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1988 DIGILAW 12 (BOM)

UNION OF INDIA v. PUNJAB WOOLLEN MILLS AMRITSAR

1988-01-08

M.L.PENDSE

body1988
JUDGMENT Pendse J. Oral - This petition is filed by Union of India under Section 30 of the Arbitration Act, 1940 to set aside award dated August 18, 1984 passed by the sole arbitrator M. L. Gupta, Additional Legal Adviser to the Government of India and sole arbitrator Ministry of Law, Justice and Company Affairs. By the impugned award the claim made by the Union of India against the respondents for recovery of sum of Rs. 12,10,549 was dismissed. The arbitrator also directed that the Union of India shall release all the amounts withheld against the claim within four months from the date of the award. The parties were directed to bear their respective costs. The facts giving rise to passing of this award are as follows. The petitioners entered into an agreement with the respondents on December, 24, 1971 for purchase of 20,000 metres of Serge Blue Superior at the rate of Rs. 40.52 per metre. The respondent Company was required to import raw materials and the Union of India agreed to recommend to the Import Authority the requirement of the respondents. The respondents sought import licence for the value of large amount, but the Union of India recommended licence for a smaller amount and ultimately an import licence was issued on May 18, 1982 for value of Rs. 2,77,691. The date of completion of the contract was fixed at March 31, 1973. The respondents were unable to import the raw materials, with the result that the purchase could not be effected by the Union of India. On April 7, 1983 the Union of India rescinded the contract and served show cause notice upon the respondents to explain why the Union of India should not effect risk purchase and recover the difference in the price which was required to be paid. The risk purchase was effected on August 14, 1983. According to the Union of India an amount of Rs. 12,10,549 was required to be spent over and above the amount which was required to be paid under the contract. The agreement between the parties inter alia included Clause 24 of the General Terms and Conditions of Contract which provided for reference of disputes to arbitration. In accordance with these provisions, Union of India referred the claim for Rs. 12,10,549 to the sole arbitrator. The agreement between the parties inter alia included Clause 24 of the General Terms and Conditions of Contract which provided for reference of disputes to arbitration. In accordance with these provisions, Union of India referred the claim for Rs. 12,10,549 to the sole arbitrator. The arbitrator heard the parties and passed the impugned award refusing the entire claim of Union of India and that has given rise to the present petition. Shri Govilkar, learned counsel appearing on behalf of the petitioner, raised two contentions to challenge the legality of the award. The first submission is that the arbitrator was biased in favour of the respondents and therefore the award should be struck down on that count. In support of the submission, Shri Govilkar urged that the arbitrator has set out in detail the arguments advanced on behalf of the respondents but has referred only to one submission urged on behalf of Union of India and that indicates that the arbitrator was biased. It is impossible to accede to the submission of the learned counsel. The arbitrator has not given any reasons for coming to conclusion that the claim of Union of India was without any merit. In that sense it is not a speaking award. What the arbitrator has done is to set out the arguments advanced before him by the respective parties. The submission of Shri Govilkar that the argument of Union of India is couched in only two lines and that should lead the Court to conclude that the arbitrator was biased in favour of the respondents cannot be accepted. The arbitrator was appointed by Union of India and he is holding a high office of Additional Legal Adviser and is the sole arbitrator for the Ministry of Law and Justice and the argument advanced by Shri Govilkar alleging bias against him is nothing short of a desperate attempt to avoid the award. The first submission of Shri Govilkar, therefore, must be turned down. The second contention urged by the learned counsel is that the arbitrator misconstrued the agreement between the parties. There is no merit in this submission also. As mentioned hereinabove, the arbitrator has not given any reasons for coming to the conclusion and therefore it is futile to suggest that the agreement between the parties was misconstrued. The second contention urged by the learned counsel is that the arbitrator misconstrued the agreement between the parties. There is no merit in this submission also. As mentioned hereinabove, the arbitrator has not given any reasons for coming to the conclusion and therefore it is futile to suggest that the agreement between the parties was misconstrued. I inquired from Shri Govilkar as to from what material the submission is made, and the learned counsel had to state that in case the arbitrator would have correctly construed the agreement then the claim would have been decreed. In my judgment, the submission is without any merit and deserves to be repelled. The challenge to the award is without any substance and the petition must fail. Accordingly, petition is dismissed with costs.