BANCO CONSTRUCTION CO Vs. UNION OF INDIA

JUDGEMENT

(1.) Assailing the order date 11-9-2009 passed by VI Additional District Judge, Bhopal in Execution Case (Arbitration) bearing No. 561/05, the appellant has preferred this appeal under section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act'). By the said order request to suspend the execution proceedings till decision on the application of appellant under section 34 of the Act has been rejected, and the said application has also been dismissed for the reason it is barred by res judicata. The facts leading to this case are that an arbitral award was passed on 11-1-2002. Two applications under section 34 of the Act to set aside the said award were filed within the prescribed period of limitation, one is by the appellant in the Court of VI Additional District Judge, Gwalior on 27-3-2002, and another is by the respondent in the Court of V Additional District Judge, Bhopal for awarding the interest. The application filed by the appellant has been transmitted as per order dated 2-4-2004 passed by the Gwalior Bench in M.C.C. No. 99/2004 to Bhopal. In the meantime appellant opposed the application of respondent and filed the reply. The Court while deciding the said application first observed that the ground so raised in reply by the appellant in additional pleas may be adjudicated while considering the application filed by him, but in later part of the order some observations were made reiterating the findings as recorded in arbitral award. On filing application for execution of award by respondent under section 36 of the Act, objection has been filed by appellant inter alia contending that the award is unexecutable without deciding the application of section 34 of the Act. But the objection so filed and the application, both have been rejected, by the order impugned and it is held that on account of rejection of application under section 34 of the Act of the respondent, principle of res judicata to consider the application of appellant shall be applicable, however merit of their contention cannot be gone into.

(2.) Shri Arvind Dudawat, learned counsel appearing on behalf of the appellant referring section 36 of the Act, contends that when an application to set aside the arbitral award has been filed prior to expiry of the period of limitation i.e. 90 days, the enforcement of the arbitral award until decision on the said application remain suspended, however trial Court committed an error in passing the order impugned in execution case. It is urged that the Apex Court in the case of National Aluminium Co. Ltd. vs. Pressteel & Fabrications (P) Ltd. and another, 2004 1 SCC 540, has laid down the said principle of law. It is submitted by him that the application under section 34 of the Act filed by the respondent for setting aside the arbitral award was only on the issue of not awarding the interest, while in the application of appellant various points were raised on merit inter alia challenging the award, however the order rejecting the application of respondent would not operate as res judicata to decide the application filed by appellant, therefore the finding as recorded in the order impugned is unsustainable in law. Learned Judge committed an error by considering the application for setting aside the arbitral award along with the execution proceedings filed by the respondent. In fact, the application for setting aside the arbitral award ought to have been considered separately thereafter only the execution proceedings may be continued. In view of the foregoing, prayer is made to set aside the impugned order and to direct the trial Court to decide the application under section 34 of the Act filed by appellant prior to enforcement of award.

(3.) On the other hand Shri Anand Singh, learned counsel representing Union of India, contends that while deciding the application filed by the respondent under section 34 of the Act vide order dated 26-11-2002, the similar objection has been decided, however the said order shall operate as res judicata in view of section 11 of the Code of Civil Procedure and the application filed by the appellant under section 34 of the Act is liable to be dismissed. It is contended by him that trial Court has rightly rejected the application filed by appellant applying the principle of res judicata. It is further submitted that if the application filed by the appellant for setting aside the arbitral award was not entertainable, however consideration of such application along with the execution proceedings filed by respondent is merely an irregularity to which interference by this Court is not warranted. In view of the foregoing, it is urged that the order passed by the trial Court is in accordance to law and the appeal filed by the appellant may be dismissed.