{"id":262061,"date":"2006-04-21T00:00:00","date_gmt":"2006-04-20T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-mukand-ltd-vs-hindustan-petroleum-corporation-on-21-april-2006"},"modified":"2019-02-28T08:56:59","modified_gmt":"2019-02-28T03:26:59","slug":"ms-mukand-ltd-vs-hindustan-petroleum-corporation-on-21-april-2006","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-mukand-ltd-vs-hindustan-petroleum-corporation-on-21-april-2006","title":{"rendered":"M\/S Mukand Ltd vs Hindustan Petroleum Corporation &#8230; on 21 April, 2006"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">M\/S Mukand Ltd vs Hindustan Petroleum Corporation &#8230; on 21 April, 2006<\/div>\n<div class=\"doc_author\">Author: P Balasubramanyan<\/div>\n<div class=\"doc_bench\">Bench: S.B. Sinha, P.K. Balasubramanyan<\/div>\n<pre id=\"pre_1\">           CASE NO.:\nAppeal (civil)  2153 of 2006\n\nPETITIONER:\nM\/S MUKAND LTD.\t\t\t\t\t\n\nRESPONDENT:\nHINDUSTAN PETROLEUM CORPORATION LTD.\t\t        \t\t\t\n\nDATE OF JUDGMENT: 21\/04\/2006\n\nBENCH:\nS.B. SINHA &amp; P.K. BALASUBRAMANYAN\n\nJUDGMENT:\n<\/pre>\n<p id=\"p_1\">J U D G M E N T<br \/>\n(Arising out of SLP(C) No.3194 of 2005)<\/p>\n<p>P.K. BALASUBRAMANYAN, J.\n<\/p>\n<p id=\"p_1\">Leave granted.\n<\/p>\n<p id=\"p_2\">1.\t\t This appeal arises out of an award made by the<br \/>\narbitrator on a reference made to him under the <a href=\"\/doc\/1052228\/\" id=\"a_1\">Arbitration<br \/>\nAct<\/a>, 1940 (for short &#8220;the Act&#8221;).   Though there was controversy<br \/>\nbetween the appellant and the respondent as to whether there<br \/>\nexisted an arbitration clause justifying  reference to an<br \/>\narbitrator, ultimately, the appellant agreed to the appointment<br \/>\nof one of the arbitrators suggested by the respondent clarifying<br \/>\nthat the appellant was agreeing to the appointment of the<br \/>\narbitrator &#8220;not under the alleged contract but outside the<br \/>\nalleged contract to decide whether there is a concluded<br \/>\ncontract and in any event can you invoke the arbitration<br \/>\nclause under the alleged contract&#8221;   Thus, the dispute stood<br \/>\nreferred to a sole arbitrator.   The sole arbitrator while making<br \/>\nan award held that there had come into existence a valid<br \/>\ncontract between the parties; that there was an arbitration<br \/>\nclause in the contract and proceeded to adjudicate the claim<br \/>\non merits and passed an award directing the appellant to pay<br \/>\na sum of Rs.1,26,67,529.10 and costs of Rs.75,600\/- to the<br \/>\nrespondent on or before 31.07.1994 and failing payment,<br \/>\ndirected the appellant to pay interest at the rate of 11 per cent<br \/>\nper annum on the sum of Rs.1,26,67,529.10 from 28.06.1994<br \/>\ntill the date of payment.   The award was pronounced on<br \/>\n27.06.1994.\n<\/p>\n<p id=\"p_3\">2.\t\tThe appellant moved the High Court of Bombay in<br \/>\nits original civil jurisdiction seeking to have the award set<br \/>\naside in terms of <a href=\"\/doc\/1503578\/\" id=\"a_1\">Section 30<\/a> of the Act.   A learned single<br \/>\nJudge of the Bombay High Court rejected the objections of the<br \/>\nappellant to the award except as regards the quantum.   The<br \/>\nsingle judge modified the award by reducing the amount<br \/>\npayable by the respondent to the appellant to Rs.71,31,954.40<br \/>\nwith costs of arbitration of Rs.75,600\/-, with further interest<br \/>\nat the rate of 11 per cent per annum from the date of the<br \/>\ndecree till payment or final realization.   An appeal filed by the<br \/>\nappellant before the Division Bench was dismissed by the<br \/>\nDivision Bench upholding the finding of the arbitrator that<br \/>\nthere had come into existence a concluded contract between<br \/>\nthe parties and that there was an arbitration clause based on<br \/>\nwhich the disputes between the parties could be referred to<br \/>\narbitration and consequently, the award was one rendered<br \/>\nwithin jurisdiction.   Feeling aggrieved thereby, this appeal by<br \/>\nspecial leave has been filed by the appellant.\n<\/p>\n<p id=\"p_4\">3.\t\tLearned senior counsel for the appellant challenged<br \/>\nthe decision of the High Court and that of the arbitrator that<br \/>\nthere had come into existence a concluded contract between<br \/>\nthe parties.   He further contended that even if there was a<br \/>\nconcluded contract, there was no arbitration agreement in the<br \/>\ncontract or in the correspondence relating thereto.   He also<br \/>\ncontended on merits that the arbitrator was not justified in<br \/>\nawarding damages.   Learned senior counsel for the<br \/>\nrespondent, on the other hand, submitted that the finding by<br \/>\nthe arbitrator that there had come into existence a concluded<br \/>\ncontract was based on an appreciation of the materials<br \/>\navailable and the circumstances obtaining and such a finding<br \/>\nby the arbitrator was not amenable to correction in<br \/>\nproceedings under <a href=\"\/doc\/1503578\/\" id=\"a_2\">Section 30<\/a> of the Act which conferred on<br \/>\nthe court only a circumscribed jurisdiction.   Counsel<br \/>\nsubmitted that the arbitrator had neither misconducted<br \/>\nhimself nor the proceedings.   