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the reappraisal of evidence, filed before arbitrator, by the court is not permissible

We are of the considered opinion that the High Court committed a serious error in Respondent-appreciating the evidence led by the parties before the arbitrator. This evidence was duly scrutinized and evaluated by the arbitrator. With regard to claim No.5, the arbitrator has given elaborate reasons.

(TARUN CHATTERJEE & SURINDER SINGH NIJJAR, JJ.)
M/S. RAVINDRA KUMAR GUPTA & COMPANY VERSUS UNION OF INDIA

Civil Appellate Jurisdiction Civil Appeal No. 8019 of 2009 (Arising out of Special Leave Petition (C) No. 3755 of 2008)-Decided on 3-2-2009

Arbitrator cannot properly deal with malpractice allegations

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7019 OF 2009

[Arising out of SLP)No.5994 of 2007]

N. Radhakrishnan -------Appellant Versus

M/s. Maestro Engineers & Ors. -----Respondents JUDGMENT

The Supreme Court (SC) has stated when there are serious allegations of malpractices and manipulation of accounts of a firm, the dispute cannot be properly dealt with by an arbitrator. It would be appropriate to let the civil court decide. In this case, N Radhakrishnan vs M/s Maestro Engineers, partners in the firm split and one of them wanted his share to be paid after resignation. However, there were disputes on the amounts due. The partner wanted arbitration which was denied by the district court. He appealed to the SC which dismissed his plea. It said when there are allegations of manipulation of accounts, fraud, misrepresentation and similar charges, it would not be proper to refer all these to an arbitrator. Therefore, the case was remitted to the civil court in Coimbatore
Source:http://www.business-standard.com/

Signature not by mistake

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5994 OF 2004

Grasim Industries Ltd. & Anr. .... Appellants Versus

Agarwal Steel .... Respondent WITH

CIVIL APPEAL NOS. 7477/2004 AND 1733/2005

In our opinion, when a person signs a document,there is a presumption, unless there is proof of force or fraud, that he has read the document properly and understood it and only then he has affixed his signatures thereon, otherwise no signature on a document can ever be accepted. In particular, businessmen, being careful people (since their money is involved) would have ordinarily read and understood a document before signing it. Hence the presumption would be even stronger in their case.

a subscriber of telophone/mobile phone connection has a right to approach the Consumer Fora s established under the Consumer Protection Act

In a recent Judgment passed by the District Consumer Forum, Ferozepur, Punjab, India recently received in the office of a local Newspaper, District Consumer Disputes Redressal Forum, Ferozepur comprising of Sanjay Garg, President and Tarlok Singh, Member held that a subscriber of telophone/mobile phone connection has a right to approach the Consumer Fora s established under the Consumer Protection Act for the redressal of their grievances as the Consumer Protection Act is a special legislation enacted for the protection of consumer rights. The facts of the case are that one Lakhbir Singh approached the Consumer Forum at Ferozepur with a complaint that his mobile phone connection has been wrongfully deactivated by the Bharat Sanchar Nigam Limited despite paying the necessary charges and submission of necessary documents. However, consel for the B.S.N.L. contested the case on the ground that the Consumer Forum has no jurisdiction to entertain a dispute relating to telecommunications services in view of the recent authority of the Supreme Court styled as General Manager, Telecom Versus M. Krishnan and others decided on 1.9.09, which was also published in various news papers.
Sanjay Garg, President and member Tarlok Singh of the District Forum Ferozepur after discussing various other authorities of the Supreme Court held that the newly enacted Telecom Regulator Authority of India Act, 1997 is more applicable to the matters relating to telecom disputes than the old Indian Telegraph Act, 1885. The Consumer Forums have been given jurisdiction to adjudicate upon the matters relating to telecom consumer disputes under the said Act of 1997. While holding that the consumer Protection Act is a special legislation and not a general law, Shri Sanjay Garg, President of the Consumer Forum finding the B.S.N.L. deficient in services ordered it to pay a sum of Rs.10,000/- to complainant Lakhbir Singh on account of mental agony, pain and harassment suffered by him and Rs.2000/- as litigation expenses and further ordered to restore the mobile connection of the complainant without charging any extra sum.
A copy of the order of District Consumer Forum, Ferozepur is given/placed below for ready references::


BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, FEROZEPUR.

QUORUM
President : Shri Sanjay Garg

Member : S. Tarlok Singh

C.C. No.180 of 2009

Date of Institution: 9.4.2009

Date of Decision: 11.9.2009

Lakhbir Singh, aged about 34 years, son of Mohinder Singh son of Harnam Singh, resident of Basti Kamboj Nagar, Ferozepur City.

……. Complainant
Versus

1. Aman Arora Telecom, Dulchi Ke Road, Opposite Guruduwara
Market, Basti Kamboj Nagar, Ferozepur City, Tehsil and District
Ferozepur, through its Proprietor Aman Arora.

2. Bharat Sanchar Nigam Limited, Telecom (Mobile), Ferozepur Cantt,
through its General Manager.
……… Opposite parties

Complaint under Section 12 of the
Consumer Protection Act, 1986.
* * * * *
P R E S N T :

For the complainant : Complainant in person

For opposite party No.1 : Sh. Deepak Maggo, Advocate

For opposite party No.2 : Sh. Gagan Goklany, Advocate

O R D E R

SANJAY GARG, PRESIDENT:-

Complainant Lakhbir Singh has filed the present complaint against Aman Arora Telecom (herein after referred to as opposite party No.1) and Bharat Sanchar Nigam Limited (herein after referred to as opposite party No.2) pleading that the complainant got a mobile telephone
C.C. No.180 of 2009 \\2//

connection No.94645-59188 from opposite party No.1 after paying Rs.200/- on 6.2.2009 and at that time the complainant had given his proof of identity i.e. one snap and photo copy of voter card to opposite party No.1. Opposite party No.1 issued a sim card of the above said mobile connection to the complainant and told that the validity of the same would be three months with the value of Rs.100/- talk time. After that the said mobile connection was activated and it was running upto 1.3.2009, but on 2.3.2009, opposite party No.1 disconnected the connection of the complainant. On enquiry, the complainant came to know that his mobile connection has been disconnected for want of identity proof. On 3.3.2009, the complainant again submitted the same proof i.e. one snap and one photo copy of the voter card to the opposite parties and opposite party No.2 promised that the mobile connection in question will be activated again up till evening of the same day. Thereafter, the complainant made several requests to the opposite parties, also served a legal notice dated 28.3.2009 upon the opposite parties regarding the above said negligence and deficiency in service, but the opposite parties have neither paid any heed to the requests of the complaint nor given any reply to the notice. Pleading deficiency in service on the part of the opposite parties, the complainant has claimed Rs.20,000/- as compensation for mental agony, pain and harassment and Rs.2200/- as litigation expenses.
2. Notice of the complaint was given to the opposite parties, who appeared and filed their separate written replies to the complaint. Opposite party No.1, in its written reply, has pleaded that the complainant got a
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mobile telephone connection No.94639-59188 from opposite party No.1 on 6.2.2009 and had given his identity proof i.e. one snap and photo copy of voter card and opposite party No.1 issued sim card of the mobile connection and told that as per the norms and conditions of the company, the validity was of three months with talk time worth Rs.100/-. After obtaining the proof required for the connection, the same was forwarded to BSNL for activation of the connection and the said connection was activated. It has been further pleaded that after submission the identity proof, the connection in question was activated by the BSNL and opposite party No.1 has got no role to play thereafter. The verification of the identity proof is done by the company and in case of negative verification, the company can seek the identity proof other than the furnished at the time of getting the connection. Denying any deficiency in service on the part of opposite party No.1, dismissal of the complaint has been prayed for.
3. Opposite party No.2, in its written reply, has pleaded that opposite party No.1 is not an authorized agent of opposite party No.2 rather M/s Aneja Enterprises, Jalalabad (W) is the authorized dealer. Prepaid mobile connections are given to consumers after the completion of requisite formalities and the dealer is to activate the same. The sim in question was given to M/s Aneja Enterprises and not to opposite party No.1. It has been further pleaded that the said sim is in working condition. Other allegations of the complaint have been denied.
4. Parties led evidence.
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5. We have heard the complainant in person and learned counsel for the opposite parties and have also gone through the file.
6. At the outset, the learned counsel for opposite party No.2 has produced a recent judgment of the Hon’ble Supreme Court of India styled as General Manager, Telecom Versus M. Krishnan & Another, Civil Appeal No.7687 of 2004, decided on 1.9.2009 and submitted that in view of the above said authority, this Forum has no jurisdiction to entertain and decide the present complaint.
7. So before adjudicating the matter on merits, it has become necessary to decide as to whether this Forum, established under the Consumer Protection Act, has jurisdiction to entertain the disputes relating to mobile connections. The Hon’ble Supreme Court of India in the above said judgment has held that under Section 7-B of the Indian Telegraph Act, 1885, the disputes concerning any telegraph line, appliance or apparatus are required to be referred to an Arbitrator appointed by the Central Government. Relying upon another authority of the Hon’ble Supreme Court styled as “Chairman, Thiruvalluvar Transport Corporation Versus Consumer Protection Council, (1995) 2 SCC 479”, the Hon’ble Supreme Court of India has further held that special law overrides the general law.
8. In full respect to the Hon’ble Supreme Court of India, before relying upon the above said authority, we would like to discuss another law/legislature enactments made by the Parliament and also the various other authorities on the question relating to the jurisdiction of the Consumer Forums.
C.C. No.180 of 2009 \\5//

