2000 (10) TMI 972 - SC - Indian Laws

Supreme Court sets aside arbitration award claim item, emphasizes necessity of existing dispute

Union of India Versus M/s. Popular Builders, Calcutta

The Supreme Court allowed the appeal by the Union of India against the Division Bench of Calcutta High Court's judgment in an arbitration proceeding. The ... - Issues:- Dismissal of appeal by Division Bench of Calcutta High Court in arbitration proceeding- Acceptance of final bill without objection by respondent- Appointment of arbitrator by Chief Engineer- Objection by Union of India under Sections 30 and 33 of the Arbitration Act- Challenge to the impugned award by Union of India- Existence of arbitrable disputeAnalysis:The Supreme Court heard an appeal by the Union of India against the Division Bench of Calcutta High Court's judgment in an arbitration proceeding. The respondent had entered into an agreement with the appellant for construction work, which included an arbitration clause. After completion of the work, the final bill was accepted by the respondent without objection. Subsequently, the respondent raised claims for additional works not included in the final bill, leading to the appointment of an arbitrator by the Chief Engineer. The Union of India objected to the award under Sections 30 and 33 of the Arbitration Act, primarily on the grounds of limitation and the absence of an arbitrable dispute.The Union of India contended that since the respondent accepted the final bill without protest, there was no arbitrable dispute to refer to arbitration. The respondent argued that this objection was not raised specifically in the objections filed under the Arbitration Act and that the Union Government actively participated in the arbitration proceedings without contesting the existence of a dispute. The Court noted the participation of the Union Government in the arbitration process and the subsequent rectification application challenging only the quantum, not the arbitrability of the dispute.Upon careful consideration, the Court acknowledged the Union's argument but emphasized the condition precedent of the existence of a dispute for arbitration. It was observed that the arbitrator had rejected the Union's plea regarding claim item No. 2 despite the acceptance of the final bill by the respondent. The Court held that claim item No. 2 could not have been a subject of arbitrable dispute and set aside the award in that regard. However, the rest of the award amount was affirmed since objections were not specific on other claim items. The appeal was allowed in part, setting aside the award only for claim item No. 2 while upholding the remaining award amount.