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1987 DIGILAW 225 (DEL)

D. K. SHARMA v. UNION OF INDIA

1987-05-20

C.L.CHAUDHRY

body1987
Chaudhry ( 1 ) THE petitioner was awarded a contract by the Union of India for the work "constraction of Monitoring Centre at Ayanagar (main building)" by virtue of agreement No. 38/ee/72-73 which contained an arbitration clause. Certain disputes and differenes arose between the parties out of the execution of the work awarded to the petitioner. In terms of arbitration clause 25 of the agreement the disputes were referred by Additional Chief Engineer, All India Radio, by his memo dated 5-7-1979 to the sole arbitration of Shri K. K. Aggarwal, Superintending Engineer, All India Radio, Calcutta. The Arbitrator entered upon the reference and published his award on 24-6-1984. The Arbitrator filed the award and the Arbitration proceedings in this court. ( 2 ) NOTICE of the filing of the award was given to the petitioner and the Union of India. The Union of India seems to have accepted the award and no objections have been filed on its behalf. However, the petitioner has chosen to as sail the award and has filed the objections which are the subject matter of I. A. 5838/1984. ( 3 ) BY these objections the petitioner seeks to set aside/modify the award in so far as it relates to claim No. 8 of the petitioner and counter claim No. 4 of the Union of India. It is urged that the arbitrator gravely arred while dealing with claim No. 8 of the petitioner in not awarding interest on claim No 4. It is stated that in view of the provisions of the Interest Act 1978 the Arbitrator ought to have allowed interest on the sum awarded on claim No. 4 also. The petitioner was as a matter of right entitled for the interest on the security deposit which was wrongly with held by the Union of India. The other objection is that the Arbitrator erred in allowing the counter-claim No. 4 of the Union of India and the decision of the Arbitrator on the counter-claim No. 4 is directly hit by the provisions of Section 74 of the Indian Contract Act, and the award of the learned Arbitrator against counter-claim No. 4 is erroneous as it has awarded penalty to the petitioner without any actual loss or damage being caused to the Union of India. ( 4 ) THE Union of India is contesting the objections filed by the petitioner. ( 4 ) THE Union of India is contesting the objections filed by the petitioner. In the reply it is stated that the award of the Arbitrator is final both on the uestion of fact and law and it is not open to challenge under Sections 15,16, 30 and 33 of the Arbitration Act as the Arbitrator is the sole and final Judge of both fact and law. It is further stated that the Arbitrator had rightly disallowed the interest in respect of security deposit. The decision of the Arbitrator on counter-claim No. 4 of the Union of India was justified. ( 5 ) ON the pleadings of the parties the following issues were framed :- (1) Whether the award is liable to be set aside on the objections of the petitioner ? (2) Relief. The parties have led evidence by way of affidavits. The learned counsel for the petitioner submitted that the Arbitrator has wrongly disallowed interest in respect of claim No. 5 regarding refund of security deposit. Claim No. 5 reads as under :- "a sum of Rs. 41,963. 00 has been claimed on account of refund of security deposit. In this connection, the claimant would like to submit that a sum of Rs, 41,963. 00 is lying with the respondents as security deposit which has not been refunded so far and the same is claimed now" On this claim the learned Arbitrator returned the following verdict:- "security deposit of Rs. 41,963. 00 (Rs. Forty one thousand Nine Hundred Sixty three only) is refundable by respondents forthwith as part of disposition of this claim, Claim No. 8 of the petitioner in respect of pending litigation was in the following terms:- "interest pending litigation @ 18% per annum has been claimed. 41,963. 00 (Rs. Forty one thousand Nine Hundred Sixty three only) is refundable by respondents forthwith as part of disposition of this claim, Claim No. 8 of the petitioner in respect of pending litigation was in the following terms:- "interest pending litigation @ 18% per annum has been claimed. In this connection the claimant would like to submit that the respondent wrongfully and illegally withheld the legitimate dues of the claimant and as such the claimants are entitled to their interest thereon at the market rate of 18% per annum As a matter of fact the entitlement of the interest becomes due from the date of withholding but keeping in view the restrictions of Interest Act and specified provisions of the contract, the claimant has been preferred only for the interest pending litigation for which the Learned Arbitrator has got ample powers and is solely on his discretion as held by the Supreme Court in various cases and as such the interest pending litigation has been claimed. " ( 6 ) THE award of the Arbitrator on this claim runs as under :- "simple interest at the rate of 9% per annum (Nine per cent per annum) is payable by respondents to claimants on the claim Nos. 1 and 3 and counter claims No. 1 and 2 from the date on which claimants asked for arbitration through letter to Additional Chief Engineer, All India Radio upto the date of publication of the award. The amount is to be determined after completion of process at (ii) above against claim No. 1 and counter claim No. 1. If the settlement (Payment) of net arbitration