, Section 63 of the Act applies in

case of unilateral act of the promisee. A promisee is at liberty to OMP NO.351/2003 Page No.17

accept part performance or condone non performance, if he is

satisfied. It requires and implies intention on the part of the

promissee to discharge the promisor in spite of his failure to meet

his obligations or part obligations.

23. In view of the above reasoning, reliance placed by the Objector

on the decision of the D&C. Builders Pvt. Ltd. (supra) is held to be

misplaced. It is also held that the said decision does not apply and is

not good law in India.

24. In the case of New Standard Bank of India (supra) cited by the

Objector, the Calcutta High Court has referred to the wide difference

between the English law and Section 63 of the Contract Act and it

was noticed that the said provision does not refer to any agreement

and valuable consideration. Relying upon the judgment of the Privy

Council in the case of Chunna Mal Ram Nath versus Mool Chand

Ram Bhagat reported in AIR 1928 PC 99, the Court applied Section

63 read with Sections 41 and 43 of the Contract Act and held that

the payment made in the said case had resulted in "accord and

satisfaction" and therefore the entire liability of the debtors was

discharged. In this case, the Calcutta High Court had also noticed

difference of opinion on interpretation of Section 62 of the Contract

Act and whether the said section applies to executory contracts or

executed contracts where there is a breach of the original contract.

1888 judgment of the Calcutta High Court in the case of Manohar OMP NO.351/2003 Page No.18

versus Thakur Dass reported in (1888) 15 Cal. 319 was referred to

and it was noticed that one of the judges of the Madras High Court

in the case of Ramihba Gavathar versus Somasiambalam

reported in AIR 1916 Mad. 832 had dissented from the said view on

the ground that principles of common law cannot be introduced

without considering provisions of the Contract Act. This view was

approved later on by the Madras High Court in K.M.P.R.N.M. Firm

versus P. Purumal Chetty AIR 1922 Mad 314. As already stated

above, I am not required to examine and go into this controversy as

this plea was never raised before the learned Arbitrator and the

Objector cannot be permitted and allowed to raise this plea now.

25.Learned counsel for the Objector had also referred to the

decision of the Supreme Court in the case of United Bank of India

versus Ram Dass Mahadev Prashad and others (Supra). In the

said case while proceedings were pending before the Debt

Recovery Tribunal, the parties had entered into a Memorandum of

Understanding. The Appellate Tribunal allowed the Appeal of the

debtor holding that the Memorandum of Understanding had resulted

in novation of the earlier contract. The Supreme Court on

interpreting and reading the Memorandum of Understanding held to

the contrary, inter alia, holding that the three conditions stipulated in

the said Memorandum were conditions precedent to novation and

no concluded contract had resulted out of the Memorandum of OMP NO.351/2003 Page No.19

Understanding and thus there was no novation. The said judgment

is not applicable to the facts of the present case. The factual

findings of the arbitrator are to the contrary. There was no condition

precedent.

26.The Objector has contended that the agreement that was

reached to settle the account of the Objector on payment of Rs.

26.81 Lakhs was on account of economic duress and coercion.

The said contention has been dealt with by the learned arbitrator in

detail and he has refused to accept the said contention. Economic

duress is not to be accepted lightly. Learned Arbitrator has applied

the said principles to the facts found and has decided this aspect

against the Objector. The finding of learned Arbitrator cannot be

gone into in a petition under Section 34 of the Act. There is nothing

on record that shows that the Objector has been subjected to a

decree of "duress" to vitiate the agreement. On the contrary it was

the respondent‟s case that they were hard pressed to sell free

commercial time for a programme which was falling in popularity.

The concept of "duress" and "economic coercion" has been

explained in the case of Double Dot Finance Ltd. versus Goyal

Mg Gases Ltd., reported in ILR (2005) 1 Del 161; in the said case it

reference was made to the decision in the case of Pao On and

others versus Lau Yiu and Another reported in 1979 (3) of

England Reporter 65; it was held that mere financial pressure is not OMP NO.351/2003 Page No.20

enough to show commercial duress. The learned single judge of this

Court observed as under :

"....Therefore, the „coercion‟ or „duress‟ required for vitiating „free consent‟ has to be of the category under which the person under „duress‟ is left with no other option but to give consent and is unable to take an independent decision, which is in his interest. Bargaining and thereafter accepting an offer by give and take to solve one‟s financial difficulties cannot be treated as „coercion‟ or „duress‟ for the reason that in trade and commerce every day such situations arise and decisions are taken by parties some of which they might not have taken but for their immediate financial requirements and economic emergencies....."

