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TMI Blog2009 (11) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of 1940). The Arbitration Act of 1940 itself was repealed by section 85 of the Arbitration and Conciliation Act, 1996, hereinafter referred to as the `Act'. This Act comprehensively amended the then existing law in relation to arbitration and provided for a complete methodology and mechanism which would govern right from the stage of constitution of the Arbitral Tribunal to enforcement of the Award of the Arbitral Tribunal with least interference of the court. 2. Principal of mutability is equally applicable to the Legislation as well. The Legislature is always expected to examine the needs of the society and amend, modify and enact laws accordingly. Looking into the legislative history, the Law of Arbitration in India was unsatisfactory and, in fact, quite non-existent which persuaded the Legislature to enact the Arbitration Act, 1899 which was quite similar to the English Arbitration Act, 1899. This probably was the beginning of enforcement of Law of Arbitration in India but at that time, the reference to arbitration was primarily permissible with intervention of the court. The 1899 Act was applicable to presidency towns and its scope was confined to, "arbitration by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and Conciliation Bill, 1995, reads as follows: "1. The law of arbitration in India is at present substantially contained in three enactments, namely, the Arbitration Act, 194, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) act, 1961. It is widely felt that the 1940 Act, which contains the general law of arbitration, has become outdated. The Law Commission of India, several representative bodies of trade and industry and experts in the field of arbitration have proposed amendments to this Act to make it more responsive to contemporary requirements. It is also recognized that our economic reforms may not become fully effective if the law dealing with settlement of both the domestic and international commercial disputes remains out of tune with such reforms. Like arbitration, conciliation is also getting increasing worldwide recognition as an instrument for settlement of disputes. There is, however, no general law on the subject in India. 2. The United Nations Commission on International Trade Law (UNCITRAL) adopted in 1985 the Model Law on International Commercial Arbitration. The General Assembly of the United Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal; and ix) to provide that, for purposes of enforcement of foreign awards, every arbitral award made in a country to which one of the two international conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award. 5. The Bill seeks to achieve the above objects." 3. The above objects clearly indicate the legislative intent to make arbitration proceedings more effective, expeditious, result oriented and the arbitral procedure fair, efficient and capable of meeting the specific needs of arbitration. To achieve those objects and to encourage enforcement of Law of Arbitration in all fields of law relating to civil disputes viz. at family, domestic and commercial levels and even at international levels, section 89 was inserted to the Civil Procedure Code, 1908 by the Civil Procedure Code (Amendment) Act, 1999. This section casts an obligation upon the courts to consider, at any stage of the suit, the possibility of settlement, formulation of terms of possible settlement and reference thereof to arbitration amongst other modes of alternative dispute resolution system. Thus, the object of newly inserted section 89 is to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice. Learned Counsel for the Respondents accepts notice and waives service. He prays for time. 2. Learned Counsel appearing for the Appellant refers to paragraph-93 and 94 of the impugned Judgment and submits that keeping in view the settled principle of law and the observations made by the learned Single Judge, it would be appropriate that the matter is referred to larger Bench as the learned Judge has made reference to the Division Bench order of the Court. We find substance in this submission and in any case, this question is likely to arise repeatedly before the Courts concerned and would be of some significance. Consequently, we agree that the matter should proceed before the larger Bench. 3. Having perused the pleadings and the impugned Judgment, the Registry is directed to place the matter on 24th July, 2009 before the larger Bench." We may now notice the facts giving rise to the present appeal and consequential reference made by the Division Bench. 