9. So far the provisions of The Indian Telegraph Act, 1885 are concerned, under Section 3 (1AA), the word ‘Telegraph’ has been defined as under :-
“telegraph” means any appliance, instrument, material
or apparatus used or capable of use for transmission or
reception of signs, signals, writing, images, and sounds
or intelligence of any nature by wire, visual or other electro-
magnetic emissions, Radio waves or Hertzian waves, galvanic,
Explanation – “Radio waves” or “Hertzian waves” means
electro magnetic waves of frequencies lower than 3,000
giga-cycles per second propagated in space without artificial
guide.”
10. The instrument named telephone, through which one person could directly talk with another person at a distant place without seeing personally face to face, was invented by Alexander Graham Bell in the year 1876. In 1878, the first telephone exchange was established at New Haven. In the year 1882, first telephone exchange was opened at Calcutta in India having only 93 subscribers. In the year 1885, when the Indian Telegraph Act was enacted, telephone facility was not available to the people at large in India. Through telegraph system, certain messages were used to be conveyed through signs, signals and sounds etc. Even the facility was not available to people at large, but was used in emergency cases through the specialized facility offered by the Government authorities. With the advancement of
C.C. No.180 of 2009 \\6//
technology, new inventions were made and landline telephone services were made available to the consumers at large. Thereafter, mobile telephone technology stepped into to serve the people and it was indeed a revolution in the field of telecommunication.
11. Section 3 (1AA), as reproduced above, was introduced in the said Act in the year 1961 by way of amendment to the parent Act of 1885. In the year 1961, the mobile technology had not been developed in India. Mobile phones were formally launched in India in August, 1995. With the advancement of the technology, the facility of phones reached to the consumers at large. With the changed circumstances, the law relating to telecommunication has also been changed and it must be changed with the changed circumstances, otherwise the legal system would fall flat and the people would become violators of law.
12. Several mobile service providers have been granted licenses to provide mobile telephone services to the consumers. To regulate the telecommunication services, adjudicate disputes, dispose of appeals and to protect the interest of service providers and consumers of the telecom sector and for matters connected therewith, the Parliament has passed “The Telecom Regulatory Authority of India Act, 1997”. Under the Telecom Regulatory Authority of India Act, 1997, the ‘telecommunication services’ have been defined, which for the purpose of facilitation is reproduced as under :-
“2. Definitions.-(1) In this Act, unless the context otherwise
requires -

(k) “telecommunication service” means service of any
C.C. No.180 of 2009 \\7//
description (including electronic mail, voice mail,
data services, audio tax services, video tax services,
radio paging and cellular mobile telephone services)
which is made available to users by means of any
transmission or reception of signs, signals, writing,
images and sounds or intelligence of any nature, by
wire, radio, visual or other electromagnetic means
but shall not include broadcasting services:
Provided that the Central Government may
notify other service to be telecommunication service
including broadcasting services.”
13. Under the said Telecom Regulatory Authority of India Act, 1997, a provision has been made for establishment or incorporation of an authority namely Telecom Regulatory Authority of India to regulate the functioning of telecommunication service providers and other matters including and relating to mobile telephones also. Under Section 14 of the said Act, a provision has been made for establishment of Appellate Tribunals to adjudicate any dispute relating to the telecommunication services. For the purpose of facilitation, Section 14 of the Telecom Regulatory Authority of India Act, 1997 is reproduced as under :-
“14. Establishment of Appellate Tribunal – The Central
Government shall, by notification, establish an Appellate
Tribunal to be known as the Telecom Disputes Settlement
and Appellate Tribunal to –
(a) adjudicate any dispute –
(i) between a licensor and a licensee;
(ii) between two or more service providers;
C.C. No.180 of 2009 \\8//

(iii) between a service provider and a group of
consumers:
Provided that nothing in this clause shall apply
in respect of matters relating to -
(A) the monopolistic trade practice, restrictive trade
practice and unfair trade practice which are subject
to the jurisdiction of the Monopolies and
Restrictive Trade Practices Commission established under sub-section (1) of Section 5 of
the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969);
(B) the complaint of an individual consumer
maintainable before a Consumer Disputes Redressal Forum or a Consumer Disputes Redressal Commission or the National Consumer Redressal Commission established under section 9 of the Consumer Protection Act, 1986 (68 of 1986);
(C) dispute between telegraph authority and any other
person referred to in sub-section (1) of section 7B
of the Indian Telegraph Act, 1885 (13 of 1885)”.
14. From the bare perusal of the above said provisions, now it is clear beyond doubt that the telephone services and to be more particular
C.C. No.180 of 2009 \\9//

Cellular mobile telephone services have been specifically covered under the Telecom Regulatory Authority of India Act, 1997 and the provisions of the said Act are in addition to the previous Indian Telegraph Act, 1885. From perusal of Section 14 (b), it is very much clear that even when a consumer approaches the Consumer Disputes Redressal Forum, then the provisions of the Telecom Regulatory Authority of India Act, 1997 or the jurisdiction of the Appellate Tribunals established under the Telecom Regulatory Authority of India Act, 1997 ceases, rather the provisions of the Consumer Protection Act get precedence over the powers vested with the Appellate Tribunals established under the Telecom Regulatory Authority of India Act, 1997.
15. The Telecom Consumers Protection and Redressal of Grievances Regulations, 2007 have come into force vide Notification dated 4th May 2007 and have been published in Gazette of India. Under Regulation No.1 Clause (3), it has been provided that these regulations shall apply to –
“(a) all service providers including Bharat Sanchar Nigam
Limited and Mahanagar Telephone Nigam Limited,
being the companies registered under the Companies
Act, 1956 (1 of 1956) providing –
(i) Basic Telephone Service;
(ii) Unified Access Services;
(iii) Cellular Mobile Telephone Service.”
The ‘Basic Telephone Service’ has been defined under Section 2 (g) of the above said Regulations. The meaning of ‘consumer’ has also been defined.
C.C. No.180 of 2009 \\10//

For the sake of convenience, Section 2 (d), 2 (g) and 2 (h) of the above said Regulations are reproduced as under :-
“2. Definitions – In these regulations, unless the context
otherwise requires -
(d) “Basic Telephone Service” covers collection, carriage,
transmission and delivery of voice or non-voice
messages over licensee’s Public Switched Telephone
Network in licensed service area and includes provision
of all types of services except those requiring a separate
licence;
(g) “Cellular Mobile Telephone Service” -

(i) means telecommunication service provided by means
of a telecommunication system for the conveyance of messages through the agency of wireless telegraphy
where every message that is conveyed thereby has been,
or is to be, conveyed by means of a telecommunication
system which is designed or adapted to be capable of
being used while in motion;
(ii) refers to transmission of voice or non-voice messages
over Licensee’s Network in real time only but service
does not cover broadcasting of any messages, voice or
non-voice, however, Cell Broadcast is permitted only to
the subscribers of the service,
C.C. No.180 of 2009 \\11//

(iii) in respect of which the subscriber (all types, pre-paid as
well as post-paid) has to be registered and authenticated
at the network point of registration and approved numbering plan shall be applicable;
(h) “consumer” means a consumer of a service provider
falling in clause (a) or clause (b) of sub-regulation (3) of
regulation 1 and includes its customer and subscriber.”
16. Section 25 of the above said Regulations is very much relevant, which for the sake of convenience is reproduced as under :-
“25. Right of consumers to seek redressal under
the Consumer Protection Act, 1986 or any other
law for the time being in force – (1) The provisions
of these regulations are in addition to any right
conferred upon the consumers under the Consumer
Protection Act, 1986 (68 of 1986) or any other law
for the time being in force.
(2) Any consumer may, at any time -
(a) during pendency of redressal of his grievance, whether
by filing of complaint or appeal, under these regulations;
or
(b) before or after filing of complaint or appeal, under these
regulations, exercise his right conferred upon him under
the Consumer Protection Act, 1986 (68 of 1986) or any
C.C. No.180 of 2009 \\12//
other law for the time being in force and seek redressal
of his grievance under that Act or law.”
17. Section 27 of the above said Regulations is also very much important, which for the sake of convenience is reproduced as under:-
“27. These regulations not to apply in certain cases –
Nothing contained in these regulations shall apply to
any matter or issue for which –
(a) any proceedings, before any court or tribunal or
under the Consumer Protection Act, 1986 (68 of
1986) or any other law for the time being in force,
are pending; or
(b) a decree, award or an order has already been
passed by any competent court or tribunal or
authority or forum or commission, as the case
may be.”
18. From the bare perusal of the above said Regulations framed by the Telecom Regulatory Authority of India exercising the powers conferred upon it under Section 36 and Section 11 of the Telecom Regulatory Authority of India Act, 1997, it is abundantly clear that the provisions of the Consumer Protection Act, 1986 prevail over the Telecom Regulatory Authority of India Act, 1997 and the jurisdiction and powers of the Consumer Disputes Redressal Forums are over and above the jurisdiction and powers of the Tribunals established for the purpose of adjudication of disputes relating to telecommunication services.
C.C. No.180 of 2009 \\13//
19. It is settled law that the law enacted by the Parliament cannot be changed or made useless by judicial interpretation. The provisions of the enactments have to prevail over the judicial decisions. The question of interpretation comes only when the provisions of legislative enactments are either not clear, ambiguous or cannot depict the true meaning. When the provisions of the legislative enactments are plain, clear and unambiguous, then these cannot be negtivated through judicial interpretation. Reliance can be placed upon various authorities of the Hon’ble Supreme Court of India on this point. The Hon’ble Supreme Court in “State of U.P. & Others Versus Jeet S. Bisht & Anr., 2007 (3) CLT 10”, wherein the Hon’ble Supreme Court has specifically held that court cannot add or substitute word in a statute. By judicial verdict the court cannot amend the law made by the Parliament or State Legislature. It has been further held by the Hon’ble Supreme Court in the said authority that mere a direction of the Hon’ble Supreme Court without laying down any principle of law is not a precedent. It is only where the Hon’ble Supreme Court lays down a principle of law that will amount to a precedent. The courts are subordinate to law and not above the law.
20. So far the question as to whether the Consumer Protection Act, 1986 is a special legislation or a general law, the Hon’ble Supreme Court of India has given its view in various authorities, some of which we will discuss hereinafter. However, before discussing the authorities, we would like to discuss certain provisions of the Consumer Protection Act, 1986.
“1. Short title, extent, commencement and application –
(1) This Act may be called the Consumer Protection Act,
1986.
C.C. No.180 of 2009 \\14//

