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1987 DIGILAW 382 (DEL)

V. P. MEHTA v. UNION OF INDIA

1987-10-12

N.C.KOCHHAR

body1987
N. C. Kochhar ( 1 ) THE petitioner had entered into a contract with the respondent Union of India for executing the work of "lining of NG Drain from RD 124400 to RD 125275 1/c NG Drain from Dhansa Regulator to Bharat Nagar Bridge" and agreement bearing No. EE II/agmt. /21/83-84 was executed between the parties. The agreement between the parties was governed by arbitration clause according to which in the event of disputes, the matter was to be referred to the sole arbitration of a person to be appointed by the Chief Engineer of the Flood Control Department of the Delhi Administration. The disputes in fact arose between the parties and the petitioner requested the Union of India that the disputes including the disputes to receive interest in regard to the claim of the petitioner be referred in accordance with the terms of the agreement. A reference was made to the arbitrator. In the order of reference, the dispute with regard to interest was not referred to the arbitrator. The matter was agitated by the petitioner before the arbitrator who sought the clarification from the appointing authority whether the dispute regarding interest was also referred to him. The appointing authority did not send any clarification in this regard. Before the award was made, the petitioner moved this application under section 20 of the Arbitration Act praying that the arbitration agreement between the parties be filed in court and the dispute regarding interest, which was claimed by the petitioner, should be referred to the arbitrator in terms of the arbitration clause. ( 2 ) THE application has been opposed on the ground that the award has already been made by the arbitrator in regard to the disputes referred to him and that the grant of interest is not a dispute within the meaning of clause 25 of the arbitration agreement and cannot be referred to arbitration and that no suit/petition for claim of interest lies. It has been further pleaded that the interest is not payable in equity and the contractor had not claimed any interest in the bill and that he had joined the proceedings before the arbitrator without any reservation and is deemed to have waived his right for reference of his claim of interesto arbitration. It has been further pleaded that the interest is not payable in equity and the contractor had not claimed any interest in the bill and that he had joined the proceedings before the arbitrator without any reservation and is deemed to have waived his right for reference of his claim of interesto arbitration. It has also been pleaded that the agreement in question was rescinded by the respondent on 15th April 1985 and there was no subsisting agreement between the parties. ( 3 ) AFTER making the replication, following issues have been framed by H. C. Goel, J. on 25th March 1986. 1. Whether the petition has become infructuous in view of the fact that the arbitrator has published his award on 30th September, 1985 ? 2. Whether the claim of interest is a referable dispute ? 3. Whether the non-claiming of interest by the petitioner in his final bill amounts to waiver of the petitioner s right to claim interest on the principal amount of claim ? 4. Relief. ( 4 ) THE parties were allowed to lead their evidence in the form of affidavits. My findings on the issues are as under: ( 5 ) ISSUE No. 1-Mr. A. S. Chandhiok, the learned counsel for the respondents, states that in his claim before the arbitrator the petitioner had claimed interest but in the award made by the arbitrator, no interest having been allowed, this petition has become infructuous. It is not disputed before me that the arbitrator had sought clarification from the appointing authority whether the dispute regarding interest had also been referred to him but no such clarification was given by the appointing authority. It is also not disputed that the question of interest has not been dealt with by the arbitrator at all, and understandably so because the arbitrator himself was not sure whether that dispute had been referred to him or not. This petition was admittedly filed before the award was made by the arbitrator and in these circumstances I am of the view that the petition cannot be said to be infructuous. Consequently, I decide this issue in favour of the petitioner and against the respondents. ( 6 ) ISSUE No 2. This petition was admittedly filed before the award was made by the arbitrator and in these circumstances I am of the view that the petition cannot be said to be infructuous. Consequently, I decide this issue in favour of the petitioner and against the respondents. ( 6 ) ISSUE No 2. It is not disputed that the petitioner has been claiming interest on the ground that it is due to him from the respondent and the respondent has been denying its liability to pay the interest. The claim of interest had arisen out of the contract between the parties and whether or not the respondent is liable to pay to the petitioner interest on the amount found due to the petitioner is thus one of the disputes between the parties. The claim having arisen out of the contract between the parties is thus a referable dispute Mr. Chandhiok, the learned counsel for the respondents, has contended that the grant of interest is within the jurisdiction of the arbitrator and as such no reference was required to be made to him and that the dispute of interest was implied in the reference itself. He has relied upon a decision of the Supreme Court in case Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd. , AIR 1967 SC 1030 The question before the Supreme Court was whether the arbitrator had the power to grant interest. In the present case, the arbitrator himself was in doubt whether he could go into the claim of the petitioner for grant of interest and whether such a dispute had been referred to him and it is also not disputed that the objection was raised before the arbitrator about his going into the question of interest and as noted above, no clarification was given by the appointing authority which the arbitrator sought about the claim of interest having been referred to him. The ruling cited at the Bar in these circumstances does not apply to the facts of this case and is of no assistance to the respondents. ( 7 ) ISSUE No. 3. Whether or not the petitioner had waived his right to claim interest on the principal amount will have to be decided by the arbitrator while deciding the disputes regarding payment of interest by the respondent to the petitioner. ( 7 ) ISSUE No. 3. Whether or not the petitioner had waived his right to claim interest on the principal amount will have to be decided by the arbitrator while deciding the disputes regarding payment of interest by the respondent to the petitioner. This court cannot go into this question and as such no finding need be given on this issue. The issue is decided accordingly. ( 8 ) RELIEF. In view of my findings on issues No. 1 to 3, I allow this petition and direct that the arbitration agreement between the parties be filed in court. I further direct the Chief Engineer, Flood Control department of Delhi Administration to make a reference of the disputes regarding interest claimed by the petitioner to an arbitrator within a period of two months from today. The respondent would pay the costs of this petition to the petitioner. Counsel s fee Rs. 100. 00. ( 9 ) SUIT No. 1235-A of 1985 stands disposed of accordingly.