6. M/s. Ircon International Limited, hereinafter to be referred to as "the company", had been issued a contract by Maharashtra State Road Development Corporation interalia for constructing a rail over bridg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est were allowed while the remaining claims were rejected. So also all the counter-claims raised by the company were rejected. Aggrieved from the Award of the learned Arbitrator, the company filed petition for setting aside the Award dated 5.5.2005 in terms of sections 34 and 16(6) of 1996 Act. However, the appellant did not challenge the award or any part thereof. The petition was admitted and was finally disposed of by the learned Single Judge vide his judgment dated 11th November, 2008. The learned Single Judge recorded the findings that out of the 15 claims allowed by the learned Arbitrator, 11 claims were sustainable and the appellant was entitled to those claims but while referring to the Division Bench judgment of this court in the case of Mrs. Pushpa P. Mulchandani v. Admiral Radhakrishin Tahiliani, 2008(7) LJ Soft, 161, the learned Single Judge set aside the entire award. It will be useful to refer to the relevant part of the judgment passed by the learned Single Judge that reads as under:- "5......... I have upheld the award in respect of ten claims, the claim for interest and in so far as it rejects the Petitioners counter-claim. I have set aside the award in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that part of the award which according to the Court was beyond the jurisdiction of the arbitrator, because it was not submitted to arbitration. In all other cases, if the Court finds that only a part of the award is affected by illegality which is pointed out to the court, the court cannot itself modify the award, but if a party to the petition applies to the court in exercise of its power under Sub-section 4 of Section 34, the Court can direct the arbitral tribunal to resume the proceedings and take such action to eliminate the ground for setting aside the award. In such situation, the arbitral tribunal on resumption may be able to delete that part of the award which the Court finds to be invalid or illegal and make suitable modification in the award. It, thus, appears that while exercising jurisdiction under Section 34, the court can modify the award only in one situation which is to be found in clause (iv) of sub- section 2 of section 34. In all other cases if the Court finds that only part of the award is affected, then in case the party makes an application, the court can adopt the course of action contemplated by sub-section 4 of Section 34 and only option available to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiating arbitration, the period spent during the earlier arbitration is liable to be excluded while computing the period of limitation. In our opinion, the decision of various courts either on Arbitration Act, 1940 or the Acts which were in the field before that, while considering whether the Court has the power to modify the award in a petition filed under Section 34 cannot be considered because under those enactments power was positively conferred on the court to modify the award. It is further to be seen here that Arbitration Act, 1996 has repealed the Arbitration Act, 1940. Arbitration Act, 1940 had a specific power conferred on the court to modify the award. While enacting 1996 Act, the Parliament has chosen not enact that provision. In our opinion, the intention of the Legislature, therefore, was clear not to confer on the court power to modify the award. It is now well settled that scheme of Arbitration Act, 1996 is clear departure from the scheme of 1940 Act. In 1940 Act, power was conferred on the court itself to modify the award. In 1996 Act, as observed above, the scheme is that the power is conferred on the court to modify the award only in one situation found in Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. That must be left to be decided by the Division Bench which considers the appeal that will quite obviously and understandably be filed against this judgment. 95. In the result, the petition is made absolute, the award is set aside." INTERPRETATION :- 7. A bare reading of the impugned judgment and particularly above referred portion shows that though the learned Single Judge upheld the award of the learned Arbitrator in favour of the Appellant and expressed agreement with the arguments raised on behalf of the Appellant that the principle of severability would be applicable to such award but being bound by discipline and precedent reluctantly set aside the whole award. The sole question of law that thus arise for consideration before this Larger Bench is ; (1) Whether doctrine of severability can be applied to an award while dealing with a Petition under Section 34 of the Arbitration and Conciliation Act, 1996; and (2) What is the scope of proviso to Section 34(2)(iv) and whether its application is restricted to clause (iv) alone or it applies to the whole of Section 34(2) of the Act. 8. It is this provision of Section 34 which falls for interpretation and explanation, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt would keep in mind that its function is jus dicere, not jus dare. The right of appeal being creation of a statute and being a statutory right does not invite unnecessary liberal or strict construction. The best norm would be to give literal construction keeping the legislative intent in mind. 52. The Supreme Court in the case of Shiv Shakti Co-op. Housing Society, Nagpur vs Swaraj Developers and Others, reported in (2003) 6 SCC 659, while referring to the principles for interpretation of statutory provisions, held as under: - "19. It is a well-settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. (See Institute of Chartered Accountants of India v. Price Waterhouse.) The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guous, not clear or where two views are possible or where the provision gives a different meaning defeating the object of the statute. If the language is clear and unambiguous, no need of interpretation would arise. In this regard, a Constitution Bench of five Judges of the Supreme Court in R.S. Nayak v. A.R. Antulay, AIR 1984 SC 684 has held: ".....If the words of the Statute are clear and unambiguous, it is the plainest duty of the Court to give effect to the natural meaning of the words used in the provision. The question of construction arises only in the event of an ambiguity or the plain meaning of the words used in the Statute would be self defeating." Recently, again Supreme Court in Grasim Industries Ltd. v. Collector of Customs, Bombay, (2002)4 SCC 297 has followed the same principle and observed: "Where the words are clear and there is no obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for court to take upon itself the task of amending or altering the statutory provisions." 