M/S. SATHYANARAYAN BROTHERS (P) LTD. versus TAMIL NADU WATER SUPPLY & DRAINAGE BOARD

Citation: [2003] SUPP. 5 S.C.R. 733 · Decided: 18-11-2003 · Supreme Court of India · Bench: BRIJESH KUMAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

MIS. SA THYANARA YAN BROTHERS (P) LTD. 
A 
v. 
TAMIL NADU WATER SUPPLY & DRAINAGE BOARD 
NOVEMBER 18, 2003 
[BRIJESH KUMAR AND ARUN KUMAR, JJ.] 
B 
Arbitration Act, 1940: 
Work contract for Water Supply Project subject to clearance of foreign 
collaboration arrangement/release of foreign exchange-Delay in import of C 
equipments-Non-compliance of the terms of the contract by the Board-
Stoppage of work by Contractor-Raising of claims against Board-
Arbitration clause-Invoking of-Arbitrator appointed by Contractor 
awarded the claim partly in· his favour-Arbitrator appointed by the Board 
did not agree-Appointment of Umpire-Award-Challenge to on ground of D 
denial of perusal of relevant documents-Single Judge held that non-
production of relevant documents by the Board vitiating the award-Reversed 
by Division Bench of the High Court-On appeal, Held: Perusal of the 
contents of the relevant documents could not be denied even on ground of 
confidentiality-Single Judge rightly held that such infirmity vitiated the 
award-Hence matter remitted to the Division Bench of the High Court for E 
reconsideration/re-adjudication. 
Appellant-Contractor and Respondent-Board entered into a contract for 
manufacture, supply and delivery of pipes and fittings in connection with a 
Water Supply Project of the Board. The contract was subject to clearance of F 
the foreign collaboration arrangement and release of necessary foreign 
exchange by the Board. 
The Contractor, before accepting the contract, requested the concerned 
a·uthority for providing necessary assistance in procurement of foreign 
exchange to import equipments and getting Central Government clearance. G 
The contract contained an arbitration clause. Due to delay in procurement of 
imported equipment on account of necessary formalities, completion of the 
work was delayed. Contractor had requested for extension of time but the 
Authority did not accede to his request; however, it extended the time later. In 
the meanwhile, the Contractor raised certain conditions but the same was 
733 
1-1 
734 
SUPREME COURT REPORTS (2003] SUPP. 5 S.C.R. 
A not agreed to by the Board. The contractor stopped the work and invoked 
arbitration clause of the contract and appointed an arbitrator who awarded 
the claim partly in his favour. As per arbitration clause, the Board also 
appointed another arbitrator, who did not agree with the award of first 
arbitrator. Hence, an Umpire was appointed who gave an award. Contractor 
B raised objections against the award before the High Court. Single Judge of 
the High Court found that due to delay in extension of time, the Contractor 
stopped the work and that by doing so, the Contractor did not commit any 
breach of the contract; that non-production of relevant documents by the Board 
for perusal of the Contractor had vitiated the award given by the Umpire. The 
order was reversed by the Division Bench of the High Court. Hence the 
C present appeal. 
It was contended for the appellant-Contractor that as per clause 70 of 
the agreement, there should have been three arbitrators instead of two and 
an Umpire; that the authority did not render proper assistance in getting 
foreign exchange clearance which caused delay in procurement of the 
D imported equipments; that interrupted electric supply and low voltage affected 
the progress of the work adversely; that the authority had extended time 
belatedly in an unreasonable manner; and that non-production of relevant 
documents by the Board for his perusal vitiated the award. 
On behalf of the respondent-Board, it was submitted that the Board had 
E extended all possible assistance to the Contractor; and that the Board was 
not under any liability to arrange electricity for the contract. 
Allowing the appeals, the Court 
HELD: 1.1. Two arbitrators were appointed in accordance with the 
F provisions of arbitration clause as well as the third arbitrator called Umpire. 
The mode of hearing was adopted in the manner that the dispute was heard by 
two arbitrators appointed by the respective parties. The matter was referred 
to Umpire since there was no agreement between the two arbitrators. There 
is no justification to raise such an objection that board of three arbitrators 
G should have decided the matter. Such a plea contradicts appellant's own action, 
and it seems to be taken now to wriggle out of the award ultimately given by 
the Umpire, but it would not be permissible at this stage. (740-E-F-Gl 
Ar

Excerpt shown. Read the full judgment & AI analysis in Lexace.