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Himachal Pradesh High Court · body

1980 DIGILAW 94 (HP)

STATE OF HIMACHAL PRADESH v. RAMA AND CO.

1980-11-27

H.S.THAKUR

body1980
JUDGMENT H S. Thakur, J.—The work of construction of culverts on National Highway No. 1-A was given to M/s Rama and Co. the defendant, by the Himachal Pradesh Public Works Department. The three culverts along with wing walls were to be constructed. An agreement was executed between the parties. It is not necessary to give full details of the work that was to be executed. A dispute having arisen between the parties, the defendant under clause 25 of the agreement, requested the Chief Engineer to appoint an arbitrator to adjudicate upon the same. Initially Shri M. L, Bansal, Superintending Engineer, was appointed as an arbitrator. The defendant filed claim for Rs. 1,42,121.37, on 26th November, 1976. Some hearings took place but Shri Bansal refused to act as an arbitrator and consequently Shri S. M. Bhagchandani, Superintending Engineer, was appointed as such. The plaintiff also filed a counter claim on 3rd September, 1978. The arbitrator made an award in favour of the defendant on 24th September, 1978 awarding a total sum of Rs. 1,22 668/-. The arbitrator filed the award in this court through Shri Piara Singh, Stenographer, on 29th December, 1978. This court on 9th January, 1979 issued notices to the parties about the filing of the award. The plaintiff filed objections to the award under section 30 of the Arbitration Act. No objections were, however, filed on behalf of the defendant. On the contrary, the defendant supported the award. Numerous objections have been raised on behalf of the plaintiff, to the award. Mainly it is contended on behalf of the plaintiff that the arbitrator has not only misconducted himself, but has misconducted the proceedings. The objections so raised may be detailed as under :— (i) No proper reference had been made to the arbitrator. (ii) The arbitrator acted beyond the scope of agreement in allowing the claim of the defendant. (iii) The arbitrator has given no reason to condone the delay caused by the defendant in completing the work. (iv) The arbitrator had no jurisdiction to revive the claim of the defendant which was properly rejected. (v) The arbitrator acted as an adviser to the defendant and entered into communication with him in respect of the matter in dispute. (vi) The defendant procured the award by putting pressure on the arbitrator. (vii) The arbitrator was biased against the plaintiff-department and also against the representative of the department. (v) The arbitrator acted as an adviser to the defendant and entered into communication with him in respect of the matter in dispute. (vi) The defendant procured the award by putting pressure on the arbitrator. (vii) The arbitrator was biased against the plaintiff-department and also against the representative of the department. (viii) The arbitrator misconducted himself and also the proceedings inasmuch as he made an award in favour of the defendant, even in excess of the claim made by the defendant. (ix) The claim of the plaintiff-department has been wrongly and arbitrarily ignored and rejected, by the arbitrator. In support of the objections filed by the plaintiff, certain instances and circumstances, have been pointed out, 2. It is not necessary to go into the detailed discussion of the nature of work, the items of work etc., but in the exercise of the powers under section 30 of the Arbitration Act, the limited question that has to be considered is whether the arbitrator had the power to adjudicate upon the matter, and whether the reference had bean properly made and the arbitrator has misconducted himself and the proceedings. So far as the question of jurisdiction is concerned, I am of the view that the Chief Engineer was competent, in terms of the agreement, to appoint an arbitrator and accordingly the arbitrator had the jurisdiction to adjudicate upon the matter. The main question which survives for consideration is whether the arbitrator has misconducted himself and the proceedings. The objections (ii) to (ix) above are the instances given in this behalf, and they can be decided together. 3. Shri H. K. Paul, who conducted the case on behalf of the plaintiff, has addressed lengthly arguments to demonstrate the facts and circumstances from which it may be inferred that the arbitrator misconducted himself as also the proceedings. At the outset it has been pointed out that the total amount payable for the entire work to the defendant under the agreement, was Rs. 3,42,046/-. The defendant had been paid a total amount of Rs. 2,79,714.80 and under the award the defendant has been held entitled to an additional amount of Rs. 1,22,668/-. In this way, it is urged that if the award is held to be valid, the defendant would be entitled to a total amount of Rs. 4,02,382.89 P. which is manifestly in excess of an amount of about Rs. 2,79,714.80 and under the award the defendant has been held entitled to an additional amount of Rs. 1,22,668/-. In this way, it is urged that if the award is held to be valid, the defendant would be entitled to a total amount of Rs. 4,02,382.89 P. which is manifestly in excess of an amount of about Rs. 62,000/-of the total amount of work which was to be completed by the defendant. On this account, it is contended on behalf of the plaintiff