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1981 DIGILAW 37 (HP)

SUBRAJ AND COMPANY v. STATE OF HIMACHAL PRADESH

1981-07-22

T.R.HANDA

body1981
JUDGMENT T. R. Handa, J.-The plaintiff, Subraj and Company is a contractor the defendant, Himachal Pradesh Housing Board is a statutory body. The defendant appears to have allotted the following construction works in its Brick Factory, Paonta Sahib to the plaintiff contractor :— 1. Construction of 30 Dryers, 2. Construction of workshop building, and 3. Construction of Administrative Block. Three separate agreements Nos. 25, 28 and 29 of 1975-76 were executed between the parties containing the terms and conditions on which the above mentioned works were to be executed. Clause 25 common to ail these agreements is in the following terms :— Clause 25.—"Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in aay way arising out of or relating to tht contract, designs, drawings specifications, estimates, instruction, orders or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Chairman, Himachal Pradesh Housing Board. It will be no objection to aay such appointment that the arbitrator so appointed is a Board or Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Board or Government servant he had expressed views on all or any of the matters in dispute of difference. The arbitrator unto whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, the Chairman, Himachal Pradesh Housing Board at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by Chairman, Himachal Pradesh Housing Board should act as arbitrator and, if for any reason, that is not v possible, the matter is not to be referred to arbitration at all. Subject as aforesaid the provisions of the Arbitration Act, 1940, or any statutory modification or re-enactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceeding under this clause. The arbitrator may from time to time with th3 consent of the parties enlarge the time for making and publishing of award". 2. Some differences having arisen between the parties with respect to the execution of the aforesaid works, the Chairman of the defendant-Board vide his latter dated 7th September, 1978 appointed Shri S. M. Bhagchandani, Superintending Engineer, H. P. P\VD., as Arbitrator to decide and make an award regarding claims/disputes raised by the plaintiff contractor and also regarding counter claims of the defendant-Board against the contractor subject, however, to their admissibility under clause 25 of the agreements (reproduced above) executed between the parties. 3. The arbitrator entered upon the reference and after hearing the parties, he made his award on 23rd April, 1979 in terms of which he directed the defendant-Board to pay Rs. 49,453 to the plaintiff-contractor. 4. The plaintiff-contractor thereafter made an application under Section 14 read with Section 17 of the Indian Arbitration Act, 1940 praying that the award made by the Arbitrator be filed in court and that a decree be passed in terms thereof. In the meanwhile the arbitrator had already filed his award in this court. Notices of filing of the award were issued to both the parties calling upon them to file their objections, if any, against the award within the statutory period. The plaintiff had no objection to make against the award and prayed that the same be made rule of the court. The defendant-Board, however, filed its objections. According to the defendant-Board, the arbitrator had mis-conducted himself and the proceedings and a pan of the award was also beyond the scope of reference. In view of these objections, the defendant- Board prayed that the award be set aside or in the alternative, it be remitted to the arbitrator for re-consideration. 5. The defendant-Board, however, filed its objections. According to the defendant-Board, the arbitrator had mis-conducted himself and the proceedings and a pan of the award was also beyond the scope of reference. In view of these objections, the defendant- Board prayed that the award be set aside or in the alternative, it be remitted to the arbitrator for re-consideration. 5. The objections against the award as filed by the defendant-Board, were repudiated by the plaintiff and on the pleas of the parties, the following issues were framed :— 1. Whether the arbitrator misconducted himself or the proceedings ? 2. Whether the award or any part thereof is beyond the scope of reference ? Issue No. 1 : 6. The submissions made on behalf of the defendant-Board in support of this issue are of three fold character. The first submission is that in response to the notice of the arbitrator calling upon the parties to file their claims, the plaintiff-contractor had originally submitted his claims on 24-10-1978 on the basis of which issues were framed by the arbitrator on 24-11-1978 during the course of second hearing before the arbitrator. The plaintiff-contractor, however, later on submitted additional claims on 1-12-1978 which the arbitrator entertained inspite of the objection of the defendant Board. The arbitrator thus by entertaining such additional claims inspite of objection of the defendant-Board, mis-conducted himself and the proceedings. 7. So far as the first submission is concerned the record of the arbitrator shows that soon after his appointment, the arbitrator ride his letter dated 12-9-78 called upon the parties to submit their statements of claims and counter-claims along with their pleadings in defence within 15 days. The plaintiff contractor filed his initial claim before the arbitrator on 24-10-1978. Soon after, he on 2-11-78 made an application before the arbitrator praying that the defendant be ordered to produce certain records as mentioned in his application for his inspection. This application was followed by another application dated 4-11-1978 containing a similar prayer. The arbitrator allowed that prayer of the plaintiff and directed the defendant to allow such inspection to the plaintiff. It was after inspection of such records that the plaintiff on 1-12-1978 moved his application before the arbitrator for permission to file amended claims under the various agreements, namely, agreement I Nos. 25, 28 and 29 of 1975-76. The arbitrator allowed that prayer of the plaintiff and directed the defendant to allow such inspection to the plaintiff. It was after inspection of such records that the plaintiff on 1-12-1978 moved his application before the arbitrator for permission to file amended claims under the various agreements, namely, agreement I Nos. 25, 28 and 29 of 1975-76. That application purports to have been made under the provisions of Order VI Rule 17 of the C. P. C. The defendant opposed that prayer of amendment on the solitary ground that by not submitting such claims earlier, the plaintiff was deemed to have waived the same. The learned arbitrator, however, in his discretion, allowed the plaintiff to amend his claims. 