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Union Of India v. Associated Producers Company
Structured Summary of the Opinion (Jaspal Singh, J.)
Factual and Procedural Background
This judgment arises from a petition filed by the Union of India under Section 20 of the Arbitration Act, 1940 against M/s Associated Producers Company, Penang and Mr. Abdul Wahab of Madras. By an order dated May 26, 1972, Avadh Behari, J. appointed Mr. Hardyal Hardy as sole arbitrator. The arbitrator entered on the reference on September 12, 1972 and made his award on February 21, 1973. The award was accepted by the Union of India but objected to by M/s Associated Producers Company, Penang and its sole proprietor Mr. M.A.A. Wahab, who filed separate objections under Sections 30 and 33 of the Arbitration Act.
The court framed four issues for determination: (1) whether the objection petition was filed within the period of limitation; (2) whether the objector was duly served in arbitration proceedings and, if not, the effect; (3) whether the award is liable to be set aside on other grounds alleged in the objections (which included that the award was beyond the statutory four-month period and that the arbitration clause fell because the contract was allegedly declared null and void); and (4) relief.
Procedural facts relevant to service and timing emerged: an apparent administrative error by the Deputy Registrar incorrectly recorded an earlier date of service; notices issued by the arbitrator used an incorrect name and address for the proprietor and firm; substituted service by publication was ordered in The Hindu (Madras); proceedings continued ex parte; and the objectors led evidence contesting service at the Madras address. The court ultimately considered these matters in relation to limitation, service, and the validity and timeliness of the award.
Legal Issues Presented
- Whether the objection petition had been filed within the period of limitation.
- Whether the objector(s) were duly served in the arbitration proceedings and, if not, what effect improper service has on the award.
- Whether the award was liable to be set aside on other grounds alleged in the objection petition, specifically:
- whether the award was made beyond the statutory period of four months without an extension under Section 28 of the Arbitration Act, 1940; and
- whether the arbitration clause fell because the Union of India had declared the underlying contract null and void (particularly by reference to clause 8 of the contract).
- What relief should be granted.
Arguments of the Parties
Union of India's Arguments
- The Union contended that the objections filed by respondent No. 2 (the proprietor) were not within time (i.e., were barred by limitation), based on a Deputy Registrar's record suggesting an earlier date of service.
- Implicitly (in the course of the court's analysis) the Union maintained that it had not unilaterally declared the contract null and void: its telegram was characterized by the court as drawing attention to clause 8 and asking for performance rather than serving as a unilateral declaration terminating the contract.
Objectors' Arguments (M/s Associated Producers Company and M.A.A. Wahab)
- The objectors argued they were never properly served with notices issued by the arbitrator: notices were addressed to a different name (“Abdul Wahab” instead of “M.A.A. Wahab”) and to an incorrect address (notably a Madras address), and notices at the firm's correct Kuala Lumpur address were not sent.
- They contended that the substituted service (publication in The Hindu, Madras) and the arbitrator's proceeding ex parte were unjustified and unlawful.
- The objectors asserted the award was beyond the statutory four-month period (arbitrator entered reference September 12, 1972; award dated February 21, 1973) and no application for extension under Section 28 was made, so the award was time barred.
- They also contended that the Union of India had unilaterally declared the contract (which contained the arbitration clause) null and void (by reference to clause 8 and a telegram dated September 15, 1967), and that, if the main contract fell, the arbitration clause would fall with it.
