1999 (11) TMI 889 - HC - Indian Laws

Summary

Issues involved: Application under Sections 30 and 33 of the Arbitration Act for setting aside the Award dated 25.9.1992 on grounds of arbitrator misconduct and error of law.

Analysis:

1. Issue 1 - Contract Cancellation and Security Deposit Forfeiture:
The Contractor failed to supply Milk Aluminium Containers as per the tender, leading to contract cancellation by the Union of India. The Arbitrator found that the contract was not illegally terminated, justifying the forfeiture of the security deposit due to the Contractor's non-performance.

2. Issue 2 - Validity of Risk Purchase:
The Arbitrator held that the Risk Purchase was flawed as the original contractor was not notified, and there was a significant delay of 2 1/2 years after the contract cancellation. This led to a conclusion that the Risk Purchase was not in order.

3. Issue 3 - Entitlement to Damages:
Regarding damages, the Arbitrator stated that the Union of India was not entitled to general damages due to the invalid Risk Purchase. The Arbitrator found no proof of actual general damages suffered by the Union of India.

4. Issue 4 - Contractor's Claim for Refund:
Based on the findings on the previous issues, the Arbitrator ruled in favor of the Contractor, awarding a refund of the amount withheld by the Union of India. The Contractor was entitled to a refund of Rs. 2,12,466.40 due to the actions of the Union of India.

5. Overall Assessment:
The High Court reviewed the objections raised by the Union of India but found no grounds to conclude that the Arbitrator had misconducted himself or the proceedings. The Court noted that there were no manifest errors of law on the face of the Award. Despite some potential arguments regarding the forfeiture of the security deposit, the Court upheld the Arbitrator's decision as it adequately compensated for the Contractor's failure to deliver goods.

6. Final Decision:
The Court rejected the application to set aside the Award, making it the Rule of the Court. The Union of India was directed to pay costs to the Contractor. A decree sheet was ordered to be drawn up, with the Award forming part of the decree.

This detailed analysis of the judgment highlights the key issues, findings, and the final decision rendered by the High Court in this arbitration matter.