KALI CHARAN SHARMA v. MUNICIPAL CORPORATION OF DELHI
1981-03-31
J.D.JAIN
body1981
DigiLaw.ai
J. D. JAIN ( 1 ) THE petitioner Shri Kali Charan Sharma, sole proprietor of M/s. Bhartiya Construction Co. entered into an agreement dated 1st March, 1968 with the Delhi Electric (Electricity?) Supply Undertaking of Municipal Corporation of Delhi, respondent No. 1, for the construction of 9 sub-station buildings at different places, for instance, Defence Colony, Jamia Milla etc. The contract inter alia provided for reference of the disputes between the parties arising out of or in relation to the said contract to arbitration vide clause No. 29. Subsequently, some disputes arose between the parties and the same were referred to arbitration in terms of clause 29 which envisages appointment of one arbitrator by each of the parties. Shorn of unnecessary details, it may be stated that an award was made by Shri Gaiha as sole arbitrator on 18th October, 1977 despite stay order issued by this Court in CMP 115a of 1977, under Sections 9 (b) and 11 of the Arbitration Act (hereinafter referred to as the Act ). Thereupon, the petitioner filed suit No. 927a of 1977 under Sections 14 and 17 of the Act for making the award a rule of the Court. However, the Municipal Corporation of Delhi, respondent No. 1, filed objections to the award, under Sections 30 and 33 of the Act. Eventually, vide order dated 16th July, 1979, this Court (D. K. Kapur, J.) set aside the award and appointed Shri B. C. Misra a retired Judge of this Court as the sole arbitrator to determine the disputes between the parties. The petitioner lodged claims totalling Rs. 5,59,000. 00 p. on different counts besides interest and costs. Respondent No. 1 while opposing the claims made by the petitioner filed a counter-claim on various counts aggregating to Rs. 1,83,064. 00 besides interest and costs. Eventually, the sole arbitrator made an award on 29th July, 1980 and he allowed the claim of the plaintiff and for a total sum of Rs 2,95,440. 00 in full and final settlement of all the claims and disputes between the parties including the counterclaim of the respondent. Thereupon, the petitioner moved an application under Sections 14 and 17 of the Act being Suit No. 392a/80 with the request that the award made by the sole arbitrator on 29th July, 1980 be filed in Court and made a rule of the Court.
Thereupon, the petitioner moved an application under Sections 14 and 17 of the Act being Suit No. 392a/80 with the request that the award made by the sole arbitrator on 29th July, 1980 be filed in Court and made a rule of the Court. On the award being filed and both the parties having been served, Municipal Corporation of Delhi, respondent No. 1 has filed objections to the award which are embodied in the instant application. ( 2 ) A perusal of the award in question will show that it is a non-speaking award and the learned arbitrator has not assigned any reasons which influence him in arriving at the lump sum of Rs. 2. 95,440. 00 awarded to the petitioner. After referring to the contract in question, the learned arbitrator has simply mentioned the total claim made by the petitioner as also the total claim made by respondent No. 1 by way of counter-claim. He has then proceeded to make this award without giving any reason therefor. ( 3 ) THE learned counsel for respondent No. 1 has made a valiant effort before this Court to assail the award on the grounds of (i) its being bad in law on account of an error apparent on the face if it; (ii) legal miscounduct on the part of the arbitrator in not deciding the real question in controversy, and (iii) in awarding future interest till the date of realization in the face of Section 29 of the Act. His line of argument is not the main controversy between the parties centered round the question as to whether the petitioner was entitled to any enhancement over and above the contract rate. He has pointed out that the contract in question was awarded to the petitioner at percentage basis, same being 25% above the schedule of rates and it did not embody any escalation clause. Thus according to him, the price of construction, being Rs. 4,93,918. 75 p. was firm and he has been paid accordingly for the work actually executed. In other words, according to respondent No. 1, the cost of construction had been finally settled and once for all and as such the petitioner was not entitled to any increase whatsoever notwithstanding the fact that the price of material had shot up subsequently, assuming it to be so.
