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1986 DIGILAW 261 (CAL)

UNION OF INDIA v. BILASH SINGH, CO.

1986-06-26

PRATIBHA BONNERJEA

body1986
PRATIBHA BONNERJEA, J. ( 1 ) THIS is an application for setting aside the award dated 12-9-84 made in Sp. Suit No. 41 of 1975 under Ss. 30, 33 and 16 of the Indian Arbitration Act, on the grounds, inter alia, that the disputes raised in Special Suit No. 41 of 1975 had already been raised and decided in the earlier reference ordered in Sp. Suit No. 6a of 1970. What Bilas Singh and Co. had done in Sp. Suit No. 41 of 1975 was to inflate the claims in respect of the same old disputes which were agitated and decided by the Joint Arbitrators in Sp. Suit No. 6a of 1970. In Sp. Suit No. 41 of 1975, Bilas Singh and Co. also claimed interest on the sum awarded in Sp. Suit No. 6a of 1970, which had been duly paid by the petitioner. By entertaining these claims the Arbitrator legally misconducted himself and the proceeding. Bilas Singh and Co. ought to have claimed that interest in the earlier proceeding in Sp. Suit No. 6a of 1970. These grounds are set out in paragraphs 26, 27, 28, 29 and 30 of the present petition. The petition was amended by an order dated 10-4-85 and a few new grounds were added subject to the right of Bilas Singh and Co. to raise the question of limitation as the new grounds were taken after the expiry of 30 days from the date of receipt of S. 14 (2) notice under the Arbitration Act by the petitioner. In the affidavit-in-opposition all these allegations were denied. During hearing, the counsel for the petitioner as well as the respondent made their respective submissions on the added grounds as well, but this decision is not based on the added new grounds. ( 2 ) THE facts of the present application are as follows :- by an agreement No. 36j/kb dated 21-3-64, the petitioner issued works order in favour of Bilas Singh and Co. (hereinafter referred to as the firm) for execution of certain earth work in Section 13/14 group 'a' in Kuper Hiroly Reach of Kottawalvals Bailatilla New Railway line. The total value of the work was Rs. 11,30,300/ -. The firm completed the work within the extended period which was 30-6-65. (hereinafter referred to as the firm) for execution of certain earth work in Section 13/14 group 'a' in Kuper Hiroly Reach of Kottawalvals Bailatilla New Railway line. The total value of the work was Rs. 11,30,300/ -. The firm completed the work within the extended period which was 30-6-65. The petitioner alleged that it made final payment for all works done by the firm under this contract and the amount of total payment was Rs. 9,11,081/ -. The firm, however, raised certain disputes and took out an application under Section 20 of the Arbitration Act being Special Suit No. 6a of 1970 and on 13-9-71 an order was made for filing the arbitration agreement and referring the disputes for arbitration. In terms of the arbitration clause, Joint Arbitrators were appointed who entered upon the reference after appointing an umpire. In the statement of claim filed by the firm in Special Suit No. 6a of 1970, the firm at first made a claim for Rs. 10,23,333. 70. Subsequently, the firm by a letter dated 16-475 alleged that its claims would amount to a further sum of Rs. 24,34,899. 53 to which the petitioner took strong objection. As a result, the Joint Arbitrators refused to entertain these additional claims. Under the circumstances, the firm took out another application under Section 20 of the Act being Special Suit No. 41 of 1975 and obtained an order for reference on 7-5-76 referring the disputes to the same Joint Arbitrators. The petitioner preferred an appeal from the said order being Appeal No. 293 of 1976. On 10-8-78 the said appeal was dismissed. As a result, a statement of claims was filed by the firm in which the claims were further inflated to Rs. 46,48,757. 11 and the petitioner filed a counter-statement of facts denying the said claims. Subsequently, in Sp. Suit No. 41 of 1975, a sole arbitrator was appointed by removing the Joint Arbitrators. On 10-4-81 an award was made and published in Sp. Suit No. 6a of 1970 awarding Rs. 4,30,172/- in favour of the firm which was duly paid by the petitioner. In Sp. Suit No. 41 of 1975 Sri R. Das was appointed as the sole arbitrator by removing the previous arbitrator. On 12-9-84 an award was made and published by Sri R. Das in Sp. Suit No. 41 of 1975 awarding a sum of Rs. 19,45,550/ -. 4,30,172/- in favour of the firm which was duly paid by the petitioner. In Sp. Suit No. 41 of 1975 Sri R. Das was appointed as the sole arbitrator by removing the previous arbitrator. On 12-9-84 an award was made and published by Sri R. Das in Sp. Suit No. 41 of 1975 awarding a sum of Rs. 19,45,550/ -. This award is a non speaking award. In the present application, the petitioner challenged the validity of this award and prayed for setting aside the same. It is alleged that before the sole arbitrator Sri R. N. Das the petitioner demonstrated that all that the firm had done in Sp. Suit No. 41 of 1975 was to inflate the claims on the disputes already referred to the Joint Arbitrators in Sp. Suit No. 6a of 1970 and decided by the Joint Arbitrators by award dated 10-4-81. ( 3 ) THE counsel for the petitioner invites my attention