54. Above stated principles clearly show that the Court can safely apply rudiments of plain construction to leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, generally be found that inconsistencies can be avoided by applying the general rule that the words of a proviso are not to be taken "absolutely in their strict literal sense," but that a proviso is "of necessity ... limited in its operation to the ambit of the section which it qualifies." And, so far as that section itself is concerned, the proviso again receives a restricted construction: where the section confers powers, "it would be contrary to the ordinary operation of a proviso to give it an effect which would cut down those powers beyond what compliance with the proviso renders necessary." 11. Normal function of a proviso is to except something out of enactment or to qualify something enacted therein which but for the proviso would be within the purview of enactment. "As stated by LUSH, J. "When one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject-matter of the proviso. In the words of LORD MACMILLAN: "The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; (3) It may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and (4) It may be used merely to act as optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision." The above summary cannot however be taken as exhaustive and ultimately a proviso, like any other enactment, ought to be construed upon its terms. DISCUSSION ON LAW :- 14. Having referred to the basic principles of construction applicable to such cases with particular reference to ambit, scope of proviso to section, now we may refer to legislative history of this provision. In the opening part of this judgment, we have made reference, to some extent to the legislative history of the Arbitration and Conciliation Act, 1996 which clearly indicate that with the passage of time this law has developed in various respects. The main object of enacting this Act was to bring the law of arbitration in conformity with UNCITRAL Model Rules on one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arbitral tribunal considers the the award or any matter referred to request made under sub-section (1) to be arbitration to the arbitrators or umpire justified, it shall make the correction or for reconsideration upon such terms as give the interpretation within thirty days it thinks fit,- from the receipt of the request and the interpretation shall form part of the (a) where the award has left arbitral award. undetermined any of the matters referred to arbitration, or where it (3) The arbitral tribunal may correct determines any matter not referred to any error of the type referred to in clause arbitration and such matter cannot be (a) of sub-section (1), on its own separated without affecting the initiative, within thirty days from the date determination of the matters referred: of the arbitral award. or (4) Unless otherwise agreed by the (b) where the award is so indefinite as parties, a party with notice to the other to be incapable of execution; or party, may request, within thirty days from the receipt of the arbitral award, the (c) where an objection to the legality arbitral tribunal to make an additional of the award is apparent upon the face arbitral award a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty making the application was the Court shall decide the question on not given proper notice of the affidavits : appointment of an arbitrator or of the arbitral proceedings or was otherwise PROVIDED THAT where the unable to present his case; or Court deems it just and expedient, it (iv) the arbitral award deals with a may set down the application for dispute not contemplated by or not hearing on other evidence also, and it falling within the terms of the submission may pass such orders for discovery and to arbitration, or it contains decisions on particulars as it may do in a suit. matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, ig only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived the award and would entertain it after the prescribed limitation of three months only if sufficient cause is shown within a period of 30 days and not thereafter. The ambit and the scope of power setting aside an arbitral award are entirely controlled by Section 34(2). An arbitral award may be set aside by the Court only if the grounds stated in sub-section (2) are satisfied and application to that effect are placed before the Court. The expression `May' sufficiently indicates that larger discretion is vested in the Court which has to be exercised in accordance with the settled canons of judicial discretion and the context would require that the expression 'may' should be read as 'may" alone and does not admit or invite any other meaning or interpretation. The