WALCHANDNAGAR INDUSTRIES LTD Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) AS both the writ petitions raise common points, they are disposed of by a common judgment. W.P. No. 11049 of 1990

(2.) THE petitioner entered into agreement with the second respondent on 23-2-1983 for sale of cement manufacturing machinery. Clause 12(2) of the agreement provided for referring any dispute, that may arise under it, to arbitration. As certain disputes arose, the petitioner nominated Justice Rege, retired Judge of High Court of Bombay, as arbitrator, while the second respondent appointed late Justice Krishna Rao, as arbitrator. Justice G. Venkat Rarna Sastry was appointed as O.S. No. 2 off 988, in the Court of Additional Chief Judge (Temporary), Hyderabad, as Umpire. THE arbitrators gave unanimous award on 2-2-1987 granting petitioner Rs. 17,74,858.00 together with interest of Rs. 3,05,006,.00 but did not give reasons. THE petitioner filed O.S. No. 249 of 1987, later renumbered under Section 14(2) of the Arbitration Act (for short 'the. 'Act') to make the award rule of the Court. THE second respondent filed O.P. No. 387 of 1987, later renumbered as O.P. No. 41 of 1988, under Section 30 of the Act to set aside the award. THE Court below pronounced ex parte judgment on 8-11-1988. LA. No. 453 of 1988 filed by the second respondent to set aside the ex parte decree was allowed on 1-2-1989 and C.R.P. No. 1043 of 1989 filed against the same by the petitioner was dismissed by this Court on 24-11-1989. When the matter was thus sent back to the City Civil Court and was pending there, A. P. Amendment Act 1 of 1990 adding provisos to Sections 14(1) and 17 of the Act came into force with effect from 19-2-1990. Based on this amendment, the Civil Court on 3-7-1990 remanded the mailer to the arbitrators to give reasons for the award. But Justice Krishna Rao, arbitrator, nominated by second respondent refused to act as arbitrator and in his place Sri K. Jagannatha Rao, Advocate, was appointed as arbitrator on 26-7-1990. At this stage, the petitioner has filed W.P. No. 11049 of 1990 questioning the virus of proviso to Section 14 and 1st proviso to Section 17 introduced by Act I of 1990 and obtained stay of all further proceedings.

(3.) THE question whether an award is vitiated by failure to give reasons has been considered by the 5 Judge Bench of Supreme Court in Raipur Development Authority v. M/s. Chokhamal Contractors, AIR 1990 SC 1426 where, after reviewing entire case law. it was held that failure to give reasons in the award does not constitute violation of principles of natural justice and that the -award cannot be set aside on that ground unless parties have contemplated in the agreement that the award should contain reasons. THE Supreme Court held as follows (Paras 33 to 37):