1995 (5) TMI 264 - SC - Indian Laws

Summary

Issues Involved:
1. Legislative Competence of the Orissa State Legislature to Enact the 1991 Amendment Act.
2. Allegation of Mala Fides in Enacting the 1991 Amendment Act.
3. Merger of Awards of Special Arbitration Tribunals in Judgments and Decrees of Courts.
4. Encroachment upon Judicial Power by the Orissa State Legislature.
5. Nullification of Awards by the 1991 Amendment Act.
6. Arbitrary and Unreasonable Nature of the 1991 Amendment Act.

Summary:

Issue 1: Legislative Competence
The Orissa State Legislature had the competence to enact the 1991 Amendment Act on the topic of 'arbitration' in the Concurrent List of the Seventh Schedule to the Constitution. The Act received the President's assent, thereby validating it despite any repugnancy to the Principal Act, the Arbitration Act, 1940.

Issue 2: Allegation of Mala Fides
The argument that the 1991 Amendment Act was enacted with mala fides was rejected. The Court held that mala fides or ulterior motives attributed to a legislature in making a law within its competence cannot render such law unconstitutional.

Issue 3: Merger of Awards
The awards of Special Arbitration Tribunals did not merge in judgments and decrees of the Courts even though the Courts by their judgments and decrees made such awards 'Rules of Court' for their enforceability. The Court noted that the judgment and decree rendered by the Civil Court in respect of an award are merely to super-add its seal thereon for making such award enforceable through the machinery of the Court.

Issue 4: Encroachment upon Judicial Power
The Court held that the 1991 Amendment Act did not encroach upon the judicial power of the State. The judgments and decrees made by Civil Courts in making the awards of Special Arbitration Tribunals 'Rules of Court' are not those judgments and decrees of Courts made in exercise of judicial power of the State. Hence, the 1991 Amendment Act cannot be regarded as unconstitutional on this ground.

Issue 5: Nullification of Awards
The Court found that the 1991 Amendment Act, which nullifies the awards of Special Arbitration Tribunals made in exercise of the judicial power conferred upon them under the 1984 Amendment Act, encroached upon the judicial power of the State. The Act was declared unconstitutional as it sought to nullify judicial decisions by legislative action, which is impermissible.

Issue 6: Arbitrary and Unreasonable Nature
The Court did not find it necessary to decide on this point since the 1991 Amendment Act was already declared unconstitutional based on the encroachment upon judicial power.

Conclusion:
The Supreme Court allowed the writ petitions, made the 'Rules' issued in them absolute, and struck down the Arbitration (Orissa Second Amendment) Act, 1991, in so far as it nullified the arbitral awards made by the Special Arbitration Tribunals constituted by the respondent-State under the 1984 Amendment Act, including the awards of the petitioners which are made 'Rules of Court', as unconstitutional. No costs were awarded.