IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8268 OF 2010 [Arising out of SLP(C) No.19500/2008]

NEW GRAMIN MILK COOPERATIVE SOCIETY LTD. .......APPELLANT

Versus

THE GENERAL MANAGER, DELHI MILK SCHEME, GOVERNMENT OF INDIA

.....RESPONDENT

O R D E  

Leave granted.  Heard.

2. The appellant, M/s. New Gramin Milk  

Cooperative Society Ltd. was a contractor with the Delhi  

Government in regard to its  Delhi Milk Scheme.  Certain  

disputes having arisen between the parties, the appellant  

sought arbitration in regard to the following claims:

(i) Damages for losses sustained  by the appellant  

Rs.9,54,000/-

(ii) Release of Security Deposit       Rs.1,90,431/56

(iii) Liquidated damages       Rs.   9,000/-

(iv) Interest at 18% per annum

The disputes were referred to arbitration by order dated  

25.9.1995.  The sole Arbitrator made a non-speaking award  

dated 6.5.1996.  The arbitrator rejected claims (i), (iii)  

and (iv).  He allowed only claim (ii) for the refund of  

security  deposit  withheld,  namely,  Rs.1,90,431.56p.  No

interest was awarded.

.......2.

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3. Being  under  the  impression  that  the  award  

could  be  directly  executed,  the  appellant  filed  an  

execution petition on 5.7.1996.  By order dated 31.10.1998,  

the Executing Court rejected the execution petition on the  

ground that the matter was governed by Arbitration Act,  

1940 and under the provisions of the said Act, the award,  

unless  made  into  a  rule  of  the  Court,  could  not  be  

executed.  Thereafter, on 12.1.1999, the appellant filed an  

application under Section 14 and 17 of the Arbitration Act,  

1940 for making a decree in terms of the award.  He also  

filed an application under Section 5 of the Limitation Act,  

1963  supported  by  an  affidavit  giving  reasons  for  the  

delay.  If the time spent by the appellant in prosecuting  

the execution proceedings between 5.7.1996 and 31.10.1998  

is excluded, the delay was hardly about a month.  Learned  

District Judge, by his judgment dated 8.12.2000 dismissed  

the application filed by the appellant on the ground that  

the  delay  of  one  month  and  twelve  days  was  not  

satisfactorily  explained.  Even  though,  there  was  no  

application under Section 30 read with Section 33 of the  

Arbitration Act, 1940, learned  District Judge  also went  

into the merits of the award in a casual manner and held

that the arbitrator had erred in making the award.  The  

appeal  filed  by  the  appellant was dismissed by the High  

......3.

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Court by the impugned judgment dated 25.3.2008.  The High  

Court was of the view that the reason given for condonation  

of delay was not satisfactory.

4. As noticed above, the main part of the delay  

was  on  account  of  the  pendency  of  the  execution  

proceedings.  Under  the  Arbitration  and  Conciliation  Act,  

1996 (and the ordinance proceeding) it is not necessary to  

make the award a rule of the Court before execution.  It is  

clear  that  the  appellant  was  under  the  bonafide  wrong  

impression that it could execute the award directly being  

under the impression that the matter was governed by the  

new  law.   Therefore,  the  period  spent  in  pursuing  the  

execution  proceedings  has  to  be  excluded.  On  such  

exclusion, the delay is hardly one month and twelve days.  

The appellant has satisfactorily explained the said delay  

with reference to the illness of his counsel. We  find  

that  the  delay  has  been  satisfactorily  explained  and  

deserved to be condoned.  The learned District Judge and  

the  High  Court  were  not  justified  in  dismissing  the  

application on the ground of delay.  

5. In this case, no application was filed by the  

respondent under Section 30 read with Section 33 of the Act

for setting aside the award.    In the absence of such an  

......4.

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application, the Court ought to have made the Award a rule  

of the court unless it was patently illegal [See Madan Lal  

Vs. Sunderlal & Anr., 1967 (3) SCR 147 and Forasol  Vs. Oil  

& Natural Gas Corporation, 1984 Supp. SCC 263]  The fact  

that security deposit was given by the appellant is not in  

dispute and the award of the arbitrator was a non-speaking  

award.   In  the  circumstances,  there  was  no  ground  for  

interference with the award.   

6. Therefore, we allow this appeal, set aside  

the judgments of the High Court and of the District Judge  

and make the award dated 6.5.1996, a rule of the Court.  

The award amount will carry interest at 6% per annum from  

the date of the award to date of payment. The respondent  

shall also pay costs of Rs.10,000/- to the appellant.

  ......................J.             (  R.V.  

RAVEENDRAN )

New Delhi;    ......................J. September 24, 2010.              ( H.L. GOKHALE )