(4) Save as otherwise expressly provided by the Central
Government by notification, this Act shall apply to all
goods and services.
2. Definitions – (1) In this Act, unless the context otherwise
Requires --
(o) “service” means service of any description which is made
available to potential users and includes, but not limited
to, the provision of facilities in connection with banking,
financing, insurance, transport, processing, supply of electrical or other energy, board, or lodging or both
housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.
3. Act not in derogation of any other law – The
provisionsof thisAct shall be in addition to and not
in derogation of the provisions of any other law for the
time being in force”.
21. So from the perusal of the above said provisions of the Consumer Protection Act, 1986, it is quite clear that the provisions of the Consumer Protection Act, 1986 apply to all type of goods and all services availed by the consumers against consideration paid or promised. Section 1 (iv) of the Consumer Protection Act, 1986 is of wide connotation.
C.C. No.180 of 2009 \\15//

22. The Hon’ble Supreme Court of India in “Secretary, Thirumurugan Co-operative Agricultural Credit Society Versus M. Lalitha (Dead) through LRs. and others, 2004 (1) CLT 456”, wherein an objection was raised as to the jurisdiction of the Consumer Disputes Redressal agencies in view of the bar/arbitration clause contained in Section 90 and Section 156 of the Tamil Nadu Co-operative Societies Act, 1983, the Hon’ble Supreme Court of India has held that merely because the rights and liabilities are created to the appellate society under the Co-operative Societies Act, 1983 and Forums are provided for adjudicating the dispute between them, it cannot take away or exclude the jurisdiction conferred on Forum under the Consumer Protection Act, 1986 expressly and intentionally to serve a definite cause in terms of the objects and reasons of the Act. The Hon’ble National Commission was held right in holding that the view taken by the Hon’ble State Commission that the provisions under 1983 Act relating to reference of disputes to arbitration shall prevail over the provisions of 1986 Act, is incorrect and untenable. The authority Chairman, Thiruvalluvar Transport Corporation Versus Consumer Protection Council, (1995) 2 SCC 479, relied upon in the authority General Manager, Telecom Versus M. Krishnan & Another (supra), has been discussed and distinguished by the Hon’ble Supreme Court in the above said authority. The Hon’ble Supreme Court in para 11 and 12 of the judgment has observed as under :-
“(11) From the statement of objects and reasons
and the scheme of 1986 Act, it is apparent that the main
objective of the Act is to provide for better protection of
the interest of the consumer and for that purpose to
provide for better redressal mechanism through which
cheaper, easier, expeditious and effective redressal is
made available to consumers. To serve the purpose of
the Act, various quasi judicial forums are set up at the
district, State and National level with wide range of
powers vested in them. These quasi judicial forums,
observing the principles of natural justice, are
empowered to give relief of a specific nature and to
award, wherever ‘appropriate, compensation to the
consumers and to impose penalties for non-compliance
of their orders.
(12) As per Section 3 of the Act, as already
stated above, the provisions of the Act shall be in
addition to and not in derogation to any other provisions
of any other law for the time being in force. Having due
regard to the scheme of the Act and purpose sought to
be achieved to protect the interest of the consumers,
better the provisions are to be interpreted broadly,
positively and purposefully in the context of the present
case to give meaning to additional/extended jurisdiction,
particularly when Section 3 seeks to provide remedy under
the Act in addition to other remedies provided under other
Acts unless there is clear bar”.
So as per the above said authority, despite provisions for referring the dispute to arbitration in the certain Acts/Laws, the object and purpose of the Consumer Protection Act cannot be frustrated as the provisions of the Consumer Protection Act are in addition and not in derogation of any other law in force.
It was further held by the Hon’ble Supreme Court that if parties approach both the Forums created under any other Act and the 1986 Act (Consumer Protection Act, 1986), it is for the Forum under the 1986 Act to leave the parties either to proceed or avail the remedies before the other Forums depending upon the facts and circumstances of the case.
23. The Hon’ble Supreme Court of India in “Neeraj Munjal and Others Versus Atul Grover (Minor) and another, 2005 (3) CLT 30”, in para 10 and 11 of the judgment has held that the courts could not deprive the parties from a remedy, which is otherwise available to them in law. It has been further held that a court of law has no jurisdiction to direct a matter to be governed by one statute when provisions of another statute are available. 24. In “State of U.P. & Others Versus Jeet S. Bisht & Anr., 2007 (3) CLT 10” (supra), the Hon’ble Supreme Court has held that the Consumer Protection Act, 1986 has been enacted for better protection of the interest of the consumers. The said Act is in addition to and not in derogation of the provisions of the any other law for the time being in force.
C.C. No.180 of 2009 \\18//

The Act not only provides for new rights for the citizens of India in their capacity as consumers, it envisages their empowerment in this behalf. It is indisputably the solemn duty of the executive of both the Government of India and also the Government of State to implement the provisions of the Act in true letter and spirit. The Hon’ble Supreme Court in the above said authority has further held that the Consumer Protection Act embodies a certain value in protecting the interest of the consumers in the age of consumerism and the institution of consumer Fora is a specific mission in that behalf.
25. In “State of Karnataka Versus Vishwahharathi House Building Coop. Society and others, 2003 (2) CLT 3”, where the constitutionality of the Consumer Protection Act, 1986 was challenged on various grounds, the three Judges Bench of the Hon’ble Supreme Court of India has held that the provisions of the Consumer Protection Act clearly demonstrate that it was enacted keeping in view a long felt necessity of protecting the common man from wrongs where for the ordinary law for all intent and purport had become illusory. In terms of the said Act, a consumer is entitled to participate in the proceedings directly as a result whereof his helplessness against a powerful business house may be taken care of. The Hon’ble Supreme Court of India further held that by reason of the said statute (Consumer Protection Act), quasi-judicial authorities have been created at the District, State and Central levels so as to enable a consumer to ventilate his grievances before a Forum where justice can be done without
C.C. No.180 of 2009 \\19//

any procedural wrangles and hyper-technicalities. One of the objects of the said Act is to provide momentum to the consumer movement. While referring to the several provisions of the Consumer Protection Act and also discussing the various authorities, the Hon’ble three Judges Bench of the Supreme Court of India further held that by reason of provisions of Section 3 of the Act, the said Act supplements and not supplants the jurisdiction of the civil court or other statutory authorities. The Hon’ble Supreme Court of India while relying upon another authorities styled as “Fair Air Engineers Versus N.K. Modi, (1996) 6 SCC 385” and “Satpal Mohindra Versus Surindra Timber Stores, (1999) 5 SCC 696” has specifically held that the provisions of the said Act are required to be interpreted as broadly as possible. It has jurisdiction to entertain a complaint despite the fact that other Forum/courts would also have jurisdiction to adjudicate upon the matter.
26. The Hon’ble Supreme Court of India in “Ghaziabad Development Authority Versus Balbir Singh, 2004 (2) CLT 628”, has held that the Consumer Protection Act has a wide reach and the Commission has jurisdiction in case of services referred by the statutory and public authorities. The provisions of the Consumer Protection Act enable a consumer to claim and empower the Commission to redress any injustice done. The Hon’ble Supreme Court in the said authority further held that matters, which require immediate attention, should not be allowed to linger on. The consumer must not be made to run from pillar to post. Where there
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has been capricious or arbitrary or negligent exercise or non-exercise of power by an officer of the authority, the Commission/Forum has a statutory obligation to award compensation.
27. In Kishore Lal Versus Chairman, Employees’ State Insurance Corporation, 2007 (4) SCC 579, the Hon’ble Apex Court has observed :-
“It has been held in numerous cases of this Court that
jurisdiction of the Consumer Fora has to be construed
liberally so as to bring many cases under it for their speedy disposal. The Act being a beneficial legislation, it should receive a liberal construction.”
28. The Hon’ble Supreme Court in “Fair Air Engineers Pvt. Ltd. & ANR. Versus N.K. Modi, III (1996) CPJ 1 (SC)” has held :-
“Accordingly, it must be held that the provisions of the Act
are to be construed widely to give effect to the object and
purpose of the Act. It is seen that Section 3 envisages that
the provisions of the Act are in addition to and are not in
derogation of any other law in force. It is true, as rightly
contended by Mr. Suri, that the words “in derogation of
the provisions of any other law for the time being in force”
would be given proper meaning and effect and if the
complaint is not stayed and the parties are not relegated to
the arbitration, the Act purports to operate in derogation of
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the provisions of the Arbitration Act. Prima facie, the
contention appears to be plausible but on construction and
conspectus of the provisions of the Act we think that the
contention is not well founded. The Parliament is aware of
the provisions of the Arbitration Act and the Contract Act
and the consequential remedy available under Section 9 of
the Code of Civil Procedure i.e. to avail of right of civil
action in a competent Court of civil jurisdiction. Nonetheless,
the Act provides the additional remedy”.
The Hon’ble Supreme Court has further held that in view of the object of the Act and by operation of Section 3 thereof, it would be appropriate that these Forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve all the consumers of the cumbersome arbitration proceedings or civil action unless the Forums at their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate Forum for adjudication of the disputes would be otherwise those given in the Act.
29. The Hon’ble Supreme Court of India in “Lucknow Development Authority Versus M.K. Gupta, 1994 (1) CLT 1” has observed that a legislation which is enacted to protect public interest from undesirable activities cannot be construed in such narrow manner as to
C.C. No.180 of 2009 \\22//

