Tamil
Nadu Water Supply & Drainage Board Vs. M/S. Satyanarayana Brothers Pvt.
Ltd. [2009] INSC 1699 (5 November 2009)
Judgment
REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL
NOS.2880-2881 OF 2005 Tamil Nadu Water Supply & Drainage Board ...
Appellant M/s. Satyanarayana Brothers Pvt.Ltd. ... Respondent
O R D E R
1.
In order to overcome the shortage of drinking water in the City of
Chennai, the Government of Tamil Nadu formulated a scheme known as
"Veeranam Project" to provide drinking water to the city. Tenders
were invited for the said scheme and ultimately, the tender submitted by the
respondent M/s. Satyanarayana Brothers Pvt. Ltd. was accepted. The work
undertaken could not be completed within the stipulated time and the respondent
sought 2 extension to complete the work. Though the time was extended, the
respondent could not complete the same on account of disputes which were
ultimately referred to the arbitration of two arbitrators appointed by the
parties.
The
arbitrators appointed Hon'ble Mr. Justice K.S. Palaniswamy, a retired Judge of
the Madras High Court, as their umpire. On account of disagreement between the
arbitrators the matter was referred to the umpire who held that the respondent
was entitled to Rs.40,02,591/- from the appellant and after allowing the
deduction for the same the respondent was liable to pay to the appellant a sum
of Rs.2,69,93,674/- with interest @9% per annum from the date of the Award. Out
of the said Award, only a sum of Rs.5,000/- was awarded as damages for breach
of contract.
2.
The Award was filed by the umpire in the Madras High Court and was
numbered as O.P.No.428/79. While the appellant filed Application No.560/80 in
the said O.P.No.428/79 praying for a decree to be passed in terms of the Award,
the respondent being aggrieved by the Award, filed O.P.No.122/80 for setting
aside the Award. The learned single Judge allowed the prayer for setting aside
the Award and consequently, the other application filed by 3 the appellant for
a decree to be passed in terms of the Award was dismissed. C.S.No.176/78, which
had been filed by the appellant, was also dismissed.
3.
Thereafter, the appellants preferred appeals, being O.S.A.Nos.248
of 1989 and 59 of 1993, against the order of the Single Judge. The said appeals
were allowed by the Division Bench of the High Court by its order dated
18/10/2001 and a decree was passed in terms of the Award dated 10th September,
1979, passed by the umpire.
Aggrieved
by the order dated 18/10/2001, by which OSA 248/89 and 59/93 had been initially
allowed by the Division Bench, the respondent filed SLP(C)Nos.2096-2097 of
2002.
The said
special leave petitions were re-numbered as C.A.Nos.9136-9137 of 2003, and were
disposed of by this Court on 18/11/2003. The matter was remitted to the
Division Bench of the High Court and on remand, the Division Bench dismissed
the said appeals, holding that foreign exchange was to be obtained by the joint
efforts of the appellant and the respondent and that the Government was not
extending time reasonably but in a piece meal manner. Accordingly, the High
Court held that the respondent had not committed any breach of the contract.
4
Aggrieved by the said order dated 24th March, 2004, the appellant preferred
these appeals (C.A.Nos.2880-2881/05), which were dismissed by this Court on 7th
February, 2007.
By
consent of parties, the Hon'ble Mr. Justice S. Mohan, a retired Judge of this
Court was appointed as Sole Arbitrator to decide the disputes between the
parties. The learned Arbitrator submitted his Award on 26th October, 2007,
holding that the respondent/claimant would be entitled to a sum of Rs.15,84,933.76p.
Thereafter, the parties were given the opportunity of filing their respective
objections to the said Award and ultimately the matter has come up for the
acceptance of the Award.
4.
At the very outset, it was sought to be urged on behalf of both
the parties that the said Award dated 26th October, 2007 was not acceptable to
either party on account of an erroneous understanding of the respective cases
made out by the parties. While the appellant questioned the rejection of its
case that the respondent had no claim against the appellant and the innocuous
finding that the breach committed by the contractor was no longer available in
view of the earlier decision, the respondent-contractor questioned the Award on
the ground that its just claims had 5 been wrongly rejected in respect of
damages suffered in view of the stoppage of the work on account of the
appellant's failure to provide necessary assistance for obtaining foreign
exchange for completion of the project.
5.
Both the parties are aggrieved by the Award on the ground of
non-application of mind by the Arbitrator to the material before him. It is the
common ground of the parties that the learned Arbitrator misconducted himself
in appreciating the case made out by of the respective parties vis-a-vis the
materials on record. We have considered the submissions made and we have also
looked into the Award, which indicates that the learned Arbitrator had legally
mis-conducted himself thereby attracting the provisions of Section 30(a) of the
Arbitration
Act, 1940. We, accordingly, set aside the Award and
remit the matter to the learned Arbitrator for a fresh decision. However, in
place of Justice S. Mohan, who had submitted his Award, we appoint Justice
Shivraj Patil, a retired Judge of this Court to be the sole Arbitrator to
consider the matter and pass a fresh Award in the light of the judgment of this
Court dated 07/02/2007 in C.A.Nos.2880-2881 of 2005 and file the same in this
Court. The learned Arbitrator shall 6 be entitled to settle his fees and other
expenses which are to be equally shared by the parties and work out the
procedure to be followed in conducting the arbitration proceedings. The learned
Arbitrator is requested to make his Award expeditiously, but preferably within
a period of six months from the date of entering upon the reference.
................................................J. (ALTAMAS KABIR)
................................................J. (CYRIAC
JOSEPH)
New Delhi Dated:
November 05, 2009.
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