Numero Uno International Ltd v. Prasar Bharati

T.S. THAKUR,J VEENA BIRBAL, J FEBRUARY 08, 2008 pk

* IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) 507/2007 Date of Decision : 8 th February, 2008 NUMERO UNO INTERNATIONAL LTD. ..... Appellant Through : Mr. Arun Jaitley, Sr. Adv. with Ms. Bina Madhvan, Mr. Hemal K. Sheth, Advs. versus PRASAR BHARTI ..... Respondent Through : Mr. Rajeev Sharma, Mr.Abhishek Birthray, Mr. N.R. Mohapatra, Advs. CORAM: HON'BLE MR. JUSTICE T.S. THAKUR HON'BLE MS. JUSTICE VEENA BIRBAL 1. Whether reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes Per THAKUR, J. Based entirely on the admissions of the appellant company, Justice S.C. Aggarwal, a former Judge of the Supreme Court of India has, acting as sole arbitrator, passed an interim award directing the appellant herein to pay to the respondent Prasar Bharti the admitted amount of Rs.7.69 crores outstanding against the former. Aggrieved by the said interim award, the appellant filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before a Single Judge of this Court who has dismissed the same by his order dated 20th August, 2007. The learned Single Judge was of the opinion that the arbitrator had given cogent reasons for making an interim award in favour of the respondent. He repelled the contention urged on behalf of the appellant that the provisions of Order 12 Rule 6 of the CPC were not applicable and declared that the arbitrator was competent to make an interim award on the admissions of the parties contained either in the pleadings or in the correspondence exchanged between the parties. The Court relied upon two letters, one dated 17th May, 2001 and the other dated 31st May, 2001 to hold that a candid admission had been made by the appellant company as to the outstanding liability of Rs.7.69 Crores. The present appeal calls in question the correctness of the said order. 2. Appearing for the appellant, Mr. Jaitley made a solitary submission before us. He contended that while the arbitrator was correct in holding that the appellant had admitted its liability to the extent of Rs.7.69 Crores, the arbitrator should have, while making an interim award, also kept in view the fact that the appellant had made a counter claim of Rs.25 Crores before him. He submitted that the interim award may have been justified if the appellant had not made any counter claim, but once the counter claim was made, the arbitrator could not have, relying upon the admissions of the appellant, made any interim award or directed payment of the amount, no matter the pleadings and the correspondence on the subject clearly admitted the liability of the appellant to the tune of Rs.7.69 Crores. 3. On behalf of the respondent, it was on the other hand argued by Mr. Sharma that the arbitrator's power to make an interim arbitral award not being in dispute, the only question which fell for consideration was whether the award suffered from any patent illegality or perversity. He drew our attention to Section 2(c) of the Arbitration and Conciliation Act, 1996 to argue that an arbitral award includes an interim award. He placed reliance upon Section 31(6) of the Act to contend that the tribunal may, at any time during the arbitral proceedings, make an interim arbitral award. He submitted that the arbitrator had, in the instant case, correctly appraised the material on record including the pleadings of the parties and the correspondence which contained a clear acknowledgement of the liability of the appellant to the tune of Rs.7.69 Crores after giving adjustment of the payments made and even the set off claimed by it. The fact that the respondent had made a counter claim could not therefore, argued the learned counsel, make any difference insofar as the power of the arbitrator to make an interim award was concerned. Relying upon the decision of a Division Bench of this Court in Cofex Exports Limited v. Canara Bank AIR 1997 Delhi 355, Mr. Sha