- The objectors produced evidence asserting that they had no connection with the Madras address (280 Linghi Chetty Street), supporting their claim of non-service at that address.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Union Of India v. M/s. Bhatia Tanning Industries, Kanpur, AIR 1986 Delhi 195 | Whether an arbitrator can pass an order for substituted service (principle: arbitrator cannot pass such an order). | The court treated this Division Bench judgment as establishing that an arbitrator has no power to order substituted service; that principle added "another dimension" to condemn the arbitrator's substituted-service-driven proceedings and supported the finding that the proceedings were improper. |
| I.T.C. Ltd. v. George Joseph Fernandez & Anr., AIR 1989 SC 839 | In an application under Section 34 of the Arbitration Act the court must first decide whether there is a binding arbitration agreement, even if that incidentally involves deciding the validity/existence of the parent contract. | The court noted this principle but observed that it had no direct bearing on the present case (the decision under discussion did not concern an application under Section 34 in the same context), and therefore the authority was not applicable to the present facts. |
| Chiranji Lal Multani v. Union of India, AIR 1963 Punjab 372 | If a contract is forbidden by law (illegal), the arbitration clause forming part of it is also illegal because the taint of illegality attaches to every part of the contract. | The court observed the principle but held it inapplicable because it was not the case here that the contract was forbidden by law. |
| Alliance Mills Pvt. Ltd. v. Madan Gopal & Sons, AIR 1982 Calcutta 282 | Where a contract is illegal due to statutory prohibition, the arbitration clause forming part of the contract may also be void and unenforceable. | The court found this authority inapplicable because the facts did not demonstrate statutory illegality of the contract. |
| Dodal Pvt. Ltd. v. Delhi Electric Supply Undertaking, AIR 1984 NOC 111 (Delhi) | Where a contract contravenes statutory requirements and the defect is not curable, the arbitration agreement may be unenforceable. | The court recorded the principle but found the case distinguishable and inapplicable to the present facts. |
| Suwalal Jain v. Clive Mills Co. Ltd., AIR 1960 Calcutta 90 | When the contract itself is forbidden in law and illegal, the arbitration clause included therein may also be illegal and void. | The court stated the principle and concluded it did not apply to the present factual scenario (no claim the contract was forbidden by law). |
Court's Reasoning and Analysis
The court addressed the issues in turn and explained its legal analysis as follows:
Issue No. 1 — Limitation (Service date / filing date)
The court first corrected an administrative error: the Deputy Registrar had wrongly noted an earlier date of service (recording August 26, 1976), which was actually a postal office date stamp rather than the date of service. The record contained acknowledgements showing respondent No. 2 was actually served on September 1, 1976. Since the objections were filed on September 28, 1976, the court held the objections were within time for respondent No. 2; objections by objector No.1 were also within limitation. The court therefore resolved Issue No.1 in favor of the objectors on the timing point (i.e., objections were not time-barred).
Issue No. 2 — Service and Substituted Service
The court reviewed the facts concerning how notices were addressed and served and found multiple, material errors:
- The proprietor's name was inconsistently recorded: the proprietor was named in many documents as "M.A.A. Wahab" but during the arbitrator's proceedings became "Abdul Wahab."
- The firm's and proprietor's address also changed in the arbitrator's records: from "28, Beach Street P.O. Box 811, Penang" to "88 Beach Street" and an altered PO Box number; notices by the arbitrator used a Madras address (280 Linghi Chetty Street, Madras-1) based on unverified information in a communication from the High Commissioner (which said "We understand Mr. Wahab is at present in India at following address...").
- Notices were sent to and publication effected in The Hindu (Madras) addressed to "Abdul Wahab" at the Madras address, and the arbitrator proceeded ex parte when there was no response; notices were not sent to the firm's correct Kuala Lumpur address, nor to a known Singapore address at which the Union had earlier communicated.
- The objectors produced uncontroverted evidence that they had no connection with the Madras address used for substituted service.
Legally, the court relied on precedent (Union of India v. M/s Bhatia Tanning Industries) establishing that an arbitrator cannot lawfully order substituted service. Given the misdirected notices, the unverified basis for the Madras address, the arbitrator's reliance on substituted service and publication, and the objectors' evidence of non-association with the Madras address, the court concluded the arbitrator had proceeded improperly and that this defect fatally undermined the ex parte award. For these reasons Issue No. 2 was decided in favor of the objectors.
Issue No. 3 — Timeliness of Award and Contract Nullity
The court considered two sub-objections:
- That the award was made beyond the statutory four-month period (entered on the reference September 12, 1972; award dated February 21, 1973) and no extension under Section 28 was sought or granted; and
- That the Union of India had unilaterally declared the contract null and void (by telegram dated September 15, 1967 and clause 8 of the contract), so the arbitration clause (clause 12) fell with the contract.
On the first point the court accepted that the award was outside the statutory four-month period and there was no application under Section 28 for extension. The court discussed whether it could and should extend time suo motu. While recognizing the court's discretion to act suo motu, the judge emphasized that discretion must be exercised judicially and only for cogent reasons. Applying that standard, the court refused to exercise discretion to extend time because the record disclosed multiple "fatal misadventures" and procedural irregularities (including the arbitrator's errors and the Union's conduct, such as avoidable adjournments). The court concluded it was not a fit case to exercise discretion in favor of an extension; accordingly, the award was time-barred on this ground.