In other words, according to respondent No. 1, the cost of construction had been finally settled and once for all and as such the petitioner was not entitled to any increase whatsoever notwithstanding the fact that the price of material had shot up subsequently, assuming it to be so. Thus according to him the arbitrator should have specifically decided whether the petitioner-contractor was entitled to any enhancement over the settled rate despite the contract being absolutely silent regarding escalation of prices. ( 4 ) IN this context he has adverted to Union of India v. Firm J. P. Sharma and Sons AIR 1968 Raj, 99 which is a Bench decision and State of Madhya Pradesh v. Satyapal Wasson AIR 1979 Madhya Pradesh, 119, also a Bench decision of that Court. In the Rajasthan case the principal dispute between the parties was about the applicability of agreed rate for the job done by the contractor. Certain issues were framed and eventually, the arbitrator awarded a lump sum to the contractor without dealing with each and every issue separately. Learned Judges while adverting to various authorities including Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. AIR 1923 PC 66, Jivarajbhai v. Chintamanrao Balaji AIR 1965 SC 214 , Bungo Steel Furniture (P) Ltd. v. Union of India AIR 1967 SC 378 , Firm Madan Lal Roshan Lal Mahajan v. Hukamchand Mills Ltd. Indore AIR 1967 SC 1030 . and Smt. Santa Sila Devi v. Dhirendra Nath Sen AIR 1963 SC 1677 etc. reproduced the following observations of their Lordships of the Supreme Court in AIR 1963 SC 1677 , (See headnote ). "where an award given by the arbitrator is filed in Court and it is challenged on the ground of its incompleteness, the Court has to bear in mind certain basic positions. These are: (1) a Court should approach an award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal; (2) unless the reference to arbitration specifically so requires the arbitrator is not bound to deal with each claim or matter separately, but can deliver a consolidated award.
These are: (1) a Court should approach an award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal; (2) unless the reference to arbitration specifically so requires the arbitrator is not bound to deal with each claim or matter separately, but can deliver a consolidated award. The legal position is clear that unless so specifically required an award need not formally express the decision of the arbitrator on each matter of difference; (3) unless the contrary appears the Court will presume that the award disposes finally of all the matters in difference; and (4) where an award is made de praemissis (that is, of and concerning all the matters in dispute referred to the arbitrator), the presumption is, that the arbitrator intended to dispose finally of all the matters in difference; and his award will be held final, if by any intendment it can be made so. " ( 5 ) THE learned Judges came to the conclusion that the reference in that case specifically required the arbitrator to decide what were agreed rates applicable to the job done by the contractor and the arbitrator not having decided the same, the award given was incomplete and defective on that ground. According to their Lordships, the award did not show what decisionthe arbitrator had given regarding the rates that were to be applied to the various items of work. However, with respect, I am not persuaded to follow the reasoning which weighed with their Lordships in the said case. Even otherwise the instant case is distinguishable on facts. As would appear from the report of the said case, there was only one principal question to be adjudicated upon by the arbitrator namely applicability of the rates for the work done but that is not so in the instant case. A perusal of the statement of facts and claims lodged by the petitioner before the arbitrator will reveal that the total claim was based on about half a dozen counts which, inter alia, included refund of Rs. 27. 500.
A perusal of the statement of facts and claims lodged by the petitioner before the arbitrator will reveal that the total claim was based on about half a dozen counts which, inter alia, included refund of Rs. 27. 500. 00 approximately which according to the petitioner had been deducted illegally by the respondent; rise in the prices of material subsequent to the award of the contract to him, loss suffered by him due to prolongation of the work for a year on account of delay and laches on the part of the respondent; obliging him to employ technical hands and labour etc. for a longer period and Rs. 15,000. 00 on account of loss of profit for the value of the balance work which according to him was not allowed to be executed by the respondent. Thus by no stretch of reasoning, it can be said that any specific question or dispute as such was referred to the arbitrator for decision in Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. AIR 1923 PC 66, it was observed by their Lordships: "that an error of law on the face at the award means. . . . . . . . . that you can find in the award or a document actually incorporated thereto, as, for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. " ( 6 ) IN the instant case It is impossible to say from what is apparent on the face of the award as to what mistake the arbitrator has made. He has not tied himself to any particular legal proposition which may be said to form the basis of the award. It is well settled that the Court has no jurisdiction to investigate into merits of the case and to examine documentary or oral evidence on the record for the purpose of finding out whether or not the. arbitrator has committed an error of law. It cannot be said that the arbitrator has incorporated any document or evidence in the award. It is not open to Court to speculate or to probe mental process by which the arbitrator has reached its conclusion where it is riot disclosed by the terms of the award.
