Hariprasad,J:
This Arbitration Appeal is filed under Section 37(1) of the Arbitration and Conciliation Act,1996 (for short 'the Act'). The appellant is the petitioner in O.P.(Arbitration) No.867/2013 pending before the II Additional District Court, Ernakulam. It is submitted by the counsel on both sides that the matter has now been transferred to the Vth Additional District Court, Ernakulam. The Original Petition is filed under Section 34 of the Act for setting aside the arbitral award.
2. Heard the learned counsel for the appellant and the respondent.
3. The objection is regarding the sustainability of Annexure-7 order. It is seen that Annexure-7 is an order passed in modification of Annexure-5 order. As per Annexure-5 order, the learned Additional District Judge on 16.12.2013 passed an order staying the enforcement of the award until further orders.
4. Subsequently, as per Annexure 7 order, certain conditions were imposed. The order reads as follows:-
“Hearing is advanced. Heard both sides. The award directs payment of `16,41,600/- along with interest and VAT, Service tax and Cess by the appellant. The respondent contends that if VAT and Service Tax are paid before 31.12.2013 amnesty of waiver of interest and penalty will be obtained. In the circumstance, order of stay is modified. The appellant shall pay the amount of VAT and Service Tax to the respondent for being paid to the authority concerned on or before 28.12.2013 and on that condition, enforcement of the award shall stand stayed till disposal of the O.P.”
The appellant drew our attention to the following excerpts from Annexure I (Contract Agreement). In page 11, the obligation of the contractor is as follows:-
“OBLIGATION OF THE CONTRACTOR The Contractor shall ensure full compliance with tax laws India with regard to this Contract and shall be solely responsible for the same. The Contractor shall submit copies of acknowledgements evidencing filing of returns every year and shall keep the Client fully indemnified against liability of tax, interest, penalty etc. of the Contractor in respect thereof which may arise.”
In page 13 of Annexure-I, in Note 2 of Preamble to Bill of Quantities, it has been stated as follows:-
“NOTE:
1. xxx xxx xxx
2. All the above rates agreed by the Contractor are inclusive of all applicable taxes and duties except VAT/Service tax, as applicable, will be paid to the Contractor at actual upon production of the related documents.
3. xxx xxxx xxx xxx
4. xxx xxxx xxx xxxx”
In page 14 of Annexure-I, in clause 4 of Special Contract Conditions, it has been stated as follows:-
“VAT/SERVICE TAX VAT & Service Tax as/if applicable shall be separately shown in all the bills raised by the Contractor and shall be paid to the Contractor by the Client as applicable and as supported by the documentation supplied by the Contractor.”
5. Learned counsel for the appellant submitted that by a modified order, the learned Additional District Judge directed the appellant to pay the amounts of VAT and Service Tax without quantifying the same. Per contra, the learned counsel for the respondent would submit that he has produced documents before the court below to show the quantification of the VAT and Service Tax.
6. Having heard the learned counsel appearing on both sides, we are of the view that the dispute can be resolved by considering and disposing of the Original Petition(Arbitration) filed under Section 34 of the Act. It is specifically stated in Section 36 of the Act that the award, which is under challenge, cannot be enforced before determination of the proceedings under Section 34 of the Act. Therefore, we do not find any necessity in having a stay order in this matter.
7. However, considering the fact that the award was passed in the year 2012 and the O.Ps.(Arbitration) were filed in the year 2013, we direct the court below to dispose of the Original Petitions as expeditiously as possible. Considering the facts and circumstances and also the legal provisions, we do not find any necessity to keep Ext.P7 order alive. Therefore, we set aside Ext.P7 order.
In the result, we direct the Vth Additional District Court to dispose of the O.P.(Arbitration) Nos.866 & 867 of 2013 filed under Section 34 of the Act as expeditiously as possible, at any rate within six months from the date of production of a copy of this judgment.
V.K.MOHANAN, Judge A.HARIPRASAD, Judge.
MBS/