On the second point (contract nullity), the court analyzed clause 8 and the telegram (Ex. R-44). Clause 8 provided that failure to deposit a transferable non-performance bond within ten days of establishment of the letter of credit would render the contract "null and void forthwith." The objectors argued that the Union had declared the contract null and void by telegram. The court examined the telegram and the subsequent correspondence between the parties and found that the telegram merely drew attention to clause 8 and asked for performance; it did not unilaterally and finally declare the contract void. The court further noted that subsequent communications (including later telegrams and exchanges) evidenced that the parties continued to treat the contract as subsisting and conducted themselves on that basis; the Union in later communications complained of failure to ship goods and claimed damages for breach, not that the contract had been terminated by clause 8. On these facts the court held the arbitration clause remained operative and the plea that the arbitration agreement fell with the contract was not made out.
Net result on Issue No. 3: while the contract-nullity contention failed, the award nevertheless fell because it was not made within time and no extension was justified; therefore the issue went in favor of the objectors.
Holding and Implications
Holding: The court set aside the arbitral award.
Implications:
- Direct effect on the parties: the ex parte award made by the sole arbitrator dated February 21, 1973 was set aside. The court made no order as to costs.
- Scope and precedent: the court applied established principles (including that an arbitrator cannot order substituted service) to the facts and declined to exercise suo motu discretion to extend the statutory period for making the award. The opinion confines itself to the facts at hand; it does not purport to lay down a new general principle beyond applying existing authority and established standards for exercise of judicial discretion on extensions under Section 28. (The opinion expressly found several cited authorities on contract-illegality inapplicable to these facts.)
This summary is strictly limited to facts, arguments, reasoning and holdings contained in the provided opinion. No facts or conclusions have been inferred beyond the text.
Jaspal Singh, J.:— The facts giving rise to this judgment fall into a short compass. Let me recapitulate.
2. On a petition by the Union of India under Section 20 of the Arbitration Act, 1940 (hereinafter called the Act) against M/s. Associated Producers Company, Penang and Mr. Abdul Wahab of Madras, Avadh Behari, J., by his order dated May 26, 1972 appointed Mr. Hardyal Hardy, a retired Chief Justice of this Court, as the sole arbitrator who entered on the reference on September 12, 1972 and made his award on February 21, 1973. Whereas the Award has won whole hearted approval of the Union of India, the other side, namely M/s. Associated Producers Company, Penang as well as its sole proprietor Mr. M.A.A Wahab have found it totally unacceptable. They have thus filed separate objections under Sections 30 and 33 of the Act.
3. On the basis of the objections raised, following issues were framed:—
(1) Whether the objection petition has been filed within the period of limitation? OPO
(2) Whether the objector was not duly served in arbitration proceedings? If not, its effect? OPO
(3) Whether the award is liable to be set aside on other grounds mentioned in the objection petition? OPO
(4) Relief.
4. Let me first give a brief resume of what led to the framing of the issues.
5. As far as the first issue is concerned, it being self-speaking needs no feed-back excepting this much that as per the Union of India, the objections filed by objector No. 2 are not within time.
6. The objectors have taken the plea that neither the objector firm nor its sole proprietor had ever been served with any notice issued by the arbitrator on his entering on the reference and that, in any case, Mr. Hardy was hardly justified in law or even on facts, in resorting to service by publication in “The Hindu Madras” and as even that did not constitute proper service there was no justification for him to proceed ex parte against the objectors. It is this objection which has given birth to issue No. 2.
7. The third issue has within its fold, two objections. It is claimed that Mr. Hardyal Hardy having entered on the reference on September 12, 1972 and having made the award on February 21, 1973. the award is beyond the statutory period of four months and no extension having been granted nor there being any application under Section 28 of the Act for any such extension, it is liable to be thrown out as barred by limitation. This is the first objection. The second is that as the Union of India had unilaterally declared the contract containing the arbitration clause as null and void, therefore, the arbitration clause also fell along with it and for that reason too the arbitration clause could not be invoked or resorted to.
8. The last issue, of course, relates to relief.
9. Time now to examine the nuts and bolts.
Issue No. 1
10. I am sure that Union of India would not have raised this objection had the Deputy Registrar of this Court not been guilty of a faux pas by wrongly noting in his order dated September 2, 1976, that respondent No. 2 had been served by registered post on August 26, 1976. Actually August 26, 1976 was the date put by the postal authorities showing when the registered envelop had been received in the post office. The Deputy Registrar took it to be the date of service. Had he cared to look at the back of the registered envelop itself he would have found two endorsements by the postal authorities as follows:
“Left “Left Sd/- Sd/- 30/8 31/8
11. Anyhow, we have the acknowledgment due on record showing that respondent No. 2 was served on September 1, 1976. The objections having been filed on September 28, 1976, were thus well within time. There is no dispute that as far as objector No. 1 is concerned, its objections were within limitation. This much for the issue.