other expression which is of significance is `only if'. The word `only if' empowers the Court to set aside an award only if conditions of sub-clause (a) and (b) of sub-section (2) are satisfied. In other words, it is for the grounds stated in the said provisions alone that the award can be set aside and not otherwise. Further an obligation is cast upon the applicants to furnish proof thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Thus, we have to examine the provision of Section 34 of the 1996 Act to find whether it permit of any other interpretation than the one put forward by the Respondents. Sub-clause (i),(ii),(iii) and (v) of clause (a) of sub- section (2) of Section 34 deal with certain situations which may require the Court to set aside an award of the arbitral tribunal. These may be the cases where the party was under incapacity, the agreement is not valid under the law in force, where proper notice was not given to the party or otherwise enable to present his case, and the composition of arbitral tribunal or procedure was not in accordance with the agreement between the parties and lastly the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force. Explanation to Section 34(2) which is in the nature of a declaration further explains that when an award is in conflict with the public policy of India when the award was induced or affected by (i) fraud or (ii) by corruption; or (iii) was in violation of Section 75 or 81 of the Act. It is difficult for this Court to hold that under all these categories it would be inevitable for the Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of it. In law it is the same thing as if the void thing had never existed." What was declared void was election. That is the process which led to choosing or selecting appellant as a member was invalid. The legal effect of declaration granted by the Tribunal was that the election of the appellant became non-existent resulting automatically in nullifying the earlier declaration. The declaration did not operate from the date it was granted but it related back to the date when election was held. The legislative provision being clear and the Tribunal being vested only with power of declaring election to be void the entire controversy about voidable and void was unnecessary. The appellant could not therefore, claim any pension under Secti9on 7-A of the 1975 Act." 18. In the event the arbitration agreement between the parties is not valid means where it is unlawful or void, the whole award will have to be set aside as the very root of the matter suffers from a defect of law and is not valid under the law for the time being in force. Severability is an established concept. It is largely applicable to various branches of civil jurisprudence. Where it is possible to sever t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, shorn of the offending parts, must retain the characteristics of a valid contract, so that if severance will remove the whole or main consideration given by one party the contract becomes unenforceable. Otherwise, the offending promise simply drops out and the other parts of the contract are enforceable. Reference may be made to Chitty on Contracts (29th Edn. Vol. 1) pp. 1048-49: "16-188. Introductory.- Where all the terms of a contract are illegal or against public policy or where the whole contract is prohibited by statute, clearly no action can be brought by the guilty party on the contract; but sometimes, although parts of a contract are unenforceable for such reasons, other parts, were they to stand alone, would be unobjectionable. The question then arises whether the unobjectionable may be enforced and the objectionable disregarded or 'severed'. The same question arises in relation to bonds where the condition is partly against the law. 16-189. Partial statutory invalidity. - It was laid down in some of the older cases that there is a distinction between a deed or condition which is void in part at common law. This distinction must now be understood to appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verable from lawful parts had been held to be enforceable. [Referred Canbank Financial Services v. Custodian and others, 2004(8) SCC, 355.] 20. The cases would be different where it is not possible or permissible to sever the award. In other words, where the bad part of the award was intermingled and interdependent upon the good part of the award there it is practically not possible to sever the award as the illegality may affect the award as a whole. In such cases, it may not be possible to set aside the award partially. However, there appears to be no bar in law in applying the doctrine of severability to the awards which are severable. In the case of Messrs. Basant Lal Banarsi Lal v. Bansi Lal Dagdulal, AIR 1961 SC 823, though the Supreme Court was dealing with an application for setting aside an award passed by the Bombay City Civil Court, contending that forward contract in groundnuts were illegal as making of such contracts was prohibited by Oil seeds (Forward Contract Prohibition) Order, 1943 and hence arbitration clause contained in the forward contracts in groundnuts between the parties was null and void, where it was found as a matter of fact that it was not possible to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only ₹ 13,93,373.50. The award to this extent is not open to challenge. This part of the award does not suffer from any misconduct. There is also no error apparent on the face of the award in respect of the amount. It is not open to challenge. 