National Projects Construction ... vs Nec Engineering Pvt. Ltd.
2010 Latest Caselaw 1122 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+     FAO(OS) No. 354/2008

National Projects Construction   .....Appellant through
Corporation Limited              Mr. S.K. Taneja, Sr. Adv.
                                 with Mr. Santosh Kumar &
                                 Mr. Azgar Ali, Advs.

                  versus

NEC Engineering Pvt. Ltd.        .....Respondent through
                                 Mr. Ravi Sikri & Mr. Saket
                                 Sikri, Advs.

%                      Date of Hearing: January 28, 2010

                       Date of Decision: February 26, 2010

      CORAM:
*     HON'BLE MR. JUSTICE VIKRAMAJIT SEN
      HON'BLE MR. JUSTICE MANMOHAN SINGH
      1. Whether reporters of local papers may be
         allowed to see the Judgment?             No
      2. To be referred to the Reporter or not?   Yes
      3. Whether the Judgment should be reported
         in the Digest?                           Yes

VIKRAMAJIT SEN, J.

1. The facts, as they emerge before us, are that the NPCC

(hereinafter referred as the „Appellant‟) had entered into a

contract with NEC Engineering Pvt. Ltd. (hereinafter referred

to as the „Respondent‟). The Agreement dated 12.5.1988

contained the following Arbitration Clause:

51.0

Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim right matter or things, or as to any other question, claim right matter or things, whatsoever, in any way arising out or relating to the contract, designs, drawing, specifications, estimates, instructions, order or these conditions or otherwise concerning instructions, order or these conditions or otherwise concerning instructions, order or these conditions or otherwise concerning the works, or the execution or failure to execute the same. Whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole Arbitration of the persons appointed by CMD of the National Project Construction Corporation Ltd. acting as such, at the time of dispute. It will be no objections to any such appointment that the Arbitrator so appointed is a Corporation Officer that he had to deal with the matters to which the contract relates and that in the course of his duties as Corporation Officer he had expressed views on all or any of the matters of dispute or difference.

The Arbitrator to whom the matter is originally referred being transferred or vacating his office or

being unable to act for any reason, the Chairman and Managing Director as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act Arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with reference from the state at which it has left by his predecessor. It is also a term of this contract that no person other than a person appointed by the CMD as aforesaid should act as Arbitrator may from time to time with the consent of the parties, enlarge the time, for making and publishing the award.

Subject as aforesaid the provisions of the Arbitration Act, or any statutory modification or re-enactment thereof and the rules made thereunder and from the time being in force shall apply to the Arbitration proceedings under the clause.

The court at New Delhi shall have the exclusive jurisdiction in the matter of dispute and any other case relating to this agreement.

2. The disputes arose between the parties in January,

1989. In January, 1991, the Appellant wrote to the

Respondent suggesting the names of the two persons,

namely, Shri T.S. Murthy and Shri C.R. Chopra, out of which

one person was to be chosen as an Expert. On 13.2.1991, the

Respondent agreed to the appointment of one of the persons

as an Expert for the purpose of giving his opinion on the

aspect of escalation. Later on, the Respondent agreed to the

appointment as an Expert of either of the persons mentioned

by the Appellant. It appears that Shri Chopra was appointed

as an Expert but thereupon he styled himself as the

Arbitrator and assumed attendant authority. The Appellant

objected to this conduct. Nevertheless, Shri Chopra

commenced "arbitration proceedings" which prompted the

Appellant to file OMP No.50/1992 in this Court, invoking

Section 33 of the Arbitration Act, 1940 (for short „the Act‟).

On 19.5.1992, Shri Chopra was prohibited by the Court from

announcing any Award till the next date of hearing, which

was fixed for 7.7.1992. These Orders had undisputedly been

brought to the notice of Shri Chopra in terms of the letter of

the Appellant dated 29.6.1992, despite which he published

his "Award" on 6.7.1992. Shri Chopra granted Rupees

2,44,73,000/- together with interest quantified at Rupees

25,69,000/- in favour of the Respondent and against the

Appellant. We are not surprised with this Award since Shri

Chopra had usurped the powers of an Arbitrator in a scenario

where the parties were considering his candidature only as

an Expert to calculate the escalation; and in the face of the

opposition of the Appellant to his exercising the powers of an

Arbitrator. Shri Chopra has also endeavoured to nullify the

Orders of this Court, hence making him unsuitable for any

further assignments as Arbitrator and/or Expert. The

Respondent filed this Award before this Court under Sections

14 and 17 of the Act which was numbered as CS(OS)

No.3113/1992. The Appellant filed his Objections (IA

No.14140/1992) on 26.11.1992 assailing the Award, not only

on the ground that Shri Chopra had no jurisdiction to act as

the Arbitrator, but also on the merits of the Award.

