{"id":129113,"date":"1998-08-24T00:00:00","date_gmt":"1998-08-23T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-madhya-pradesh-export-on-24-august-1998"},"modified":"2017-01-18T07:13:29","modified_gmt":"2017-01-18T01:43:29","slug":"union-of-india-vs-madhya-pradesh-export-on-24-august-1998","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-madhya-pradesh-export-on-24-august-1998","title":{"rendered":"Union Of India vs Madhya Pradesh Export … on 24 August, 1998"},"content":{"rendered":"
Delhi High Court<\/div>\n
Union Of India vs Madhya Pradesh Export … on 24 August, 1998<\/div>\n
Equivalent citations: 1998 (47) DRJ 349<\/div>\n
Author: Y Sabharwal<\/div>\n
Bench: Y Sabharwal, K Gupta<\/div>\n<\/p>\n
<\/pre>\n
JUDGMENT<\/p>\n
 Y.K. Sabharwal, J.  <\/p>\n
 1.     The  disputes between Union of India, Ministry of Railways,  appellant in  this appeal and respondent-Madhya Pradesh Export Corporation  Ltd  (for short ‘the Corporation’) were adjudicated by Shri V.K. Raizada, Sole  Arbitrator  in terms of his Award dated 31st August, 1994. The  Award  directed the appellant to pay to the Corporation a sum of Rs. 40,91,531\/-. The claim of the Corporation for interest was, however, rejected by the Arbitrator in the following words:\n<\/p>\n
       “As regards the claimant’s prayer for the payment of interest  on the  balance amount due on account of the difference in rates  at which  payment  was due and the rates at which  the  payment  has actually been made, I am of the view that no interest is  payable in  this case as the contract did not provide for payment of  any interest. Also, para 2401 of the Indian Railways Standards Conditions  of Contract entitles the purchaser to withhold payment  of any  sum which the purchaser claims as his own and on such a  sum no  interest  is payable. Therefore, no interest of any  kind  is considered justified on the balance amount due to the claimant.”\n<\/p>\n
 2.   The  appellant  accepted  the Award and did not  file  any  objections thereto.  The Corporation, however, filed objections to only that  part  of the  Award  where  the Arbitrator had declined to  grant  interest  to  it. Learned Single Judge held that the Award declining grant of interest to the Corporation  cannot be sustained at all and it was set-aside. It  was  also held  by learned Single Judge that Para – 2401 oft the Standard  Conditions of Contract did not apply to the facts of the case. After setting-aside the Award  in this manner, learned Single Judge instead of remitting the  Award to the Arbitrator for fresh decision of question of interest, modified  the award  under  Section  15 of the Arbitration Act, 1940 and  held  that  the
\nCorporation  is entitled to interest at the rate of 12% per annum from  1st May,  1990 till date of realisation on sum of Rs. 40,91, 531\/-. The  appellant is in appeal before us.\n<\/p>\n
 3.   Section 15 confers the power on court to modify or correct an Award on the existence of one of the contingencies mentioned in clause (a) to (c) of the  section. The court will have no jurisdiction to modify or  correct  an Award  in  absence of fulfillment of one of the Clauses a, b or c.  A  plain reading of Section 15 shows that the power of the Court is limited by these three clauses. The court would be acting without jurisdiction, if an  Award is modified only for the reason that the court takes a view different  than the  Arbitrator.  Admittedly,  Clauses (a) and (c) of Section  15  have  no applicability  to  the facts of the present case. Learned counsel  for  the Corporation,  however, submits that the present case is covered  by  Clause\n<\/p>\n
(b)  as it is a case of an obvious error in the Award. Under Clause (b)  it is  not only an obvious error simpliciter which vests power with the  court to  modify or correct an Award. An obvious error in the Award can be  modified  or corrected only when it can be amended without affecting the  decision  of  the  arbitrator. There can be various  illustrations  of  obvious errors  which can be amended without decision of the Arbitrator.  One  such illustration  can be where the Arbitrator while intending to make Union  of India liable, by mistake makes President of India liable. Such an error can
\nbe  corrected under Section 15 without affecting the decision of the  Arbitrator on merits. In the present case, the Arbitrator has, however, come to the  conclusion that the Corporation was not entitled to any interest.  The Court  taking  a different view, as in the present case, has  modified  the Award. In our view, the court has no such jurisdiction and, therefore,  the impugned order correcting the Award cannot be sustained. Under the  circumstances of the case, one of the courses open to the Court was to remit  the Award to the Arbitrator for reconsideration upon question of interest.\n<\/p>\n
