1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.306 OF 2007 IN CHAMBER SUMMONS NO.1490 OF 2006 IN ARBITRATION PETITION NO.79 OF 2005 M/s Indus Engineering Co. ...Appellants v/s Indian Oil Corporation Ltd. And anr. ...Respondents Mr Zal Andhyarujina i/b M/s Thakordas and Madgavkar for Appellants. Mr Gaurav Joshi i/b M/s RMG Law Associates for Respondents. CORAM : D.K. DESHMUKH AND SMT R.P. SONDURBALDOTA JJ. DATE : 7TH JUNE 2010. 2 P.C. :- 1] By this appeal, the appellants challenge the order passed by the learned Single Judge of this Court in chamber summons No.1490 of 2006 dated 28th January 2007. The facts that are relevant and material for deciding this appeal are that arbitration petition No.79 of 2005 was filed by the present appellants challenging the award made by the Sole Arbitrator dated 17th September 2004. In that petition, an order was made on 22nd November 2005 by a Single Judge of this Court accepting the application made on behalf of the respondents in the petition under sub-section (4) of section 34 of the Arbitration and Conciliation Act 1996. The order was made in relation to the finding recorded by the learned Arbitrator in respect of issue No.4. Issue No.4 reads as under :- 4.Whether the claimants are entitled for refund of LD for an amount of Rs. 1,16,16,054/- deducted by the respondent as 3 per clause 6(a) and other related provisions of the Works Contract dated 16/01/1998 on account of considerable delay by the claimants in completing the work under the aforesaid Works Contract ? The Single Judge found that the learned Arbitrator in the award has recorded a finding that it was the petitioner who was responsible for the delay. The finding recorded by the learned Arbitrator in the award reads as under :- I hold that the delay caused in completing the work is attributable to the claimants. The claimants finally completed the work on 08/01/2000 after delay of 214 days. From the perusal of minutes of meeting submitted by the respondents, I find that the respondents pointed out the lapses on slow progress of the work on the part of the claimants. 4 The Single Judge found that the learned Arbitrator has not given any reason in support of his conclusion that it is the petitioner who is responsible for delay and therefore, the application made on behalf of the respondents to make an order under section 34(4) of the Act was accepted. The relevant part of the order reads as under :- Therefore, I propose to accept the request made on behalf of the respondents that recourse to the provisions of sub-section (4) of section 34 of the Act be adopted. In this view of the matter therefore, the present proceedings are adjourned for a period of twelve weeks in order to give the learned Arbitrator an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the learned Arbitrator would be necessary to eliminate the ground for setting aside the arbitral award. It is clarified that in 5 case the learned Arbitrator holds that the delay is not attributable to the petitioners, the learned Arbitrator would be free to consider issue No.5 only. Thereafter, proceedings were taken up by the learned Arbitrator. It appears that before the learned Arbitrator, written submissions were filed by both the parties. The learned Arbitrator passed an order on 12th August 2006. Paragraph 5 of that order is relevant, it reads as under :- 5.After perusal of various documents submitted earlier and during these proceedings, I maintain my earlier decision that the delay in completing the work is attributable to the claimants and that the loss of liquidated damages is as per the terms and conditions of the contract. The learned Arbitrator thereafter in paragraphs 6 to 13 gave reasons in support of the 6 conclusion that he had recorded in the award itself. The concluding part is paragraph 13, it reads as under :- 13.Considering all the aforesaid facts and the materials before me by both the parties, I am of the view that there is delay by the claimants in completing the work and therefore, they have committed breach of the terms and conditions of the work contract. Thus, I hold that the levy of liquidated damages by the respondents is as per the terms and conditions of the contract and that the claim of the claimants for refund of liquidated damages is hereby rejected. Consequently as no liquidated damages are to be refunded, I further hold that the claim of claimants for interest on the amounts of the liquidated damages deducted is also liable to be rejected. 