3. On 22.6.1992, the Chairman and Managing Director of

the Appellant appointed Shri Dharni Dhar as the Arbitrator. A

copy of this Order was dispatched to the Respondent. The

Respondent, however, did not participate in the arbitration

proceedings conducted by Shri Dharni Dhar, who eventually

published his Award on 17.10.1992, whereby a sum of Rupees

1,80,62,200/- was adjudicated by him in favour of the

Appellant (NPCC) and against the Respondent. Since this

Award was forwarded by the Arbitrator to this Court, it was

numbered as CS(OS) No.4547/1992. This time around, as is

to be expected, it was the Respondent who filed Objections

(IA No.2680/1997) under Sections 30 and 33 of the Act in

these proceedings, assailing the authority of Shri Dharni

Dhar, as well as the legal propriety of the said Award on its

merits. All three proceedings, that is, OMP No.50/1992,

CS(OS) No.3113/1992 and CS(OS) No.4547/1992), along with

the applications filed therein, were set down for hearing

together.

4. All the Suits/Petition were taken up for consideration by

the learned Single Judge on 2.5.2005. The Suits, as well as

the applications filed therein, were disposed of and the

Petition was dismissed. The Order passed by the learned

Single Judge on that date is reproduced:-

IA 3421/2005 in CS(OS) 3113/1992 This application has been filed by the counsel for defendant seeking discharge. It is between the counsel and his client and as far as this court is concerned it has no objection in the counsel being discharged from the matter. Vakalatnama in favour of the counsel for the respondent is discharged. IA stands disposed of.

IA 14140/1992 These are objections filed by the respondent to the award dated 6.7.1992 passed by Shri C.R.Chopra. Since the respondent is not taking any steps to press the objection and counsel has sought discharge, objections stands dismissed.

CS(OS) 3113/1992 No application was filed by the defendant/respondent and accordingly registry did not list the matter in court. Matter has been listed in court today by the registry notifying by publishing in the advance cause list, the counsel for the parties on 25.4.2005 that the matter would be placed in court today. Since IA 14140/92, being objections to the award have been dismissed for non-prosecution, award dated 6.7.1992 published by Shri C.R.Chopra is made a rule of the court. Principal sum adjudged under the award shall carry interest @ 12% p.a. from date of decree till date of realization.

IA 3405/2005 in CS(OS) 4547/1992 This application has been filed by the counsel for defendant seeking discharge. It is between the counsel and his client and as far as this court is concerned it has no objection in the counsel being discharged from the matter. Vakalatnama in favour of the counsel for the respondent is discharged. IA stands disposed of.

IA 2680/1997 These are objections filed by the respondent to the award dated 17.10.1992 passed by Shri Dharni Dhar. On 22.4.2003 counsel for the respondent sought discharge and matter was adjourned sine die to be listed as and when such application was filed. I am little surprised at the conduct of the petitioner for the reason, if counsel for the non-objector was not receiving instructions, counsel for the petitioner

which had filed objections to the award should have pressed its objections.

Since the petitioner is not taking any steps to press the objections, objections are dismissed. CS(OS) 4547/1992 No application was filed by the defendant/respondent and accordingly registry did not list the matter in court. Matter has been listed in court today by the registry notifying by publishing in the advance cause list, the counsel for the parties on 25.4.2005 that the matter would be placed in court today. Since IA 2680/97, being objections to the award have been dismissed for non-prosecution, award dated 17.10.1992 published by Shri Dharni Dhar is made a rule of the court. Principal sum adjudged under the award shall carry interest @ 12% p.a. from date of decree till date of realization.

