Law:

Section:

Arbitration Act (X of 1940)--- ----Ss. 30 & 33---Contract for supply of vehicles---Arbitration award in favour of defendant was remitted by the court with directions to the arbitrator to state reasons for the award, which direction was not complied with by the arbitrator---Defendant, during pendency of said arbitration proceedings, appropriated an amount lying with it, which amount was in consideration for another later contract between the parties---Plaintiff's present suit for recovery sought recovery of the said amount---Held, that the defendant's act of appropriation of amount in respect of the earlier contract from amount lying with the defendant under a contract was not justified nor lawful---Failure of defendant to pursue legal remedy for recovery of said amount once arbitration award was set aside by the court rendered the defendant liable to refund the said amount forthwith---Suit was decreed accordingly. JUDGMENT NAZAR AKBAR, J.---Very briefly the facts of the case are that the plaintiffs entered into a contract dated 31-1-1967 with the defendant for local assembly of 450 vehicles imported by the defendant. The plaintiff by March 1969 assembled and delivered 330 vehicles to the defendant and the remaining 120 vehicles could not be supplied for various reasons, therefore, by invoking Clause 38 of the Contract Act, the dispute was referred to the Sole Arbitrator where the plaintiff filed a claim of Rs.37,39,073.95 against the defendant and the defendant also filed counter claim amounting to Rs.1,75,25,343.06. The sole arbitrator announced the award on 30-4-1975 rejecting the plaintiff's claim and accepted the defendant's claim to the extent of Rs.33,21,579.65. The plaintiff filed objections under sections 30 and 33 of the Arbitration Act, 1940 and ultimately, the award was remitted to the Arbitrator with the directions to state reasons on the award in sufficient detail within a period of three months, however, the Arbitrator failed to comply with the directions of the Court, meaning thereby that there did not exist any award. However, pending the proceeding before the Arbitrator, the defendant appropriated a sum of Rs.33,21,579.65 from the amount of…

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