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1995 DIGILAW 1039 (ALL)

State Of U. P. v. Om Metals And Minerals

1995-09-26

R.B.MEHROTRA, R.K.SINGH

body1995
Judgment R.K. Singh, J. 1. This First Appeal from Order arises out of the judgment and order dated 31st of January, 1992 passed by Sri H.N. Misra, Civil Judge, Roorkee, District Hardwar in original suit No. 160 of 1991 rejecting the objection of the appellant-defendant under Section 30(a) of the Arbitration Act, 1940 and making award of the arbitrator rule of the court. 2. The defendant-appellant entered into an agreement No. 1/ICCR of 1980-81 with the plaintiff-respondent for fabrication and erection of steel gates and hoists for new barrage across river Ganga at Bhimgoda, Hardwar. The contract work was completed on 28th of June, 1986. The work was certified by the appellant's Engineers to be satisfactory and upto the mark. The claimant-plaintiff claimed certain amounts on account of re-imbursement of steel whereas the appellant (defendant) raised a counter-claim on account of excess issue of steel. Thus a dispute arose between the parties and it was referred to the sole arbitrator as per terms of agreement by L.R's. letters dated 10.7.1989 and 21.3.1990. The arbitrator entered into reference on 4th of September, 1989. The final award came on 11th of October, 1991. In the award, the learned arbitrator has allowed part of the claim of the claimant. The pendente lite interest has been allowed at the rate of 14% per annum and future interest at the rate of 6% on the principal. We have heard Sri R.K. Bisaria, learned standing counsel appearing for the appellant and Sri P.C. Markanda, learned counsel appearing on behalf of the respondent at length and in detail. We have gone through the Impugned judgment and the relevant award. The grounds of objection under Section 30(a) of the Arbitration Act and the grounds taken in this appeal have also been perused and considered. 3. Learned standing counsel has assailed the impugned award mainly on the ground that the different items of the claim were in respect of the disputes which had already got the decision of Engineer-in-Charge who was supervising the progress of the construction work at the sight and the contractor-claimant did not raise any written protest against the decision of the Engineer-in-Charge within stipulated time limit in accordance with the clause 22.01 of Part II of the agreement. So the decision had become final and the conclusion is binding on the claimant-contractor. So the decision had become final and the conclusion is binding on the claimant-contractor. So there was nothing to be arbitrated by the learned arbitrator and so the award is bad going against the terms of agreement in clause 22.01. The second ground of attack against the impugned award is that under clause 16.06, only 3% wastage of materials was to be taken into account but the learned arbitrator has awarded 14% wastage which is against the terms of agreement. Thirdly, the learned standing counsel has attacked the rate of interest awarded to the claimant at the rate of 14% which according to him should not go beyond 6% as stipulated in the Civil Procedure Code. 4. Relying on the two decisions, namely, (i) (1975) 2 SCC 236 , K.P. Poulose v. State of Kerala and another ; and (ii) (1994) 4 SCC 665 , Union of India v. Jain Associates and another, the learned standing counsel has submitted that by going against the written terms of agreement in clauses 22.01 and 16.06 and by not considering the counter-claim of the department, the arbitrator has committed misconduct provided under Section 30(a) of the Arbitration Act and so, the award is fit to be set aside. The parties to the contract referred the disputes of arbitration to the sole arbitrator named in the agreement under clause 22.02 of the agreement. It is a reference by the parties to the contract to the arbitrator named in the agreement under clause 22.02. So, the ground of objection that there was no dispute to be referred to the arbitrator, is not available to any of the parties. The reference under clause 22.02 to the arbitrator to decide "every dispute, differences or question touching or arising out of or in respect of the aforesaid agreement between the parties" in itself says that if there is bona fide dispute between the parties, so it was referred to the arbitrator for his decision. The challenge on this count is not at all acceptable. 5. The second ground of attack is that clause 16.06 of the agreement provides only three per cent permissible limit of wastage materials whereas the learned arbitrator has allowed 14% wastage, has been discussed in the impugned award of the learned arbitrator at internal page No. 5. The challenge on this count is not at all acceptable. 