LexM/S SIKKIM SUBBA ASSOCIATES versus STATE OF SIKKIM
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MIS SIKKIM SUBBA ASSOCIATES v. STATE OF SIKKIM MAY 1, 2001 [DR. A.S. ANAND, CJ., R.C. LAHOTI AND DORAISWAMY RAJU, JJ.] Sikkim High Court (Practice & Procedure) Rules, 1991-Rules 149 and 150-Deletion of Rules retrospectivelr-Difference of opinion between A B two Judges-Order of reference to third Judge-Validity and effect of-Held, C valid-Retrospective deletion could not per se have the effect of nullifying or destroying orders passed or acts already performed-Sections 98(2) and 151-C.P.C. Arbitration Act, 1940-Section 30-Misconduct of Arbitrator-Non- D application of mind-Recording of findings which is absurd, unreasonable and irrational-Held, amounts to misconduct of Arbitrator and the award is vitiated on account of serious errors of law apparent on the face of it. Respondent-State appointed appellant as organising agent for its lotteries and later discontinued it due to disputes relating to settlement of E amounts. The disputes were referred to an Arbitrator under the pro,isions of the Arbitration Act, 1940. Arbitrator made an award determining the net amount payable by the respondent to the appellant at Rs. 33.14 crores. Besides, proportional costs and future interest were also granted to the appellant at the rate of 12% p.a. on the amount. The damages awarded in favour of the F appellant was Rs. 37. 75 crores. The State filed an application under Section 30 of the Act before Trial Court to set aside the award of the Arbitrator. The Tr!al Comi made the award, a tule of Comi by passing a decree in terms of the award An appeal was fded by the respondent before High Court. The matter was heard by a Division Bench consisting of two Judges. One Judge set aside the award of the Arbitrator and allowed the a1>peal of the respondent with costs. , G Another Judge gave a dissenting judgment and remanded the matter back to the Arbitrator for fresh determination of quantum of damages. Due to difference of opinion, the matter was referred to a third Judge .. Before the matter was heard by the third Judge, appellant filed an application before the High Court invoking powers under sections 98 and 151 C.P.C. The respondent H 261 262 SUPREME COURT REPORTS [2001] 3 S.C.R. A also filed an application questioning the maintainability of the application filed by the appellant The third Judge dismissed the application of the appellant and allowed the application of the respondent In ap11eals before this Com1, the appellant contended that due to difference of opinion in the judgment of the High Court, the award of the B Arbitrator should be confirmed under Section 98(2) C.P.C. since Rules 149 and 150 of the Sikkim High Court (Practice & Procedure) Rules, 1991 (Sikkim Rules) were deleted retrospectively with effect from the date of l!nforcement of the original rules; and that the award of the Arbitrator cannot be challenged under Section 30 of the Act since the award had been upheld C by the Trial Court and did not disclose any misconduct of the Arbitrator. The respondent contended that the proviso to sub-section (2) of Section 98 C.P.C. should be construed \\ith reference to the sanctioned strength alone, which was only three Judges in Sikkim High Court; that the matter can be referred to and heard by a third Judge; that Rules 149and150 of the Sikkim D Rules apply to the case; that the Rule making authority cannot delete a statutory rule retrospectively through a notification in the absence of a statutory f>rovision conferring such power; that the Judge of the High Court, who allowed the a11peal, enumerated in his judgement numerous errors, which were apparent of the face of the award and substantiated with the materials on record; and that the Judge of the High Court, who gave a dissenting E judgment, also found serious infirmities relating to the quantum of damages awarded by the Arbitrator. Disposing of the appeals, the Court HELD: 1.1. Rules 149 & 150 of the Sikkim High Court (Practice & F Procedure) Rules, 1991 were in force on the date when the Division Bench exercised their powers and, therefore, the order of reference passed is not bad in law. Apart from the axiomatic principle of law that a subordinate legislation in the form of Rules or Notification could not be made/unmade retrospectively unless any power in that regard has been specifically G conferred upon the Rule making Authority, a mere retrospective deletion could not per se have the effect of nullify
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