to the fact that the value of the work under the contract was Rs. 11,30,500/ -. Out of that, the value of the works executed by the firm was Rs. 9,11,089/- which was duly received by the firm on completion of the work. Thereafter the firm received Rs. 4,30,172/- in Special Suit No. 6a of 1970 by way of additional claims on the said work. Thereafter in Sp. Suit No. 41 of 1975 the firms was again awarded Rs. 19,45,550/ -. Therefore, in connection with the execution of work valued at Rs. 9,11,089/-, the contractor had already received Rs. 13,41,261/ -. If this award is allowed to stand, the firm, in all, will recover Rs. 32,86,811/- which is unconscionable and perverse. Moreover, by a comparative study of the two statements of claims filed in the two references being Sp. Suit No. 6a of 1970 and Sp. Suit No. 41 of 1975 it will be amply clear that the disputes raised in Sp. Suit No. 41 of 1975 are repetition of the disputes raised in Sp. Suit No. 6a of 1970. In the present petition the petitioner disclosed a copy of the letter dated 16-4-75 written by the firm to the General Manager, South Eastern Railway for consideration of its claims made in Special Suit No. 41 of 1975. This is annexure-'b' to the petition. Suit No. 6a of 1970. In the present petition the petitioner disclosed a copy of the letter dated 16-4-75 written by the firm to the General Manager, South Eastern Railway for consideration of its claims made in Special Suit No. 41 of 1975. This is annexure-'b' to the petition. The petitioner also annexed a copy of the statement of claim filed by the firm before the Joint Arbitrators in Sp. Suit No. 6a of 1970 which is annexure-'c' to the present petition. Comparing the claims in the said annexures-B and C, it would be evident that the claims in both the references have been made on the basis of the same disputed works as will be apparent from the particulars set out below :- Annexure-'c' at pages 34-55, being the statement of claim in Sp. Suit No. 6a of 1970 Letter dated 16-4-75 Annexure-'b' at pages 24-32, the subject matter of Sp. Suit No. 41 of 19751. Item No. 1 in. 'c' is the same 2. Item No. 2 in 'c' " " " 3. Item No. 3 in 'c' " " " 4. Item No. 10 in 'c' " " " 5. Item No. 11 in 'c' " " " as Item Nos. 1-4 in 'b' with breakups as Item Nos. 5-7 in 'b' with breakups as Item No. 9 in 'b' "item No. 19 in 'b' item No. 20 in'b' ( 4 ) THEREFORE, in Sp. Suit No. 41 of 1975 the firm only enhanced its alleged claims in respect of the same old disputes decided by the award dated 10-4-81 in Sp. Suit No. 6a of 1970. ( 5 ) IT is contested by the petitioner's counsel that the disputes covered by the Sp. Suit No. 6a of 1970 could not be reagitated by the firm in Sp. Suit No. 41 of 1975 as the arbitrator in Sp. Suit No. 41 of 1975 will have no jurisdiction to redecide the same. This point was specifically taken before the arbitrator Sri R. N. Das and it was submitted that these claims were hit by the principle of res judicata. Suit No. 41 of 1975 as the arbitrator in Sp. Suit No. 41 of 1975 will have no jurisdiction to redecide the same. This point was specifically taken before the arbitrator Sri R. N. Das and it was submitted that these claims were hit by the principle of res judicata. The petitioner's counsel strongly relies on an unreported judgement of the Division Bench of this Court in Appeal No. 62 of 1983 arising out of the Award Case No. 200 of 1982 (Union of India v. Union Builders), ( AIR 1985 Cal 337 ) where it was held by the Division Bench :-"the claims put forward by the contractor and referred hereinbefore makes it clear that those were also the items of claim before the earlier arbitrators,. . . . . . . . . . What was being claimed in the second arbitration was nothing but additional amounts over those items. It is no doubt true that during the pendency of the earlier arbitration proceeding the contractor wanted to put forward those claims for additional amount in their letter dated August 10, 1976 and that was not allowed since the arbitration was restricted to the quantum specified in the contractor's original claim dated May 5, 1972. In our opinion, if the contractor had insisted upon their claim for additional amount on the aforesaid items then under adjudication they should have sought for intervention of the Court on the refusal of the railway administration to allow those additional claims to bring in for adjudication. That not having been done, the contractor, in our opinion, cannot treat those additional claims to be new items of claims. The order of reference under S. 20 makes it clear that what would go for fresh adjudication was new items of claims. In that view, in our opinion, the umpire had no jurisdiction to entertain any of the claims so entertained by him in terms of reference made under Section 20 of the Arbitration Act. . . . . . . . . . . . . . . . . " ( 6 ) THE position in law is very simple. In that view, in our opinion, the umpire had no jurisdiction to entertain any of the claims so entertained by him in terms of reference made under Section 20 of the Arbitration Act. . . . . . . . . . . . . . . . . " ( 6 ) THE position in law is very simple. While it is a settled law that there may be successive references under an arbitration agreement in respect of fresh sets of disputes arising