Uoi vs Delhi School Teachers Assn.
2009 Latest Caselaw 746 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              FAO(OS) 165/1993

                                      Date of Decision: 04th March, 2009



      U.O.I.                                        ..... Appellant
                           Through:     Mr. Sanjay Poddar, Advocate

                      versus


      DELHI SCHOOL TEACHERS ASSN.        ..... Respondent
                     Through: Mr. Alok Kumar, Advocate for
                              respondent No.1
                              Mr. Sangeeta Chandra, Advocate
                              for DDA


      CORAM:
      HON'BLE MR. JUSTICE MUKUL MUDGAL
      HON'BLE MR. JUSTICE VIPIN SANGHI


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

      2. To be referred to Reporter or not?                   Yes

      3. Whether the judgment should be reported              Yes
         in the Digest?


%                              JUDGMENT (Oral)

MUKUL MUDGAL, J.

1. This appeal is preferred by the Union of India (appellant No.1),

the Lt. Governor (appellant No.2) and the Government of National

Capital Territory of Delhi (appellant No.3) against the order dated

12.11.1991 passed by the learned Single Judge in Suit No.1162A of

1989 and I.A. 2397/1991, whereby the learned Single Judge disposed

off the objections to an arbitral award dated 20.03.1989 preferred by

respondent No.2 DDA.

2. The main plea raised by the appellant Nos.2 & 3 is that at no

stage of the proceedings before the learned arbitrator, the appellant

Nos.2 & 3 had been impleaded as party respondents. The only parties

who were impleaded as respondents were Union of India and the DDA

and, accordingly the award, which has led to the decree would not be

executable against the appellant Nos.2 & 3.

3. The award in question is an exparte award. Despite service,

none appeared either for the Union of India or for the DDA in the

arbitral proceedings. Though the Land & Building Department of Delhi

Administration was intimated of the arbitration proceedings, neither

the said department , nor the Delhi Administration, the predecessor of

appellant No.3 were actually impleaded in the arbitration proceedings.

No claim was made against appellant Nos.2 & 3 in the arbitration.

Appellant Nos.2 & 3 chose not to respondent to the notices issued to it

by the arbitral tribunal.

4. In response to the notice issued by the Court upon filing of the

arbitration award, only DDA filed it objections. No objections were filed

by appellant No.1 Union of India to the award.

5. The learned Single Judge has based the impugned judgment

on the premise that the payment on account of additional ground rent,

of which refund was directed under the award, was made by the

respondent no.1 to the Union of India, Delhi Administration. However,

since even the DDA was also made liable under the award for refund of

the said amount, it had preferred objections. The learned Single Judge

accepted the objection of the DDA that the amount of Rs.6,12,190.20

was claimed by Delhi Administration and the same was paid to them

by respondent No.1. In these circumstances, the DDA was held as not

being liable to refund the amount to respondent No.1. It was observed

that the liability would be of appellant No.1 i.e. Union of India alone.

Accordingly, the award was made a rule of the Court, subject to

modification that DDA was not liable to pay the amount of

Rs.6,12,190.20 and/or any interest thereon.

6. Learned counsel for the respondent No.1 submits that this

appeal is not maintainable in view of Section 39 of the Arbitration Act,

1940. He submits that clause (vi) of sub-section(1) of Section 39 which

permits an appeal to be preferred only against an order "setting aside

or refusing to set aside the award", would not be of any avail to the

appellants, as according to him, the affirmation of the award by a

learned Single Judge did not amount to refusal to set aside the award.

Reliance is placed on the judgment of the Hon'ble Supreme Court in

Nilkantha Shidramappa Ningashetti v. Kashinath Somanna

Ningashetti & Ors. AIR 1962 SC 666 and in particular para 14 of that

decision, which reads as follows:

"14. The second question is whether the order of the Civil Judge amounted to an order refusing to set aside the award and therefore appealable to the High Court. The High Court held that it was

not such an order and we agree. When no party filed an objection praying for the setting aside of the award, no question of refusing it to set aside can arise and therefore no appeal was maintainable under s. 39(1)(VI) of the Arbitration Act which allows an appeal against an order refusing to set aside an award."

7. We are unable to agree with the argument of Mr. Alok Kumar,

learned counsel for respondent No.1 that the appeal is not

maintainable. In the matter before the Hon'ble Supreme Court no

party had preferred objections to the award and consequently, it is

obvious that when objections are not preferred, the question of filing of

an appeal obviously does not arise. The above case is consequently

not applicable in the facts of this case, as in the present case, DDA had

preferred objections against the award. In any case, a perusal of

Section 17 of the 1940 Act, which states "Where the Court sees no

cause .................... to set aside the award, the Court shall,

..................... proceed to pronounce judgment according to the award,

and upon the judgment so pronounced a decree shall follow.............."

shows that even when objections have not been preferred to an award,

it is the duty of the Court to examine the award to satisfy itself that no

ground is made out to, inter alia, set aside the award. Therefore, when

the Court affirms an award, it is implicit in that affirmation that it has

found no reason to, inter alia, set it aside.