35. The scope of interference is limited. In Hindustan Construction Co. Ltd. Governor of Orissa (1995 (3) SCC 8) this Court held (SCC p.17 para 10): "10. ... .. It is well known that the court while considering the question whether the award should be set aside, does not examine that question as an appellate court. While exercising the said power, the court cannot re-appreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case the award in question could have been made. Such award can be set aside on any of the grounds specified in Section 30 of the Act." 23. This view was reiterated by the Supreme Court in a very recent judgment in the case of Kwality Manufacturing Corporation v. Central Warehousing Corporation, 2009(5) SCC 142. 24. Now a further question that falls for consideration of this court is as to whether there is anything contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e understood or equatable to void. 28. These are distinct terms. Normally, the power to do an act would include an ancillary power to do that act purposefully, unless a specific language has been used in the provisions of the Statute so as to lead to an irresistible conclusion expressly or by necessary implication that such an act is prohibited or is barred. We have already noticed that in the language of Section 34, no such prohibition can be traced. The attempt of the Legislature in enacting the 1996 Act is to free Arbitral Tribunal from rigours of strict rules of procedure and permit least interference by judicial intervention. It was vehemently argued before us that the Legislature has eliminated Sections 15 and 16 of the Act of 1940 thereby conveying its intent not to permit remand or remitting of the matters to arbitrator. Section 34(2) only vests power, according to the learned counsel appearing for the Respondents, to set aside the award and thus the Court is powerless from taking any other steps or passing any other appropriate orders. This argument on the face of it, besides being misconceived, cannot stand the test of law inasmuch as under Section 34(4) of the 1996 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applying the doctrine of severability if some part of the award is unsustainable and where other part of the award is found to be good and enforceable in law by the Court in exercise of its powers vested under Section 34 of the Act. 29. In the case of State of T.N. and Another v. P. Krishnamurthy and Others, (2006)4 SCC 517, the Supreme Court held as under: - "31. If a rule is partly valid and partly invalid, the part that is valid and severable is saved. Even the part which is found to be invalid, can be read down to avoid being declared as invalid. We have already held that premature termination of existing leases, in law, can be only after granting a hearing as required under sub-section (3) of Section 4-A for any of the reasons mentioned in Section 4-A(1) or (2). Therefore, let us examine whether we can save the offending part of Rule 38-A (which terminates quarrying leases/permissions forthwith) by reading it down. Apart from the statutory provision for termination in Section 4-A(3), there is a contractual provision for termination in the mining leases granted by the State Government. This provision enables either party to terminate the lease by six months' no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly referable to the section itself and, thus, must take its colour from the principal section viz. 34(2)(iv). A reading of the proviso shows that where severability is possible, the court in the class of the cases falling under sub-clause (iv) is expected to set aside the award partially. In other words, a greater obligation is placed upon the court to adopt such an approach when the case in hand is covered under the provisions of sub-clause (iv). This contention will not have any adverse effect on the interpretation and scope of section 34 as a whole. It is a settled rule of interpretation that the statutory provision should be read as a whole to find out the real legislative intent and that provision should be read by keeping in mind the scheme of the Act as well as the object which is sought to be achieved by the Legislation while enacting such a law. There is nothing in the proviso or in the language of section 34 which has an impact or effect to restrict the power of the court as contemplated under section 34(1) read with the opening words of sub- sections (2) and (4) of section 34 the Act. Est boni judicis ampliare jurisdictionem is a settled canon of law courts should exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the other courts which take the former view are Mt. Amir Begum v. Syed Badr-ud-din Husain & ors., AIR 1914 PC 105; Mattapalli Chelamayya & Anr. v. Mattapalli Venkataratnam Anr., (1972)3 SCC 799; The Upper Ganges Valley Electricity Supply Co. Ltd. v. The U.P. Electricity Board, (1973)1 SCC 254; State of Orissa v. Niranjan Swain, (1989)4 SCC 269; Union of India v. Jain Associates & Anr. (1994)4 SCC 665; J.C. Budhraja v. Orissa Mining Corpn. Ltd. (2008)2 SCC 445; Poonam International Co.Pvt.Ltd. v. ONGC, 1998(1) Arb. LR 28; Union of India v. M.L. Dalmiya, AIR 1977 Cal 266; M/s. Metro Electric Co. v. DDA, AIR 1976 Del 195; M/s. Umraosingh & Co., Lucknow v. State of Madhya Pradesh, AIR 1976 MP 126; Anandilal Poddar v. Keshavdeo Poddar, AIR (36) 1949 Cal, 549; S.B. Garware & Ors. v. D.V. Garware, AIR 1939 Bom. 296; Dagdusa Tilakchand v. Bhukan Govind Shet, 1884 Indian Law Reports Vol. IX 82; Mehta Teja Singh & Co. v. UOI, AIR 1977 DEL 231, Union of India v. M/s. Artic India, Arb.Petn.No. 355/2004 (SJ); and Sanyukt Nrimata v. IIT & Ors. 1986(2) Arb LR 33 (Del); while Rakomder Lrosjam Ljamma v/ IPO. (1998)7 SCC 129; ITDC v. T.P. Sharma, (2002)3 RAJ 360 (Del); Mc Dermott Internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 52 of the judgment of the Supreme Court in the case of McDermott International (supra) It must be noticed at the very outset that the Supreme Court in that case was not concerned with the application of principle of severability of award. The court was primarily concerned with the ambit and scope of section 34(2) in its entirety. The contention of severability neither came up for consideration nor has been dealt with by the Supreme Court in the entire judgment as the court was not called upon to decide such an issue. In stricto senso the proviso to section 34(2)(iv) may not literally apply to the entire provision of section 34(2) but can certainly be taken as a yardstick for rest of the provision in so far as exercise of judicial discretion of the court is concerned. The Supreme Court while considering the provisions of section 34(2) discussed in some detail as to which of the cases would fall under those heads and defined the supervisory role of the courts under that provision. Discussion on this topic, in fact, starts at paragraph 45 and goes upto paragraph 66 of the judgment. The Supreme Court in that case has defined in particular principle which may be attracted in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant laws and earlier judgments should be brought to the notice of the court and they should be correctly applied. Mere observations in a previous judgment may not be binding on a subsequent Bench if they are not applicable to the facts and controversies in a subsequent case as per settled principle of "ratio decidendi". The rule of precedent, thus, places an obligation upon the Bench considering such judgments that the Court should discuss the facts and the law of both the cases and then come to a conclusion as to whether the principle enunciated in the previous judgment is actually applicable on facts and in law of the subsequent case. In the case of Commissioner of Customs (Fort) vs. Toyota Kirloskar Motor (P) Ltd., (2007)5 SCC 371, the Supreme Court stated the law relating to precedents and held that a decision, as is well known, is an authority for what it decides and not what can logically be deduced therefrom. The ratio of a decision must be culled out from the facts involved in a given case and need not be an authority in generality without reference to the reasons, discussions and facts of the case. 35. The Supreme Court was primarily stating the principles w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase which itself is a glaring example of what devastating results can be produced by accepting the contention which has been raised on behalf of the respondent in the present appeal. Undisputedly claims were adjudicated upon on merits. Parties led evidence, documentary as well as oral, argued the matter before the Arbitrator whereafter the Arbitral Tribunal allowed some claims of the claimants and rejected all remaining claims of the claimants and the counter-claim filed by the company. The claimant was satisfied with the award. An enforceable right by way of decree accrued to the claimant in terms of sections 32,35 and 36 of the Act. The company approached this court by filing a petition under section 34 which partially allowed in the sense that out of 15 claims allowed by the Arbitrator in favour of the claimant, held that other claims were not payable to the claimants but still did not make any observation that the award in so far as it rejects the remaining claims and the counter-claim were unsustainable. However, to conclude, the learned Single Judge despite having upheld the claims in favour of the claimants, set aside the entire award in view of the Division Bench judgment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to set aside an award. There is nothing in the provisions of the Act and for that matter absolutely nothing in the Model Law which can debar the court from applying the principle of severability provided it is otherwise called for in the facts and circumstances of the case and in accordance with law. The courts will not get into the merits of the dispute. Thus, the interpretation which should be accepted by the court should be the one which will tilt in favour of the Model Laws, scheme of the Act and the objects sought to be achieved by the Act of 1996. 38. For the reasons afore-recorded, we are of the considered view that the dictum of law stated by the Division Bench in the case of Ms. Pushpa Mulchandani (supra) is not the correct exposition of law. We would predicate the contrary view expressed by different Benches of this court for the reasons stated in those judgments in addition to what we have held hereinabove. It is difficult to prescribe legal panacea which, with regard to the applicability of the principle of severability can be applied uniformally to all cases. We find that the principle of law enunciated by us hereinabove is more in comity to object of the Act, legi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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