Holding

The High Court's dismissal was erroneous; its order is set aside and the appeal is remanded for fresh adjudication with proper findings.

Summary

The appellant, Navnirman Development Consultants, was awarded a contract to construct a sports complex for a government agency, completed the work, but was not paid for its bills. The parties' agreement contained an arbitration clause, and when the respondent failed to constitute an arbitral tribunal, the appellant invoked Section 11(6) of the Arbitration and Conciliation Act, 1996, leading to the appointment of a tribunal which awarded Rs 25.64 lakh to the appellant. The respondent challenged the award under Section 34 before the District Judge, who reduced the award to Rs 7.15 lakh. The appellant appealed the modification under Section 37 to the High Court, which dismissed the appeal without recording any findings or reasoning and did so in the absence of both parties. The Supreme Court held that the High Court erred by not complying with Order 41 Rule 17 of the CPC and by failing to provide a reasoned decision, and therefore set aside the impugned order. The case was remanded to the High Court to rehear the appeal afresh with proper findings and reasoning.

Issues considered

What is the correct procedure when a High Court dismisses an appeal in the absence of both parties under Order 41 Rule 17, CPC?
Did the High Court's dismissal of the arbitration appeal comply with the requirements of reasoned adjudication under the Arbitration and Conciliation Act, 1996?
Should the Supreme Court set aside the High Court's order and remand the matter for fresh consideration?

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 34, s. 36, s. 37
Code of Civil Procedure, 1908s. Order 41 Rule 17, s. Order 41 Rule 19

Subjects

ArbitrationAward modificationSection 34Section 37Order 41 Rule 17Civil Procedure CodeSupreme CourtRemandReasoned judgment

Judgment

[2017] 6 S.C.R. 347

• THE NAVNIRMAN DEVELOPMENT A
CONSULTANTS (I) PVT. LTD.
v.
THE DIVISIONAL COMMISSIONER & PRESIDENT DISTRICT
SPORTS COMPLEX EXECUTIVE COMMITTEE
(Civil Appeal Nos. 8408-09 of2017) B
JULYOS,2017
[ABHAY MANOHAR SAPRE AND R. BANUMATHI, JJ.J
Arbitration and Conciliation Act, 1996 - Arbitration award -
Pronouncement of, in favour of appellant - On challenge by
respondent, District Judge modified the award by reducing the C
awarded sum - Appeal thereagainst as also review, dismissed by
the High Court - On appeal, held: High Court while dismissing the
appeal did not set out even the factual controversy properly much
less in detail and nor dealt with any of the grounds taken by the
parties - High Court erred in not recording any finding much less D
reasoned finding keeping in view the stand of the parties taken in
the pleadings and the grounds of appeal -Also erred in not pointing
out as to why the order of the District Judge is legally sustainable -
High Court decided the appeal in the absence of both parties - In
such situation, provisions of Or. XL! r. 17 CPC got attracted and,
thus, the High Court should have taken recourse to the E
powers u/Or. XL! r. 17 for passing appropriate orders - Said
approach and the cryptic reasoning of the High Court cannot be
accepted - Thus, the impugned order is set aside and case is
remanded back to the High Court for deciding the appeal afresh
on merits. F
Partly allowing the appeals, the Court
HELD: 1.1 The High Court while dismissing the appeal did
not set out even the factual controversy properly much less in
detail and nor dealt with any of the grounds taken by the parties
in their pleadings and in appeal in support of their respective G
contentions. In order to appreciate the factual and legal
controversy involved in the tis, the least which was expected of
was that the order which decides the tis between the parties should
have contained the brief facts of the case and the grounds on
which the action is impugned, the stand of the parties impugning
H
347
348 SUPREME COURT REPORTS [2017] 6 S.C.R.

