UNION OF INDIA  Vs JAI BALAJI JYOTI STEELS LTD -Judgment by Delhi High Court

$~2, 9&10

* IN THE HIGH COURT OF DELHI AT NEW DELHI

+ FAO(OS) (COMM) 8/2023
UNION OF INDIA ….. Appellant
Through: Mr. Vineet Dhandha, CGSC with Mr. Shubham Prasad and Ms. Shruti Gupta, Advs.
versus
MADHU TRANSPORT COMPANY PRIVATE LTD….. Respondent
Through: Mr. Shatadru Chakraborty, Ms. Sonia Dube and Ms. Surbhi Anand, Advs.

+ FAO(OS) (COMM) 17/2023 & CM.APPL. 3969/2023
UNION OF INDIA ….. Appellant
Through: Mr. Vineet Dhandha, CGSC with Mr. Shubham Prasad and Ms. Shruti Gupta, Advs.
versus
JAI BALAJI JYOTI STEELS LTD ….. Respondent
Through: Mr. Shatadru Chakraborty, Ms. Sonia Dube and Ms. Surbhi Anand, Advs.

+ FAO(OS) (COMM) 18/2023 & CM APPL. 3979/2023
UNION OF INDIA ….. Appellant
Through: Mr. Vineet Dhandha, CGSC with Mr. Shubham Prasad and Ms. Shruti Gupta, Advs.
versus
TYRIST ENTERPRISES ….. Respondent
Through: Mr. Shatadru Chakraborty, Ms. Sonia Dube and Ms. Surbhi Anand, Advs.
% Date of Decision: 30th January, 2023

CORAM: HON’BLE MR. JUSTICE MANMOHAN HON’BLE MR. JUSTICE SAURABH BANERJEE
JUDGMENT MANMOHAN, J: (ORAL)

CM APPL. 3967-3968/2023 in FAO(OS) (COMM) 17/2023 CM APPL. 3977-3978/2023 in FAO(OS) (COMM) 18/2023
Exemption allowed, subject to all just exceptions.
Accordingly, the applications stand disposed of.

FAO(OS) (COMM) 8/2023 FAO(OS) (COMM) 17/2023 & CM.APPL. 3969/2023 FAO(OS) (COMM) 18/2023 & CM APPL. 3979/2023
1. Present appeals have been filed challenging the orders of the learned Single Judge dated 17th October, 2022 passed in O.M.P. (COMM) 425/2022 & O.M.P. (COMM) 426/2022 and 28th October, 2022 passed in O.M.P. (COMM) 422/2022 whereby the appellants� petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the �Act�) challenging the interim award dated 03rd January, 2022 were dismissed. The relevant portion of the impugned award dated 03rd January, 2022 and the order passed by the learned Single Judge in one of the matters are reproduced hereinbelow:�
Interim Award dated 03rd January, 2022
�16. From the foregoing narration of facts and submissions it is clear that: (1) the issue of validity of termination of the agreements has been finally settled by the decision of the Division Bench of the Hon�ble High Court of Delhi; (2) the termination of the said agreements have, therefore, to be taken as valid; (3) accordingly, the Respondents were required to purchase the said rakes for which purpose they were to be valued; (4) the Respondents have valued the said rakes of wagons at Rs. 13,14,69,178.08; (5) therefore, the Respondents admit the said value of the said rakes of wagons; (6) the Claimant does not accept this valuation and has put forth a much higher valuation and (7) the Respondents have indicated that they have a counterclaim but no such counterclaim has been preferred.
17.
The disputes between the parties are with regard to the claimant�s claim in excess of Rs. 13,14,69,178.08 and the interest thereon. There is no dispute that the value of the said rakes is at least Rs. 13,14,69,178.08. The only question sought to be raised by the Respondents is that they have a huge counterclaim, much in excess of the said value of the rakes. But no such counterclaim has been preferred that would be the subject matter of dispute. Insofar as the Respondents are concerned, on the one hand there is the admitted value of the said rakes and on the other hand there is disputed (though yet non-existent) counterclaim based on an alleged breach of contract.

18.
In Raman Foundaries (supra) it has been held that: �..Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not eo instanti incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages.� Clearly, the respondents, in the present case, are not entitled to any amount from the Claimant. At best, they only have a right to sue for the damages (counterclaim), which right also has been opted for.

