Central Coalfields Limited v. Dutta Construction — 1998 DIGILAW 184 (PAT)

Judgment P.K.Deb, J. 1. This appeal has been preferred against the judgment and award dated 23.2.1993 passed by the then Subordinate Judge, 1st Court, Ranchi, in Miscellaneous Case No. 4 of 1989. 2. The respondent entered into a contract with the appellant for construction of Intake Well-cum-Raw Water Pump House at Jarangdih. The work order was issued to the respondent on 16.10.1969. Although the work order for the approved work comprised in the agreement was executed between the parties on 25.10.1969, the work order had already been issued to the respondent on 16.10.1969. The respondent started the execution of the work. However, some dispute arose between the parties subsequently with respect to the shifting of sites and other modification in its design and the nature of the work to be undertaken as per the agreement. The work site was originally at the river bed of Damodar but afterwards it was changed to a place on the river bank. According to the respondent, on this account of shifting of place and modification in the designs, he had to execute the work at a height of 41 foot from the ground level instead of 30 foot. The claim of the respondent was that he wanted to modify/increase the price of the work and for settlement and negotiation over the same, but when no settlement had been arrived at, the respondent filed an application under Sec. 20 read with Sec. 8 of the Arbitration Act (the Act) before the Subordinate Judge, 1st Court, Ranchi, for appointment of an arbitrator as per Clause (9) of the agreement which runs as follow: If any dispute, question or controversy, the settlement of which is not herein specifically provided for, shall any time arise between the National Coal Development Corporation Limited and the contractor/contractors, touching this agreement or any clause of anything herein contained on the construction thereof or any matter connected with this agreement or the operation of the same or the rights or duties or liabilities of either party, then and in every such case, either party, shall forthwith give to the other notice of such difference and such dispute or difference shall be referred to an arbitrator nominated by the Managing Director of the National Coal Development Corporation Limited and the award of such arbitrator shall be final and binding on the parties. Progress of the work shall not be suspended or delayed on account of the reference of any dispute or difference to arbitration under this clause. 3. According to the respondent, when on notice also, the appellant did not abide by the terms of the agreement for appointment of an arbitrator, then a petition was filed for appointment of an arbitrator as contemplated under Sec. 20/8 of the Act. Against that petition, the appellant filed written statement and raised objections. According to the appellant, the claims of the plaintiff-respondent were inadmissible under proviso to Clause 3 of the General terms and conditions and had not been made in the manner and within the time prescribed by the agreement and, as such, the claim was barred and not maintainable. The nature of the objections in essence was for the time being the essence of contract, work had to be completed within a period of 12 months, and, therefore, the plaintiff-respondent was not entitled to any extra claims as made by him. It was also contended that the claims of the plaintiff-respondent being barred by limitation had already been repudiated and, as such, there was no scope for appointment of arbitrator. The learned Sub-Judge after hearing the parties, allowed the petition and appointed the arbitrator to settle the difference which had arisen between the parties. Against that order, miscellaneous appeal was filed before this Court being M.A. No. 7 of 1976 (R). The repudiation of claim and the point of limitation as raised had been turned down by this Court also and held that the order of the Sub-Judge referring the difference which comes within the purview of the arbitration clause of the agreement had rightly been referred to the arbitrator. Then both the parties submitted to the jurisdiction of the arbitrator and the sole arbitrator Sri. W. Dasgupta, Chief Design Engineer (Civil) Mecon India submitted his award and the same was filed in the Court for making a rule of the Court. The objection was filed by the appellant-Central Coalfields Limited under Sec. 30 read with Sec. 33 of the Act. The said objection has been registered as Miscellaneous Case No. 4 of 1989. The respondent also filed rejoinder to the objection raised. 4. Various points had been raised from the side of the appellant challenging the award. The objection was filed by the appellant-Central Coalfields Limited under Sec. 30 read with Sec. 33 of the Act. The said objection has been registered as Miscellaneous Case No. 4 of 1989. The respondent also filed rejoinder to the objection raised. 4. Various points had been raised from the side of the appellant challenging the award. The first point was that it was an unreasoned award and the point raised from the side of the appellant regarding repudiation of claim and limitation matter had not been considered by the arbitrator. The second point is that when the claims had already been repudiated and the same had been barred by limitation. There was no scope of the arbitrator to enter into the merits and as such the arbitration award is not maintainable in the eye of law. The third point is with regard to the grant of interest retrospective, pendente lite and future interest which is not permissible under the law. 5. Mr. Naresh Prasad, appearing for and on behalf of the appellant had strenuously made on attempt to drag this Court into various clauses of the agreement so that the award can be challenged on factual aspects. Mr. P.K. Sinha, learned Counsel appearing for an on behalf of the respondent has rightly submitted that there is no scope of the appellant at this stage to enter into the factual aspect unless it could be show that there was an error apparent on the face of it causing miscarriage of justice, resulting in holding of misconduct on the part of the arbitrator. 