frustrate its objective. It has been further observed in the said authority that any attempt to exclude services offered by statutory or official bodies to the common man would be against the provisions of the Act and spirit behind it. The Hon’ble Supreme Court of India has further observed that truly speaking it would be a service to the society if such bodies instead of claiming exclusion subject themselves to the Act and let their acts and omissions scrutinized, as public accountability is necessary for healthy growth of society.
30. In “General Manager, Telecom Versus M. Krishnan & Others” (supra), the Hon’ble Supreme Court has held that the special law prevails over the general law. But the point whether the Consumer Protection Act is a special enactment or a general law has not been discussed. On the other hand, in view of the other judgments, reference of which has been given above, the Hon’ble Supreme Court has declared the Consumer Protection Act as a special legislation.
Time and again it has been held by the Hon’ble Apex Court of
country that where a law is declared after thorough discussion, only then it is held as a binding precedent and not otherwise.
His Lordship Markandey Katuj, J. in “State of U.P. Versus Jeet S. Bisht” (supra), in para No.66 and 67 of the judgment has observed as under :-
“66. It is well settled that a mere direction of the
Supreme Court without laying down any principle
C.C. No.180 of 2009 \\23//
of law is not a precedent. It is only where the Supreme
Court lays down a principle of law that it will amount
to a precedent.
67. In Municipal Committee, Amritsar Vs. Hazara
Singh, AIR 1975 SC 1087, the Supreme Court
observed that only a statement of law in a decision
is binding. In State of Punjab Vs. Baldev Singh,
1999 (6) SCC 172, this Court observed that
everything in a decision is not a precedent. In Delhi
Administration Vs. Manoharlal, AIR 2002 SC 3088,
the Supreme Court observed that a mere direction
without laying down any principle of law is not a
precedent. In Divisional Controller, KSRTC vs.
Mahadeva Shetty, 2003 (7) SCC 197, this Court
observed as follows:
“….. The decision ordinarily is a decision on
the case before the Court, while the principle underlying
the decision would be binding as a precedent in a case
which comes up for decision subsequently. The scope
and authority of a precedent should never be expanded
unnecessarily beyond the needs of a given situation. The
only thing binding as an authority upon a subsequent
judge is the principle, upon which the case was
decided…..”.”
C.C. No.180 of 2009 \\24//

31. The Hon’ble National Commission in “Union of India and Others Versus Jagdamba Rice Mills, 1993 (1) CLT 705, while discussing Section 7-B of the Indian Telegraph Act and referring to the authority styled as Santokh Singh Versus Divisional Engineer Telephones, Shilong, AIR 1990 Ghuwahati 47, has observed that the Government of India has itself taken a policy decision to the effect that all the requests and reference to Arbitration under the Indian Telegraph Act shall be rejected and Arbitrator shall be appointed only in such cases where subscriber approaches a court with a request for arbitration and court orders for the same. So when the Government of India to be more specific Telecom Authority itself is not willing to refer the dispute concerning the telegraph apparatus etc. to the Arbitrator except upon the orders of the court, then it does not behoove to the opposite parties to raise an objection under Section 7-B of the Telegraph Act.
32. Now, it is also a settled law that where two interpretations of statute/law are possible, then the one favouring the consumer is to be taken. Moreover, in case of petty consumer disputes, to direct a poor consumer to approach the Central Government for appointment of an Arbitrator for the adjudication of his small dispute, would be just the denial of justice to him especially when the legislature has enacted a consumer friendly legislation for better protection of the consumer rights and the remedy is available at the door step of the consumer as the District Consumer Forums have been established at every District head quarter of a State.
C.C. No.180 of 2009 \\25//
33. The Consumer Forum established under the Consumer Protection Act, 1986 does not exercise jurisdiction upon each and every matter, rather the jurisdiction of the Consumer Forum can be invoked only on the matters/disputes where the consumer element is involved. So when a dispute where the rights of the consumers are to be adjudicated there only the consumer courts, specially enacted for the said purpose, have the jurisdiction and all other Forums fall subordinate to it. It is now clear that the Consumer Protection law is not a general law, but a special law enacted for the better protection of the interests of the consumers. Where there is a deficiency in service and unfair trade practice, the provisions of the Consumer Protection Act, 1986 can be invoked irrespective of any other statute dealing with the same matter. The remedy under the Consumer Protection Act is an additional and special remedy. Moreover, even as per the provisions of the Telecom Regulatory Authority of India Act, 1997, the provisions of the Consumer Protection Act, 1986 prevail upon the other provisions/enactments relating to telecommunication. So we hold that the Fora established under the Consumer Protection Act has jurisdiction to entertain the matter concerning the disputes relating to telecommunications.
34. Now coming to the merits of the case, the connection of the complainant was disconnected without any notice. However, opposite party No.1, who is the dealer, has pleaded that he has no role to play in the disconnection of the connection of the complainant after the activation of the same. The disconnection, if any, has been done by opposite party No.2. Opposite party No.2 i.e. Bharat Sanchar Nigam Limited, who is the telecom
C.C. No.180 of 2009 \\26//
service provider, has pleaded that infact the connection is working and it was Charged/extended for validity in last month. However, no reason has been given as to why the connection of the complainant was disconnected. After the filing of the present complaint, opposite party No.2 has restored the services, but without any intimation to the complainant and the complainant could not use the said connection because he was under the impression that his sim is not working. The complainant has definitely suffered loss and harassment at the hands of opposite party No.2. Opposite party No.2 has failed to give any explanation for the deficiency in service on their part. Opposite party No.2 is thus grossly deficient in service and is liable to be burdened with exemplary costs. In view of this, this complaint is allowed and opposite party No.2 is directed to activate the connection of the complainant for a period of another three months with due intimation to the complainant without charging any extra sum for the same. Opposite party No.2 is further directed to pay a sum of Rs.10,000/- to the complainant for the loss and harassment suffered by him. Opposite party No.2 is further directed to pay a sum of Rs.2000/- as litigation expenses to the complainant. The orders be complied with within a period of thirty days from the date of receipt of its copy. File be consigned to the record room.
Pronounced
11.9.2008 (Sanjay Garg)
President (Tarlok Singh)
Member

Employers means within the meaning of Section (2) (g)

PARADIP PORT TRUST, PARADIP V. THEIR WORKMEN (9 September 1976)
CITATION: 1977 AIR 36 1977 SCR (1) 537 1977 SCC (2) 337
The definition of employer under section 2(g), which is a purposive but not an exhaustive definition, shows that an industrial dispute can be raised in relation to an industry carried on even by the Government and by local authorities. It need not be added that industry is also carried on by private owners, private companies and partnerships. Employers and workmen will, therefore, be drawn from numerous sources.

interpretation of a statute

IN THE HIGH COURT OF DELHI AT NEW DELHI Crl.M.C. No. 1379/99
Date of Decision: 15-11-2006 Shri Ashwani Kumar Julka Versus Lt. Col. Parthojit Choudhary (Retd.)

It is now well settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result, which could never have been intended by the legislature, the Court may modify the languageused by the legislature, or even “do some violence” to it, so as to achieve the obvious intention of the legislature, the Court may modify the language used by the legislature and produce a rational construction (vide Luke v. Inland Revenue Commissioner, 1963 AC 557). The Court may also in such a case
read into the statutory provision a condition which though not expressed, is
implicit as constituting the basic assumption underlying the statutory provision.

where the arbitrator acts within jurisdiction.........

Supreme Court of India : Civil Appeal No. 2506 of 2004
Judge(s): MARKANDEY KATJU ,ASOK KUMAR GANGULY

Date of Judgment: Wednesday, September 16, 2009

K.V.MOHANMMED ZAKIR Versus REGIONAL SPORTS CENTRE


We are of the view that the settled position in law is that Court should not substitute its own view for the view taken by the arbitrator while dealing with the proceedings for setting aside an award. It is equally well settled, where the arbitrator acts within jurisdiction, 'the reasonableness of the reasons' given by the arbitrator is not open to scrutiny by Courts. However, if the reasons are such as no person of ordinary prudence can ever approve of them or if the reasons are so 'outrageous in their defiance of logic' that they shock the conscience of the Court, then it is a different situation. And in an appropriate case the Court may interfere. However, the degree of such unreasonableness must be greater than the standard in a certiorari proceeding

survival of arbitration agreement on termination of contract

Supreme Court of India CIVIL APPEAL NO.6399 of 2009

Judge(s): Tarun Chatterjee,R. M. Lodha

Date of Judgment: 18 September, 2009

THE B. MANAGER,M/S. MAGMA LEASING &FIN. LTD. & ANR Versus POTLURI MADHAVILATA & ANR.

The core question that falls to be determined in this appeal by special leave is : does the arbitration agreement survive for the purpose of resolution of disputes arising under or in connection with the contract even if its performance has come to an end on account of termination due to breach ?

The hire purchase agreement having been admittedly entered into between the parties and the disputes and differences have since arisen between them, we hold, as it must be, that the arbitration clause 22 survives for the purpose of their resolution although the contract has come to an end on account of its termination.

The next question, an incidental one, that arises for consideration is whether the trial court must refer the parties to arbitration under Section 8 of the Act, 1996.

Section 8 is in the form of legislative command to the court and once the pre-requisite conditions as aforestated are satisfied, the court must refer the parties to arbitration. As a matter of fact, on fulfillment of conditions of Section 8, no option is left to the court and the court has to refer the parties to arbitration.

Long pending of the matters in courts

Supreme Court of India


CIVIL APPEAL No. 6309 of 2009


Judge(s): MARKANDEY KATJU, ASOK KUMAR GANGULY


Date of Judgment: 16 September, 2009


BAJAJ AUTO LIMITED


Versus

TVS MOTOR COMPANY LIMITED


J U D G M E N T


MARKANDEY KATJU, J.


1. Leave granted.


2. This Appeal has been filed against the impugned order of the Division Bench of the High Court of Judicature at Madras dated 18.5.2009 in O.S.A. No. 92 of 2008.

3. It appears that a suit bearing No. C.S. No.1111 of 2007 had been filed by the appellant herein before the learned Single Judge of the Madras High Court alleging infringement of its patent No.195904 under the Indian Patents Act, 1973 ( for short 'the Act').


4. The learned Single Judge granted an interim injunction on 16th February, 2008.

5. Challenging the said interim order dated 16th February, 2008, an appeal was filed by the respondent-defendant before the Division Bench of the Madras High Court which allowed the appeal by the impugned order dated 18.5.2009.