out of the same contract from time to time, but there cannot be successive references on the basis of same disputes. In this case, the proper course for the firm was to move the Court for enlarging the scope of the reference in Sp. Suit No. 6a of 1970 by allowing the firm to increase the amount of claims by amending the statement of claims. But the firm, instead of taking that course, took out a fresh application under Section 20 of the Act for a fresh reference for additional claims on the basis of the same old item of disputes. Section 20 of the Arbitration Act does not contemplate repeated references on the same disputes. Hence the disputes in Sp. Suit No. 41 of 1975 which were also the subject matter of Sp. Suit No. 6a of 1970, were all barred by the principle of res judicata as they had been finally decided by the award dated 10-4-81. I, therefore, uphold the contention of the petitioner taken in the ground in paragraph 26 of the petition. The arbitrator has given a lump sum award in favour of the firm in a non-speaking award. Hence it is not possible to probe into the mind of the arbitrator and to find out how he had arrived at the figure of Rs. 19,45,550/- or what claims he had allowed. The award does not show that he had rejected the claims made on the basis of the old disputes already decided in Sp. Suit No. 6a of 1970. Therefore, the award, must be set aside. ( 7 ) IN paragraph 28 of the petition, another ground has been taken by the petitioner that the arbitrator did not know the scope of the reference under Sp. Suit No. 41 of 1975. Suit No. 6a of 1970. Therefore, the award, must be set aside. ( 7 ) IN paragraph 28 of the petition, another ground has been taken by the petitioner that the arbitrator did not know the scope of the reference under Sp. Suit No. 41 of 1975. It is alleged that the petitioner made an application before the arbitrator on 21-5-82 for filing the order dated 7-5-76 passed in Sp. Suit No. 41 of 1975 before the arbitrator and further prayed that unless the terms of the reference were known to the arbitrator, the reference should not be allowed to proceed any further. The petitioner also prayed for stay of the reference until production of the order dated 7-5-76. It is submitted that the learned arbitrator did not give any direction for production of the same nor did he try to get himself acquainted with the terms of the reference. This fact is not denied by the respondent. He proceeded with the matter which resulted in the impugned award. If the arbitrator had noticed the terms and scope of the reference as set out in Section 20 petition in the Sp. Suit No. 41 of 1975 he would have immediately found out that the claims covered by the order dated 7-5-76 were limited to Rs. 24,34,899. 53 only but in the statement of claims filed by the firm before the arbitrator the claims were inflated to Rs. 46,48,757. 11. Moreover, in paragraph 26 of the statement of claims, the firm demanded interest on the sum of Rs. 4,30,172/- awarded in Sp. Suit No. 6a of 1970 which had already been received by the firm. As the arbitrator did not care to know the scope of this reference. he entertained all these claims of the firm which were beyond the scope of the reference and acted without jurisdiction and thereby misconducted the proceeding. It is further submitted that practically the whole of the reference covered by the Sp. Suit No. 41 of 1975 was without jurisdiction as most of the claims were hit by the principle of res judicata and some of the claims were beyond the scope of the order of reference. Hence the non-speaking award for Rs. 19,45,430/- cannot stand and must be set aside. Suit No. 41 of 1975 was without jurisdiction as most of the claims were hit by the principle of res judicata and some of the claims were beyond the scope of the order of reference. Hence the non-speaking award for Rs. 19,45,430/- cannot stand and must be set aside. On the facts of this case, the submission of the respondent that the award should stand as the sum awarded is within the quantum specified by the order dated 7-5-76, cannot be accepted. ( 8 ) IT should be significant to note that the firm had already recovered Rs. 9,11. 089/- and Rs. 4,49,235. 52 aggregating to a sum of Rs. 13,60,324. 52 for the work valued at Rs. 9,11,089/ -. The firm's further claims for Rs. 46,48,757. 11 in respect of the same works are unconscionable and without jurisdiction as pointed out earlier. Although the attention of the arbitrator was invited to those facts and he was requested by the petitioner to see the order to find out the scope of the reference, the arbitrator failed to do so and thereby legally misconducted himself and the proceeding. I do not think that any useful purpose will be served by merely setting aside the award when the reference itself is infructuous. In my opinion, to put an end to this ruinous legal battle which is being fought out by the parties since 1975, the present reference must be superseded for the interests of justice. ( 9 ) IN that view of the matter, I set aside the award dated 12-9-84 and direct that the arbitration agreement shall cease to have effect with respect to the difference referred. The petitioner will be entitled to the cost of this application from the respondent firm. Application allowed.