arbitrator has committed an error of law. It cannot be said that the arbitrator has incorporated any document or evidence in the award. It is not open to Court to speculate or to probe mental process by which the arbitrator has reached its conclusion where it is riot disclosed by the terms of the award. As observed by their Lordships in N. Chellappan v. Secretary, Kerala State Electricity Board, AIR 1975 SC 230 (at p. 235): "in the award, the umpire has referred to the claims under this head and the arguments of the Board for disallowing the claim and then awarded the amount without expressly adverting to or deciding the question of limitation. From the findings of the umpire under this head it is not seen that these claims were barred by limitation. No mistake of law appears on the face of the award. The umpire as sole arbitrator was not bound to give a reasoned award and if in passing the award he makes a mistake of law or of fact, that is no ground for challenging the validity of the award. It is only when a proposition of law is stated in the award and which is the basis of the award, and that is erroneous, can the award be set aside or remitted on the ground of error of law apparent on the face of the record. "these observations to my mind aptly apply to the case in hand, the law being well settled that where the arbitrator makes a mistake either on law or on fact in determining the matter referred but such mistake does not appear on the face of the award, the award is good, notwithstanding the mistake will not be remitted or set aside. I may also add that the same view has been taken recently by a Bench of this Court (to which I was a party with Sachhar J.) Union of India v. M/s. Salwan Construction Co. FAO (OS) No. 29 of 1977 decided on 20th March. 1981. In that case too the contractor had claimed enhancement over the contract rate which was on percentage basis.
FAO (OS) No. 29 of 1977 decided on 20th March. 1981. In that case too the contractor had claimed enhancement over the contract rate which was on percentage basis. It was said that subsequent to the contract in question there was steep rise in the prices of material and this fact was sought to be evidenced by a subsequent contract awarded to the said contractor for the remaining construction of that very building at a higher percentage rate, the original percentage being 15. 40 above the schedule of rates of 1967 and the subsequent being 60. 70% higher than the aforesaid schedule of rates. The contractor had claimed a sum of Rupees 8,18,136. 89p. for the balance work of the first contract which had been executed by him subsequent to the award of second contract. The arbitrator awarded a sum of Rs. 5,20,198. 77p. by means of a non-speaking award. This Court, inter alia, observed "that it will thus be seen that the arbitrator in fact applied his mind to the various facts and that is why the arbitrator reduced the amount from the rate of 45. 21% which was the figure mentioned by the contractor and (44. 58% which was the figure mentioned in the reference) to 28. 47%. The fact that quite substantially less figure than the claimed amount was given by the arbitrator negatives the argument that the arbitrator had no material before him to work out the various details for the purpose of awarding compensation. We. therefore, find no error of law on the face of record. " ( 7 ) THESE observations are quite apposite having regard to the nature of controversy between the parties in the instant case. So I am not persuaded to hold either that the award suffers from any error apparent on the face of it or that there is any legal misconduct on the part of the arbitrator. Needless to say that, Madhya Pradesh case (supra) is also distinguishable on facts, inasmuch as the arbitrator therein had appended the record of proceedings and in the proceedings dated 2nd December, 1970. the arbitrator had calculated as to how figure of Rs. 21,500. 00 was arrived at. He had apportioned different amounts towards different claims. That is evidently not so in the instant case. Hence, from any reckoning.