Present : Mr. Rajive Vikram Nath, Adv. for the Petitioner

IA No.3406/2005 in OMP No.50/1992 No application was filed and accordingly registry notified on 25.4.2005 that matter would be listed in court today. In the meanwhile, IA No.3406/2005 has been filed after 25.4.2005. Prayer made is to discharge the counsel for the petitioner. Prayer is allowed. Vakalatnama in favour of the counsel for the petitioner is discharged.

OMP No.50/1992 Dismissed for non-prosecution.

5. NPCC moved an application for restoration of OMP

No.50/1992 in which it had questioned the status of Shri

C.R. Chopra as Arbitrator and in which proceedings this

Court had restrained Shri Chopra from pronouncing the

Award but undeterred, he published his Award one day prior

to the Court hearing. The Appellant also prayed for the

restoration of the Objections filed by it in CS(OS)

No.3113/1992 in which the Award of Shri C.R. Chopra had

been received in this Court.

6. It will be recalled that Shri Dharni Dhar had published

his Award on 17.10.1992 and since it was forwarded to this

Court, it was numbered as CS(OS) No.4547/1992. The

Respondent had filed Objections to this Award but, by

oversight or otherwise, neglected to take any action for

restoration of its Objections filed therein.

7. The learned Single Judge framed the following two

questions for determination by him:-

(1) The validity of arbitration proceedings conducted by Shri Chopra as well as Shri Dharni Dhar.

(2) The effect of dismissal of IA No.2680/1997 moved by the Respondent to the Award made by Shri Dharnidhar and the consequence of the

application not being restored on the file of the Court.

8. On the first question, the learned Single Judge has held

that Shri Chopra had not been chosen as an Arbitrator in

accordance with Arbitration Clause. The Award pronounced

by him was accordingly set aside. In other words, the

Objections filed by the Appellant, which had earlier been

dismissed in default and were subsequently restored, came to

be allowed/sustained. That put an end to the proceedings in

CS(OS) No.3113/1992. Since the Respondent has not filed an

Appeal against this part of the Order, it attains finality. Even

otherwise, we affirm the Order of the learned Single Judge

since, at the highest, Shri Chopra had been considered as an

Expert and not as an Arbitrator. An arbitrator could have

been appointed only in conformity with the Arbitration Clause

reproduced above.

9. As has already been mentioned above, all three actions

had been dismissed by the learned Single Judge on 2.5.2005.

The Appellant had succeeded in the restoration of OMP

No.50/1992 in which it had prayed for and had received

appropriate orders staying the proceedings conducted by Shri

Chopra in which he had styled himself as the Arbitrator. With

the setting aside of the Award of Shri Chopra by the dismissal

of CS(OS) No.3113/1992, these proceedings had been

rendered infructuous.

10. The only remaining lis was CS(OS) No.4547/1992 which

contained the Award passed by Shri Dharni Dhar as

Arbitrator. As is to be expected, the Respondent had filed

Objections in those proceedings in which the Court would

either allow or reject the prayer for the Award being made

the Rule of the Court. The Objections filed by the Respondent

had been dismissed in default on 2.5.2005 and unlike the

action of the Appellant, the Respondent had taken no steps

for revival of the Objections. What should not be lost sight of

is that in the absence of any application seeking revival, the

matter stood closed with the decision in those proceedings

passed on 2.5.2005. With respect to the learned Single Judge,

who passed the impugned Order, this is exactly what has

occurred on the part of the Court. The previous learned

Single Judge had noted that the Respondent‟s Objections to

the Award dated 17.10.1992 published by Shri Dharni Dhar

had been dismissed for non-prosecution. There is also no

scope for doubt that without any further discussion or

consideration, the previous learned Single Judge had

proceeded to make the Award published by Shri Dharni Dhar

as the Rule of the Court. The previous learned Single Judge

had ordered that the Award shall carry interest at the rate of

ten per cent per annum from the date of the Decree till the

date of realisation. The correctness of this Order could have

been considered only by traversing the avenue of an Appeal

or a Review filed by the Respondent. This Award is in favour

of the Appellant. Nevertheless, the second learned Single

Judge has entered upon the legal propriety of the Award

passed by Shri Dharni Dhar. The mere fact that the impugned

Order was passed in "Open Court" does not lead to the

inference that it had the consent of all the parties. In fairness

to learned counsel for the Respondent, this argument had not

been pressed.