6. It is a settled principle of law that while considering the conditions under Sections 30/33 of the Act, the Court does not sit as an appellate Court to go into the details of the factual aspect of the consideration and non-consideration of the claims and counter-claims of the parties. However, it appears from the impugned award that the learned Sub-Judge had took strain in going into the merit also and then rejected the submissions made on merit from the side of the appellant. The main contention of the appellant is that when this arbitration proceeding was raised under Sec. 20/8 of the Act, the claim had already been barred by limitation and as such there was no scope of the arbitrator to enter into arbitration under the agreement. The main contention of the appellant is that when this arbitration proceeding was raised under Sec. 20/8 of the Act, the claim had already been barred by limitation and as such there was no scope of the arbitrator to enter into arbitration under the agreement. According to learned Counsel for the appellant, if a claim cannot be recovered by way of suit because of barred by limitation then there remains no existence of claim in the eye of law and such claim cannot be arbitrated. This point of limitation is to be considered at the initial stage and it appears that the same was considered by the Sub-Judge when the petition was filed from the side of the respondent under Sec. 20/8 of the Act and after considering the limitation matter, the petition was allowed referring the dispute and difference to the arbitrator. On the said ground of limitation and repudiation of claim, the order of the Sub-Judge was challenged before this Court in the Miscellaneous Appeal and the order of the Sub-Judge was retained by a Division Bench of this Court as already mentioned above. It is true that the limitation matter was not discussed in details in the order of the Division Bench and it appears that the same had been referred to the arbitrator for consideration. Although by recent judgment of the Supreme Court, it has been held that if the claim is already barred by limitation, then there remains no existence of claims in the eye of law and there is no scope of the Court to refer a barred claim which is non-existence in the eye of law to the arbitrator for consideration of the limitation matter also. That was decided by the Apex Court in the case of S. Rajan V/s. State of Kerala and An. AIR 1992 Supreme Court 1918 but that decision was arrived at in a proceeding under Sec. 20/8 of the Act. That was decided by the Apex Court in the case of S. Rajan V/s. State of Kerala and An. AIR 1992 Supreme Court 1918 but that decision was arrived at in a proceeding under Sec. 20/8 of the Act. As I have already stated that in the present case although the matter was raised by the appellant, the same had not only been turned down by the Sub-Judge but also by a Division Bench of this Court and it appears that this limitation matter was also referred to the arbitrator and when that matter had been referred to the arbitrator then the arbitrator must have considered that and when unreasoned award is there, there is no scope to infer that the limitation matter or repudiation matter had not been considered by the arbitrator. When the whole matter had been referred to the arbitrator and unreasoned award is there after hearing both the parties, then there is a legal inference that the arbitrator had considered that point while arriving at the decision. In this respect, reference may be made to the case of N. Chellappan V/s. Secretary, Kerala State Electricity Board and Anr. AIR 1975 Supreme Court 230. Moreover, although the point of limitation and repudiation of claims were raised by the appellant at the initial stage and challenged upto this Court and then submitted to the jurisdiction of the arbitrator and placed their counter-claims also, then it must be held that the appellant had given go by to their earlier contention of repudiation of claims and such submission of jurisdiction creates an estoppel on the part of the appellant to raise this point again under Sec. 30/33 of the Act. 7. About non-giving of reason by the arbitrator in arriving at the just decision does not make the award bad and it has by that time become the established principle of law. The arbitrator is competent and authorised to pass an award without giving reasons and such award shall be valid in the eye of law, if there is no mandate by the arbitration clause of the agreement to give reasons or there is any specific direction from the side of the Court for giving reasons to the award. The arbitrator is competent and authorised to pass an award without giving reasons and such award shall be valid in the eye of law, if there is no mandate by the arbitration clause of the agreement to give reasons or there is any specific direction from the side of the Court for giving reasons to the award. In the present case, in other words, the arbitration agreement gives no any mandate for giving reasons nor there is any direction from the Court to the arbitrator to give reasons, hence unreasoned award is valid unless it can be shown that the arbitrator did not give opportunity to the parties to law their claims and counter-claims, in the present case, hearing was made inter-parties and there were claims and counter-claims and then the arbitrator arrived at its finding. Moreover the claim was to a greater extent and after considering the submission made on behalf of the appellant-Central Coalfields Limited, such claims had been minimised to a great extent as per the award itself which infers that the award which was definitely an inter-parte to decide the difference between the parties had applied his mind on the claim and objection and counter-claims raised by the parties. Hence, there is no scope to hold that the arbitration award is had or tainted with misconduct or invalidate on any other grounds as contemplated under Sec. 30 of the Act. 8. The last point has been taken from the side of the appellant that the arbitrator had committed error of law in granting future interest. This matter has been considered in various Courts as to the power of arbitrator regarding grant of interest, even the future interest. Some Courts were of the view that the arbitrator is within the jurisdiction to grant interest on the claims from the date it was payable and also the interest pendente lite but there is no scope of the arbitrator to grant future interest till realisation rather such right vested only with the Court. Some Courts were of the view that the arbitrator is within the jurisdiction to grant interest on the claims from the date it was payable and also the interest pendente lite but there is no scope of the arbitrator to grant future interest till realisation rather such right vested only with the Court. This matter was set at rest by the Apex Court in the case of State of Orissa V/s. B.N. Agarwalla AIR 1997 Supreme Court 925 wherein it was held that the arbitrator can grant interest retrospectively, pendente lite and also the future interest but in respect of future interest, arbitration award can take effect only after it get seal of the Court while the same is made rule of the Court. 9. In the present case, it is submitted by Mr. P.K. Sinha that the arbitrator had considered the interest to be proper and just. In the present case, when the securities in the form of N.S.Cs. were kept by the appellant and the respondent was debarred from getting benefits of the future interest arising out of the N.S.Cs. and definitely that was a point for consideration for grant of future interest also in favour of the respondent. It further appears that the future interest as granted by the arbitrator has got the seal of the Court by the impugned order passed by the learned Subordinate Judge, Ranchi, hence the point raised in this appeal have got no force and hence the same is rejected. 10. In the result, this appeal is dismissed but in the circumstances of the case, there will be no order as to costs.