FOOD CORPORATION OF INDIA versus SURENDRA, DEVENDRA AND MAHENDRA TRANSPORT CO.

Citation: [2003] 1 S.C.R. 839 · Decided: 05-02-2003 · Supreme Court of India · Bench: M.B. SHAH · Disposal: Case Partly allowed

Judgment (excerpt)

FOOD CORPORATION OF INDIA 
A 
v. 
SURENDRA, DEVENDRA AND MAHENDRA TRANSPORT CO. 
FEBRUARY 5, 2003 
[M.B. SHAH, ASHOK BHAN AND ARUN KUMAR, JJ.) 
B 
)> 
Arbitration: Agreement-Arbitration clause-Clause excluding certain 
disputes from purview of arbitration clause-Appointment of Arbitrator-Claims 
regarding excluded disputes before the arbitrator-Decision thereon-Propriety c 
of-Held, disputes excluded from reference to the arbitrator could not be 
referred to or decided by the arbitrator-The award made by the arbitrator 
in respect of excluded items would be in excess of his jurisdiction-Arbitration 
Act, I 940-Section 20. 
In agreement, entered into between the appellant and respondent, D 
the arbitration clause (Clause XX) provided for reference of all the 
disputes to the arbitrator except any matter decision of which was 
expressly provided for in the contract. Clause XII of the agreement 
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excluded certain items from the purview of clause XX. On the application 
of the respondent u/s 20 of Arbitration Act, appellant-Corporation, was 
directed to appoint Arbitrator. After the appointment of the Arbitrator, E 
respondent raised certain claims including the claims regarding transit 
loss, demurrage and wharfage charges. Appellant-Corporation also raised 
certain claims. Arbitrator rejected the claim of appellant-Corporation, and 
allowed the claim of the respondent. Objections against the award of the 
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Arbitrator by the appellant-Corporation were rejected by High Court. 
F 
-
In appeal to this Court, appellant contended that Arbitrator could 
not make an award regarding transit loss, demurrage Pod wharfage, which 
were specifically excluded from the purview of arbitration clause, and that 
by doing so, Arbitrator had acted in excess of his jurisdiction. 
Partly allowing the appeal, the Court 
G 
"" 
HELD: I. The claim made and given by the arbitrator regarding 
transit loss, demurrage and wharfage charges could not be made as the 
same had been specifically excluded under Clause XX read with Clause 
839 
H 
840 
SUPREME COURT REPORTS 
[2003) I S.C.R. 
A XII of the agreement. The matters which were excluded from the reference 
to the arbitrator therefore could not be -referred to or decided by the 
arbitrator. Entrance of reference by the arbitrator on disputes which were 
excluded from reference and the adjudication thereupon would amount 
to exceeding in the exercise of jurisdiction. Since there was a specific bar 
B 
to ·the raising of a claim regarding~transit, demurrage and wharfage 
charges, the award made by the arbitrator in respect thereof would be in 
excess of the jurisdiction. (844-E, F; 845-D-EJ 
~ .. 
Rajasthan State Mines and Minerals ltd. v. Eastern Engineering 
Enterprises and Anr., [1999) 9 SCC 283, relied on. 
c 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1577 of 
1994. 
From the Judgment and Order dated 14. 12. 1993 of the High Court of 
Calcutta in Appeal No. 482/91. 
D 
Y. Prabhakara Rao and K. Subba Rao for the Appellants. 
C.S. Vadiyanathan and P.N. Chatterjee, K.V. Vishwanathan and Rathin 
Das, for the Respondent. 
..... 
E 
The Judgment of the Court was delivered by 
BHAN, J. Food Corporation of India (for short "the Corporation") has 
filed this appeal against the Division Bench judgment and order of the High 
Court of Calcutta whereby and where under the High Court has upheld the 
award made by the arbitrator appointed under the directions of the Court. 
F 
~ 
Facts: 
..
Respondent was appointed as a handling and transport contractor on 
14th June, 1979. On 4th January, 1980 respondent addressed a letter to the 
Managing Director of the Corporation requesting him to refer the disputes 
G which had arisen between the parties for arbitration. Since no arbitrator was 
appointed to resolve the dispute, he filed an application under Section 20 of 
the Arbitration Act, 1940 (for short "the Act") in the High Court on the 
_.,. 
original side, with a prayer to issue a direction to the Managing Director of 
the Corporation to appoint an arbitrator in terms of the arbitration Clause XX 
of the agreement entered between the parties. Court by its Order dated I 6th 
H June, 1988 issued a direction to the Managing Director of the Corporation to 
' 
F.C.I. ,. SURENDRA. DEVENDRA AND MAHENDRA TRANSPORT CO. [BHAN,J.] 841 
appoint an arbitrator in terms of Clause XX of the agreement within six A 
Y.'eeks fro1n the date of conununication of the order. The direction \Vas given 
in the following te

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