6. Hence, this appeal before us by special leave.


7. It is evident that the suit is still pending before the learned Single Judge of the Madras High Court. We are unhappy that the matter has been pending in the High Court at the interlocutory stage for such a long time as the suit was filed in December, 2007 and yet even written statement has not been filed.

8. Recently, we have held in Special Leave Petition(C) No.21594 of 2009 decided on 07th September, 2009 in the case of M/s. Shree Vardhman Rice & Gen Mills vs. M/s Amar Singh Chawalwala as follows:


"...Without going into the merits of the controversy, we are of the opinion that the matters relating to trademarks, copyrights and patents should be finally decided very expeditiously by the Trial Court instead of merely granting or refusing to grant injunction. Experience shows that in the matters of trademarks, copyrights and patents, litigation is mainly fought between the parties about the temporary injunction and that goes on for years and years and the result is that the suit is hardly decided finally. This is not proper.


Proviso (a)to Order XVII Rule 1(2)C.P.C. states that when the hearing of the suit has commenced, it shall be continued from day-to-day until all the witnesses in attendance have been examined, unless the Court finds that, for exceptional reasons to be recorded by it the adjournment of the hearing beyond the following day is necessary. The Court should also observe clauses (b) to (e) of the said proviso.


In our opinion, in matters relating to trademarks, copyright and patents the proviso to Order XVII Rule 1(2) C.P.C. should be strictly complied with by all the Courts, and the hearing of the suit in such matters should proceed on day to day basis and the final judgment should be given normally within four months from the date of the filing of the suit."

9. As has been observed by us in the aforesaid case, experience has shown that in our country, suits relating to the matters of patents, trademarks and copyrights are pending for years and years and litigation is mainly fought between the parties about the temporary injunction. This is a very unsatisfactory state of affairs, and hence we had passed the above quoted order in the above-mentioned case to serve the ends of justice. We direct that the directions in the aforesaid order be carried out by all courts and tribunals in this country punctually and faithfully.

10. In the present case, although arguments were advanced at some length by the learned counsel for both the parties, we are of the opinion that instead of deciding the case at the interlocutory stage, the suit itself should be disposed of finally at a very early date.

11. Hence, without going into the merits of the controversy, we direct the respondent-defendant to file written statement in the suit, if not already filed, on or before the last date for closing of the Madras High Court for Dussehra holidays. We would request the learned Single Judge who is trying the suit to commence the hearing of the suit on the re-opening of the Madras High Court after Dussehra holidays and then carry it on a day to day basis. No adjournment whatsoever ordinarily will be granted and the suit shall be finally disposed of on or before 30th November, 2009.


12. The interim orders of this Court dated 08th June, 2009 and 31st August, 2009 are vacated and substituted by the following directions.


13. The respondent shall be entitled to sell its product but it shall maintain an accurate records/accounts of its all India and export sales.We are appointing a Receiver to whom the records of such sale shall be furnished every fortnight by the respondent and the same shall be signed and authenticated by a responsible officer of the respondent. A copy of the same shall be given to the appellant also. We are requesting the Hon'ble the Chief Justice of the Madras High Court to forthwith nominate a Receiver in the matter to whom the sale records/accounts will be submitted by the respondent fortnightly, and the Receiver will verify the said sale records/accounts and thereafter submit his Report to the learned Bench of Madras High Court where the suit is pending. A copy of the same will be sent to the parties also. This direction will continue till the pendency of the suit. The remuneration of the Receiver will be fixed by the Hon'ble Chief Justice.


14. We make it clear that we are not making any observations on the merits of the case. The learned Single Judge shall decide the suit without being influenced by this order or by any observations made in the impugned order of the Division Bench or in the order of the learned Single Judge granting temporary injunction in favour of the appellant herein.


15. The Secretary General of this Court is directed to send a copy of this judgment forthwith to the Registrar General of the Madras High Court who shall place the same before Hon'ble the Chief Justice for obtaining the appropriate directions.

16. Copy of this order be given to the parties today itself.


17. The Appeal is disposed of accordingly. No costs.


18. Leave granted.


19. In view of our judgment in Civil Appeal arising from S.L.P.(C) No.13933 of 2009, this appeal is also disposed of on the same terms. No costs.

the special law overrides the general law

Supreme Court of India

Judge(s): MARKANDEY KATJU, ASOK KUMAR GANGULY

Date of Judgment: Tuesday, September 01, 2009

GENERAL MANAGER, TELECOM versus M. KRISHNAN & ANR.

O R D E R

Heard learned counsel for the appellant.

No one appears for the respondents although they had been served.

This appeal is directed against the Full Bench judgment and order dated 14.02.2003 of the High Court of Kerala at Ernakulam whereby the Writ Appeal filed by the appellant herein has been dismissed.

The dispute in this case was regarding non-payment of telephone bill for the telephone connection provided to the respondent No. 1 and for the said non-payment of the bill the telephone connection was disconnected. Aggrieved against the said disconnection, the respondent No. 1 filed a complaint before the District Consumer Disputes Redressal Forum, Kozhikode. By order dated 26.11.2001, the Consumer Forum allowed the complaint and directed the appellant herein to re-connect the telephone connection to the respondent No. 1 and pay compensation of Rs. 5,000/- with interest @ 12% per annum from the date of filing of the complaint.

Aggrieved against the order of the Consumer Forum, the appellant filed a writ petition before the High Court of Kerala challenging the jurisdiction of the consumer forum. A learned Single Judge of the High Court dismissed the writ petition. Thereafter, the appellant filed a Writ Appeal before the Division Bench of the High Court. The Division Bench felt that the matter required consideration by a larger Bench and hence the matter was placed before the Full Bench. By the impugned order the Full Bench of the High Court has dismissed the writ appeal. Hence, the appellant is before us by way of present appeal by special leave.

In our opinion when there is a special remedy provided in Section 7-B of the Indian Telegraph Act regarding disputes in respect of telephone bills, then the remedy under the Consumer Protection Act is by implication barred. Section 7-B of the Telegraph Act reads as under:-

"S. 7B Arbitration of Disputes:-

(1) Except as otherwise expressly provided in this Act, if any dispute concerning any telegraph line, appliance or apparatus arises between the telegraph authority and the person or whose benefit the line, appliance or apparatus is, or has been provided, the dispute shall be determined by arbitration and shall, for the purpose of such determination, be referred to an arbitrator appointed by the Central Government either specifically for the determination of that dispute or generally for the determination of disputes under this Section.

(2) The award of the arbitrator appointed under sub-s. (1) shall be conclusive between the parties to the dispute and shall not be questioned in any Court."

Rule 413 of the Telegraph Rules provides that all services relating to telephone are subject to Telegraph Rules. A telephone connection can be disconnected by the Telegraph Authority for default of payment under Rule 443 of the Rules.

It is well settled that the special law overrides the general law. Hence, in our opinion the High Court was not correct in its approach.

In Chairman, Thiruvalluvar Transport Corporation Vs. Consumer Protection Council (1995) 2 SCC 479 it was held that the National Commission has no jurisdiction to adjudicate upon claims for compensation arising out of motor vehicles accidents. We agree with the view taken in the aforesaid judgment.

In view of the above, we allow this appeal, set aside the impugned judgment and order of the High Court as well as the order of the District Consumer Forum dated 26.11s.2001.


Appeal allowed. No order as to the costs.

Latest on Territorial jurisdiction

IN THE SUPREME COURT OF INDIA : CIVIL ORIGINAL JURISDICTION

TRANSFER PETITION (CIVIL) NO.78 OF 2009


Balaji Coke Industry Pvt. Ltd. Vs.M/s Maa Bhagwati Coke (Guj) Pvt. Ltd.

Dated : 09.09.2009

In the instant case, the parties had knowingly and voluntarily agreed that the contract arising out of the High Seas Sale Agreement would be subject to Kolkata jurisdiction and even if the courts in Gujarat also had jurisdiction to entertain any action arising out of the agreement, it has to be held that the agreement to have the disputes decided in Kolkata by an Arbitrator in Kolkata, West Bengal, was valid and the Respondent- Company had wrongly chosen to file its application under Section 9 of the Arbitration and Conciliation Act before the Bhavnagar Court (Gujarat) in violation of such agreement. The decisions of this Court in A.B.C. Laminart (P) Ltd. (supra) as also Hakam Singh (supra) are very clear on the point.

Power of the court u/s 9 of A &C Act 1996 & Legal position of show cause notice

OMP 538/08

IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Reserve: August 27, 2009 Date of Order: September 02, 2009

R.P.S. EDUCATIONAL SOCIETY(REGD.) versus DELHI DEVELOPMENT AUTHORITY

However, an order under Section 9 of the Arbitration and Conciliation act cannot be passed by the Court directing specific performance of the contract, the breach of which is alleged by the petitioner. This Court in Excel Generators Pvt. Ltd. Vs. IJM Corporation Berhad OMP No. 241/09(decided on 13th May, 2009) had observed that where a contract is terminable contract and it can be foreclosed, the interim relief under Section 9 of the Arbitration and Conciliation Act cannot be granted for specific performance of the contract. In all those cases where monetary damages can compensate the breach of contract, the Court cannot insist upon the parties that the contract should be specifically performed. 6. Termination of the contract is one of the facets of the commercial law and if a party is aggrieved that the contract was wrongly terminated, the remedy lies in claiming damages. The party cannot insist that the contract should be specifically performed and it should be restored to the position prior to the breach of the contract. Even otherwise it is settled law that show-cause notice cannot be stayed by a Court. Giving show-cause notice amounts to giving an opportunity to the party to explain the breaches. Serving show-cause notice is a right of the party and the Court cannot interfere in serving show-cause notice and cannot say that the department should not ask the contracting party to explain its action. It is also settled law that the Court cannot write a new contract or revalidate a contract for the parties, if the contract is already terminated. The Court cannot thrust a contract upon the party under Section 9 of the Arbitration and Conciliation Act and ask that the contract should be restored. I find no force in the petition.

