M/S. Archana Steels Pvt. Ltd.(Now ... vs Dda & Anr.
2008 Latest Caselaw 1710 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI


+                        LPA No.45 of 1996


%                                              Date of decision: 23.09.2008


M/S. ARCHANA STEELS PVT. LTD.
(now known as:
M/S. BHUSHAN METALLICS LTD.)                      ...APPELLANT
                    Through:           Mr. Rajesh Banati & Mr. Rishi
                                       Aggarwal, Advocates.

                                   Versus

DDA & ANR.                                       ...RESPONDENTS
                           Through:    Ms. Anusuya Salwan &
                                       Ms. Monica Sharma, Advocates
                                       for DDA.


CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MR. JUSTICE MOOL CHAND GARG

1.        Whether the Reporters of local papers
          may be allowed to see the judgment?               No

2.        To be referred to Reporter or not?                No

3.        Whether the judgment should be
          reported in the Digest?                           No

SANJAY KISHAN KAUL, J. (Oral)

1. The present dispute is almost 20 years old arising from an

award dated 14.9.1988 passed by Shri A.P. Paracer,

Additional Director General (Retd.) CPWD awarding a sum

of Rs.1,10,69,822.00 to the appellant along with interest @

18 per cent per annum from the date of award till date of

payment or till the award is made rule of the Court

whichever is earlier. The respondents had short-closed the

contract for supply of steel bars and for the supplies made

the payments were released. The claim of the appellant is

in respect of the supplies which they would have made but

for short-closing of the contract.

2. The objections were filed by the respondent/DDA to the said

award and the matter was considered and the petition was

disposed of vide order dated 28.2.1992 of the learned

single Judge (as he then was). The learned single Judge

came to the conclusion that the award suffered from the

vice of absence of reasons but that the said omission on the

part of the arbitrator can be made good by giving reasons.

The arbitrator was allowed four (4) months time under sub-

clause (2) of Section 16 of the Indian Arbitration Act, 1940

(hereinafter referred to as the said Act) to give reasons for

the award in accordance with law and to re-submit the

award and proceedings.

3. In terms of the aforesaid the time period for the arbitrator

to give reasons for the award elapsed on 28.6.1992. The

arbitrator, however, failed to give reasons for the award

within the period of four (4) months or file the proceedings

in Court. It is only on 28.11.1992 that the arbitrator

addressed a communication to the Registrar of the High

Court seeking one month's time to do the needful. No

reasons were given even during this extended period of one

month though apparently no order was passed on the

application. A second application was filed on 12.5.1993,

once again, seeking one month's further time for filing a

reasoned award. The reasons are, however, stated to have

been filed only in October 1993.

4. A controversy arose whether the said reasons could be

taken on record for the reasons for the same were not

given within the period of four (4) months time or any

extended period granted by the Court. The learned single

Judge on the original side in terms of impugned order dated

18.10.1995 rejected the application of the sole arbitrator

seeking extension of time to place the reasons on record.

5. The reasons stated by the arbitrator for such delay were

the transfer of his son-in-law, his shifting of residence and

his having fallen ill. These reasons by the impugned order

have been found to be incorrect as during the relevant

period of time the arbitrator was holding various

proceedings and passing awards. Since the very sub-

stratum of the application was fallacious, the learned Judge

did not find it appropriate to entertain the application. The

learned single Judge found that the delay caused by the

arbitrator was deliberate and not bonafide. The arbitrator

could not have extended the time of its own as such power

vests with the Court under proviso to Sub-section 2 of

Section 16 of the said Act. The plea on ground of equity

was rejected by the learned Judge noticing that the fact

that the petitioner would be required to resort to arbitration

proceeding afresh was no reason to condone the delay in

the facts of the case. The learned Judge, thus, rejected the

application and consequently dismissed the suit for making

the award rule of the court.

6. We have heard learned counsels for the parties and we find

force in the reasoning of the impugned order. An arbitrator

is a judge chosen by the parties. The probity of an

arbitrator is the most important thing and any aspect which

cast doubt on such probity would negate the award. The

arbitrator in the present case failed to give reasons and

when called upon to give reasons did not submit the

reasons within the time stipulated by the Court nor during

any extended period sought by him. The reasons came to

be filed more than a year later. The most important aspect

is that in the application filed by the arbitrator seeking

condonation of delay in submitting the reasons for the

award, the grounds stated therein have been found to be

false in view of proceedings available where the same

arbitrator has been holding court and passing awards. How

can the Court be expected to give credence to an award

rendered in this situation by an arbitrator.

7. We, however, find that the parties cannot be left at that

since this claim agitated by the appellant for the last 20

years would fall by the wayside without adjudication if no

further directions are passed. It is not in dispute that

evidence was led by the parties and pleadings were

complete. We, thus, consider it appropriate that another

arbitrator be appointed to take over the proceedings filed

before the earlier arbitrator and after hearing learned

counsels for the parties to pass a fresh and reasoned award

uninfluenced by the reasoning of the earlier award.

8. We appoint Mr. Justice R.C. Chopra, retired Judge of this

Court, as the sole arbitrator at the request and with the

consent of learned counsels for the parties to take on

record the pleadings and to proceed to hear final

arguments in the matter after notice to learned counsels for

the parties. The sitting fee of the arbitrator will be fixed by

the arbitrator himself subject to a maximum total fee for

arbitration of Rs.50,000.00 apart from out of pocket

expenses to be shared equally between the parties.

9. The appeal stands disposed of in the aforesaid terms

leaving the parties to bear their own costs.

10. The arbitration record be remitted to the learned arbitrator.

11. The parties to appear before the learned arbitrator on

17.10.2008 at 4:30 p.m. or any other date to be fixed by

the arbitrator.

SANJAY KISHAN KAUL, J.

SEPTEMBER 23, 2008                             MOOL CHAND GARG, J.
b'nesh