UNION OF INDIA versus M/S V. PUNDARIKAKSHUDU AND SONS AND ANR.

Citation: [2003] SUPP. 3 S.C.R. 506 · Decided: 09-09-2003 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Dismissed

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Judgment (excerpt)

A 
B 
c 
UNION OF INDIA 
v. 
MIS V. PUNDARIKAKSHUDU AND SONS AND ANR. 
SEPTEMBER 9, 2003 
[V.N. KHARE, CJ. AND S.B. SINHA, J.] 
Arbitration Act, 1940-Sections JO-Misconduct-Meaning of-One 
part of the award inconsistent with the other part of the award-Held, 
amounts to legal misconduct-Award can be set aside. 
Arbitration Act, 1940-Sections JO-Award-Setting aside of-Non 
application of mind by the arbitrator-Effect of-Arbitrator holding that 
a party is responsible for delay in execution of the contract-Still awarding 
award in favour of the defaulting party-Non-application of mind by the 
D arbitrator-Award can be set aside. 
Arbitration Act, 1940-Sections JO-Award-Challenge to--Arbitrator 
awarding claims of both parties holding that there was breach of contract 
by both-One party not challenging the award in favour of another-Held, 
the party must be held to have accepted the finding that it committed a 
E breach of contract-Finding attains finality-Acts as res judicata-Words 
and Phrases-Res Judicata. 
The appellant entered into an agreement with the first respondent 
for construction of an auditorium. The time for completion of the 
F contract was extended from time to time and ultimately, the appellant 
terminated the contract under clause 54 of the agreement. The said 
clause empowered the appellant to rancel the contract, ifthe contractor 
failed to complete the work within stipulated date for completion and 
clear the site on or before the date of completion. As disputes and 
differences arose between the parties, the parties referred the matter 
G for arbitration in terms of the agreement. Both the appellant as well as 
the first respondent raised claims before the arbitrator. 
The arbitrator made an award for Rs. 14,31,463 in favour of the 
first respondent upon arriving at a finding that the appellant was 
responsible for causing delay in completion of the contract. At the same 
H time, the arbitrator also awarded Rs. 33,95,000 to the appellant. 
506 
U.0.1. v. V. PUNDARIKAKSHUDU AND SONS 
507 
The first respondent filed petitions under Section 15, 16, 30 and 32 A 
of the Arbitration Act praying for modification/setting aside of the 
award in favour of the appellant and for judgment and decree in terms 
of the award made in favour of the first respondent. The appellant, on 
the other hand, filed a petition for judgment and decree in terms of the 
award made in favour of the appellant. 
B 
The District Judge upheld the objections of the first respondent 
holding that as the award of the arbitrator in favour of the first 
respondent was made upon arriving at a finding that the appellant was 
responsible for causing delay in completion of the contract, the award 
made in favour of the appellant was inconsistent with the said finding 
and could not have been granted. The District Judge also confirmed the C 
award of the arbitrator made in favour of the first respondent. 
The appellant filed appeals against the order of the District Judge, 
which were dismissed by the High Court. Thereafter, the appellant filed 
the present appeals. 
The appellant had earlier filed special leave petitions against the 
judgment and order of the High Court in respect of the order of the 
District Judge whereby the District Judge had confirmed the award 
made in favour of the first respondent. The said special leave petitions 
were dismissed by his Court. 
Dismissiug the appeals, the Court 
D 
E 
HELD: 1.1. If one part of the award is inconsistent with the other 
and furthermore if in determining the disputes between the parties the 
arbitrator failed to take into consideration the relevant facts or based F 
his decision on irrelevant factors not germane therefor; the arbitrator 
must be held to have committed a legal misconduct. The award suffering 
from non-application of mind by the arbitrator is liable to be set aside. · 
(516-8, 517-H] 
Bharat Coking Coal Ltd. v. Mis Annapurna Construction, (2003) 7 G 
Scale 20; KP. Poulose v. State of Kera/a, (1975) 2 SCC 236; Union of 
India v. Jain Associates and Another, (1994) 4 SCC 665 and Dandasi 
Sahu v. State of Orissa, (1990) 1 SCC 214, relied upon. 
1.2. The question as to whetheroneparty or the other was responsible 
for delay in causing completion of the contract job squarely fell for H 
508 
SUPREME COURT REPORTS (2003] SUPP. 3 S.C.R. 
A consideration before the arbitrator. The arbitrator could not have arrived 
at a finding that both committed breaches of the terms of contrac

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