JUDGMENT Satish Chandra, J. - This is an appeal by the Union of India. It is directed against in order making an award the rule of the court. The plaintiff respondents have filed a cross objection. 2. The plaintiffs entered into a contract with the Union of India for the construction of residential accommodation for British Other Ranks at the Survey of India, Dehradun, in 1944. The buildings were completed in 1945. Certain disputes arose between the parties. They were referred to the Superintending Engineer, Sri C.P. Malik as an arbitrator, on 7-11-1950. The arbitrator neglected to make an award within the prescribed time. The plaintiffs on 16-4-1953 moved the Civil Judge, Dehradun under Section 8, Arbitration Act, for appointment of an arbitrator through court. The application was opposed by the Union of India. After hearing the parties, the court appointed Sri B. L. Sethi, Advocate, as an arbitrator by an order dated 28-3-1955. The Union of India filed an appeal against this order; which was ultimately dismissed on 15-7-1958. The proceedings then commenced before the arbitrator. The plaintiffs filed a claim for Rs. 912.00 with past, pendente lite and future interest at the rate of 9% per annum with effect from 1945. The Union of India made an application under Section 33 Arbitration Act, for revoking the authority of the arbitrator. This application was dismissed. The Union of India filed a revision, which was also dismissed by the High Court on 24-10-1961. There were certain other proceedings resulting in another revision, which was also dismissed on 3-9-1964. Since the proceedings before the arbitrator remained stayed meanwhile, they re-commended after the dismissal of the revision. The arbitrator recorded the evidence and heard arguments of the parties and made his award on 5-4-1966. He awarded to the plaintiffs respondents a sum of Rs. 19,339.43 p with interest at 6% per annum with effect from 7-11-1950, when the arbitration proceedings had been first initiated. In due course, the award was filed in court; whereupon the Union of India filed a set of objections. The learned Civil Judge by his judgment dated 10-12-1966 repelled the various objections. He, however, accepted two of them. He held that the arbitrator had allowed a sum of Rs. 540.00 under item No. 17 (c). This was a clerical mistake, because the firm had itself claimed only a sum of Rs. 110.37p.
The learned Civil Judge by his judgment dated 10-12-1966 repelled the various objections. He, however, accepted two of them. He held that the arbitrator had allowed a sum of Rs. 540.00 under item No. 17 (c). This was a clerical mistake, because the firm had itself claimed only a sum of Rs. 110.37p. to this extent, the award was modified. The learned Judge also held that the arbitrator had no jurisdiction to award interest because the agreement between the parties did not provide for any interest for breach of contract. The court, however, itself granted two months' time to the Union of India to pay the amount, failing which the plaintiffs respondents were entitled to interest at 6% per annum with effect from 11-2-1967 (that is to say, two months after the date of the decisions of the learned Civil Judge, namely 10-12-1966). 3. The learned Standing Counsel appearing for the Union of India urged that the arbitrator was guilty of legal misconduct in not taking into consideration the documentary evidence filed by the appellant. This submission is based upon the observation of the arbitrator in his award that : "The O.P. has placed no material on record in support of its contention. It did not produce any oral or documentary evidence." This passage has to be read in the context of the preceding two sentence, which are as follow: "The claimants produced both oral and documentary evidence and also summoned documents from the O.P. in support of their case. The O.P. filed only 11 papers and did not produce others." The observation that the opposite parties did not produce any oral or documentary evidence would, in the context, mean that the Union of India did not produce any evidence other than 11 papers filed by it and the documents which were produced by it after having been summoned by the plaintiff respondents. It was not urged by the learned Standing Counsel that the Union of India filed any other evidence apart from these two categories. It cannot hence be said that the arbitrator was unaware of the existence of any documentary filed by the Union of India, and, consequently, he could be held guilty of not taking it then into consideration. There is no substance in this submission. 4. It was then urged that several items of claim were outside the purview of the contract.