Issue No. 2
12. It is issue No. 2 which was witness to lot of firework and not without basis. However, first the prologue. A contract was entered into on August 23, 1987 between M/s. Associated Producers Company 28, Beach Street P.O Box 811, Penang and the Union of India. The contract was signed on behalf of the firm by its sole proprietor M.A.A Wahab (See Ex. R-1) it was this contract which ultimately led to disputes, proceedings under Section 20 of the Arbitration and the appointment of Mr. Hardyal Hardy. It may be noticed that during the proceedings under Section 20 of the Act an application was moved under Order VI rule 17 of the Code of Civil Procedure by the Union of India which led to the impleading of M.A.A Wahab as respondent No. 2. It appears from the record that there was a continuous exchange of correspondence between the parties and significantly everywhere the name of respondent No. 2 was mentioned as MA.A Wahab and the address of respondent No. 1 firm was the same as mentioned above. In this connecticn reference need be made to only a few such documents. They are exhibits R-10, R-11, R-16, R-20, R-22, R-30, P-2 and P-3 I am laying emphasis on the name of the proprietor and the address of the respondents as both have come to play a vital role.
13. It so happened that during the proceedings before Mr Hardy, for a reason which it is difficult for me to comprehend, the name of the proprietor ceased to be M.A.A Wahab. It became ‘Abdul Wahab”. This quirkiness dug the grave. What finally led to the burial is as follows. As already noticed above, the address of the firm was 28 Beach Street P.O Box No. 811 Penang. Strangely enough, it too changed. It became 88 Beach Street and the P.O Box number too had a transformation of sorts. I say so on the basis of the notice sent by the arbitrator. Happily the envelop bearing that convoluted address still remains intact in the otherwise badly mauled and mutilated record of the proceedings. Mr. Hardy was thus, with respect, pounding at a wrong person at a wrong address and when he found, for, under the circumstances, what else could he find?, that there was no response from both the respondents, he directed the claimant Union of India to provide to him with their “fresh addresses” (See proceeding of October 5, 1972). This led, if I may be permitted to say so, to a Pickwickian situation. The Union of India informed Mr. Hardy that it had come to know that Mr. Wahab was in Madras. A great job done indeed. And, pray, how did it come to know of it? A letter (Ex. R-32) had done the trick. It was from the High Commissioner of India, Kuala Lumpur to the Ministry of Food and Agriculture. It said: “We understand Mr. Wahab is at present in India at following address: 280, Linghi Chetty Street, Madras-1”. No body tried to verify the correctness of this information. The words “We understand” were blindly and mutely accepted as Gospel truth. Notices were sent by registered cover at the said address and received back with the endorsement “not known”. Instead of taking the persons concerned out of their slumber and making them sit, it caused not even a flutter. The next order was to effect service by publication in the Hindu Madras with “Abdul Wahab” shown as a resident of “280 Lioghi Chetty Street, Madras-1”. With publication affected, the respondents were proceeded against ex parte leading to this ex parte award. And all this, although the claimant Union of India knew about yet another address of the respondent in Singapore. An address at which he had earlier been served with a communication by the department (see Ex P4).
14. What do we find then? M A.A Wahab was never sent a notice. On Abdul Wahab was. No notice was sent to respondent No. 1 at its correct Kuala Lumpur address. Notices were sent at a Madras address to ‘Abdul Wahab’ without verifying whether he really resided or had an office there. Without any legal justification orders were passed for substituted service and later for proceeding exparte.
15. Even if it be assumed that there was some justification on facts, though I discern not even a tiny speak of it, to order for substituted service, could the arbitrator pass an order for substituted service? No according to a Division Bench judgment of this court in Union Of India… v. M/S. Bhatia Tanning Industries, Kanpur…., Kanpur, AIR 1986 Delhi 195 This adds yet another dimension to the already condemned proceedings. But, then, I am still not finished. The objectors have led evidence, cogent and convincing, with nothing in rebuttal, to prove that they had nothing to do with “280 Linghi Chetty Street Madras-1”. This buries the award fathoms deep. Irretrievably. The issue thus goes in favour of the objectors.