that the arbitrator has manifestly misconducted himself in making the award. At the same time it is contended that the arbitrator did not consider the document marked as Ex. PW 2/J whereby the claim of the defendant for extra work on market rate had been specifically rejected on behalf of the plaintiff. On this basis it is argued that in case this document was considered; by the arbitrator, the claim in respect of claim Nos. 1, 2 and 3 was likely to be rejected. The total amount awarded to the defendant for these claims comes to about Rs. 95,000/-. Ex. PW 2/J is a reply addressed to the defendant by the Executive Engineer saying that his claim in respect of C.R. Masonary 1:3 and C. C. 1:3:6 has already been prepared under clause 12 (ii) and submitted to the circle office as already intimated. It is pointed out that the rates of C.R.M. 1;4 and 1:6 are already existing in the agreement and the same could not be considered as additional item under clause 12 (a) of the agreement. Similarly the quantity of masonary in superstructure being included in the quantity of foundation and plinth given in the schedule of quantity attached to the contract agreement, nothing extra was payable on this account. Ultimately, it is pointed out in this reply that no difference is payable to the defendant. Shri Paul appearing for the plaintiff has referred to the judgment of the Supreme Court in K.P. Poulose v. State of Kerala and another [A.I.R. 1975 S.C. I259]. Their Lordships of the Supreme Court in this judgment observed as under.— "Under Section 30 (a) of the Arbitration Act an award can be set aside when an Arbitrator has misconducted himself or the proceedings. Misconduct under Section 30 (a) has not a connotation of moral lapse. Their Lordships of the Supreme Court in this judgment observed as under.— "Under Section 30 (a) of the Arbitration Act an award can be set aside when an Arbitrator has misconducted himself or the proceedings. Misconduct under Section 30 (a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision. It is in this sense that the Arbitrator has misconducted the proceedings in this case." 4. The next vital and material objection that has been raised on behalf of the plaintiff is that the arbitrator had been advising the defendant regarding the matter in dispute. Reference has been made to the proceedings held on 13th and 14th October, 1978, before the Arbitrator. It is contended that the Arbitrator advised the defendant to submit the analysis based on market rates in respect of claim No. 3, although those analysis had to be given to the Engineer incharge under clause 12 (a), within seven days in response to a letter from the Engineer Incharge, for executing the extra work. It is asserted that the Arbitrator had no power under the agreement to entertain the analysis after the contractor had abandoned the work. It is also contended that in case the Engineer Incharge had known that the defendant could claim higher rates on this account, before the Arbitrator, he would have got the work done departmentally or through another contractor on a much lower rates. As such, it is pointed out that the arbitrator has acted beyond the scope of agreement in helping the defendant by awarding a huge amount to him. My attention has also been drawn to several proceedings held before the Arbitrator. In this way, it is contended that the defendant procured the award in his favour improperly. 5. It is further contended that the Arbitrator was biased against the plaintiff department as also against the representative of the department. On this account, it is urged, that the Arbitrator has made the award in favour of the defendant arbitrarily though the defendant was not entitled to anything more from the plaintiff. 5. It is further contended that the Arbitrator was biased against the plaintiff department as also against the representative of the department. On this account, it is urged, that the Arbitrator has made the award in favour of the defendant arbitrarily though the defendant was not entitled to anything more from the plaintiff. There is a general allegation against the Arbitrator that he misconducted himself as also the proceedings inasmuch as he gave the award in favour of the defendant even in excess of the claim made by him. Lastly it has been urged that the claim of the plaintiff had been wrongly rejected. 6. It may be noticed that the only issue framed by this Court in the case was "whether the Arbitrator misconducted himself and the proceedings" In fact, that is the main objection pressed on behalf of the plaintiff, and the above are the instances mentioned in support thereof. 