Research › Browse › Judgment

Delhi High Court · body

1992 DIGILAW 11 (DEL)

RUBY PLASTIC INDUSTRIES v. FOOD CORPORATION OF INDIA

1992-01-09

ARUN KUMAR

body1992
Arun Kumar ( 1 ) M/s Ruby Pastic Industries, petitioner herein filed the present petition under Section 14 of the Arbitration Act for directions to the Arbitrator, respondent No. 2 to file the award along with all the records of proceedings. In pursuance of the notice of the said application, the Arbitrator filed the award along with the original proceedings. Notice of filing of the award was issued to the parties. In pursuance of the said notice, only the petitioner i. e. , M/s. Ruby Plastic Industries, has filed objection to the award under Sections 16, 30 and 33 of the Arbitration Act. The objection have been numbered as I. A. 4622/87. Inspite of various opportunities, neither the respondents put in appearance nor any reply has been filed to the objection filed by the petitioner. The respondent were ultimately proceeded ex parte vide order dated 6th May, 1988. The petitioner was directed to file affidavit by way of evidence. In Compliance with the said directions, the petitioner has filed the affidavits. ( 2 ) I have heard the counsel for the petitioner/objector. He has raised various objections against the award. However, I am of the view that the award is liable to be set aside on one of its objection which is basic to the entire issue and, therefore, I need not go into the other objections. This basic objection of the petitioner is that the Arbitrator has gone beyond the reference inasmuch as he has made the award in favour of Food Corporation of India which was not even a party to the reference. A copy of the order dated 10th April, 1980 passed in Suit No. 4-A/80 by this Court, has been placed on record. The said proceedings were between Vijay Kumar Aggarwal, the sole proprietor of M/s. Ruby Plastic Industries and the Union of India through the Director General for Supplies and Disposals. This Court was seized of the matter on the basis of a petition under Section 20 of the Arbitration Act moved by M/s. Ruby Plastic Industries. The existence of the arbitration agreement between the parties was admitted and on that basis the inter se disputes between the parties arising under the contract were referred to the arbitration of an Arbitrator to be appointed by the Director General of Supplies and Disposals. The existence of the arbitration agreement between the parties was admitted and on that basis the inter se disputes between the parties arising under the contract were referred to the arbitration of an Arbitrator to be appointed by the Director General of Supplies and Disposals. The proceedings before the Arbitrator filed in this Court show that initially the Union of India was participating in the proceedings. However, at a subsequent stage, the Food Corporation of India which is a statutory Corporation registered under the Companies Act was substituted by the arbitrator in place of Union of India and was also allowed to file claims. The petitioner/objector has been objecting to this even before the Arbitrator by moving various applications before him and in fact this is one of his other grievances that without deciding his objections, the Arbitrator has proceeded on to make the award. Even a perusal of the award dated 29th October, 1986 shows that the same has been made in favour of the Food Corporation of India after considering the various claims of the said Corporation. Counsel for the petitioner/objector has urged that the Arbitrator could not entertain the claims of the Food Corporation of India because the said body was not a party to the reference and without amendment of the reference through Court, the Corporation could not be allowed to participate in the proceedings nor an award could be made in its favour. In this connection, he has relied on Orissa Mining Corporation Ltd. v. M/s. Pran Nath Vishwa Nath Rawlley1. In the said case, the Supreme Court has held that when an agreement is filed in Court, an order of reference is made under Section 20 (4) then the claim as a result of the order of reference is limited to a particular relief and the Arbitrator can not enlarge the scope of the reference and entertain the fresh claims without further order of reference from the Court. On the basis of this authority, it is submitted that by entertaining the claims of the Food Corporation of India, which was not a party to the reference and in that sense was a third party, the Arbitrator has acted beyond his jurisdiction. He has allowed a third party to join the proceeding and has entertained its claim and in fact passed an award in its favour. He has allowed a third party to join the proceeding and has entertained its claim and in fact passed an award in its favour. Even though, that party as never appeared before the Court which made the reference to arbitration. I think there is substance in this objection. It was beyond the authority or power of the Arbitrator to substitute the Food Corporation of India as a party to the reference in place of Union of India and entertain the claims of the Food Corporation of India. Even if the Union of India had entered into the contract with the petitioner/objector for the benefit of the Food Corporation of India, the fact remains that the Food Corporation of India was as such never a part to the reference. If at all the Food Corporation of India had to be substituted as a party to the reference, the same ought to have been done under orders of the Court which made the reference and not by the Arbitrator himself as has been done in the present Case. Accordingly, I held that the Arbitrator has acted beyond the scope of reference and since the award is only about the claims made by the Food Corporation of India, as is apparent from the perusal of the award, the award is liable to be set aside. I accordingly set aside the award dated 29th October, 1986. Since, I am setting aside the award on account of the aforesaid objection, I express no opinion on the other objections taken by the objector. I. A. 4622/87 stands disposed of. There will be no order as to costs. ( 3 ) SUIT No. 2/88/86. In view of the award having been set aside, the suit stands disposed of.