Issue No. 3
16. The issue takes within its embrace two objections. I am mentioning them only for no other objection was canvassed or pressed. The first is that the award having not been made within the statutory period and no extension having been granted under Section 28 of the Act, it falls. The second relates to the contract itself. It is contended that the contract itself having been declared as null and void by the claimants by their telegram dated September 15, 1967, clause 12 of the Contract containing the arbitration agreement also becomes null and void and with that falls the reference and the award.
17. Coming to the first objection, the award itself goes to show that Mr. Hardy had entered on the reference on September 12, 1972 and had made the award on February 21, 1973 As no time limit for making the award was fixed by Avadh Behari, J. the award was required to be made within the statutory period of four months. It was not so made. Admittedly no application was made under Section 28 of the Act and as such there was no extension of time. Interestingly even during arguments no request was made even orally. Can I extend the time suo motu? If so, should? There is no doubt in my mind that no formal application need be moved and that the court may act suo motu. The discretion lies with the Court. But then ‘discretion’ being a much maligned, much mis-used term, the wise-men of law have, with a view to tame this wild horse, and to control its swift hoofs, held that discretion must be exercised judicially and only if cogent reasons are forthcoming. If this be the prescription or specification for the grant of extension, and I have no doubt that this is, is it a fit case for exercising the discretion in favour of extension? No, is my firm answer. Right from head to the, it is a case of fatal misadventures. I have already ventured to pen them in the preceding paragraphs, Neither the Arbitrator nor the Union of India can claim innocence. And then, the proceedings before the Arbitrator would go to show that the Union of India had been taking adjournments which could easily be avoided. The objectors were hardly responsible, (and how could they be when they were being proceeded against exparte?) for the delay. Why should then I exercise discretion in favour of extension? Here, at least, Barkes is not willing.
18. During arguments my attention was drawn to the contract Ex. R-1, and, more particularly, to its clauses 8 and 12. Clause 8 provides that on the failure of the sellers to deposit with the buyers a transferable non-performance bond in the amount of U.S Dollars 63,000 within 10 days of the establishment of the Letter of Credit under clause TO of the contract, the contract “shall become null and void forthwith”. It was contended that as the required transferable nonperformance bond Was not deposited, therefore, the Union of India bad actually declared the contract ss null and void and, in support, my attention was drawn to telegram Ex. R-44 dated September 15, 1967 sent by the Union of India to the objectors which runs as follows:—
“3-6/67 Fimpiv stop reference coqtract of 23rd August 1967 for purchase of Forty five thousand tonnes South American origin rice as amended vide Telegram Exchanged between us on September 11th 1967 stop clause eight of the said contract stipulates that if sellers fail to deposit with buyers within ten days of establishment of 1.c. The non performance bond referred to under the said clause then the contract shall become null and void forthwith stop as intimated by you L/c duly received by your Bank on September 5, 1967 stop non performance bond should thus be deposited with buyers by 15th September 1967. Stop non performance bond should thus be deposited with buyers by 15th September 1967. Stop wish to bring to your notice that if the said non performance bond is not received, hereby Septembers 5th 1967. The contract of 23rd August 1967 becomes null and void.”
It was contended that the Union of India having itself declared the contract as null and void, the arbitration agreement as contained in Clause 12 of the contract Ex. R-1 also fell alongwith it and that for that reason, the entire proceedings would fall to the ground. In support, reliance was placed on I.T.C Ltd. v. George Joseph Fernandez and another AIR 1989 SC 839, Chiranji Lal Multani R. B. (Private) Ltd. v. Union of India AIR 1963 Punjab 372 Alliance Mills Pvt, Ltd v. Madan Gopal & Sons, AIR 1982 Calcutta 282 Dodal Pvt. Ltd. v. Delhi Electric Supply Undertaking AIR 1984 NOC : 111 (Delhi) and Suwalal Jain v. Clive Mills Co. Ltd. AIR’ 1960 Calcutta. 90.
