Archana Steels Pvt. Ltd. (now known as Bhushan Metallics Ltd.) vs DDA and Another

Sanjay Kishan Kaul, J.—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.

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.

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.

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.

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 substratum 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.

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.

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.

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.

The appeal stands disposed of in the aforesaid terms leaving the parties to bear their own costs.

The arbitration record be remitted to the learned arbitrator.

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.