Deciding Authority: Supreme Court of India
Date of Judgement: 5th February, 2003
Bench: Justice M. B. Shah, Justice Ashok Bhan & Justice Arun Kumar
Facts of the Case: Respondent was appointed as a handling and transport contractor on 14th June, 1979. On 4th January, 1980 respondent addressed a letter to the Managing Director of the Corporation requesting him to refer the disputes which had arisen between the parties for arbitration. Since no arbitrator was appointed to resolve the dispute, he filed an application under Section 20 of the Arbitration Act, 1940 in the High Court on the original side, with a prayer to issue a direction to the Managing Director of the Corporation to appoint an arbitrator in terms of the arbitration Clause XX of the agreement entered between the parties. Court by its Order dated 16th June, 1988 issued a direction to the Managing Director of the Corporation to appoint an arbitrator in terms of Clause XX of the agreement within six weeks from the date of communication of the order. Food Corporation of India has filed this appeal against the Division Bench judgment and order of the High Court of Calcutta whereby and where under the High Court has upheld the award made by the arbitrator appointed under the directions of the Court.
Judgement of the Case: High Court issued a direction by order dated 16th June, 1988 referring the disputes for arbitration in terms of Clause XX. The matters which were excluded from the reference to the arbitrator therefore could not be referred to or decided by the arbitrator. Entrance of reference by the arbitrator on disputes which were excluded from reference and the adjudication thereupon would amount to exceeding in the exercise of the jurisdiction as held by this Court in Rajasthan State Mines & Minerals Ltd.’case . Since there was a specific bar to the raising of a claim regarding transit, demurrage and wharfage charges, the award made by the arbitrator in respect thereof would be in excess of the jurisdiction. The Supreme Court held that the appeal is partly allowed. Order of the High Court confirming the award regarding the aforesaid two amounts as well, is set aside. Award of the arbitrator on issues 3 and 5 relating to the refund of Rs. 67,149.65 paise towards the transit loss and the refund of Rs. 1,68,500/- towards demurrage and wharfage charges is set aside. Corporation would not be liable to pay these amounts. There is no infirmity in the award regarding other claims made by the respondents. There shall be no order as to costs.
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