19. In I.T.C Ltd. v. George Joseph Fernandes and another there was an application under Section 34 of the Arbitration Act and an issue was raised as to the validity or existence of the contract containing the arbitration clause. It was held the couit has to decide first of all whether there is a binding arbitration agreement, even though it involves incidentally a decision as to the validity or existence of the parent contract. The conrt dealt with the question as to whether in an application under Section 34 of the Act, the Court can decide the question of validity of the agreement containing the arbitration clause This, obviously, has nothing to do with the case before me. Coming to Chiranji Lal Multani v. Union of India, which is from Punjab, it was held that if the contract itself is forbidden by taw and, therefore, illegal, the arbitration clause forming part of the contract would also be illegal as the taint of illegality attaches to every part of the contract, including the arbitration clause. Obviously, the facts before me do not attract even this authority inasmuch as it is no body's case that the contract entered into was forbidden by law and for that reason the arbitration clause forming part of the contract would also be illegal. Similarly in the case of Alliance Mills Pvt Ltd., the contract entered into was illegal in view of the statutory prohibition. If was held that in such a case the plea that the arbitration clause was void could be raised even after the party had acquiesced and taken part in the arbitration proceedings. This judgment too is not attracted to tee facts of the present case. The judgment of the Delhi High Court in Dodal Pvt. Ltd. equally inapplicable. In that case the contract had been entered into in contravention of some statutory requirements and as the defect was not curable, it was observed that the arbitration agreement would also be unenforceable. Similarly in Suwalal Jain's case before the Calcutta High Court, the contract itself was forbidden in law and as such illegal and it was under these circumstances that the arbitration clause which formed part of the contract was also held to be illegal and void.
20. Coming back to the contract and, particularly, to clause 8, of course, it does state that in case of failure of the sellers to deposit with the buyers the requisite non performance bond within 10 days of the establishment of the Letter of Credit, the contract shall become null and void forthwith However, the objectors are not justified in taking the plea that the Union of India had actually declared the contract to be null and void unilaterally by its telegram Ex. R-44 By the said telegram the Union of India had only drawn the attention of the objectors to the clause in the contract and had only asked for the performance of the said clause. The telegram by itself didnot declare the contract to be null and void. In any case non compliance of clause 8 would not render, to my mind, the arbitration agreement also null and void. The arbitration clause would be attracted even on non compliance of clause 8 as it would amount to breach of the terms of the contract, inasmuch as, it would effect the “rights and obligation” of the parties. In any case, it is significant to note that even after the telegram dated 15-9-1967 the parties did not take the contract as having come to an end. In this connection, I may make reference to only a few of the documents placed on the record. The first is Ex R-2. It is a telegram dated October 13, 1967 and is by the Union of India. It was admittedly received by the objectors. By it the Union of India noticed the inability of the objectors to supply the goods according to the specifications laid down in the contract. It also noticed that the objectors had failed to ship any rice by 5th October 1967 which was the last date of shipment according to the contract. It was on account of this failure on the part of the objectors that they were stated to be guilty of the breach of the contract. Thus on October 13, 1967 the Union of India itself had not taken the stand that the contract had already become null and void. Rather it appears that the contract was amended by telegrams exchanged between the parties on 14th September. 1967 and the failure to supply goods according to the specifications including their shipment was the actual cause which was taken to be the reason for the breach of the contract. The next document is of October 7, 1968 (Ex. R-9). It is also from the Union of India and is addressed to the objectors Here also the objectors were stated to have committed the breach of the contract on account of their failare “to supply the contracted stores in terms of the contract.” Thus non compliance of clause 8 was no where taken as one of the grounds. The third document is of October 7, 1968 It is Ex. R-10 It is from the objectors and is addressed to the Union of India. Therein the objectors no where plead or allege or mention even obliquely that the Union of India had unilaterally declared the contract null and void Rather it talks of unfulfilment of the contract on the part of the government and holds the Government of India solely responsible for the breach of the contract on account of its having “obstructed” the shipment of the goods. The next document is Ex. R-11. It is dated 7th January, 1969 and is also from the objectors. It again talks of the Union of India having obstructed the shipment of the goods and holds it solely responsible for the same. In short, what these documents show is that the parties had not taken the contract having become null and void. Rather they proceeded with the contract and it was only much later that the Government of India claimed dnmages on account of the breach of the contract not on the basis of the violation of Clause 8 but on account of the failure of the objectors to supply the goods in question and significantly the objectors also did not, at any stage, place reliance on Clancelanse & and rather treated the contract as subsisting and, on their part, claimed the Government of India to be responsible for non shipment of the goods.
21. For the reasons recorded above, I am inclined to hold that neither the Union of India had unilaterally declared the contract to be null and void nor it was at any stage treated to have become null and void for non compliance of Clause 8 of the contract and that in any case the arbitration agreement as contained in Clause 12 stood firm and thus remained applicable.
22. The award being not within time and no case having been made out for extension of time, the issue goes in favour of the objectors.
Relief
23. The award is set aside. However, no order, is made as to costs.
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