SHIV NARAYAN DHINGRA

the applicant has to ‘prove’ the existence of any ground under section 34(2) of A & C Act 1996

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5139 OF 2009 (Arising out of SLP(C) No.16281 of 2009)
Fiza Developers & Inter-Trade P. Ltd. Vs. AMCI(I) Pvt. Ltd.


Held in Para 14:

Having regard to the object of the Act, that is providing an expeditious alternative binding dispute resolution process with minimal court intervention, it is difficult to envisage proceedings under section 34 of the Act as full-fledged regular civil suits under Code of Civil Procedure. Applications under section 34 of the Act are summary proceedings with provision for objections by the defendant/respondent, followed by an opportunity to the applicant to ‘prove’ the existence of any ground under section 34(2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the defendant/respondent to place his evidence by affidavit. Where the case so warrants, the court permits cross-examination of the persons swearing to the affidavit. Thereafter, court hears arguments and/or receives written submissions and decides the matter. This is of course the routine procedure. The Court may vary the said procedure, depending upon the facts of any particular case or the local rules. What is however clear is that framing of issues as contemplated under Rule 1 of Order 14 of the Code is not an integral part of the process of a proceedings under section 34 of the Act.

Territorial Jurisdiction

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION

TRANSFER PETITION (CIVIL) NO.61 OF 2007 Decided on 04/08/2009

Shree Baidyanath Ayurved Bhawan Pvt. Ltd. Versus Praveen Bhatia

Held in Para 13:

The parties hereto are governed by the terms of the contract. If, in terms of the provisions of the contract, they by agreement conferred jurisdiction on one of the courts which would have otherwise jurisdiction to deal with the matter, the same should ordinarily be given effect to.

'Guarantor as liable as debt defaulter'

Supreme Court of India CIVIL APPEAL NO. 4613 of 2000

INDUSTRIAL INVESTMENT BANK OF INDIA LTD. Versus BISWANATH JHUNJHUNWALA

Date of Judgment: 18 August, 2009 Judge(s): Dalveer Bhandari,H.L. Dattu


apex court has ruled that the principal debtor and the guarantor or surety are both equally liable to be proceeded against for recovery of a loan by the creditor. This means, if your friend was evasive in paying back the loan, then the bank would be fully within legal limits to initiate proceedings against you for recovering the outstanding loan amount.

whether the MM, while entertaining a complaint under Section 138 NI Act, at the pre-summoning stage, can insist upon the complainant producing some

whether the learned MM, while entertaining a complaint under Section 138 NI Act, at the pre-summoning stage, can insist upon the complainant producing some proof of despatch of the notice in terms of NI Act sent to the drawer of the dishonoured cheque

Crl.Rev.P. No. 296/2009

IN THE HIGH COURT OF DELHI AT NEW DELHI

Crl REV P No. 296/2009

HDFC BANK LIMITED Versus AMIT KUMAR SINGH

To recapitulate, a complainant in a case under Section 138 NI Act has
at the pre-summoning stage to satisfy the learned MM that the legal notice in terms of the Section 138 (b) NI Act was in fact “served” on the drawer of the dishonored cheque. If some proof of delivery, or an internet generated or postal delivery report or a signed acknowledgement due card of the drawer, or the unserved cover with the postal endorsement is produced before the learned MM, it will be in the discretion of the learned MM to form an opinion if a presumption of service should be drawn. If the complainant chooses to file an affidavit, the deponent should state that he either went personally and found that the accused was residing at the address or is able to produce some postal certificate or an endorsement by a courier service agency that the accused is in fact residing at the address and yet refusing to accept the notice. If the affidavit merely states that the accused is residing at the address without giving any further documentary proof in support thereof such an affidavit cannot be accepted as satisfying the requirement of Section 138 (b) read with Section 138 (c) of the NI Act 31. For the aforementioned reasons, it is held that no error was committed by the learned MM in rejecting the complaint in the instant case.

Whether a petitioner who has obtained ex parte orders and enjoyed the benefit thereof can be permitted to withdraw his petition without directions for

IN THE HIGH COURT OF DELHI AT NEW DELHI FAO (OS) No. 168/2009 & CM 1497/2009 in FAO(OS) 448/2008 DTC VERSUS M/s INTERNATIONAL AVENUES

Whether a petitioner who has obtained ex parte orders and enjoyed the benefit thereof can be permitted to withdraw his petition without directions for performance of his contractual obligations and restitution of the benefit which the petitioner has received pursuant to interim orders in his petition;

Whether compensation can be granted by this court or in other words can the court order restitution of the benefit received under interim orders in a petition which has been voluntarily withdrawn by the petitioner;

The principle of law is well established that where proceedings filed by any person have come to an end whether by withdrawal or by the same being dismissed then such person is bound to restitute the benefit which he has received under interim orders which he was successful in seeking during the pendency of the proceedings. This principle is unexceptionable because otherwise a person would simply take benefit of interim orders and thereafter not pursue either the interim proceedings or the final proceedings till its conclusion because the same may go against him and consequently he may prefer to quietly withdraw the proceedings and pocket the benefit derived out of interim orders which he had obtained in his favour. In fact, even if, proceedings are not withdrawn but are ultimately unsuccessful i.e., the same are dismissed, even then the principle of restitution will govern the parties.

Deciding a notice is actually constituted a notice u/s 138 - after the evidence of the parties are recorded

In these circumstances, it will not be appropriate at this stage prima facie to say that the said fax constituted a notice to furnish a cause of action in favour of the petitioners to file a complaint under Section 138 of the Negotiable Instruments Act or that in the present case the notice which is the basis of the filing of the complaint is a second notice. All these questions can be gone into by the learned Metropolitan Magistrate after the evidence of the parties are recorded where the petitioners will have a right to cross-examination and to seek proper explanation.

Crl.M.C.5538-39/2005 & CM No. 10951/2005 % Date of reserve : 16.02.2009 Date of decision: 04.03.2009 M/s Delhi Automobiles Ltd. & Anr.Versus Mohan Exports India Ltd. HON’BLE MR. JUSTICE MOOL CHAND GARG

power of the Magistrate before filing the report

The role of the Magistrate starts only after filing of a report under Section 173 Cr.P.C. Till then the Magistrate is neither empowered nor justified in giving directions to the investigating agency to conduct investigation in any particular manner...They are bound by the procedure prescribed under the law and cannot transgress the limits of the law. Cr.P.C. does not give inherent powers to courts below High Court. The court of MM cannot devise a procedure other than the one provided under the Code:Delhi High Court-Crl.M.C. No. 2246/2002-Dated 06/08/2009

Contractor should not suffer due to wage rise

1


REPORTABLE


IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4427 OF 2009
[Arising out of SLP (C) No.3501/2007]

Union of India ... Appellant

Versus

Saraswat Trading Agency & Ors. ... Respondents




JUDGMENT

AFTAB ALAM,J.

Leave granted.
 2


This appeal, at the instance of Union of India, arises from an

arbitration award dated September 9, 2000 made in favour of the respondent.

The appellant challenged the award before the Calcutta High Court by filing

an application under section 34 of the Arbitration and Conciliation Act,

1996. A learned Single Judge of the High Court upheld the challenge

substantially and by judgment and order dated November 20, 2001 passed in

G.A.No.87/01, arising out of AP No.325/98, sustained the award only on

one issue and set it aside on two of the three issues under reference. Against

the judgment of the Single Judge the respondent preferred an internal court

appeal and the Division Bench of the High Court by its judgment and order

dated July 4, 2006 passed in G.A.No.87/01: APOT No.792/01 with APO

No.362/01 allowed the appeal, set aside the judgment of the Single Judge

and fully restored the arbitrator's award in favour of the respondent on all

the three issues in dispute. Against the judgment of the Division Bench of

the High Court the appellant has come in appeal to this Court.

The facts of the case are brief and simple and may be stated thus. For

the work of "handling of goods, parcels and booked luggage" at a group of

six stations falling in its Nagpur Division, the South Eastern Railway,

Calcutta, invited tenders that were opened on May 16, 1990. The tender

submitted by the respondent was the lowest. Hence, after some negotiations
 3


and extension of the validity of offer the respondent's tender was accepted

on August 2, 1991 and it was given the work for a period of three years

commencing from August 3, 1991. The grant of the contract was formalized

in an agreement executed by the parties on December 3, 1991. The

agreement was deemed to have come into force with effect from August 3,

1991 and it was to remain in force for a period of three years, till August 2,

1994 unless determined by either of the parties in terms of clause 1(1)

(authorizing the appellant to determine the contract by giving three months

notice) and its proviso (giving the same right to the contractor, after expiry

of the period of one year of the contract). Clause 2 of the agreement dealt

with the nature of the work the contractor was required to do. Clause 4 of the

agreement along with a detailed schedule mentioned fixed rates for every

piece of work covered by the contract. Clause 7 stated that the contractor

would not be entitled to any increase in the accepted rates of remuneration or

compensation due to fluctuations in the traffic (increase or decrease) due to

any reason. Under clause 13 the contractor indemnified the Railway

Administration against all claims that might be made under the Workmen's

Compensation Act, 1923 in consequence of any accident or injury sustained

by any labourer/servant or person in his employment and engaged in the

performance of the contract. Clause 14 bound the contractor to pay to the
 4


labourers engaged by him not less than the fair wage. It further provided that

`fair wage' would be the wage including the allowances, notified at the time

of inviting tenders for the work. Clause 15 made the contractor responsible

for compliance with the provisions of the Payment of Wages Act, 1936, and

the rules made thereunder in respect of the staff employed by him. Clause 16

similarly made the contractor responsible for compliance with the provisions

of the Contract Labour (Regulation and Abolition) Act, 1970 and the rules

made thereunder and required him to obtain the statutory license from the

licensing authority. Clause 18 made the contractor responsible for

compliance with the provision of the Hours of Employment Regulations in

respect of the staff employed by him in the manner decided upon by the

appropriate authorities. Clause 19 stipulated that no labourer would be

unfairly treated or removed from work except for valid reasons and further

provided that the porters engaged in the handling of goods, parcels and

booked luggage under the terms of the agreement would be deemed as

employees of the contractor within the meaning of the Industrial Disputes

Act, 1947 or any other enactment that might be applicable. This clause

further stated that the contractor would comply with all the laws, regulations

and rules for the benefit of labour that were in force or might come into

force and he would indemnify and keep the Railway Administration
 5


indemnified against all loss, damage, claims and costs arising in any manner

whatsoever. Clause 20 reserved the right of the Railway Administration to

deduct from the moneys due to the contractor or from his security deposit

any sum required or estimated to be required for making good the loss

suffered by the labour or labourers or any other person in his employment

for the reasons of non-fulfillment of the conditions for the benefit of the

labourers, non-payment of wages or deductions made from him or their

wages which were unjustified or illegal. Clause 31 stipulated that no interest

or damage would be paid to the contractor for delay in payment of the bill

`for any reason whatsoever'. Clause 32 with its various sub-clauses

contained the provision for arbitration and provided that the General

Manager of the South Eastern Railway or a person appointed by him would

be the sole arbitrator in respect of any dispute as to the respective rights,

duties and obligations of the parties to the agreement or as to the

construction or interpretation of any of the terms and conditions of this

agreement or as to its applications.

