STAR CONSTRUCTION AND TRANSPORT CO. AND ORS. versus THE INDIA CEMENTS LTD.

Citation: [2001] 1 S.C.R. 1000 · Decided: 12-02-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Judgment (excerpt)

A 
STAR CONSTRUCTION AND TRANSPORT CO. AND ORS. 
-
v. 
~ 
THE INDIA CEMENTS LTD. 
FEBRUARY 12, 2001 
B 
[S. RAJENDRA BABU AND K.G. BALAKRISHNAN, JJ.] 
Arbitration Act, 1940---Civil Procedure Code, I 906-0rder XXlll Rule 
3-Non-speaking award-Award of arbitrator sellling money claim-
c 
Adjustment of another money claim dispute pending before High Court while 
satisfjiing the award-Maintainability of-Held, on facts, the arbitrators 
have not taken into consideration the disputed claim pending before High 
Court at the time of giving the award-Mental process of arbitrators cannot 
be looked into to find out whether the claims have been considered in the 
award or not. 
D 
Appellants and respondent had a money claim dispute which was referred 
to arbitration. The arbitrators published the award directing the respondent 
to pay the appellants an amount of Rs. 65,00,000 in full and final settlement 
of the claim with interest at the rate of 9% per annum. The award was filed 
"*" 
in Court under Section 14(2) of the Arbitration Act, 1940. A decree was 
E passed in terms of the award under Section 17(1) of the Act. The respondent 
paid Rs. 49 lacs to the appellants withholding a sum of Rs. 16 lacs on the 
ground that the amount is due from the appellants which are pending in two 
different suit proceedings before High Court. In the two pending suits, 
applications were filed by the appellants under Order XXlll, Rule 3 of the 
F 
C.P.C. for settlement. Single Judge allowed t,he applications of the appellants 
on the ground that a settlement has been arrived at between the parties, 
which is disclosed in the award of the arbitrator that instead of an award of 
Rs. 81 lacs, an award of Rs. 65 lacs has been made after setting off the 
disputed amount of Rs. 16 lacs. The respondent filed an appeal before the 
Division Bench of the High Court. The Division Bench reversed the judgment 
G of the Single Judge holding that the award of the arbitrator cannot be 
considered as having resulted in a settlement of claims. Hence the appeal. 
... 
The appellants contended that the reference to the arbitrators was made 
as per the agreement; that the particular clause in the agreement is wide 
H 
enough to include all disputes between the parties; that there need not be 
1000 
STAR CONST. AND TPT. CO. r. INDIA CEMENTS LTD. 
1001 
separate reference for the disputed amount for arbitration; that the A 
respondents claimed set-off of the disputed amount before the arbitrators; 
that the respondents filed a reconciliation statement before the arbitrators 
showing the disputed suit-amounts; and that the suit amounts were taken 
into consideration by the arbitrators in the non-speaking award in deciding 
the claims of the parties by the arbitrators. 
B 
The respondent contended that the two applications filed by appellants 
under Order XXIII Rule 3 C.P.C. was not maintainable; that the disputed 
amounts in the suits were never referred to the arbitrators; that the figures 
mentioned in the reconciliation statement produced before the arbitrator 
during arbitration proceedings do not pertain to the suit claim; that the C 
appellants themselves requested the respondent to set off the disputed suit 
amount of Rs. 16 lacs and pay the balance decreed amount of Rs. 49 lacs; that 
the ·appellants undertook that on such payment, the decree would not be 
executed till the suits are disposed or the matter is settled amicably between 
both the parties. 
Dismissing the appeal, the Court 
D 
HELD: I.I. In the case ofa non-speaking award, trite to say that the 
mental process of the arbitrators in reaching the conclusion cannot be gone 
into or examined as the same are not disclosed in the award. Therefore, to 
glean into the minds of the arbitrators to find out whether they included the E 
claims stated to have been made in the reconciliation statement is a very 
torturous process, not an easy one, hazarded with too many difficulties. The 
contention of the appellants that the suit claims were in the minds of the 
arbitrators can only be imagined and not definitely inferred from the facts. 
~ 
(1008-D-F[ 
F 
1.2. Unless it is clearly established that such accord or compromise 
has been entered into between the parties, the powers under Order XXIll 
Rule 3 CPC could not be exercised. The respondent's case is that the claim 
made in the suit were never before the arbitrators in any form and even the 
figures mentioned in the reconciliation statements also do not

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