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1997 DIGILAW 409 (RAJ)

ALIM AND CO. v. STATE OF RAJASTHAN

1997-03-21

S.K.SHARMA

body1997
Judgment SHIV KUMAR SHARMA, J. ( 1 ) BOTH these appeals arise from the judgment and decree dated November 15, 1994 passed by the additional District Judge No. 1, Bharatpur, making the award a rule of the court. ( 2 ) THE relevant facts in brief, which have given rise to these appeals, are that M/s. Alim and Company (for short the Company) entered into a contract with the State of Rajasthan (for short the State) for the work of construction of high level bridge over river banjara on Jaipur Agra Road, National Highway No. 11, Kilometre 96/0/0 at Agra under agreement No 19 of 1982-83 for a sum of Rs 1,07,83,700/- The disputes which arose in respect of the said contract were referred to the sole Arbitrator Shri Man Mohan Singh retired Additional Chief Engineer, P. W D. Rajasthan, who passed the award on August 29, 1991 by which Companys claim to the extent of Rs. 1,21,421. 94 was allowed besides other directions regarding release of the performance guarantor bond and the other bank guarantee. The Arbitrator had also allowed the future interest @ 18 per cent from the date of award upto the actual payment or the date of decree whichever is earlier for making the award, a rule of the court under section 17 of the Arbitration Act, 1940 (for short the Act ). The Company filed an application under Sections 14, 17 and 29 of the act before the District Judge, Bharatpur which was later on transferred to the court of Additional District Judge Court No. 1, Bharatpur who made the award a rule of the court. ( 3 ) THE Company has challenged the impugned judgment and decree on the ground that the court acted illegally in reducing the interest from 18% to 12% per annum and also urged that direction regarding the bank guarantee be ordered to be set aside. Whereas the contention of the State is that entire judgment deserves to be quashed. Mr. K. S. Rathore, learned Additional Advocate General for the state canvassed that the court below had ignored the counter claim objections filed by the State. The Arbitrator has wrongly awarded the claim of Rs. 12,48,643. Whereas the contention of the State is that entire judgment deserves to be quashed. Mr. K. S. Rathore, learned Additional Advocate General for the state canvassed that the court below had ignored the counter claim objections filed by the State. The Arbitrator has wrongly awarded the claim of Rs. 12,48,643. 60 towards the escalation in terms of Clause 45 of the printed agreement PWD MF 107 inducted on September 21, 1983 subsequently disregarding the explicit contractual provision existing in the agreement in terms of Clause 60 of the agreement No. 19. In fact escalation as per provision of Clause 60 of the original agreement No. 19 of 1982-83 was paid to the company which was accepted by it without objection but the court below failed to appreciate this important aspect. The learned court below also failed to consider that Clause did not exist in the original agreement No 19 of 82-83 and the observation of the Arbitrator that remedy was available to the Company under the said Clause was against the record. ( 4 ) THE Arbitrator misinterpreted the provision of section 55 (3} of the Indian Contract Act but the court below failed to consider the objections raised by the State in this regard. The court below also did not consider that the company was not entitled to any interest pendente lite. Reliance has been placed by the learned counsel on M/s. Chahal Engineering and Construction Co. v. Irrigation department Punjab, Union of India v M/s. Jam Association and Anr. , and K. V. George v The Secretary to the Govt ( 5 ) ON the other hand, Mr O. P Garg, the learned counsel for the company contended that the court below committed error in reducing the interest awarded by the Arbitrator The direction issued by the court below with regard to bank guarantee were also unjustified and illegal Besides these objections the rest of the judgment of the court below was supported by the learned counsel. He referred Juga! Kishore v Vijayendra prabhatilal Sharma, Hindustan Construction Co Ltd v State of Jandk, Secretary irrigation v G. C. Roy, Hans Construction co. v. Delhi Development Authority. ( 6 ) I have given my anxious consideration to the rival contentions and carefully perused the record ( 7 ) IN M/s. Chahal Engineering and Co. He referred Juga! Kishore v Vijayendra prabhatilal Sharma, Hindustan Construction Co Ltd v State of Jandk, Secretary irrigation v G. C. Roy, Hans Construction co. v. Delhi Development Authority. ( 6 ) I have given my anxious consideration to the rival contentions and carefully perused the record ( 7 ) IN M/s. Chahal Engineering and Co. s case (supra), the apex court quashed the award in question in view of the errors apparent on the face of the record observing that the case was covered both by sub-section (a) of Section 30 of the Act and the second part of subsection (c) thereof. ( 8 ) IN Union of India v M/s Jain Associates (supra), the Supreme Court observed thus -"it is true that if the bad portion of the award is severable from the good part the court may set aside the bad part and uphold the rest of the award But when it hingers upon the state of mind of the arbitrator or the Umpire the award being a non-speaking award is not reasonably certain as to what part of the award is good and vice versa And if such a part cannot be separated then the whole award must be declared as invalid and it would be set aside on the ground of misconduct under Section 30 (a) of the Act " ( 9 ) K, V. George v. The