STATE OF J&K Vs. VOLTAS LIMITED

JUDGEMENT

(1.) THIS civil first Miscellaneous appeal arises out of the arbitration proceedings. A dispute arose between M/s Voltas Limited, the respondent herein and the State of Jammu and Kashmir the appellant with regard to a matter to pay extra customs duty amounting to Rs. 20,852.85 on the basis of assessment made on loading charges of 3.5% under the provisions of the Customs Act, 1962, read with Customs Valuation Rules, 1963. The respondents asserted that the said amount was paid by them on account of variation in the basis of assessment of duty made by the respondents. According to the respondent the afore said extra customs duty of Rs. 20,852.85 on account of loading the CIB value constituted a statutory variation in the basis of assessing customs duty and therefore, in accordance with clauses (6) and (7) of the agreement entered into between the parties the appellant was liable to pay the amount to the respondent. The claim of the respondent was denied by the State Government whereupon the matter was referred to the arbitration of Shri G. M. Qarra the then President of the Bar Association Kashmir in terms of clause 15 of the agreement. The arbitrator gave the award. He upheld the claim of the respondent. He held that the extra payment made and claimed by the respondent was due to the statutory variation as a result of the coming into force of Customs Act of 1962 and Customs Valuation Rules 1963 which came into force with effect from February 1, 1963, and also on account of the operation of Section 64 -A of the Sale of Goods Act of 1893. The arbitrator held that the appellant was liable to pay the aforesaid amount, to the respondent. The appellant in his objections before the learned Single Judge (Honble Justice Jaswant Singh as His Lordship then was) of this court who was seized of the matter contested the award and did not agree that the award be made rule of the court. It was contended before the learned Single Judge that the arbitrator had misconducted himself and misappreciated the documents produced by the Parties; that he had put an erroneous construction on the law applicable to the cases and therefore the award should be set aside. An objection was also raised regarding the insufficiency of the stamp paper on the instrument of award. The last objection was, however, disposed of on October 3, 1972 and the award was admitted in evidence on payment of Rs. 220/ - as penalty which was paid by the respondent. The learned Judge overruled the objections of the appellant that the learned Arbitrator had misconducted himself and had misconstrued the law on the subject. After discussing at length the relevant law as applicable to the facts of the case he held that the e ward was valid and that it should be made rule of the court. A decree in terms of the award was passed in favour of the respondent. Aggrieved by this judgment and decree the State has come up in appeal before this Bench.

(2.) WE have heardedthe learned counsel for the parties at great leangth.

(3.) MR . A. K. Malik, the learned counsel for the appellants has argued that the award suffers from an error apparent on the face of it in as much as the arbitrator has construed and interpreted the law in an erroneous manner. He has further submitted that the learned Single Judge has agreed with the appellant that the arbitrator has relied upon Section 64 -A of Sale of Goods Act which does not exist in the Jammu and Kashmir Sales of Goods Act of 1996. It is the State Act that is applicable and not the Indian Act, The learned Judge has also found that the arbitrator has erroneously construed expression (statutory variation) occurring in clause (6) of the agreement between the parties as also 1he relevant provisions of Customs Act. Notwithstanding this the learned Judge wrongly over -ruled the objections of the appellant and directed that the award be made rule of the court.