27.I may also note here that the Award dated 31st May, 2003 which

is subject matter of the Petition under Section 34 of the Act is an

interim award. It deals with the period upto 1st March, 2001. While

examining the disputes and the contentions of the parties, the

learned Arbitrator has gone into the question whether the three

letters in question had resulted in a concluded contract which had

the effect of novation of the earlier contract. The said plea has been

accepted. Learned Arbitrator thereafter had made and published the

final Award dated 21st November, 2003 for the period after 1st

March, 2003. While examining the claims of the parties after 1st

March, 2003, one of the issues that arose for consideration and was

examined by the learned Arbitrator was the effect of the three letters

including letter dated 9th May, 2001 and whether the same had

resulted in a concluded contract and had the effect of novation of OMP NO.351/2003 Page No.21

the earlier contract. Learned Arbitrator in the final award dated 21st

November, 2003 has again reiterated his earlier findings made in

the first interim Award dated 31st May, 2003. Partly allowing the

claims made by the Objector in para 46 of the award it has been

observed by the learned arbitrator that he had followed the same

principle while passing the final award as while making the interim

award. The reason why I have referred to the final Award dated 21st

November, 2003 is that none of the parties have challenged the said

award and the same has been accepted. Thus the Objector has

accepted the reasoning and the findings given by the learned

Arbitrator in the final award dated 21st November, 2003 including the

finding on the question whether the said three letters including letter

dated 9th May, 2001 had resulted in novation of the earlier contract

and amendment of its terms. An incongruous situation would result

in case the interim award is set aside accepting the objections of the

Objector in respect of the interim award, while the final award

remains untouched. The findings given by the learned Arbitrator in

the interim award and the final award in respect of the three letters

including letter dated 9th May, 2001 are the same. The interim award

and the final award may pertain to different period but the underlying

principle, reasoning and the ratio for making payment is interlinked

and inseparably connected. The Objector admittedly has not filed

objections to the final Award dated 21st November, 2003 and has

accepted the same while she is objecting to the same reasoning and OMP NO.351/2003 Page No.22

grounds given by the learned Arbitrator in his interim Award dated

31st May, 2003. In this connection, I may refer to the decision of the

Supreme Court in the case of Satwant Singh Sodhi versus State

of Punjab and others reported in (1999) 3 SCC 487. In the said

case, there was an interim award and a final award. Interim award

was in respect of item no.1. The interim award was challenged after

the final award was given and the question arose whether the

interim award dated 26th November, 1992 could be challenged after

the final award dated 28th January, 1994 passed under the

Arbitration Act, 1940. The Supreme Court explained distinction

between an interim award which is final in nature and determines

and decides controversies and an interim award which is to have the

effect as long as the final award is not delivered. It was held that

interim award which is a complete award in itself and has effect

even after the final award is delivered, is a complete award which

adjudicates respective rights of the parties and therefore can be

challenged. To that extent an interim award is a final award.

Reference was also made to the principle of functus officio and it

was observed that where an arbitrator has already made and

published his award he cannot make fresh adjudication and re-

determine a claim already decided.

28. In equity also both the parties had suffered losses as the two

programmes had lost their popularity and ceased to be commercially OMP NO.351/2003 Page No.23

viable. The respondent has been directed to pay balance

consideration of Rs. 13, 38, 250/- along with interest @ 18% per

annum for the period from July 2001 to 31st January, 2003. The

Objector has also been awarded cost of Rs. 2 lakhs by the learned

Arbitrator. As a result the respondent shall be liable to pay a total of

Rs. 5,81, 401/- along with interest.

29.In view of the reasoning given above, I do not find any merit in

the present objection petition and the same is accordingly

dismissed. In the facts and circumstances of the case there will be

no order as to costs.

                                                  (SANJIV KHANNA)

                                                       JUDGE

SEPTEMBER           10, 2008.

P