8. The language of Section 39, therefore, also militates against

the view canvassed on behalf of learned counsel for the respondent.

Our view is buttressed by the judgment of the Hon'ble Supreme Court

in the matter of Union of India & Ors. v. Manager, M/s Jain &

Associates (2001) 3 SCC 277 and in particular paras 12 and 14

thereof, which reads:

"12. The result is - before pronouncing judgment, the court has to apply its mind to arrive at the conclusion whether there is any cause to modify or remit the award. Further the phrase "pronounce judgment' would itself indicate judicial determination by reasoned order for arriving at the conclusion that decree in terms of award be passed. One of the meanings given to the word "Judgment" in Webster's Comprehensive Dictionary [International Edition, Vol. 1 (1984)] reads thus: "the result of judging; the decision or conclusion reached, as after consideration or deliberation". Further, Order 20 Rule 4(2) C.P.C. in terms provides that "Judgment" shall contain a concise statement of case, the points for determination, the decision thereon, and the reasons for such decision. This is antithesis to pronouncement of non-speaking order.

13. .........................................

14. Similarly, when the Court is required to proceed without objection application under Section 30 or 33 of the Act, it cannot pronounce the judgment without considering the provisions of Sections 15 and 16 of the Act, which provide, as stated above, for modification or correction of any award or for remitting it to the arbitrator for reconsideration on the ground that (i) there is any error of law apparent on the face of the award, (ii) the award is incapable of being executed, (iii) the award has left undetermined any of the matters referred to arbitration, (iv) that a part of the award is upon a matter not referred to arbitration, and (v) the award contains any obvious error. Jurisdiction of the Court to pronounce judgment depends on exercise of its power to modify or remit the award."

9. Accordingly, we are of the view that the refusal to set aside

an award is in no manner different from affirmation of the award and

the difference is merely of semantics. There is another aspect that we

may take notice of in the present case. Appellant nos. 2 and 3 were

not even parties to the arbitration proceedings or even before the

learned single Judge. They were not even given a notice by the

learned single Judge. Obviously they could not have objected to the

award before the learned single Judge. If the observations made by

the learned single Judge adversely affects their rights, they would, in

our view, be entitled to appeal against the order, which modifies and

affirms the award to their prejudice.

10. We have in fact perused the record and indeed heard the

arguments qua the award too. It is stated that the appellant

Government of NCT of Delhi and the Lt. Governor had not been

impleaded as a party respondent in the arbitration proceedings.

However, notices of the arbitration proceedings were indeed served on

them. In our view, once the appellant Nos.2 & 3 had not been made

parties and no claim had been made against them, the mere service of

notice of the arbitration proceedings cannot bind the said appellants.

Such a notice was nothing more than an intimation of the arbitration

proceedings between respondent No.1 on the one hand, and Union of

India and DDA on the other hand, being pending. Respondent Nos.2 &

3 were not obliged to respond to the notices, since no claim was made

against them nor were the parties in the arbitration proceedings.

Accordingly, there is merit in the plea of learned counsel for the

appellant Nos.2 & 3 that appellant Nos.2 & 3 cannot be made liable

under the decree. Consequently, while we are not interfering with the

affirmation of the award dated 20.03.1989 by the learned Single Judge,

we make it clear that the decree may be executed, but not against the

Government of NCT of Delhi and the Lt. Governor.

11. Accordingly, the appeal is allowed qua the appellant Nos.2

and 3. In case, any sum has been realized by the respondent No.1

from appellant No. 3 in pursuance of the decree in question, the same

shall be refunded to the appellant no.3, not later than eight weeks

from today. If the amount is so refunded within eight weeks,

respondent No.1 shall not be liable to pay any interest. However, upon

failure to do so within the stipulated time, the amount shall be

refunded with interest @ 10% p.a. In case the amount is so refunded

by respondent No.1 to appellant No. 3, respondent No.1 shall be free to

execute the decree against appellant No.1 Union of India. However,

respondent No.1 shall not be entitled to claim any interest from Union

of India for the period that it has enjoyed the amount received from

respondent Nos.2 & 3. With these directions, this appeal stands

disposed off.

MUKUL MUDGAL, J.

VIPIN SANGHI, J.

MARCH 04, 2009 rsk