He also submitted that there<br \/>\nwas no error apparent on the face of the record justifying<br \/>\ninterference by this Court especially when the single judge and<br \/>\nthe Division Bench of the Bombay High Court have refused to<br \/>\ninterfere with the award subject to the modification of the<br \/>\nquantum realizable by the respondent.  The award could not<br \/>\nalso be said to be otherwise invalid.\n<\/p>\n<p id=\"p_5\">4.\t\tWe were taken elaborately through the materials by<br \/>\nsenior counsel for the appellant in an attempt to show that<br \/>\nthere was no concluded contract between the parties and there<br \/>\nexisted no arbitration clause.   He attempted to argue that<br \/>\nwhat the appellant had agreed to was to the appointment of an<br \/>\narbitrator to decide whether there was a concluded contract<br \/>\nbetween the parties containing an arbitration clause and there<br \/>\nis no consistent finding on this question by the arbitrator, the<br \/>\nlearned single Judge and by the Division Bench of the High<br \/>\nCourt and the approach and the reasoning of all the three had<br \/>\ndiffered materially.   Counsel for the respondent necessarily<br \/>\nsubmitted that the question referred to arbitration was<br \/>\nwhether there was a concluded contract between the parties,<br \/>\nwhether there was an arbitration clause, and what was the<br \/>\namount, if any, due to the respondent from the appellant.  He<br \/>\nsubmitted that the findings on these aspects based on the<br \/>\nmaterials was perfectly correct and that there was no occasion<br \/>\nfor interfering with the same.\n<\/p>\n<p id=\"p_6\">5.\t\tWe do not think it necessary to deal in detail with<br \/>\nthe materials placed before us by learned counsel for the<br \/>\nappellant.   During the course of the hearing when we took<br \/>\nnote of the nature of the transaction between the parties and<br \/>\nthe continuing and prospective business relationship between<br \/>\nthem, we put it to the counsel for the appellant that even if we<br \/>\naccept his contention and hold that there was no arbitration<br \/>\nagreement, that may not put an end to the dispute and the<br \/>\nsame would lead to the parties fighting another round of<br \/>\nlitigation for years to come, thus, further souring their<br \/>\ncommercial relationship.   Ultimately, counsel for the<br \/>\nappellant submitted that the appellant was really aggrieved by<br \/>\nthe award of future interest at 11 per cent per annum from the<br \/>\ndate of decree till the date of payment or realization by the<br \/>\nlearned single Judge.  He pleaded that in the circumstances,<br \/>\npost decree interest be reduced to six per cent per annum.<br \/>\nLearned counsel for the respondent submitted that the<br \/>\nconduct of the appellant did not justify any such reduction of<br \/>\ninterest as sought for and considering the nature of the<br \/>\ncontract and the default on the part of the appellant, the rate<br \/>\nof post decree interest awarded was justified.   Having<br \/>\nconsidered the rival submissions and having taken note of the<br \/>\ncircumstances and the transaction in question in the light of<br \/>\nthe correspondence between the parties and on an over all<br \/>\nview of the situation, we are of the view that it would be<br \/>\nappropriate to reduce the post decree interest awarded by the<br \/>\nlearned single Judge.   We think that in the circumstances<br \/>\nseven and a half per cent per annum would be the reasonable<br \/>\nrate of interest that could be directed to be paid by the<br \/>\nappellant to the respondent, for the period subsequent to the<br \/>\ndecree.   Therefore, while we confirm the decision of the<br \/>\nDivision Bench upholding the modified award made by the<br \/>\nlearned single Judge, we reduce the interest awarded by the<br \/>\nlearned single Judge subsequent to the decree from eleven per<br \/>\ncent per annum to seven and a half per cent per annum.   In<br \/>\nother words, we hold that the amount awarded by the learned<br \/>\nsingle Judge in terms of paragraph 13 of his judgment would<br \/>\nbear interest at the rate of seven and a half per cent per<br \/>\nannum from the date of that decree (18.08.1998) till the date<br \/>\nof final payment and\/or realization plus costs of the<br \/>\narbitration proceedings as awarded therein.   In the<br \/>\ncircumstances we direct the parties to bear their respective<br \/>\ncosts in this Court.\n<\/p>\n<p id=\"p_7\">6.\t\tThe appeal is disposed of on the above terms.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India M\/S Mukand Ltd vs Hindustan Petroleum Corporation &#8230; on 21 April, 2006 Author: P Balasubramanyan Bench: S.B. Sinha, P.K. Balasubramanyan CASE NO.: Appeal (civil) 2153 of 2006 PETITIONER: M\/S MUKAND LTD. RESPONDENT: HINDUSTAN PETROLEUM CORPORATION LTD. DATE OF JUDGMENT: 21\/04\/2006 BENCH: S.B. SINHA &amp; P.K. BALASUBRAMANYAN JUDGMENT: J U D G [&hellip;]<\/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":[30],"tags":[],"class_list":["post-262061","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>M\/S Mukand Ltd vs Hindustan Petroleum Corporation ... on 21 April, 2006 - Free Judgements of Supreme Court &amp; 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\/ms-mukand-ltd-vs-hindustan-petroleum-corporation-on-21-april-2006\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S Mukand Ltd vs Hindustan Petroleum Corporation ... on 21 April, 2006 - Free Judgements of Supreme Court &amp; 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