1994 (10) TMI 323 - SC - Indian Laws

Summary

Issues Involved:
1. Valuation and acquisition of 173 items of jewellery belonging to the erstwhile Nizam of Hyderabad.
2. Validity and implementation of the Arbitration Award.
3. Payment terms and conditions for the purchase of jewellery by the Central Government.
4. Rights and obligations of the Trustees and the Central Government regarding the jewellery.
5. Interest on the valuation amount due to delay in payment.
6. Costs incurred for the safe custody and insurance of the jewellery.

Detailed Analysis:

1. Valuation and Acquisition of Jewellery:
The dispute centered around the valuation of 173 items of jewellery held by two trusts created by the erstwhile Nizam of Hyderabad. The valuation process involved multiple inspections and evaluations by various committees and experts over several years. The final valuation was determined by an Umpire appointed through arbitration, who fixed the just and fair price of the jewellery at Rs. 225,37,33,959.00, later corrected to Rs. 180,37,33,959.00 due to a clerical error.

2. Validity and Implementation of the Arbitration Award:
The arbitration agreement stipulated that the award must be reported to the Supreme Court for appropriate orders and adjudication of any disputes relating to the award. Both the Union of India and the Trustees filed applications challenging the award, which delayed its implementation. The Supreme Court held that the award could not become enforceable until the Court adjudicated the disputes and made appropriate orders.

3. Payment Terms and Conditions:
The Central Government was initially required to pay the full amount within eight weeks of the award. However, due to the delay in adjudication, the Supreme Court extended the deadline and allowed the Central Government to make the payment by 31st December 1994. The Court also rejected the Central Government's request to pay in installments, emphasizing the need for a lump sum payment.

4. Rights and Obligations of the Trustees and the Central Government:
The Trustees were entitled to sell the jewellery if the Central Government failed to purchase it within the stipulated time. The Supreme Court modified the award to allow the Central Government to exercise the option of partial purchase of the jewellery at the determined price. The Trustees were given the right to sell or export the remaining items, subject to existing laws.

5. Interest on the Valuation Amount:
The Supreme Court awarded interest at the rate of 6% per annum on the valuation amount from the date of the award (27th July 1991) until the payment is made. This was to compensate for the delay and the impact of inflation on the valuation.

6. Costs for Safe Custody and Insurance:
The Trustees were entitled to reimbursement for the expenses incurred for the safe custody and insurance of the jewellery from the date of the award until the payment is made. The reimbursement would be based on a certificate issued by the Bank of Hongkong, where the jewellery was kept in safe custody.

Conclusion:
The Supreme Court directed the Central Government to pay the corrected amount of Rs. 180,37,33,959.00 with interest to the Trustees by 31st December 1994. The Trustees were required to hand over the jewellery to the Central Government upon receipt of the payment. The Court also allowed the Central Government the option of partial purchase and granted the Trustees the right to sell or export the remaining items. The applications challenging the award were dismissed as not pressed, and the modified award was made a Rule of the Court.