M/S.New Gramin Milk Coop.Society Ltd vs Delhi Milk Scheme

NEW GRAMIN MILK COOPERATIVE SOCIETY LTD. .......APPELLANT

Versus

THE GENERAL MANAGER, .....RESPONDENT

DELHI MILK SCHEME, GOVERNMENT OF INDIA

O R D E

Leave granted. Heard.

2. The appellant, M/s. New Gramin Milk

Cooperative Society Ltd. was a contractor with the Delhi

Government in regard to its Delhi Milk Scheme. Certain

disputes having arisen between the parties, the appellant

sought arbitration in regard to the following claims:

(i) Damages for losses sustained by the appellant Rs.9,54,000/-

(ii) Release of Security Deposit Rs.1,90,431/56

(iii) Liquidated damages Rs. 9,000/-

(iv) Interest at 18% per annum

The disputes were referred to arbitration by order dated

25.9.1995. The sole Arbitrator made a non-speaking award

dated 6.5.1996. The arbitrator rejected claims (i), (iii)

and (iv). He allowed only claim (ii) for the refund of

security deposit withheld, namely, Rs.1,90,431.56p. No interest was awarded.

.......2.

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3. Being under the impression that the award

could be directly executed, the appellant filed an

execution petition on 5.7.1996. By order dated 31.10.1998,

the Executing Court rejected the execution petition on the

ground that the matter was governed by Arbitration Act,

1940 and under the provisions of the said Act, the award,

unless made into a rule of the Court, could not be

executed. Thereafter, on 12.1.1999, the appellant filed an

application under Section 14 and 17 of the Arbitration Act,

1940 for making a decree in terms of the award. He also

filed an application under Section 5 of the Limitation Act,

1963 supported by an affidavit giving reasons for the

delay. If the time spent by the appellant in prosecuting

the execution proceedings between 5.7.1996 and 31.10.1998

is excluded, the delay was hardly about a month. Learned

District Judge, by his judgment dated 8.12.2000 dismissed

the application filed by the appellant on the ground that

the delay of one month and twelve days was not

satisfactorily explained. Even though, there was no

application under Section 30 read with Section 33 of the

Arbitration Act, 1940, learned District Judge also went

into the merits of the award in a casual manner and held that the arbitrator had erred in making the award. The

appeal filed by the appellant was dismissed by the High

......3.

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Court by the impugned judgment dated 25.3.2008. The High

Court was of the view that the reason given for condonation

of delay was not satisfactory.

4. As noticed above, the main part of the delay

was on account of the pendency of the execution

proceedings. Under the Arbitration and Conciliation Act,

1996 (and the ordinance proceeding) it is not necessary to

make the award a rule of the Court before execution. It is

clear that the appellant was under the bonafide wrong

impression that it could execute the award directly being

under the impression that the matter was governed by the

new law. Therefore, the period spent in pursuing the

execution proceedings has to be excluded. On such

exclusion, the delay is hardly one month and twelve days.

The appellant has satisfactorily explained the said delay

with reference to the illness of his counsel. We find

that the delay has been satisfactorily explained and

deserved to be condoned. The learned District Judge and

the High Court were not justified in dismissing the

application on the ground of delay.

5. In this case, no application was filed by the

respondent under Section 30 read with Section 33 of the Act for setting aside the award. In the absence of such an

......4.

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application, the Court ought to have made the Award a rule

of the court unless it was patently illegal [See Madan Lal

Vs. Sunderlal & Anr., 1967 (3) SCR 147 and Forasol Vs. Oil

& Natural Gas Corporation, 1984 Supp. SCC 263] The fact

that security deposit was given by the appellant is not in

dispute and the award of the arbitrator was a non-speaking

award. In the circumstances, there was no ground for

interference with the award.

6. Therefore, we allow this appeal, set aside

the judgments of the High Court and of the District Judge

and make the award dated 6.5.1996, a rule of the Court.

The award amount will carry interest at 6% per annum from

the date of the award to date of payment. The respondent

shall also pay costs of Rs.10,000/- to the appellant.

......................J. ( R.V. RAVEENDRAN )

New Delhi; ......................J. September 24, 2010. ( H.L. GOKHALE )