It cannot hence be said that the arbitrator was unaware of the existence of any documentary filed by the Union of India, and, consequently, he could be held guilty of not taking it then into consideration. There is no substance in this submission. 4. It was then urged that several items of claim were outside the purview of the contract. Learned counsel urged that the arbitrator committed an error in interpreting clauses 12 and 25 of the contract. The award states : "Clause 12 of the contract agreement, in my opinion, mean that when the work for which no rate is specified in the contract or is entered in the schedule of rates, the contractor has the right to inform the department of the rate which it is his intention to charge for such class of work and this right is to be exercised within seven days of the receipt of the order. The department has the right not to agree to the rate, but if he does not agree it is his duty to inform the contractor of such non-acceptance and to cancel his order, and if such cancellation is made, the portion of work already carried out at rates as may be fixed by the Department and in case of dispute at the rates as may be decided upon by the Superintending Engineer of the circle. From the words used in this clause it is, in my opinion, reasonable to conclude that the intention of the parties is that if no cancellation order is given, it will be presumed the rates as quoted by the "contractor" have been accepted. It would be also reasonable to say that if the department does not intimate rejection of the rate quoted by the contractor he must be presumed to have accepted the same. Once it is admitted that the work has been done and the contractor had quoted the rate, it becomes necessary for the O.P. to prove that the rate quoted by the contractor was not accepted by the department and there was dispute about it and it was referred to the Superintending Engineer. If the O.P. fails to prove that the rate quoted by the contractor was not accepted he is presumed to have accepted it.
If the O.P. fails to prove that the rate quoted by the contractor was not accepted he is presumed to have accepted it. The question then remains only in dispute, and therefore, question of determination of rates does not arise as the rates have already been quoted and accepted. Clause No. 25 of the contract agreement is very clear and simple. It does not require any elucidation. I have carefully studied the contract agreement between the parties and having heard, examined and considered the contentious of the parties and oral and documentary evidence placed before me and the arguments addressed and having duly considered the whole matter in dispute hold that all the claims in question are within the jurisdiction of the Arbitration, and I award to the claimants against the O.P. for :" Thereafter the award gives the various accounts awarded against each claim. It is obvious that the arbitrator has interpreted clause 12 as he understood it. The question is whether this Court can interfere with such an award, On the ground that there was a mistake apparent on the face of the award or in a document which forms part of it. 5. A similar question arose before the Supreme court in M/s Allen Born and Co. P. Ltd., A.I.R. 1971 S.C. 696 (April Part) . After a review of various decisions of the Privy Council and the Supreme Court, the Court held that as the parties chose their own arbitrator to be the Judge in the dispute between them, they could not, when the award was good on the face of it, object to the decision either upon the law or the facts. Therefore, even if an arbitrator committed a mistake either in law or in fact in determining the matters referred to him, but such mistake did not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award could neither be remitted nor set aside notwithstanding the mistake. Mere reference to the contract in the award is not to be held as incorporating it. In that case, the dispute to be decided by the arbitrator was as to what was sold and, secondly whether besides the sale notes 160 and 197, the subsequent clarifications of explanations given by the Government were binding on it.
Mere reference to the contract in the award is not to be held as incorporating it. In that case, the dispute to be decided by the arbitrator was as to what was sold and, secondly whether besides the sale notes 160 and 197, the subsequent clarifications of explanations given by the Government were binding on it. These were questions parties of fact and partly of law. The Supreme Court held that it was a case where in deciding the questions referred, the umpire had to decide a point of law. In doing so, the umpire on doubt laid down the legal proposition that the clarifications or assurances subsequent to the dates of the sale notes, given by an officer or officers of the Department, were not binding on the respondent, nor could they affect the scope of the sales. That answer the umpire was entitled to give. The Supreme Court then observed :- "But the fact that he answered a legal point does not mean that he has incorporated into the award or made part of the award a document or documents construction of which, right or wrong, is the basis of the award. The error, if any, in such a case cannot be said to be an error apparent on the face of the award entitling the court to consider the various documents placed in evidence before the umpire but not incorporated in the award so as to form part of it and then to make a search if they had been misconstrued by him." In the case cited above, the umpire had expressly referred to the various terms of the sale notes and construed them in the light of the evidence on record. Similarly, in the present case, the arbitrator has construed clause 12 of the agreement in the light of the evidence on record and the arguments of the parties. It cannot be said that by construing clause 12, the arbitrator made the contract a part of the award. Consequently, the mistake, if any, in the interpretation put upon clause 12 by the arbitrator cannot be said to an error apparent on the face of the award or in a document forming part it, so as to entitle the Court to consider the matter on the merits. So, this submission also fails. The appeal is liable to fail. 6. The plaintiffs-respondents have filed a cross-objection.