19.
In Numero Uno (supra), a Division Bench of the Hon�ble High Court of

Delhi, inter alia, held as under: �Such being the legal nature and character of a counter claim, its pendency does not denude the arbitrator of the power to make an interim award in the original suit/claim if such an interim award is otherwise justified. What is significant is that the legality of an interim award may be tested by reference to the material on which it is based rather than the areas of dispute that may still call for adjudication between the parties. If an interim award on the basis of material available on record is not justified, the Court may set aside the same under Section 34 of the Act. No interference with an interim award would, however, be permissible only because the defendant has made a counter claim or because some areas of dispute independent of the area covered by the interim award remains to be resolved.
8. The issue can be viewed from yet another angle. The making of the interim award ensures to the party in whose favor the same is made
the payment of an amount which is an admitted position payable to it. There is no reason why the payment of what is admittedly due should await the determination of other disputes which may take years before they are finally resolved. If at the conclusion of the arbitral proceedings, the defendant were to succeed in his claim, either wholly or partially, and if after adjustment of the amounts found payable to the plaintiff, any amount is eventually held payable to one or the other party, the arbitrator can undoubtedly make such an adjustment and direct payment of the amount to one or the other party, as the case may be. The final award would in any such case

having been effected by the respondent; and (ii) the petitioner also had a counter claim before the learned Arbitrator and as such the said amount could not have been awarded by the learned Arbitrator.
10.
I am not in agreement with both the submissions made by Mr. Dhanda. Firstly, the learned Arbitrator in paragraph 16 of the impugned award has rightly held, that the validity of termination has attained the finality, with the dismissal of the Special Leave Petition.

11.
Secondly, on the other issue which arose for consideration before the learned Arbitrator on the value of the four rakes which the respondent is entitled

to, the document dated February 23, 2018, which is a communication issued by the South Eastern Railway and cannot be disputed by the petitioner, the last paragraph of the same reads as under, as the said Railway has assessed the
value of rakes as .13,14,69,178.08/-:
�As the residual value of the WIS rake i.e. Rs. 13,14,69,178.08 (as per calculation table at Page 2) has been surpassed by the loss of revenue caused to the Railway by you, the Railway will be constrained to file claim for the said loss after adjustment of Rs.13,14,69,178.08.�

claim of the petitioner for an amount of .582.18 crore is concerned, the same
has to await determination by the learned Arbitrator as against the admitted dues of the respondent herein, which it is entitled to.
13.
In fact, during the course of hearing, I have been informed that execution proceeding have been initiated by the respondent, and the said amount has been deposited before the High Court at Calcutta.

14.
In view of the above, I do not see any merit insofar as the present petition is concerned. The petition and connected applications including for condonation the delay in re-filing are dismissed.�

2. Learned counsel for the appellant states that the termination of the
agreement in question by the respondents was neither legal nor proper. He
further states that as the Railways has filed a counter-claim which is pending
before the learned Arbitrator, the interim award needs to be set aside as the
counter-claim of the respondent is far in access of the claim put forward by
the respondents-claimants.
3. In response to a pointed query, learned counsel for the appellant
admits that the issue of termination of the agreement has been conclusively
settled by the learned Single Judge, Division Bench as well as by the
Supreme Court in an earlier proceeding inter se between the parties. He,
however, states that the Railways would like to re-agitate this issue before
the Apex Court.
4.
It is not understood as to how an issue determined by the Courts including the Apex Court, in an earlier proceeding inter se between the parties, can be re-agitated in a proceeding challenging an interim award. It is settled law that re-litigation is an abuse of process of Court. (See: N.D.Qureshi Vs. UOI & Anr, 2008 SCC OnLine Del 675)

5.
Further, this Court finds that the letters dated 23rd February, 2018 and 29th January, 2018 were issued by the appellant itself wherein the appellant had mentioned the exact value of rakes. In fact, according to these letters, valuation of rakes was determined in accordance with the report prepared by the appellant�s own ED Committee.

6.
This Court is also in agreement with the view of the learned Arbitrator as well as the learned Single Judge that as the value of the rakes has been assessed by the appellant itself, the said admitted amount need not await the determination of the counter-claim, which was yet to be adjudicated upon.

7.
It is settled law that the principles that apply to an interim award apply to a final award. This Court in Mangalwar Filling Station vs. Indian Oil Corporation Limited & Ors. [2021 SCC Online Del 3646] has held that once an arbitral award has been confirmed in an application filed under Section 34 of the Act, the appellate Court must be extremely cautious in disturbing concurrent findings of fact and law as they are ordinarily not amenable to interference under Section 37 of the Act. This Court further observed that the Appellate Court should generally not interfere unless it is apparent that the perversity of the arbitral award goes to the root of the case without a possibility of alternative interpretation that might sustain the award.

8.
The Supreme Court vide order dated 16th August, 2021 in SLP No. 12125/2021 was pleased to dismiss an appeal filed against the abovementioned judgment.

9.
Consequently, the present appeals being bereft of merit are dismissed but no order as to costs.

KA