A and defending the action, the submissions of the parties in support
of their stand, legal provisions, if any, applicable to the controversy
involved in the /is, and lastly, the brief reasons as to why the case
of one party deserves acceptance or rejection, as the case may
be. This enables the superior Court to examine the legality of
B the decision in its proper perspective in its appellate jurisdiction.
[Paras 13-15] [351-C-F]
1.2 The High Court decided the appeal in the absence of
both parties. In other words, when the appeal was called on for.
hearing, neither the counsel for the appellant nor the counsel for
the respondent was present. In such situation, provisions of Or.
C XLI r. 17 CPC got attracted and, therefore, the High Court should
have taken recourse to the powers under Or. XLI r. 17 for passing
appropriate orders as contemplated in r. 17. In any event, the
dismissal of appeal being essentially under Or. XLI r. 17, the
appellant should have taken recourse to the remedy available
D under Or. XLI r. 19 by filing application to the High Court praying
therein for readmission of their appeal by making out the sufficient
cause for their non-appearance on the date when the appeal was
listed for hearing instead of filing this appeal against the impugned
order before this Court. [Para 16-18) [351-F-H ; 352-A-B)
1.3 The High Court erred in not recording any finding much
E
less reasoned finding keeping in view the stand of the parties
taken in the pleadings and the grounds of appeal. The High Court
also erred in not pointing out as to why the order of the District
Judge is legally sustainable calling no interference therein. If
the High Court decided to embark upon the merits of the appeal
F then it should have recorded findings by dealing with all the issues
arising in the case. The said approach and the cryptic reasoning
of the High Court cannot be accepted. The impugned order is
set aside and the case is remanded back to the High Court for
deciding the appeal afresh on merits in accordance with law. [Para
G 19-20) [352-C-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 8408-
8409of2017.
From the Judgment and Order dated 13.09.2013 in Arbitration
Appeal No. 9 of2008 and 04.09.2014 in Review Petition No. I of2014
H of the High Court of Judicature at Bombay.
-'

NAVNIRMAN DEV. CONSULTANTS. v. DIV. COMM.& PRESIDENT DISTT. 349
SPORTS COMPLEX EXEC COMMITTEE

Ms. Suruchi Aggarwal, Adv. for the Appellants. A
The Judgment of the Court was delivered by
ABHAY MANOHAR SAPRE, J. I. Leave granted.
2. These appeals are filed against the final judgments and orders
dated 13.09.2013 inArbitrationAppeal No.9 of2008 anddated04.09.2008 B
in Review Petition No. I of2014 passed by the High Court of Judicature
at Bombay whereby the Arbitration Appeal and the Review Petition
were respectively dismissed.
3. Brief facts need mention to appreciate the controversy involved
in these appeals. c
4. The respondent-a Government agency at Pune invited tenders
for construction of "sports complex" at Pune. The appellant-Company
was one of the tenderers whose tender was accepted and accordingly
the appellant-Company was awarded contract for the said work.
5. According to the appellant, they completed the work in terms of D
the Agreement dated 26.05.2003 and submitted the bills for the work
done but the amount claimed in the bills was not paid by the respondent.
This led to rising of the disputes between the appellant and the respondent
regarding the non-payment of some bills of the appellant.
6. Since the Agreement contained an arbitration clause for E
resolving all kinds of disputes arising between the parties in relation· to
the agreement and hence the appellant served the notices to the
respondent and called upon them to appoint the Arbitral Tribunal as
provided in clause 3.8 of the Agreement and refer the disputes regarding
non- payment of their bills to the Tribunal for its adjudication. The
F
respondent, despite demand made by the appellant, failed to constitute
the Arbitral Tribunal and, therefore, the appellant was constrained to file
an application under Section 11(6) of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as "the Act") before the High Court
praying therein for appointment of Arbitral Tribunal for deciding the
disputes which had arisen between the parties. G
7. By order dated 12.08.2005, the High Court allowed the
appellant's application and appointed Arbitral Tribunal as per Clause 3.8
of the Agreement for deciding the disputes which had arisen between
the parties. The Tribunal then embarked upon the reference and on
H
350 SUPREME COURT REPORTS [2017] 6 S.C.R.

A 03.11.2006 passed an award in favour of the appellant and against the
respondent for a total sum ofRs.25,64,490/- with interest payable at the
rate of 18% p.a. This was followed by one corrigendum issued by the
Tribunal in relation to the award to correct some arithmetical errors,
which had crept in the award.
B 8. Felt aggrieved, the respondent challenged the award before
the District Judge, Pune by filing objections under Section 34 of the Act
being Civil Misc. Application No 36 of 2007. The District Judge, by
order dated 16.11.2007, allowed the respondent's application in part and
modified the award by reducing the awarded sum from Rs.25,64,490/-
to Rs.7,15,544/- and in so modifying also gave some directions .
.C
9. Felt aggrieved, the appellant filed appeal under Section 37 of
the Act before the High Court. By impugned order, the learned single
Judge dismissed the appeal giving rise to first filing of the review petition
by the appellant and consequent upon the dismissal of review, it gave
rise to the filing of these appeals by way of special leave by the
D appellant( claimant) against the main order and review order.
10. Heard learned counsel for the appellant. None appeared for
the respondent though served.
11. Having heard learned counsel for the appellant and on perusal
E of the record of the case, we are constrained to allow the appeals, set
aside the impugned order and remand the case to the High Court for
deciding the appeal afresh on merits.
12. The impugned order reads as under:
"1. The award has been passed on 3'd November, 2006
F in favour of the appellant for Rs.25.64 lacs. The appeal
under Section 36 has been partly allowed on 16'h
November, 2007. Only the award for the amount of
Rs.11.90 lacs under bill No. 1 has been set aside and the
respondent herein has been directed to pay the appellant
Rs.7.14 lacs instead constituting 75% of that amount.
G
The amount has to be paid with interest specified in the
impugned order along with costs.
2. The ambit of this appeal is, therefore, extremely
narrow.
NAVNIRMAN DEV. CONSULTANTS. v. DN COMM.& PRESIDENT DISTT. 351
SPORTS COMPLEX EXEC COMMITTEE [ABHAYMANOHARSAPRE, J.]

