Case Note & Summary
The applicant, M/s. Associated Constructions, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to resolve disputes arising from a construction contract dated 8th October 1996 with the respondent, Mormugoa Port Trust. The contract contained an arbitration clause. Previously, a three-member Arbitral Tribunal had made an award dated 24th September 2004, granting the applicant an aggregate sum of Rs.42,86,135/-. The respondent challenged the award by filing Arbitration Petition No.197 of 2005, and by judgment dated 11th October 2005, the award was set aside. The court set aside the award on grounds including failure to state reasons for a damages claim of Rs.1,50,000/- and non-application of mind regarding an extra built-up area claim of Rs.4,62,485/-. However, the setting aside was not on merits but on procedural grounds. The respondent opposed the fresh application under Section 11, contending that the arbitration clause ceased to have effect once an award was made and set aside. The court rejected this contention, holding that the arbitration clause survives the setting aside of an award and can be invoked again. The court also noted that earlier judgments prohibiting modification of awards by segregating valid parts have been overruled by a Full Bench of the Bombay High Court in R.S. Jiwani v. Ircon International Ltd. Accordingly, the court allowed the application and appointed a sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - Survival of Arbitration Clause - Appointment of Arbitrator - Section 11, Arbitration and Conciliation Act, 1996 - The court held that the setting aside of an award does not render the arbitration clause inoperative; the clause survives and can be invoked again for fresh arbitration. The respondent's contention that the clause ceased to have effect was rejected. (Paras 1-3, 9-10) B) Arbitration Law - Modification of Award - Overruled Precedent - Section 34, Arbitration and Conciliation Act, 1996 - The court noted that earlier judgments holding that an award cannot be modified by segregating valid parts have been overruled by a Full Bench of the Bombay High Court in R.S. Jiwani v. Ircon International Ltd., allowing partial setting aside. (Para 8)
Issue of Consideration
Whether an arbitration clause ceases to have effect after an award made thereunder is set aside, thereby barring a fresh appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration clause survives setting aside of award
- Section 11 of Arbitration and Conciliation Act
- 1996
- Appointment of arbitrator
- No bar to fresh arbitration