7. In K. P. Pouloses case (supra), as pointed out, the Supreme Court observed that in case the Arbitrator ignored the material documents to arrive at a just decision to resolve the controversy, that was a manifest error apparent ex-facie The parties have examined their wit nesses in support of their respective contentions. Shri R. G. Arya, Executive Engineer, is the material witness produced on behalf of the plaintiff. It is stated by h m that the Engineer Incharge had the power to make alterations, omissions, additions and substitutions in the work awarded. It is further admitted by him that claim No. 1, made by the defendant fell under clause 12 of the agreement and similar was the position in respect of claim No. 2. The witness has further admitted in his cross-examination that he was deposing about the meeting of the Arbitrator by Shri Ram Lal, Proprietor of the defendant company, in this Court, and had not mentioned about it in the objections filed against the award. On the contrary, Shri Ram Lal, Proprietor of the defendant company, who appeared as his own witness, stated that he has not entered into private correspondence with the Arbitrator, but had written the letter which is marked Ex. PW 2/A, to hi n. Ha also admitted that he also wrote the letter Ex. P\V 2/8 to the Arbitrator. On the contrary, Shri Ram Lal, Proprietor of the defendant company, who appeared as his own witness, stated that he has not entered into private correspondence with the Arbitrator, but had written the letter which is marked Ex. PW 2/A, to hi n. Ha also admitted that he also wrote the letter Ex. P\V 2/8 to the Arbitrator. Ha has, however, denied the suggestion that he used to meet the Arbitrator personally, after he was appointed as such, Ha has denied that he failed to complete the work within the stipulated period. According to him he completed the work which was included in the agreement within the agreed period. He also denied that the Engineer Incharge did not determine the rates of additional, substituted or altered work in terms of clauses 12 and 12-A. He has specifically stated that the Department did not approve the rates, but it was mandatory on the part of the claimant to go ahead with the work irrespective of the fact whether the rates had been approved or not. In respect of the additional work he has stated that the orders could be inferred in two ways, i. e., from the drawings, as also from the written orders. According to him in this case, at the time of the notice inviting tenders, the map regarding the work was different but at the time of the execution of the work it was altered and the work had to be carried out in accordance with the changed drawings. He has also stated that the changed drawings were supplied to him for the purpose of execution of the work. The witness has further asserted that the copies of the letters concerning the change in the drawings may be in possession of the department concerned. 8. I have heard the learned counsel for the parties, and have perused the documents on record, as also the statements of the witnesses examined in this Court. It is contended by Shri A. K. Goel, the learned counsel for the defendant claimant, that the Arbitrator is deemed to have considered all the objections, made on behalf of the department. It is further pointed out by him that it is not necessary for an Arbitrator to make an award in the shape of a judgment of a court of law. It is further pointed out by him that it is not necessary for an Arbitrator to make an award in the shape of a judgment of a court of law. It is also urged that the allegation that the Arbitrator misconducted himself and the proceedings is a clear after-thought, to defeat the case of the claimant-defendant. He has referred to a decision in Tapan Kumar vs. Krishna Kant (AIR 1981) Gal 28). The relevant observations as contained in this judgment may be reproduced ;— "In the case of Union of India v. Kalinga Construction Co., [AIR 1971 SC 1646] the Supreme Court has reiterated that in proceeding to set aside an award the Court could not sit in appeal over the conclusion of the arbitrator by re-examining and re-appraising the evidence considered by the arbitrator and hold that the conclusion arrived at by the arbitrator was wrong. If the findings of the arbitrator are not perverse even though the Court differs from the said findings the court could not set aside the award as it could not be said that there was any error apparent on the face of the award. The same principle was again reiterated by the Supreme Court in the case of Allen Berry & Co. v. Union of India, [AIR 1971 SC 696]. There the Supreme Court referred to the well-known decision on this point of the Privy Council in Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co., Ltd., [1923 AC 480: AIR 1923 PC 66] and reiterated that as the parties chose their own arbitrator 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 when 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 would neither be remitted nor set aside notwithstanding the mistake. In the case of N. Chellappan v. Kerala S. E. Board, [AIR 1975 SC 236] the Supreme Court again reiterated the well-known principle that an error of law on the face of the award means that you can find in the award or in a document actually incorporated therein as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which was the basis of the award and which you could (then) say was erroneous. The Court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out whether or not the arbitrator had committed any error of law." 9. It has been contended on behalf of the plaintiff that it is apparent from the record of the proceedings of the Arbitrator that the claimant defendant pressurised the Arbitrator to make award in his favour. Shri Paul has pointedly referred to the proceedings of 7th hearing held by the Arbitrator. My attention has been drawn to Ex. PB and Ex. PW z/E of these proceedings. It is proper to reproduce the same. Ex. PB reads as under :— "The proceedings of 7th hearing held at Sundernager in the office of the Arbitrator on 13-10-78 and 14-10-78 at 2.00 PM and 10.00 AM. The following were present :— 1. Shri Ram Lal ... Plaintiff Represented M/s Rama and Co., Mohalla Sarain, Pathankot. 