 4.   The  learned  Arbitrator held that the contract did  not  provide  for payment  of any interest and further that the Para-2401 entitles  the  purchaser to withhold payment on any sum which the purchaser claims as his own and  on  such a sum no interest is payable. Having heard  counsel  for  the parties,  we are of the view that the learned Single Judge rightly came  to the  conclusion  that Para 2401 did not apply to the facts of the  case.  A bare  reading  of Para 2401 shows that it applies when the  purchaser  i.e. Union  of India has a claim against the contractor and in that  eventuality it can withhold the payment due to the contractor and on such payment being withheld  contractor is not entitled to the interest. Admittedly, the  purchaser  – Union of India had no claim against the Corporation  and,  therefore, it was rightly held that Para 2401 had no applicability.\n<\/p>\n
 5.   It  appears that the Corporation was claiming the amount due from  the appellant from 30th April, 1990. Reference to Arbitration was made in 1994. By  the  impugned judgment, the interest was awarded w.e.f. 1st  May,  1990 till date of payment. Learned counsel for the appellant on the facts of the case  besides  questioning the jurisdiction of court to modify  the  Award, further submitted that the Court could grant interest only from the date of the  decree  as postulated by Section 29 of the Act and not from  1st  May,
\n1990.  Reliance has been placed by learned counsel for the  appellant  upon the  decision of the Supreme Court in the case of Union of India  Vs.  Jain Associates and another 1994(1) Arbitration Law Reporter 494, in particular, Para-4  holding  that Section 29 also carries a negative  import  that  the court has no power to grant interest pendente lite which the arbitrator had not granted. We, however, need not go into this question, for that, we have held that the Award could not be modified under Section 15 of the Act.  The result  of  this would be that the question whether any interest is  to  be granted and if so rate thereof and for which period i.e. from 1st May, 1990 or  from  some  other date would have to be decided by  the  Arbitrator  in accordance with law.\n<\/p>\n
 6.   In  view  of the aforesaid discussion, the impugned  judgment  is  set aside to the extent it modifies the Award and grants interest to the Corporation and instead we direct the remission of the Award to arbitration  for decision  on  the  question of interest alone as no other  point  is  under challenge. The question of interest would be reconsidered by the Arbitrator in the light of this decision and in accordance with law.\n<\/p>\n
 7.   The  learned counsel for the parties submit that the  Arbitrator  Shri V.K.  Raizada has since retired. In this view, counsel for the  Corporation submits that a retired Judge of this Court may be appointed as an  Arbitrator to reconsider the question of interest. Mr. Kapur very fairly  contends that the Government will have no objection to the appointment of a  retired judge as an Arbitrator so long as the Government is not directed to pay the fee  of learned arbitrator to be appointed by this Court. Counsel  for  the Corporation  states that under these circumstances his client is  ready  to pay the fee of the learned Arbitrator.\n<\/p>\n
 8.   Accordingly,  we appoint Mr. Justice Jaspal Singh, a former  Judge  of this  Court  as  sole-Arbitrator to decide the question  of  interest.  The learned  Arbitrator will pronounce the Award under Section 16(2)  within  a period  of  two months from the date he enters the reference.  The  learned Arbitrator  will  fix his fee which would be paid by the  Corporation.  The Arbitration  record in Suit 2214\/94 shall be sent forthwith to the  learned Arbitrator.  The amount towards interest deposited by the appellant  herein shall  continue to be kept in a fixed deposit so as to be  disbursed  after the  reconsideration  by  the Arbitrator and further orders  which  may  be passed in the suit on filing of Award by the learned Arbitrator.\n<\/p>\n
 9.   The appeal is disposed of in the above terms. A copy of this  judgment be given dasti to counsel for the parties.<\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Union Of India vs Madhya Pradesh Export … on 24 August, 1998 Equivalent citations: 1998 (47) DRJ 349 Author: Y Sabharwal Bench: Y Sabharwal, K Gupta JUDGMENT Y.K. Sabharwal, J. 1. The disputes between Union of India, Ministry of Railways, appellant in this appeal and respondent-Madhya Pradesh Export Corporation Ltd (for short […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-129113","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nUnion Of India vs Madhya Pradesh Export ... on 24 August, 1998 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-madhya-pradesh-export-on-24-august-1998\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Union Of India vs Madhya Pradesh Export ... on 24 August, 1998 - 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