Arbitration case insights issue 45: January 2020
January 1, 2020
Supreme Court emphasises the requirement of arbitral awards to be reasoned.
DCM Shriram Aqua Food Limited (“DCM”) and M/s Crompton Greaves Limited (“Respondent”) entered into a contract for setting up an aquaculture unit by DCM. The Respondent invited tenders for related construction work and M/s Dyna Technologies Pvt. Ltd. (“Appellant”) submitted its proposal, estimate and quotation. Accordingly, the Respondent issued letter of intent dated 25 July 1994 to the Appellant. Thereafter, pursuant to certain inquiries and clarifications made by the Appellant, the Respondent amended the contract and issued a work order on 15 November 1994. However, on 5 January 1995, the Respondent instructed the Appellant to discontinue the work. Owing to this, the Appellant raised claims for compensation of premature termination of contract and invoked arbitration. The arbitral tribunal made the award dated 30 April 1998 (“Award”) wherein it allowed the claim for losses due to unproductive use of machineries. The same was challenged by the Respondent under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”) before the Single Judge of the Madras High Court and was dismissed. Aggrieved by the said decision, the Respondent preferred an appeal under Section 37 of the Act against the order before the Division Bench of the Madras High Court. The Division Bench partly allowed the appeal and set aside the Award with respect to the claim for losses due to unproductive use of machineries. The said judgement was assailed before the Supreme Court.