2. Shri R. G. Arya, ... Respondent Executive Engineer, Nurpur (B & R) Division. I was appointed as an Arbitrator by the Chief Engineer, H.P. P.W. D. Simla vide his letter No. PW. CTR-30/78-11424-28 dated 1-8-1978 and entered upon the reference on 31-8-78. Discussion : Letter dated 28th October, 1978 was received from the claimant in which he has informed that he met Shri R.C. Singh, Chief Engineer, HP. PWD in PWD Rest House at Nurpur on 27-9-1978 in connection with expediting the arbitration proceedings. The action of the claimant is not desirable for trying to put unnecessary pressure on the arbitrator. Ex. PW 2/8 runs as follows ;— "The arbitrator advised the plaintiff that he should prepare the analysis of items on the basis of market rates and not on the basis of the premium as circulated by the Chief Engineer and send the same to arbitrator at once. Ex. PW 2/8 runs as follows ;— "The arbitrator advised the plaintiff that he should prepare the analysis of items on the basis of market rates and not on the basis of the premium as circulated by the Chief Engineer and send the same to arbitrator at once. The plaintiff replied that he will send the analysis within fifteen days. The arbitrator further directed the plaintiff to send the copies of the analysis to the respondent also and the respondent should also send his comments within ten days from the date of receipt of analysis. The arbitrator further advised the plaintiff and respondent to jointly check and intimate to him the quantities of masonary involved in the work already executed above bed level on floor level. The plaintiff should attend the office of the Executive Engineer, Nurpur within seven days and joint report should be submitted to the arbitrator within a fortnight. The plaintiff had requested that he will submit his written statement and he informed that he has not been able to prepare the statement in writing and is therefore, getting the same recorded before the arbitrator." 10. I have gone through the record of the proceedings of the 7th hearing, which runs into several pages and is contained in the file of the proceedings before the Arbitrator from page 58 to 66. In these proceedings, the Arbitrator had asked the parties to produce several relevant documents and had, in fact, recorded numerous contentions of the parties. Certain questions were also put to Shri Ram Lal, representing the defendant-claimant, when his statement was recorded on oath, to elicit relevant information concerning the matter in controversy. As such, it can be reasonable inferred that the Arbitrator applied his mind to the matter in dispute. The Arbitrator even made a note in the proceedings that the action of the claimant was not desirable for trying to put unnecessary pressure on the Arbitrator as contained in Annexure PB (supra). In Ex. PW 2/E, do doubt the Arbitrator has recorded that he advised the claimant-defendant that he should prepare the analysis of items on the basis of market rates and not on the basis of the premium as circulated by the Chief Engineer, and send the same to the Arbitrator at once. But the same was done, presumably to get the requisite information to decide the matter in dispute. But the same was done, presumably to get the requisite information to decide the matter in dispute. Similarly, the Arbitrator had advised the claimant-defendant, and the plaintiff to jointly check and intimate him the quantity of masonary etc. items involved in the work. Such a course adopted by the Arbitrator cannot be termed as to constitute an act of misconduct. On the contrary, it appears that the Arbitrator had been trying to go deep into the matter. Similarly, if the representative of the claimant had represented the matter to the Chief Engineer for expediting the arbitration proceedings, the same would not amount to putting a pressure on the Arbitrator. At any rate, every person has a right to get his dispute resolved expeditiously. In the face of these circumstances, it cannot be said that the Arbitrator acted beyond the scope of agreement in allowing the claim. Similarly, it was not necessary for the Arbitrator to give specific reasons for condoning the delay. The same can be the conclusion in respect of other objections as detailed in objection Nos. (iv> to (ix). It may be noted that the Arbitrator who gave the award is an officer of the department concerned. On this account, it can be presumed that he knew the working of the department. No doubt, the word "misconduct" when applied to the proceedings before an Arbitrator does not necessarily imply moral turpitude, but is used in the sense of breach or neglect of such duties and responsibilities, as devolved on him, acting judicially, and as a court of justice expects from him, before allowing finality to the award. However, for the foregoing observations and reasons, I am of the view that the Arbitrator has not misconducted himself or the proceedings. The view that I have taken is supported by the aforesaid decision in Tapan Kumar case (supra). 11. In view of the aforesaid discussion, the objections filed on behalf of the plaintiff department are dismissed. The award of the Arbitrator is made a rule of the Court. But keeping in view the circumstances of the case the parties are left to bear their own costs. Order accordingly.