7 Thus, the learned Arbitrator, after taking up the proceedings under sub-section (4) of section 34 of the said Act gave reasons for the conclusion that he had already recorded in the award that he had made. The petitioners therefore took out a chamber summons for amending the petition to challenge the reasons that were disclosed by the learned Arbitrator by his new order. That was chamber summons No.1490 of 2006. That chamber summons has been rejected by the learned Single Judge by his order dated 18th January 2007. The learned Single Judge has rejected the chamber summons principally on the ground that by order dated 12th August 2006, the learned Arbitrator has made a fresh award. 2] We have heard learned counsel appearing for both the sides. We find that the finding that has been recorded by the learned Single Judge in the order dated 12th August 2006 that a fresh award has been made, is an erroneous finding. By the award, the learned Arbitrator had recorded a categorical 8 finding that it was the petitioner who was responsible for the delay in completing the work and on the basis of that finding, an award was made. That award was challenged by the petitioner in arbitration petition No.79 of 2005. At the hearing of that petition, the learned Single Judge of this Court found that there are no reasons given by the learned Arbitrator in support of his finding, therefore recourse was taken at the request of the respondents to the provisions of section 34(4) of the said Act. Section 34(4) of the said Act reads as under :- 34(4) On receipt of an application under sub-section (1), the court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the 9 grounds for setting aside the arbitral award. Perusal of the above quoted provisions of sub-section (4) of section 34 shows that if the Court decides to take recourse of the provisions of sub-section (4) of section 34 at the request of one or both the parties, the Court has to adjourn the proceedings for a period of time determined by it. Thus, the petition filed does not get disposed off when the Court makes an order under section 34(4) of the said Act. The hearing of the petition is merely adjourned and this course of action is adopted so that the arbitral tribunal gets an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the ground for setting aside the arbitral award. It means that when proceedings are adjourned by the Court under sub-section (4) of section 34, the arbitral award made by the Arbitrator which is challenged in the petition remains intact because proceedings 10 are to be taken or action is to be taken by the Arbitrator to eliminate the ground for setting aside the arbitral award. If the award already stands set aside by the Court, then there is no question of Arbitrator taking action to avoid setting aside of the arbitral award. When the proceedings are resumed by the Arbitrator pursuant to the order passed under section 34(4) of the said Act, there are various options available to the Arbitrator. In so far as the present case is concerned, it is clear from the order dated 22nd November 2005 that the award was not set aside, arbitration petition No.79 of 2005 was not disposed off, it was on the contrary kept pending and adjourned for a period of twelve weeks. During this period, the Arbitrator resumed the arbitral proceedings and made an order giving reasons in support of his conclusion. The leaned Arbitrator did not change his award but merely supplied reasons in support of his conclusion and the award. Therefore, it cannot be said that the learned Arbitrator made a fresh award as has been found by 11 the learned Single Judge As no fresh award has been made by the learned Arbitrator, there was no question of the petitioner amending the petition to challenge the fresh award. All that the petitioner wanted to do was to amend his petition to incorporate challenges to the reasons that have been given by the learned Arbitrator and the procedure that may have been followed by the learned Arbitrator. In our opinion, therefore, the learned Single Judge was not justified in rejecting the chamber summons seeking permission to amend the arbitration petition on the ground that the learned Arbitrator has made a fresh award and therefore, the petitioner has to file a fresh petition challenging that award. In our opinion, therefore, following order would meet the ends of justice. 3] The order passed by the learned Single Judge dated 18th January 2007 is set aside, chamber summons No.1490 of 2006 is granted in terms of prayer clauses (a) and (b). Amendment to be 12 carried within a period of four weeks from today. The respondents shall be entitled to file afresh affidavit in reply in view of the amendment carried out. Parties to act on the copy of this order duly authenticated by the Associate / Private Secretary of this Court. Certified copy expedited. (JUSTICE D.K. DESHMUKH) (JUSTICE SMT R.P. SONDURBALDOTA)