G.C. KANUNGO versus STATE OF ORISSA

Citation: [1995] SUPP. 1 S.C.R. 510 · Decided: 12-05-1995 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Case Allowed

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Judgment (excerpt)

A 
G.C. KANUNGO 
v. 
STATE OF ORISSA 
MAY 12; 1995 
B 
[A.M. AHMADI, CJ AND N. VENKATACHALA, J.] 
AriJitration (01issa Second Amendment) Act, 1991: 
Legislative competence of-Held Orissa legislature was competent to 
C enacf'-Subject of Act covered by E1111y 13--List III to Seventh Schedul&-
Constitution of India. 
Arbitration Tribunal-Special AriJitration Tribunal-Awards-Made 
Rule of Court-Held awards does not merge in the judgment and decree of 
Court which made it the Rule of Court-:A wards-Judgments and decrees 
D making rule of Court-Held not judgments and decrees of Courts. 
Judicial Power-Judgment-Nullification by legislatur&-Awards made 
by Special Arbitration T1ibunal-Abrogation of-Held awards were made in 
exercise of judicial power-Statute abrogating awards held encroachment on 
E judicial power and violative of basic features of the Constitution. 
State legislature-Power to make law-Attribution of ma/a fides or 
ulterior motives cannot make the law unconstitutional. 
The petitioner and the respondent-State entered into two contracts. 
F As the State Government rescinded both the contracts, the petitioner 
instituted proceedings under the Arbitration Act, 1940 in the Court of 
Sub-Jndge, Bhubaneswar seeking appointment of Arbitrators to decide 
disputes relating to his claims. The State of Orissa enacted Arbitration 
(Orissa Amendment) Act, 1982 providing for a forum of Arbitration 
Tribunal for deciding arbitral disputes arising out of the contracts. Fur-
G ther Arbitration (Orissa Amendment) Act, 1984 provided for referring 
certain disputes involving claims of Rupee one crore or above to Special 
Arbitration Tribunals to be constituted by the State Government. It also 
provided for transfer of disputes involving claims of rupee one crore or 
above pending before the Arbitration Tribunals constituted under the 1982 
H Amendment Act to the Special Arbitration Tribunal constituted by the 
510 
.. 
G.C. KANUNGO v. STATE OF ORISSA 
511 
State Government under 1984 Amendment Act. Special Arbitration A 
Tribunals constituted by the State Government decided the arbitral dis-
putes by making awards in favour of the petitioners. The awards were also 
made Rule of the Court. Thereafter, the State of Orissa promulgated the 
Arbitration (Orissa Second Amendment) Act, 1991 which has the effect of 
nullifying the awards made in favour of the petitioners by the Special B 
Arbitration Tribunals even after each of the Awards had been made a Rule 
of Court. Consequently petitions were filed before this Court challenging 
the constitutionality of the Arbitration (Orissa Second Amendment) Act, 
1991. 
On the questions: 
c 
1. Was the Orissa State Legislature not competent to enact the 1991 
Amendment Act on the topic of 'arbitration' in the Concnrrent List of 
Seventh Schednle to the Constitution when Parliament had already 
enacted on the same topic, 'the Arbitration Act, 1940' - 'The Principal Act' 
• extending its operation to the State of Orissa as well? 
D 
2. Was the Orissa State Legislature actuated by malafides in enact-
ing the 1991 Amendment Act and hence the 1991 Amendment Act was 
nnconstitutional? 
' 
E 
3. Did the award made by Special Arbitration Tribuuals merge in 
judgments and decrees of Courts, when by such judgments and decrees, 
the awards of those Tribunals were made 'Rules of Court'? 
4. If the awards of Special Arbitration Tribunals did not merge in 
the judgments and decrees of Courts, when they were made 'Rules of F 
Court', can it be said that the 1991 Amendment Act which nullifies the 
judgments and decrees of Courts by which the awards of the Special 
Arbitration Tribunals, were made 'Rules of Court' is enacted by the Orissa 
State Legislature by encroaching upon the judicial power of the State 
exclusively vested in courts as sentinals of Rule of Law, basic feature of G 
our Constitution, and hence is unconstitutional? 
5. If the awards of Special Arbitration Tribunals did not merge in 
the judgments and decrees of Courts, can it not be said that the 1991 
Amendment Act which nullifies the awards of the Special Arbitration 
Tribunals, even where such awards were made 'Rules of Court', is enacted H 
512 
SUPREME COURT REPORTS [1995) SUPP. 1 S.C.R. 
A by the Orissa State Legislature by encroaching upon the judicial power of 
the State exclusively vested in Courts as sentinals of Rule of Law, a basic 
feature of our Constitution, and hence is unconstitutional"! 
Allowing the writ petitions, this 

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