Arbitration and Conciliation Act, 1966; Sections 23, 24, 25, 28, 31 and

34: Contract for supply of goods-Time is the essence of the contract-Delay

in supply of goods-Contractor's liability to purchaser-Award-Denial of

compensation-Held: when liability to pay compensation in lieu of damages

for breach of any term of the contract by the other party is stipulated clearly

and unambiguously, and in the absence of evidence proving the compensation

claimed as unreasonable, arbitral tribunal could not ignore clear terms of the

agreement to determine liability of the defaulting party-It is not necessary

for the claimant to produce evidence proving damages/loss suffered by him-

Burden is on the contending party to prove that claim is unreasonable-Since

contending party agreed to pay damages, he cannot deny the same-Loss

actually suffered by the purchaser need not be proved-Indian Contract Act,-

Sections 73 and 74.

Claim-Deduction of compensation/claim by the purchaser from the bill

of the contractor in lieu of damages for breach of agreement-Nature of-

Held: such claim would be treated as disputed claim-Arbitrator to decide

it-Under the facts and circumstances of the case, Arbitrator holding the

claim as undisputed on the ground that goods were received and bill was no/

disputed-Such finding of the Arbitrator unjust and unreasonable. ·

Award by the arbitral tribunal-lnterference with-Jurisdiction of the

Court-Ambit and scope of-Held: arbitral tribunal is empowered lo decide

the dispute referred to ii in accordance with the provisions of the Ac/-

Procedural law provides relief against the right-Award passed in

contravention of the provisions of substantive law/Act would be patently illegal

and contrary to the basic concept of justice-Hence could be interfered with

by the Court.

Award in conflict with Public Policy of India-Power of the Court lo

interfere with-Held: since the phrase 'Public Policy of India' is not defined

under the Act, the Court requires to give contextual meaning in the light of

the principles underlying the Arbitralion Act/Contract Act/Constitutional

provisions-It could either be construed in a narrower or broader sense-

When award attains finality, jurisdiction of the Court to interfere with is

limited on the ground of public policy-It could be given wider meaning by

!he Court in exercise of its appellate/revisional jurisdiction-Award, in violation

of statutory provisions, can not be termed to be in public interest-Hence

against Public Policy of India and void-Interpretation of Statutes.

omestic award and foreign award-Dist incl ion between-Discussed.

Words & Phrases:

'Arbitral Procedure', 'Substantive Law', 'Public Policy of India', 'Force

Majeure ', 'liquidated damages', 'patent illegality' and 'disputed claim'-

Meaning of in the context of Arbitration and Conciliation Act, 1996.