Holding

The appellate authority's order could not be collaterally challenged, and since the award had been set aside, the High Court was correct in refusing to make it a rule of court.

Summary

Uptron India Ltd entered into a contract with the Union of India to maintain community viewing sets in seven North‑Eastern states, but the government failed to make the agreed payments, leading to arbitration. The arbitrator issued an award on 18 June 1990, which Uptron sought to have declared a rule of court before the Delhi High Court. Simultaneously, the government appealed the award to the Secretary, Ministry of Broadcasting and Information, who, under the Arbitration Act, 1940, set aside the award and remitted the matter to the arbitrator for a fresh award. The High Court rejected Uptron's application for making the award a rule of court on the ground that the award had been set aside, and the Division Bench affirmed this decision. Uptron contended that the appellate authority acted without jurisdiction, rendering its order a nullity, and that the award could still be made a rule of court. The Supreme Court held that the order of the appellate authority could not be challenged collaterally in the pending High Court proceedings; the proper remedy was a separate challenge in an appropriate forum. Consequently, the appeal was dismissed and the arbitrator was directed to render a fresh award within six months.

Issues considered

Whether the order of the appellate authority under the Arbitration Act, 1940, can be collaterally challenged in the pending High Court proceedings.
Whether an arbitration award that has been set aside by an appellate authority can be made a rule of court if the appellate order is alleged to be without jurisdiction.
Whether the appellant was required to challenge the appellate authority's order in a separate forum before seeking to enforce the award as a rule of court.

Legislation cited

Arbitration Act, 1940s. 16

Subjects

ArbitrationAward set asideRule of CourtJurisdictionAppellate authorityCollateral attackFresh awardIndian Arbitration Act 1940

Judgment

. \ ,..

MIS. UPTRON INDIA LTD. A
v.
UNION OF INDIA AND ANR.

·FEBRUARY 5, 2004

[V.N. KHARE, CJ., S.B. SINHA AND S.H. KAPADIA, JJ.] B

\ Arbitration Act, 1940:

... Arbitration-Award-Set aside by appellate authority-Effect of-
Company filing award before High Court for being made rule of the Court- C
Simultaneously Government challenging the award before appellate authority
which set aside the award-Consequently, High Court rejecting Company's
application for making the award as rule of Court-Company challenging
order ofHigh Court on the ground that it/ailed to take into consideration that
if order of appellate authority was without jurisdiction, the same being a D
nullity, award could be made rule of the Court-Held, order of the appellate
authority could not have been challenged co/laterally in the proceedings
pending before High Court-It was obligatory on the appellant-company to
question validity or otherwise of the order of appellate authority before an
appropriate forum by filing an appropriate application in this behalf-As the
award had been set aside, High Court was correct in holding that the prayer E
for making the award a rule of Court could not be granted-Since the award
has already been remitted to the arbitrator, he is directed to make a fresh
award.

CIVIL APPELLATE JURJSDICTION : Civil Appeal No. 1712 of 1999. F
From the Judgment and Order dated 20.7.1998 of the Delhi High Court
in F.A.O. (OS) No. 311 of 1995.

Manoj Swarup, Ms. Lalita Kohli and Anubhav Kumar for Mis. Manoj
Swarup"'& Co. for the Appellant.
G
Ex. Joseph, Ms. Nidhi Ravindra and M.M. Kashyap for the Respondents.

The following Order of the Court was delivered :

The appellant herein is a company registered under the Indian Companies
199 H
200 SUPREME COURT REPORTS [2004] 2 S.C.R.

A Act. In the year 1988, the appelfant herein entered into an agreement with
respondent No.2, wherein it was, inte,r alia, agreed that the appellant shall
-
maintain the community viewing sets in the seven States of North Eastern
region, i.e. Assam, Meghalaya, Aruna:::ahal Pradesh, Nagaland, Manipur,
Mizoram and Tripura. The agreement was for maintenance of 5000 VHF and
B DR sets for a period of five years. As per the contract, it is alleged that the
respondent agreed to pay Rs. 66,20,040 annually, which was payable to the
appellant at the beginning of each calender year and also to raise infrastructure.
The appellant alleges that they have performed the work on their part, but the
respondent did not pay to the appellant for the work done by them. It is under (
such circumstances, the dispute was referred to the Arbitrator for resolution.
C The Arbitrator gave an Award dated 18th June, 1990. The appellant tiled the
said Award before the High Court of Delhi on its original side, for being
made Rule of the Court. Simultaneously, the respondent preferred an appeal
before the Secretary to the Government, Ministr.ri of Broadcasting and
Information. The Secretary, Ministry of Broadcasting and Information set
aside the Award and remitted the same to the Arbitrator for fresh resolution.
D After the aforesaid order was passed by the Appellate Authority, the High
Court on its original side rejected the application of the appellant for making
the Award as Rule of the Court on the ground that the Award itself has been
set aside. The appeal preferred before tl~e Division Bench against the judgment
of the learned Single Judge was also dismissed. It is against the said judgment,
E the appellant is in appeal before us by way of special leave petition.

Learned counsel appearing for the appellant would. submit that the
High Court went wrong in passing the impugned judgment insofar as it failed
to take into consideration that if the order of the Appellate Authority was
without jurisdiction, the same being a nullity, the Award could be made a
F Rule of the Court. The learned counsel would c0ntend that even if the
jurisdiction of the appellate forum is riot challenged, as no power was conferred
upon it. to remit the Award to the Arbitrator purported to be in terms of
Section 16 of the Indian Arbitration Act, 1940, such order would be without
jurisdiction.

G We find no merit in this submission. The order of the Appellate Authority
could not have been challenged collarterally in the proceedings pending before
the High Court. It was obligatory on the appellant herein to question the
validity or otherwise of the order of the Appellate Authority before an
appropriate forum by filing an appropriate· application in this behalf. As the
H Award had been set aside, in our opinion, the learned Single Judge and
UPTRON INDIA LTD. v. U.0.1. 201
consequently, the Division Bench of the High Coutt were' correct in holding A
that the prayer for making the Award a Rule of Court could not be granted.
Under such circumstances, we do not find any error in the judgment under
challenge. However, since the Award has already been remitted to the
Arbitrator, we direct the Arbitrator to make a fresh Award within a period of
six months from the date of service of the certified copy of this order upon B
him, if not already made.

With the aforesaid observations, the appeal is dismissed. There shall be
no order as to costs.

R.P. Appeal dismissed. C