So, this submission also fails. The appeal is liable to fail. 6. The plaintiffs-respondents have filed a cross-objection. Their grievance is that the court illegally set aside the portion of the award which awarded interest to the claimant. The learned Standing Counsel relied upon the decision of the Supreme Court in Thawardas Phermual v. Union of India, A.I.R. 1955 S.C. 468 at page 478. There it was held :- "It was suggested that at least interest from the date of `suit' could be awarded on the analogy of Section 34 of the Civil Procedure Code, 1908. But Section 34 does not apply because an arbitrator is not a `court' within the meaning of the Code nor does the Code apply to arbitrators, and, but for Section 34 even a court would not have the power to give interest after the suit. This was therefore, also rightly struck out from the award." 7. These observations were considered by the Supreme Court in Ct. A Ct. Nachippa Chettiar v. Subramaniam Chettiar, A.I.R. 1950 S.C. 307 at 320, and in Satinder Singh v. Umrao Singh, A.I.R. 1961 S.C. 908 at 916, and it was held that the observations made in Thawardas's case, A.I.R. 1955 S.C. 468were not intended to lay down such a broad and unqualified proposition. Thawardas's case, A.I.R. 1955 S.C. 468 was again considered by the Supreme Court in Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., A.I.R. 1967 S.C. 1030. The Court observed that in Thawardas's case, A.I.R. 1955 S.C. 468 the arbitrator awarded interest on liquidated damages for a period before the reference to arbitration and also for a period subsequent to the reference. The High Court set aside the award regarding interest on the ground that the claim for interest was not referred to arbitration and the arbitrator had no jurisdiction to entertain the claim. The supreme Court affirmed the High Court's decision, and rejected the contention raised before it that the arbitrator had powers under the Interest Act, 1839, to award the interest, and, that he had power to award interest under Section 34, C.P.C. also. Bachawat, J., speaking for the Court, observed that it will be noticed that the judgment of the Court in Thawardas's case, A.I.R. 1955 S.C. 468 is silent on the question whether the arbitrator can award interest during the pendency of arbitration proceedings if the claim regarding interest is referred to arbitration.
Bachawat, J., speaking for the Court, observed that it will be noticed that the judgment of the Court in Thawardas's case, A.I.R. 1955 S.C. 468 is silent on the question whether the arbitrator can award interest during the pendency of arbitration proceedings if the claim regarding interest is referred to arbitration. He held that one of the disputes in the suit in that case was whether the respondent was entitled to pendente lite interest. This was referred to the arbitrator. The arbitrator could hence decide, and award pendente lite interest, just as a court could do so, under Section 34, C.P.C. It was held that though in terms Section 34 does not apply to arbitrations, it was an implied term of the reference in the suit that the arbitrator would decide the dispute according to law and would give such relief with regard to pendente lite interest as the court could give if it decided the dispute. This power of the arbitrator was not fettered either by the arbitration agreement or by the Arbitration Act, 1940. The contention that in an arbitration in a suit, the arbitrator had no power to award pendente lite interest must be rejected. 8. But the question is whether the same principle would apply to a reference to arbitration outside court ? 9. In Union of India v. A. L. Rallia Ram, A.I.R. 1963 S.C. 1685, it was observed that the contract did not provide for payment of interest in respect of the amounts paid by the respondent, if the contract fell through. The Supreme Court held that interest could not be awarded under Section 61 of the Sale of Goods Act or under the Interest Act on grounds of equity. In the absence of any usage or contract express or implied, or of any provision of law to justify the award of interest, interest could not be allowed by way of damages caused to the respondent for wrongful detention of their money. It was held that interest was allowed by the arbitrator on a view of the law which appeared on the face of the award to be erroneous. In the present case, there is no provision in the contract between the parties, for payment of interest in respect of the amounts which were unlawfully detained by the Union of India.
It was held that interest was allowed by the arbitrator on a view of the law which appeared on the face of the award to be erroneous. In the present case, there is no provision in the contract between the parties, for payment of interest in respect of the amounts which were unlawfully detained by the Union of India. There is no provision for payment of interest for breach of contract by either party. In the absence of any such provision in the contract or in the law, the plaintiffs-respondents were not entitled to make a claim for interest, past or pendente lite except in a suit filed in Court the arbitrator had no jurisdiction to award such interest. This part of the award was on its face erroneous. 10. Reference may also be made to the decision of the Calcutta High Court in Lal Chand Roy v. N.K. Goswamy, AIR 1966 Calcutta 478. In that case, it was held that where an agreement is in a sufficiently wide form, and the arbitrator has been given a power to adjudicate on all disputes between the parties and to adjust all equities, he can make an order as to interest, not as a result of Sec. 3I, Civil Procedure Code, but by virtue of such an agreement. In the present case, our attention was not drawn to any part of the contract, which may, expressly or by necessary implication, authorise the grant of interest for breach of contract or on an award for damages. The court below was, therefore, justified in setting aside the portion of the award which granted interest to the plaintiffs respondents. Under Section 29, Arbitration Act, the court has the authority to grant future interest. The arbitrator cannot fetter the discretion of the court by making an award of future interest. 11. In the result, both the appeal and the cross-objection fail and are accordingly dismissed with costs.