the arbitrator had calculated as to how figure of Rs. 21,500. 00 was arrived at. He had apportioned different amounts towards different claims. That is evidently not so in the instant case. Hence, from any reckoning. no apparent error on the face of the award or misconduct on the part of the arbitrator can be inferred merely on account of his allowing a lump sum after considering the rival claims of both the parties. ( 8 ) THE learned counsel for the respondent has also questioned the legality of the award on the ground of the arbitrator allowing future interest on the amount awarded. His contention is that the arbitrator could not allow future interest from the date of the award till realization as has been done by him. I find considerable force in this contention. The learned counsel for the petitioner claimant has, however, invited my attention to a Full Bench decision of Punjab and Haryana High Court in State of Punjab v. Ajit Singh AIR 1979 Punj and Har 179 in which it was held that the arbitrator has jurisdiction to grant future interest on the amount awarded till the date of its realization. Their Lordships, inter alia, adverted to Madan Lal Roshan Lal Mahajan s case AIR 1967 SC 1030 (supra) and Union of India v. Bungo Steel Furniture Pvt. Ltd. . AIR 1967 SC 1032 and held (at p. 181): "that in view of unequivocal enunciation of law by Supreme Court in the aforesaid authorities the principle, under Section 34 of the Code of Civil Procedure is at once and squarely attracted in the case of proceedings before the arbitrator. Once it is so it is plain that one has only to turn to the provisions of the section to seek answer to the question whether the arbitrator was entitled to award future interest or not. "so after alluding to Section 34, their Lordships concluded that by application of principles lying thereunder an arbitrator is expressly warranted and authorised to grant future interest on the amount awarded up to the date of its realization. However, with utmost respect I am unable to subscribe to the view taken by their Lordships.
"so after alluding to Section 34, their Lordships concluded that by application of principles lying thereunder an arbitrator is expressly warranted and authorised to grant future interest on the amount awarded up to the date of its realization. However, with utmost respect I am unable to subscribe to the view taken by their Lordships. It is for the simple reason that in both Firm Madan Lal Roshan Lal and Bungo Steel Furniture (Supra) interest had been awarded up to the date of decree and the sole question before their Lordships of the Supreme Court was whether the arbitrator had jurisdiction to grant pendente lite interest from the date of the award till the date of the decree and their Lordships answered it in affirmative having regard to the provisions of S. 34 of the Code of Civil Procedure. However, their Lordships did not make any observation as to whether the arbitrator had similar authority or discretion to award interest subsequent to the date of the decree. So both the Supreme Court authorities cannot be considered as implying competence in the arbitrator to award future interest beyond the date of decree which it may be said is exclusively the function and privilege of the Court which makes the award a rule of the Court. This is so in view of the specific provision of law contained in S. 29 of the Act which lays down that the Court may in a decree based on award for payment of money order interest from the date of decree at such rate as the Court deems reasonable to be paid as the principal sum as adjudged by the award and confirmed by the decree. That being the legal position and Section 29 being a special provision, I am afraid general provisions contained in Section 34 of the Code of Civil Procedure cannot impinge upon the same. It is somewhat strange that the Full Bench judgment is absolutely silent and does not even remotely advert to Section 29 of the Act. For these reasons, I am persuaded to hold that the arbitrator was not competent to award interest beyond the date of decree passed by this Court. All the same as pointed out by the learned counsel for the petitioner the same object may be achieved if this Court is disposed to grant future interest from the date of the decree till realization.
All the same as pointed out by the learned counsel for the petitioner the same object may be achieved if this Court is disposed to grant future interest from the date of the decree till realization. In the ultimate analysis, therefore, net result will be the same. ( 9 ) TO sum up, therefore, I reject the objections raised by the respondent against the award except to the extent I that the interest could not have been allowed by the arbitrator beyond the date of decree passed by this Court. However, that part of the award is clearly severable and does not in any manner affect the legality and validity of the award as a whole. Hence, I dispose of the objections accordingly and order that. the award is made a rule of the Court but the petitioner claimant will be entitled to interest at the rate of 6% per annum on the awarded amount from the "date of award till date. Further he shall be entitled to interest at the same rate on the principal amount awarded till realization in case the decretal amount is not paid by respondent No. 1 within three months from today. This disposes of both I. A. 3636 of 1980 as well as Suit No. 392a/80. A decree be drawn up accordingly. However, no order is made as to costs.