The award passed in favour of the appellant herein can A
be executed save and except 114'~ of the amount of bill
No.1.
3. The appellant has not shown how the order in appeal
setting aside the award passed to the above extent calls
for interference in a further appeal. Arbitration Appeal B
is dismissed."
13. In our considered opinion, the need to remand the case to the
High Court has occasioned due to the reason that the High Court while
dismissing the appeal did not set out even the factual controversy properly
much less in detail and nor dealt with any of the grounds taken by the c
parties in their pleadings and in appeal in support of their respective
contentions.
14. In our considered view, in order to appreciate the factual and
legal controversy involved in the /is, the least which was expected of
was that the order which decides the /is between the parties should D
have contained the brief facts of the case so as to know as to how the
factual controversy arose and the grounds on which the action is
impugned, the stand of the parties impugning and defending the actioq,
the submissions of the parties in support of their stand, legal provisions,
if any, applicable to the controversy involved in the !is, and lastly, the
brief reasons as to why the case of one party deserves acceptance or E
rejection, as the case may be.
15. This enables the superior Court to examine the legality of the
decision in its proper perspective in its appellate jurisdiction.
16. We find from the record that the High Court decided the appeal F
in the absence of both parties. In other words, when the appeal was
called on for hearing, neither the counsel for the appellant nor the counsel
for the respondent was present.
17. In such situation, provisions of Order 41 Rule 17 of the Civil
Procedure Code, 1908 got attracted and, therefore, the High Court should G
have taken recourse to the powers under Order 41 Rule 17 for passing
appropriate orders as contemplated in Rule 17. Indeed the explanation
appended to Rule 17 in clear terms provides that nothing in this sub-rule
shall be construed as empowering the Court to dismiss the appeal on
merits.
H
352 SUPREME COURT REPORTS [2017] 6 S.C.R.

A 18. In any event, the dismissal of appeal being essentially under
Order 41 Rule 17, the appellant herein should have taken recourse to the
remedy available under Order 41 Rule 19 by filing application to the
High Court praying therein for readmission of their appeal by making
out the sufficient cause for their non-appearance on the date when the
appeal was listed for hearing instead of filing this appeal against the
B
impugned order before this Court.
19. Be that as it may, the High Court erred in not recording any
finding much less reasoned finding keeping in view the stand of the
parties taken in the pleadings and the grounds of appeal. The High Court
also erred in not pointing out as to why the order of the District Judge is
c legally sustainable calling no interference therein. If the High Court
decided to embark upon the merits of the appeal then it should have
recorded findings by dealing with all the issues arising in the case. It
was, however, not done and hence it calls for interference by this Court.
20. In the light of foregoing discussion, we cannot countenance
D the approach and the cryptic reasoning of the High Court and are,
therefore, constrained to set aside the impugned order and remand the
case to the High Court for deciding the appeal afresh on merits in
accordance with law.
21. Since we have formed an opinion to remand the case, we
E have refrained from recording any finding on merits on any of the issues
arising in the case.
22. In view of foregoing discussion, the appeals succeed and are
accordingly allowed in part. The impugned order is set aside. The appeal
out of which these appeals arise is restored to its file. The learned single
F Judge of the High Court is requested to decide the appeal on merits in
accordance with law uninfluenced by any of our observations.
23. Since the matter is old, we request the Single Judge to decide
the appeal expeditiously after serving notice of hearing of the appeal to
the parties because the respondent despite service did not appear today
' "·
G before this Court.
..
"
Nidhi Jain Appeals partly allowed.