8. Now in a case of disputes arising out of a contract in which there is an arbitration clause, like the instant one, it frequently happens that at the date of the appointment of the arbitrator, the disputes are not fully defined. The arbitrator in such cases has ample power to order each party to file particulars of its claims or counter claims in order to enable its opponent to know the case he has to meet. It would, however, depend upon the facts and circumstances of each case as to what particulars are to be stated, subject, however, to tae condition that all such claims/counter claims mast arise out and concern the contract and fall within the purview of the arbitration agreement. 9. Unless there is an express provision to the contrary in the arbitration clause, the arbitrator has a wide discretion to allow or refuse amendments of such claims/counter claims filed before him during the proceedings, if an application to that effect is made to him. Of course, he would have no power to allow an amendment, the effect of which would be to alter the terms of the submissions under which his powers arise, that is to say, he cannot allow fresh disputes to be introduced by way of amendment which do not fall within the scope of the arbitration agreement. Of course, he would have no power to allow an amendment, the effect of which would be to alter the terms of the submissions under which his powers arise, that is to say, he cannot allow fresh disputes to be introduced by way of amendment which do not fall within the scope of the arbitration agreement. In case, however, the amendments applied for fall within the scope of the agreement of arbitration, the arbitrator may and in deserving cases must allow the amendments applied for so as to allow the disputes arising between the parties and falling within the arbitration agreement to be brought before him for adjudication in the course of the arbitration proceedings. 10. It may be observed that while exercising his discretion in allowing or disallowing amendments of the claims/disputes of the type referred to him, the arbitrator should normally follow the principles as adopted by the courts in allowing or disallowing amendments of the pleadings in a civil suit. The main principle being, that all amendments should be allowed if they fall within the purview of the arbitration agreement and can be made without manifest and grave injustice to the other side. 11. If under the circumstances of this case as narrated above, the learned arbitrator exercised his discretion in allowing the amendments applied for by the plaintiff-contractor, he cannot be said to have misconducted himself or the proceedings especially when it is the common case of the parties that all the additional claims allowed to be introduced by way of amendments arse out of the agreements executed between the parties and were, therefore, very much within the scope of the arbitration clause. 12. The second submission made on behalf of the defendant is that the arbitrator mis-conducted himself in awarding an amount of Rs. 3,734 in favour of the plaintiff by way of interest under issue No. 20 of the award. In this connection I need only state that the plaintiff had preferred a specific claim of interest presumably on account of delayed payment of his dues. This claim very much pertains to the agreement between the parties and could form the subject matter of reference. The same having been specifically referred to the arbitrator, he was bound to adjudicate the same. The arbitrator cannot be held guilty of any misconduct simply because he allowed such claims to the plaintiff. 13. This claim very much pertains to the agreement between the parties and could form the subject matter of reference. The same having been specifically referred to the arbitrator, he was bound to adjudicate the same. The arbitrator cannot be held guilty of any misconduct simply because he allowed such claims to the plaintiff. 13. The third and the last submission in respect of this issue made ou behalf of the defendant-Board is that the arbitrator misconducted himself by awarding Rs. 2,090 to the plaintiff on account of technical and legal expenses under issue No. 19 of the award. This amount had been claimed by the plaintiff on account of technical and legal expenses directly involved in the arbitration and in case the arbitrator was satisfied with respect to the plaintiffs claim that he had actually incurred such expenses, it was very much within his competence to allow the same. He cannot be held guilty of any misconduct in allowing this claim of the plaintiff which obviously arose out of the agreement between the parties. 14. All the three submissions made on behalf of the defendant-Board in support of this case are accordingly repelled and this issue is decided against the defendant-Board. Issue No. 2 : 15. The only contention in support of this issue raised on behalf of the defendant-Board is that the claim of the plaintiff forming subject matter of issue No. 5 of the award under which the arbitrator awarded Rs. 5,320 to the plaintiff-contractor does not fail within any of the items of the agreements in question. The claim of the plaintiff under issue No. 5 was that he had not been paid for fixing and grouting of door chawkhats, chimney covers, channel and pullies for which his claim amounted to Rs. 5,592.99. As against this claim the arbitrator awarded Rs. 5,320. It is not disputed that the items for which these amounts were claimed pertain to the works covered by the agreements in question. The contention of the defendant-Board, however, is that the Board got these works done from some other source. It was obviously for the arbitrator to decide whether such work had been done by the plaintiff- contractor or the defendant-Board got it done through some other source. The contention of the defendant-Board, however, is that the Board got these works done from some other source. It was obviously for the arbitrator to decide whether such work had been done by the plaintiff- contractor or the defendant-Board got it done through some other source. The works forming the subject matter of this claim being admittedly a part of the construction work forming the subject matter of the agreements in question, it cannot be said that this claim was outside the scope of reference or that the arbitrator had no jurisdiction to entertain and adjudicate upon the same. This objection of the defendant-Board is thus also over-ruled and the issue is decided against the defendant-Board. 16. In the result, I order that the award filed by the arbitrator be made a rule of the court and a decree be passed in terms thereof. This also disposes of civil suit No. 51 of 1979. Order accordingly. -