Secretary (supra)was the case where the Supreme Court indicated that Arbitrator should consider both claim and counter claim. If award is made on the basis of claim of one part and counter claim of another part kept for consideration subsequently, It will amount to misconduct of arbitrator ( 10 ) IN Jugal Kishore Prabhatilal Sharma (supra); Hindustan Construction Co Ltd. (supra), and Secretary Irrigation v. G. C Roy (supra), it was propounded by the Supreme court that the Arbitrator has power to award interest pendente lite ( 11 ) IN Hans Construction Co v. Delhi development Authority (supra), it was held by the Delhi High Court that the Arbitrator has power to award interest pendente lite and the court can not change the rate of interest granted by the Arbitrator. ( 12 ) THIS court in G. S. Arval and Co. ( 12 ) THIS court in G. S. Arval and Co. v rajasthan State Mineral Development Corporation Ltd. (supra), observed as under"merely because the court may come to a different conclusion on the appreciation of evidence it does not mean that the Arbitrator has committed any misconduct An Arbitrator is the sole Judge of the quantity and quality of evidence and it is not for the court to take upon itself the responsibility of being Judge of the evidence before the Arbitrator section 30 gives the grounds on which an award can be set aside. An award can also be set aside for the error of law appearing on the face of it it may be stated that it is not misconduct on the part of an Arbitrator to give an erroneous decision whether his error is of fact or law or whether or not his findings are supported by evidence. " ( 13 ) THE award has been assailed by the state on the ground of misconduct on the part of the Arbitrator. The argument of the learned counsel for the State that Arbitrator had wrongly awarded the claim in terms of agreement PWD MF 107 cannot be accepted as the only witness adduced by the State before the court. Shri Tulsi Ram Sharma admitted in his cross examination that agreement PWD MF 107 was filed duly signed by the Company as well as the State. The Executive Engineer who put his signatures, had authority to sign on behalf of the Department. Placing reliance on P. M. Paul v. UOl, the court below observed that determination of amount by the Arbitrator in respect of increase in price, does not come under the definition of misconduct. In Babu Ram v. DDA9, the Delhi High Court indicated that there cannot be reappreciation of evidence which has already been appreciated by the arbitrator. The other arguments advanced on behalf of the State relate to reappreciation of evidence and I am not impressed by those contentions. ( 14 ) LEARNED counsel for the state could not exactly emphasise as to what was the counter claim of the State. Even careful scrutiny of the impugned order could not place the counter claim in the area of my vision. ( 14 ) LEARNED counsel for the state could not exactly emphasise as to what was the counter claim of the State. Even careful scrutiny of the impugned order could not place the counter claim in the area of my vision. Therefore, I am unable to observe that award suffers from the error apparent on the face of the record or award deserves to be set aside under section 30 of the Act The impugned award cannot be termed as non-speaking award arguments advanced on behalf of the State are devoid of any force and the same are of no help to the State ( 15 ) BUT the arguments advanced on behalf of the Company have merit It is well-settled that Arbitrator has power to award interest pendente lite. Court cannot change the rate of interest granted by the Arbitrator. The court can modify or correct the award only under the circumstances as mentioned in section 15 (a), (b) and (c) of the Act, which are as under"15 {a) Where it appears that a part of the award is upon a matter not referred to Arbitrator and such part can be separated from the other part and does not affect the decision on the matters referred; or (b) Where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision, or (c) Where the award contains a clerical mistake or an error arising from an accidental slip or omission" ( 16 ) IT is legally settled that if a court goes beyond the powers conferred by Section 15 of the Act and makes substantial modificatior because it takes a different view from that held by the Arbitrator as to what was just and fail in this or that set of circumstances, it act; without jurisdiction. In the case on hand in learned court below was of the opinion that the rate of interest awarded by the Arbitration was excessive than it could not remit the part of the award under Section 16 of the Act to the arbitrator but it had no jurisdiction to modify the award in an arbitrary manner ( 17 ) THE learned court below also committed an error in making observations about the Bank Guarantee. The validity thereof has already expired much earlier and the Arbitrator directed for its renewal only upto July 31. 1992. The validity thereof has already expired much earlier and the Arbitrator directed for its renewal only upto July 31. 1992. After this date was no justification in keeping the Bank Guarantee with the State. The court could not have modified the award in this respect also. ( 18 ) UPSHOT of the above discussion is that appeal of the State fails and is hereby dismissed. Appeal filed by the Company is allowed and the impugned order dated November 15. 1994 is modified to the extent that awarding interest @ 18% per annum by the Arbitrator is also made rule of the court. The direction issued by the learned court below in respect of Bank Guarantee is hereby quashed. Costs easy. Appeal allowed.