We next come to what is at the root of the dispute between the parties.

It needs to be noted that at the time of submission of tender by the

respondent the base fair rate of wages for the casual labour was Rs.31=15

paise as per the Circular dated January 17, 1990. During the period of the
 6


contract the Railway authorities are said to have issued circulars/guidelines

revising the rates of casual labourers from retrospective dates. The manner

in which rates were revised by the circulars/guidelines issued by the Railway

authorities is noted in the arbitrator's award as follows:


PARTICULARS

Circular No. Circular Effect Average
dated from rate of
unskilled
labour

P/EN/C- 17.1.90 1.7.89 Rs.31.15
RAT/1/90

P/EN/NGP/ P/EN/NGP/ 16.4.92 1.7.91 Rs.42.40
Casual Labour
90-91


P/EN/NGP 10.2.93 1.1.92 Rs.47.45

Casual
Labour/MS/92 10.2.93 1.7.92 Rs.50.50

P/EN/NGP 15.2.94 1.1.93 Rs.51.10

Casual Labour
93 15.2.94 1.7.93 Rs.53.50

P/EN/NGP/MS 16.3.95 1.1.94 Rs.57.45

/94
1.7.94 Rs.62.0
 7


On August 25, 1992, the respondent wrote a letter to the Railway

authorities demanding enhancement of rates under the contract on the

ground that the rates stated in the agreement were based on the circular dated

January 17, 1990 that had undergone a number of revisions and as a result

the contract rates had become unrealistic and unviable. The Railway

authorities rejected the respondent's demand for enhancement and/or

revision of rates taking the stand that the contract was a "fixed price

contract" and it had no clause for enhancement of rates. Faced with the

authorities' refusal to revise the contract rates the respondent terminated the

contract by giving three months notice as provided under the proviso to

clause 1(1) of the agreement. The Railway authorities accepted the

termination of the contract with effect from December 31, 1992 but in order

to avoid any dislocation requested the respondent to carry on the work on the

same terms and conditions, promising that its claim would receive due

consideration. On the appellant's request the respondent continued with the

work under the contract, though under protest, till august 1994.


At the time of the final settlement of the respondent's claims the

Railway authorities offered to it a sum of Rs.6,848=00 as additional

payment for the period January 1993 to August 1994. The respondent
 8


naturally declined to accept the paltry amount offered by the authorities and

requested for a proper consideration of its claim as earlier promised.

Finally, the Railway authorities appointed a high level committee to

consider the respondent's claim for enhanced payment for the period

January 1, 1993 to August 31, 1994. The committee fixed the respondent's

claim at Rs.3, 61,058=00 but it was not acceptable to the respondent.


A departmental arbitrator was then appointed in order to resolve the

disputes and differences arising between the parties. The departmental

arbitrator gave his award on June 4, 1998. Not being satisfied with the award

the respondent challenged it by filing an application under section 34 of the

Act before the High Court. The High Court by its order dated February 12,

1999 upheld the award on items 1 & 2 but set it aside in respect of items 3, 4

& 5 and appointed a certain advocate, a member of the bar to decide afresh

in regard to the respondent's claim under those three items. On an

application made under section 11, the Acting Chief Justice of the High

Court, by order dated July 1, 1999, substituted another advocate as arbitrator

in place of the one appointed by the Court on the application under section

34 of the Act.
 9


The three issues/claims that came up before the arbitrator appointed

by the High Court were as follows:


"Claim No.3: Claim for increase in rates from

3.8.91 to 31.12.92 during the

Contractual period being sum

of Rs.10,74,408/-



Claim No.4: Claim for increase in rates from

1.1.93 to 31.8.94 during the

extended period being sum of

Rs.14, 454,581/-




Claim No.5: Payment of 18% interest on

Claim of contractor claim

No.3 and 4 on the (sic and)

from 1.11.94 till the (sic)date."




The arbitrator appointed vide order dated July 1, 1999 passed by the

Court took up the proceedings on August 3, 1999 and made and published

his award on September 9, 2000. The award held the respondent entitled to
 1
0

receive from the appellant the sum of Rs. 32, 71,774=00 along with interest

on that amount @ 18% per annum from the date of the award till the date of

payment.

The appellant challenged the award by filing an application under section

34 of the Act before the High Court on January 2, 2001. As noted above, a

learned Single Judge of the High Court substantially upheld the appellant's

challenge and set aside the award on items 1 and 3, upholding it only insofar

as the respondent's claim under item 4 was concerned. Against the judgment

and order passed by the learned Singe Judge the respondent preferred an

appeal before the Division Bench of the High Court. Here it is significant to

note that the appellant did not prefer any appeal against the judgment of the

Single Judge insofar as it upheld the arbitrator's award on item no.4. Thus

before the Division Bench of the High Court there was no challenge to the

arbitrator's award in regard to the respondent's claim for enhanced payment

from January 1, 1993 to August 31, 1994, that is to say, for the period after

the parties had agreed on the cancellation of the agreement.

The Division Bench of the High Court after an elaborate consideration

of the matter and after referring to a host of decisions of this Court and the

Calcutta High Court allowed the appeal, set aside the judgment and order
 1
1

passed by the learned Single Judge and restored the arbitrator's award fully

on all the three items.

Mr. S. Wasim Qadri, learned counsel appearing on behalf of the

appellant, submitted that in the absence of any escalation clause in the

agreement the respondent's claim for enhanced payments for the period

August 3, 1991 to December 31, 1992 during which the agreement was in

force was quite unfounded and both the arbitrator and the Division Bench of

the High Court were in error in granting the claim for that period. The

submission made by Mr. Qadri is fully answered by the decision of this

Court in Tarapore & Co. vs. State of M.P., (1994) 3 SCC 521, (noticed both

by the arbitrator and the Division Bench of the High Court). In paragraph 27

of the judgment this Court observed as follows:

"27. But then, the terms at hand did require the
appellant (who is the contractor) not to pay less
than fair wages as would appear from what has
been stated in Para 2.10 and Para 1 of Annexure-B.
The Explanation to latter Para states that where fair
wages have not been notified these wages would
be the one "prescribed by the PWD (Irrigation
Department) for the division in which the work is
done". Now these wages were being increased
from time to time as would appear from the
decisions of the wage committee referred to above;
and if the appellant was being required to pay
wages as per these decisions, we do read a meeting
of mind insofar as the claim of escalated payment
on account of increase of fair wages is concerned.
 1
2

It has to be assumed that when the appellant was
required to pay fair wages at increased rates, the
authorities did visualize that the appellant would
not do so by cutting down its profit. By asking the
appellant to give tender by taking into account the
fair wages notified at the time of inviting tenders,
the authorities did give an impression that fair
wages to be paid would be the one then
notified/prescribed, a 1a the explanation to para 1.
In such a situation, if rates of fair wages were
raised afterwards, the tendered sum cannot be
taken to be agreed amount for completing the
contract, in the face of the directions of the
authorities requiring the appellant to pay wages at
rates higher than those prescribed or notified at the
time of inviting tenders. On this fact situation, we
hold that the State had by necessary implication
agreed to reimburse this increased payment."

In a more recent decision in Food Corporation of India vs. M/s. A. M.

Ahmed & Co. & Anr., AIR 2007 SC 829, the Court reiterated the same view

and in paragraph 32 of the judgment observed as follows:

"Escalation, in our view, is normal and routine
incident arising out of gap of time in this
inflationary age in performing any contract of any
type. In this case, the arbitrator has found that
there was escalation by way of statutory wage
revision and, therefore, he came to the conclusion
that it was reasonable to allow escalation under the
claim. Once it was found that the arbitrator had
jurisdiction to find that there was delay in
execution of the contract due to the conduct of the
FCI, the Corporation was liable for the
consequences of the delay, namely, increase in
statutory wages. Therefore, the arbitrator, in our
opinion, had jurisdiction to go into this question.
 1
3

He has gone into that question and has awarded as
he did. The Arbitrator by awarding wage revision
has not mis-conducted himself. The award was,
therefore, made rule of the High Court, rightly so
in our opinion."


Mr. Qadri next questioned the grant of interest on the amounts arrived at by

allowing the respondent's claim for higher rates for the work done by it.

Learned counsel submitted that clause 31 of the agreement expressly barred

the claim of any interest by the contractor and hence, the award was clearly

unsustainable insofar as the grant of interest was concerned.

The arbitrator gave to the respondent pre-reference, pendente lite and

post-award interest on both its claims under items 3 & 4 as would be evident

from the following passages from the award:

"However, I am allowing interest to the claimant at
the rate of 16% per annum on and from 1st
November, 1994 till 9th September, 2000 the date
of award amounting to Rs.15, 85,359.85 on the
following basis.

Interest calculated from 1.11.94 to 9.9.2000 as per
demand notice dated 19th September, 1994 till the
date of award on Rs.16, 85,234.14 being the total
amount of claim item Nos.3 and 4."