award between the parties is not done upto 30-9-1984, simple interest on the net amount due will be payable to claimants from 1-10-1984 on the total net sum of award till the date of payment or decree through court of Law whichever is earlier at the rate of 9% (nine per cent) per annum. " ( 7 ) THE learned counsel for the petitioner urged before me that the Arbitrator was bound to award interest against claim No. 5 under the provisions of Interest Act. " ( 7 ) THE learned counsel for the petitioner urged before me that the Arbitrator was bound to award interest against claim No. 5 under the provisions of Interest Act. Reliance is placed on Section 4 of the Act which reads as under :- Interest Payable Under Certain Enactments- (1) Notwithstanding anything contained in Section 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law. (2) Notwithstanding as aforesaid, and without prejudice to the generality of the provisions of sub-section (1), the court shall, in each of the following cases, allow interest from the date specified below to the date of institution of the proceedings at such rate as the court may consider reasonable, unless the court is satisfied that there are special reasons why interest should not be allowed, namely :- (a) Where money or other property has been deposited as security for the performance of an obligation imposed by law or contract from the date of the deposit; (b) Where the obligation to pay money or restore any property arises by virtue of a finduciary relationship, from the date of the cause of action; (c) Where money or other property is obtained or retained by fraud, from the date of the cause of action: (d) Where the claim is for dower or maintenance, from the date of the cause of action. ( 8 ) IT is stated that under Section 4 (2) (a) of the Act the Arbitrator was bound in law to award interest unless there were special reasons for not allowing the interest. On the other hand the learned counsel for the Union of India has argued that the petitioner had not claimed the interest under the Interest Act but has confined its claim only in respect of pending litigation and the arbitrator was within his right to disallow the interest, My attention was also drawn to the proceedings before the arbitrator dated 27-5-1982 wherein it was recorded by the arbitrator that the plaintiff had claimed interest pending litigation only . ( 9 ) I have given my careful thoughts to the respective contentions of the parties. In my opinion the contention of the learned counsel for the petitioner is unfounded. In claim No. 8 the interest was claimed pending litigation. ( 9 ) I have given my careful thoughts to the respective contentions of the parties. In my opinion the contention of the learned counsel for the petitioner is unfounded. In claim No. 8 the interest was claimed pending litigation. It is specifically mentioned in this claim that keeping in view the restriction of Interest Act and specified provisions of the contract the claim had been preferred only for the interest pending litigation, for which the learned Arbitrator has got ample powers and is solely on his discretion to award interest pendentelite. The award of pendentelite interest is within the discretion of the Arbitrator. It was the case of the petitioner before the Arbitrator that the award of Interest pending litigation was his discretion. As the discretion has not been exercised by the Arbitrator in favour of the petitioner, no grievance can be made in these proceedings. In my opinion the objection is not legally sustainable. ( 10 ) THE next contention raised on behalf of the petitioner was that the Arbitrator has wrongly allowed the claim No. 4 in favour of the Union of India. In my opinion the objection relates to the merits of the award. It is settled law that the Arbitratoris made the final arbiter of the disputes between the parties. The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. In this connection reliance is placed on M/s, Hindustan Tea Co. v. M/s. K. Shahikant and Co. and another,1 where in it was observed as under: - "the award is reasoned one. The objections which have been raised against the award are such that they cannot indeed be taken into consideration within the limited ambit of challenge admissible under the scheme of the Arbitration Act. Under the law, the Arbitrator is made the final arbiter of the dispute between the parties. The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. Strong reliance was placed by the appellant s learned counsel on and old Madras decision in Yogambal Boyee Ammani Ammal v. Naina Pillai Markayar. 1909 1lr 33 Mad. 15. The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. Strong reliance was placed by the appellant s learned counsel on and old Madras decision in Yogambal Boyee Ammani Ammal v. Naina Pillai Markayar. 1909 1lr 33 Mad. 15. In our view, on the facts of this case challenge to the Award is not permissible by taking the stand that the Arbitrator acted contrary to the provisions of Section 70 of the Contract Act. In these premises the objection filed to the Award has to be rejected. We direct the award to be made a rule of the Court. The parties shall bear their own costs, throughout. , In view of the authoritative pronouncement of the Supreme Court the objection raised on behalf of the petitioner has no merit. ( 11 ) IN the result the objection petition fails, and the same is dismissed. The award is made a Rule of the Court. Decree may be drawn in terms of the award. The petition is disposed of.