5. The second ground of attack is that clause 16.06 of the agreement provides only three per cent permissible limit of wastage materials whereas the learned arbitrator has allowed 14% wastage, has been discussed in the impugned award of the learned arbitrator at internal page No. 5. It has been noted by the learned arbitrator that "the claimants in their rejoinder and authorised representative of the department in his statement before me on 16.12.1990 (noted in order sheet) admitted that clause 16.06 had no relevance whatsoever since its applicability is attracted only when the claimants were required to go in for direct purchase from the market after approval of the same by the deponent. 6. Both the parties have also admitted that parties by mutual consent can vary terms of the written contract also. In the counter-statement of facts, respondent has stated that "the Engineer-in-Charge can issue any type of certificate which materially affects either to the verification/certification of the material supplied as per specifications or which may affect or bound the opposite party to make any extra payment than of the agreed rate/price of the item of work." This being the position, it is clear that there is no substance in the argument that by allowing 14% wastage of material, the learned arbitrator has committed misconduct. In this case, the departmental Engineer has himself certified at the claimant's site at Kota where fabrication of the steel was going on, that 21% wastage of steel was there due to the unsize supply of steel by the department. In view of the certificate of the department's own Engineer that 21% wastage was going on during the fabrication of the steel in the present case, there is no iota of substance in the challenge on the ground that the award has gone beyond the terms of clause 16.06 agreement. 7. The last item of attack against the rate of interest awarded in the impugned award that 14% interest is excessive is well explained in the impugned award itself. The department has itself charged 14% Interest on mobilization of advance from the contractor, so there can be no ground against the payment of 14% interest by the department to the claimant for the period of delay in making the final payment of the bill of the contractor-claimant. The department has itself charged 14% Interest on mobilization of advance from the contractor, so there can be no ground against the payment of 14% interest by the department to the claimant for the period of delay in making the final payment of the bill of the contractor-claimant. The learned arbitrator has allowed this rate of interest as pendente lite interest. The future interest has been allowed only at the rate of 6%. So, there is no point in the argument of the learned standing counsel. 8. The counter-claim of the department has been discussed in all details and the learned arbitrator has considered every item of the counter-claim and has recorded the finding. Therefore, it is perfectly incorrect to allege that the learned arbitrator has overlooked the counter-claim. The learned counsel for the respondent Sri Markanda has referred the decision of the Supreme Court reported in AIR 1981 SC 2075 , 2077 AIR 1983 All 212; AIR 1976 SC 1745 ; AIR 1980 P&H 115 and AIR 1992 SC 732 . He has argued rightly that the arbitrator's award allowing or refusing claim or counter-claim of a party does not come under the definition of the legal misconduct. The object of the arbitration clause inserted in the agreement is for most satisfactory and speedy redressal of the dispute between the parties to the contract. The award can be touched only when there is glaring illegality or injustice in arriving at the conclusion by the arbitrator. 9. In the present case, there is no such assertion of the appellant nor in the whole award it could be pointed out before us how the appellant feels that illegality or injustice has been done. Simply because a few items of the claim have been allowed and few items of the counter-claim has been refused, it is not at all fair for the appellant to attack the award under clause 30(a) of the Arbitration Act. 10. The two rulings relied upon by the learned standing counsel as noted above do not help the appellant in present case because there is no overlooking of documentary evidence or the oral evidence nor the award is in any way inconsistent with the facts of the dispute. The award which runs into 70 pages is a well-discussed award. 10. The two rulings relied upon by the learned standing counsel as noted above do not help the appellant in present case because there is no overlooking of documentary evidence or the oral evidence nor the award is in any way inconsistent with the facts of the dispute. The award which runs into 70 pages is a well-discussed award. Every item of the claim and the counter-claim and every piece of evidence produced before the arbitrator by both the parties, have been discussed in detail. We find that very reasonable conclusion has been arrived at by the learned arbitrator. There is no merit in the appellant's contention that the arbitrator has committed any illegality or misconduct. So, there is no merit in this appeal. 11. We find no merits in this appeal. It is accordingly dismissed on contest with costs throughout.