11. The impugned Order has the effect of reversing the

Order previously passed by the learned Single Judge. Since

neither an Appeal nor a Review had been filed, we had

wondered which jurisdiction could have been invoked by the

Court to carry-out this change.

12. It seems that the only possibility was the existence of

suo moto powers of the Court to review an order. This is also

the logic contained in M.M. Thomas -vs- State of Kerala,

(2000) 1 SCC 666 which has been relied upon before us by

learned counsel for the Respondent. After referring to Article

215 of the Constitution of India, the Bench emphasized that

the High Court, being a Court of Record, must always possess

the inherent powers to correct its records. "A court of

record envelopes all such powers whose acts and proceedings

are to be enrolled in a perpetual memorial and testimony. A

court of record is undoubtedly a superior court which is itself

competent to determine the scope of its jurisdiction. The High

Court, as a court of record, has a duty to itself to keep all its

records correctly and in accordance with law. Hence, if any

apparent error is noticed by the High Court in respect of any

orders passed by it the High Court has not only power, but a

duty to correct it. The High Court‟s power in that regard is

plenary". Mr. S.K. Taneja, learned Senior Counsel appearing

for the Appellant, has firstly drawn our attention to State of

West Bengal -vs- Kamal Sengupta, (2008) 8 SCC 612 where

their Lordships have enunciated the law to the effect that

administrative, as well as other tribunals, possesses the

power to review their orders. It was, however, emphasized by

the Supreme Court that the power of review does not enable

the court/tribunal concerned to sit in an appeal over its own

judgment. In response to the contention raised on behalf of

the Respondent that the setting aside of the Order of the first

learned Single Judge was on a concession, reliance has been

placed by learned Senior Counsel for the Appellant on

Central Council for Research in Ayurveda & Siddha -vs- Dr.

K. Santhakumari, (2001) 5 SCC 60 and Union of India -vs-

Mohanlal Likumal Punjabi, (2004) 3 SCC 628. Both these

Judgments clarify that an incorrect, wrong or unsound

concession cannot bind any party. So far as this aspect of the

case is concerned, we do not think it proper to even entertain

the submission of learned counsel for the Respondent that the

impugned Order was passed on the concession of the

Appellant before us since this is not borne out from the Order

itself.

13. A perusal of the impugned Order does not lead us to the

conclusion that the second learned Single Judge was

exercising the powers of suo moto Review. On the contrary, it

appears to us that inadvertently the existence of the prior

Order had escaped the attention of the Court. There is no

discussion pertaining to the existence of an error apparent on

the face of the record. Extant practice, dictated by judicial

comity, prescribes that in such circumstances it is the Judge

who passed the Order requiring Review before whom the

matter should be placed. Otherwise, it would lead to judicial

anarchy. So far as the party adversely affected is concerned,

it is not without remedy. It could have filed a Review. It could

have equally filed an Appeal. It chose to do neither. We

conclude that the second learned Single Judge was not

exercising suo moto powers.

14. In these circumstances, we arrive at the conclusion that

the Appeal is meritorious. The impugned Order dated

8.5.2008 passed by the learned Single Judge inasmuch as it

has the effect of reversing the previous Order also passed by

the learned Single Judge in CS(OS) No.3113/1992 requires to

be set aside. This impasse has occurred because whilst the

Appellant had initiated action for the restoration/revival of

the applications filed by it, the Respondent has failed to take

similar action in seeking restoration of its Objections filed in

CS(OS) No.3113/1992. It is accordingly clarified that the

Order dated 8.5.2008 is set aside and the Order dated

2.5.2005, making the subject Award the Rule of the Court

along with interest thereon, is restored. The consequence is

that the Award published by Shri C.R. Chopra remains a

nullity, whereas the Award published by Shri Dharni Dhar is

made the Rule of the Court.

15. Appeal is allowed.

16. Trial Court records be sent back.

                                  ( VIKRAMAJIT SEN )
                                       JUDGE




                                  ( MANMOHAN SINGH )
February 26, 2010                     JUDGE
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