**** **** ****

Therefore, I, hereby award to the claimant (1) a
sum of Rs.6,05,777.34 for the claim item No.3 (ii)
a sum of Rs.10,79,456.80 for the claim Item No.4
 1
4

and (iii) a sum of Rs.15,86,539.85 towards interest
on Item No.3 and 4 for the claim Item No.5. The
aggregate sum of Rs.32, 71,773.99 (Rupees Thirty
two lacs seventy one thousand seven hundred
seventy three and ninety nine paise only) rounded
to Rs.32, 71,774/-. I further award an interest @
18% per annum on the aforesaid sum till the date
of payment."

It is thus to be seen that the arbitrator allowed interest on the amounts

determined under Items Nos.3 and 4 both for the pre-reference period and

pendente lite at the rate of 16% per annum. He further allowed interest on

the consolidated amount for the post-award period at the rate of 18% per

annum till the date of payment.

The question of interest for the pre-reference period stands settled by

the Constitution Bench decision in Executive Engineer, Dhenkanal Minor

Irrigation Division, Orissa & Ors. Vs. N. C. Budharaj, 2001 (2) SCC 721.

The majority judgment (3:2) in that case held in paragraph 26 as follows:

"For all the reasons stated above, we answer the
reference by holding that the arbitrator appointed
with or without the intervention of the court, has
jurisdiction to award interest, on the sums found
due and payable, for the pre-reference period, in
the absence of any specific stipulation or
prohibition in the contract to claim or grant any
such interest. The decision in Jena case taking a
contra view does not lay down the correct position
and stands overruled, prospectively, which means
that this decision shall not entitle any party nor
shall it employer any court to reopen proceedings
 1
5

which have already become final, and apply only
to any pending proceedings. No costs."
(emphasis added)

The legal position in regard to interest for the different periods has been

summed up, with reference to the earlier decisions, in the decision in

Bhagawati Oxygen Ltd. Vs. Hindustan Copper Ltd., 2005 (6) SCC 462. In

paragraphs 38, 39 and 40 of the judgment it was observed as follows:



"38. So far as interest for pre-reference period is
concerned, in view of the conflicting decisions of
this Court, the matter was referred to a larger
Bench in Executive Engineer, Dhenkanal Minor
Irrigation Division vs. N.C. Budharaj, 2001 (2)
SCC 721. The Court, by majority, held that an
arbitrator has power to grant interest for pre-
reference period provided there is no prohibition in
the arbitration agreement excluding his jurisdiction
to grant interest. The forum of arbitration is
created by the consent of parties and is a substitute
for conventional civil court. It is, therefore, of
unavoidable necessity that the parties be deemed to
have agreed by implication that the arbitrator
would have power to award interest in the same
way and same manner as a court."

"39. Regarding interest pendent lite also, there was
cleavage of opinion. The question was, therefore,
referred to a larger Bench in Secy., Irrigation
Deptt., Govt. of Orissa vs. G. C. Roy, 1992 (1)
SCC 508. The Court considered several cases and
laid down the following principles: (pp.532-33,
para 43)
 1
6

43. The question still remains whether
arbitrator has the power to award the interest
pendente lite, and if so on what principle.
We must reiterate that we are dealing with
the situation where the agreement does not
provide for grant of such interest nor does it
prohibit such grant. In other words, we are
dealing with a case where the agreement is
silent as to award of interest. On a
conspectus of aforementioned decisions, the
following principles emerge:

(i) a person deprived of the use of money
to which he is legitimately entitled
has a right to be compensated for the
deprivation, call it by any name. It
may be called interest, compensation
or damages. This basic consideration
is as valid for the period the dispute is
pending before the arbitrator as it is
for the period prior to the arbitrator
entering upon the reference. This is
the principle of Section 34, Civil
Procedure Code and there is no reason
or principle to hold otherwise in the
case of arbitrator.
(ii) An arbitrator is an alternative forum
for resolution of disputes arising
between the parties. If so, he must
have the power to decide all the
disputes or differences arising
between the parties. If the arbitrator
has no power to award interest
pendente lite, the party claiming it
would have to approach the court for
that purpose, even though he may
have obtained satisfaction in respect
of other claims from the arbitrator.
 1
7

This would lead to multiplicity of
proceedings.
(iii) An arbitrator is the creature of an
agreement. It is open to the parties to
confer upon him such powers and
prescribe such procedure for him to
follow, as they think fit, so long as
they are not opposed to law. (The
proviso to Section 41 and Section 3 of
the Arbitration Act illustrate this
point). All the same, the agreement
must be in conformity with law. The
arbitrator must also act and make his
award in accordance with the general
law of the land and the agreement.
(iv) Over the years, the English and Indian
courts have acted on the assumption
that where the agreement does not
prohibit and a party to the reference
makes a claim for interest, the
arbitrator must have the power to
award interest pendente lite.
Thawardas has not been followed in
the later decisions of this Court. It has
been explained and distinguished on
the basis that in that case there was no
claim for interest but only a claim for
unliquidated damages. It has been
said repeatedly that observations in
the said judgment were not intended
to lay down any such absolute or
universal rule as they appear to on
first impression. Until Jena case
almost all the courts in the country
had upheld the power of the arbitrator
to award interest pendente lite.
Continuity and certainty is a highly
desirable feature of law.
 1
8

(v) Interest pendente lite is not a matter of
substantive law, like interest for the
period anterior to reference (pre-
reference period). For doing complete
justice between the parties, such
power has always been inferred."

"40. As to post-award interest, the point is covered
by the decision of this Court in Hindustan
Construction Co. Ltd. vs. State of J & K , 1992 (4)
SCC 217. It was held there that an arbitrator is
competent to award interest for the period from the
date of the award to the date of decree or date of
realization, whichever is earlier."

In the case in hand, the respondent's claim was in regard to two periods; one

from August 3, 1991 to December 31, 1992 when the agreement was

subsisting and the parties were bound by its terms, and the other from

January 1, 1993 to August 31, 1994 when the agreement was admittedly

terminated and the respondent was carrying on the work on the request of

the appellant. In our view the fact that the first period was covered by the

agreement while the second fell beyond it is significant and on that score the

two periods must receive different treatments.

Clause 31 of the agreement provided as follows:

"31. No interest or damage for delay in payment
- No interest or damage shall be paid to the
Contractor for delay in payment of the bill or any
other amount due to the contractor for any reason
whatsoever. The Railway Administration will,
however, make every endeavour for payment of
 1
9

the bills or other amount due to the contractor
within a reasonable time."
(emphasis added)

The Division Bench of the High Court took the view that Clause 31 of the

agreement operated as a bar only between the parties but it would not affect

the authority of the arbitrator to grant interest for the pre reference period

and pendente lite. In this connection the High Court has referred to the

decisions of this Court in Executive Engineer, Dhenkanal Minor Irrigation

Division, Orissa (supra), Executive Engineer (Irrigation) vs. Abhaduta Jena,

(1988) 1 SCC 418 (which was overruled by Executive Engineer, Dhenkanal)

and Secretary, Irrigation Department, Govt. of Orissa vs. G.C. Roy, (1992) 1

SCC 508, (which was referred to in Executive Engineer, Dhenkanal). But in

Executive Engineer, Dhenkanal it is not even remotely said that a clause in

the agreement like clause 31 (quoted above) would only act as a bar between

the parties to the agreement and would not restrict the powers of the

arbitrator to allow interest for pre-reference period and pendente lite. The

High Court has then relied upon another decision of this court in The Board

of Trustees for the Port of Calcutta vs. Engineers-De-Space-Age, AIR 1996

SC 2853. The High Court has observed that in this case a similar clause in

the agreement was held not restrictive of the arbitrator's powers to allow

interest pendente lite and for pre reference period. We have closely
 2
0

examined the decision in Engineers-De-Space-Age and we find that the

relevant clause in the agreement in that case was completely differently

worded and the view taken by the High Court cannot be supported on the

basis of that decision. In Engineers-De-Space-Age the court was dealing

with a case in regard to award of interest for the post-reference period and

clause 13(g), the relevant clause in the agreement, was as follows:

"No claim for interest will be entertained by the
Commissioners with respect to any money or
balance which may be in their hands owing to any
dispute between themselves and the Contractor or
with respect to any delay on the part of the
Commissioners in making interim or final payment
or otherwise."

In that context this court held that clause 13(g) of the agreement merely

prohibited the Commissioners from entertaining any claim for interest and

did not affect the arbitrator's powers to award interest.

In the case in hand clause 31 of the agreement is materially different.

It bars payment of any interest or damage to the contractor for any reason

whatsoever. We are, therefore, clearly of the view that no pre-reference or

pendente lite interest was payable to the respondent on the amount under

Item No.3 and the arbitrator's award allowing pre-reference and pendente

lite interest on that amount was plainly in breach of the express term of the

agreement. The order of the High Court insofar as pre-reference and
 2
1

pendente lite interest on the amount under Item No.3 is concerned is,

therefore, unsustainable.

The position with regard to the claim under Item No.4 is quite

different. That relates to the period after the termination of the agreement

and hence, the bar of clause 31 would not apply to it in the same way as it

would apply to Item No.3. We, therefore, find no infirmity in grant of pre-

reference and pendente lite interest on the amount under Item No.4.

In light of the discussions made above, the respondent shall be entitled

to interest only on the sum of Rs.10, 79,456=80, the amount determined

under Item No.4, at the rate of 16% per annum for the period November 1,

1994 to September 9, 2000. The final amount under the award shall be

accordingly worked out. The consolidated amount of the award after being

re-calculated shall carry, as provided in the award, interest at the rate of 18%

from the date of the award till the date of payment. In working out the

amount of interest for the post-award period, the period(s) for which the

operation of the award was stayed by the court would be excluded.

In the result the appeal is allowed to the limited extent indicated

above. There shall be no order as to costs.



....................................J.
 2
2

[Tarun Chatterjee]



...................................J.
[Aftab Alam]

New Delhi,
July 16, 2009.