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1998 DIGILAW 377 (DEL)

MANGLA BUILDERS v. UNION OF INDIA

1998-05-08

S.N.KAPUR

body1998
S. N. Kapoor, J. ( 1 ). In this case award has been filed by the arbitrator himself. Notices were issued to both the parties and Union of India has filed objections against the award. ( 2 ). Relevant facts are as under: 2. 2 Chief Engineer, N. S. G. P. , C. P. W. D. , New Delhi under his letter No. 15 (13)92-Aandc dated 22. 10. 1992 appointed Shri S. S. Juneja, as sole arbitrator to decide and make award regarding the disputes falling within the purview of clause 27. Accordingly the arbitrator Shri S. S. Juneja gave the award dated 26th October, 1994. 2. 3 According to the objections filed against the award the work of construction of permanent complex for N. S. G. P. at Manesor - S. H. Construction of 3,00,000 litre capacity OH 65 near Petrol Pump was awarded to M/s. Mangla Builders vide agreement No. 12/ee/nsgp/d. II/89-90. The estimated cost of work was Rs. 16,77,948. 00 while the tendered cost was Rs. 8,90,260. 00. The date of start of work was 26. 2. 1990 while the stipulated date of completion was 25th November, 1990. It was actually completed by the contractor on 2. 3. 1993. The arbitrator has ignored material facts and travelled beyond the scope of agreement and thereby committed misconduct; and the findings are contradictory and inconsistent with his own findings. According to the arbitrator himself there were certain deficiencies in the design in respect of mix of concrete and evaluation of wind and seismic forces for the worst conditions had not been worked out by the claimant. Yet, the learned arbitrator observed that the respondents have not disputed the evaluation for quantity as worked out by the claimants but have denied the claims on other grounds, and concluded that the claimant was entitled to compensation for variation in quantities over and above those required as per the provisions of I. S. codes. The learned arbitrator has also ignored a material document Exhibit R/12, and by not considering exhibit R/12 committed misconduct. Inconsistent conclusions against arbitrator s own findings amounts to misconduct. The learned arbitrator has no jurisdiction to award future interest at the rate of 14% per annum as the arbitrator has become functus officio after making the award. 2. 4 These objections are being contested by the petitioner M/s. Mangla Builders. Inconsistent conclusions against arbitrator s own findings amounts to misconduct. The learned arbitrator has no jurisdiction to award future interest at the rate of 14% per annum as the arbitrator has become functus officio after making the award. 2. 4 These objections are being contested by the petitioner M/s. Mangla Builders. It is claimed that while granting claim No. 1 the reasons recorded by the arbitrator are logical and cogent. There is no alleged error much less error apparent on the record. The findings of the fact as set out in the Award are based on evidence on the record and the said findings of fact are not amenable to judicial review. Neither any ground exists nor has been disclosed in the objection petition to attract Section 16, 30 and 33 of the Arbitrator Act, 1940. The objections filed on behalf of respondent under reply are barred by limitation. Allegations of misconduct or ignoring any material piece of evidence has been denied. 2. 5 The Union of India reiterated their case by filing rejoinder to reply to the objections. ( 3 ). I have heard the parties and gone through the record. Following three points need consideration: (1) Whether the arbitrator has misconducted in any manner while allowing claim No. 1? (2) Whether the arbitrator could award future interest? (3) Whether the objections barred by limitation? ( 4 ). POINT 1 Clauses 52. 1 and 52. 2 which relate to mode of submission of tender and clause 51 which relate to time schedule of submission and approval of drawings are relevant for the purpose of decision on the point alongwith letters referred to by the learned counsel for the objector. Clauses 52. 1, 52. 2. and clause 51 reads as under: "52. 1 Tenders shall be lump-sum tenders which will be on Public Witness. D. Form-12. The tenderer shall quote his rates for the items as described in the tender Schedule. The over-head tank shall be constructed as per attached Architectural Drawing No. SA/nsgp/500/ii/r-I dated nil and contractor s own design. The design of over-head tank shall be based on I. S. Codes of practice and according to the prescribed conditions and specifications etc. which are mandatory and subjected to change. Conditional tender and tenders not conforming to the prescribed conditions, are liable to be rejected. " "52. The design of over-head tank shall be based on I. S. Codes of practice and according to the prescribed conditions and specifications etc. which are mandatory and subjected to change. Conditional tender and tenders not conforming to the prescribed conditions, are liable to be rejected. " "52. 2 The contractor shall also quote in the attached "variation Schedule", his rates at which additions/alterations/omissions from the work contracted are to be adjusted. " "51. 1 Within thirty (30) days from the receipt of the letter of acceptance of his tender, the Contractor shall submit to the Engineer-in-Charge six sets of signed detailed designs and working drawings for scrutiny and approval. " ( 5 ). POINT No. 2 In so far as the question of awarding interest is concerned now in view of the settled law this submission appears to be slightly misconceived. The earlier view was that the arbitrator could not grant pendente lite interest. But now settled legal position is otherwise. In Secretary, Irrigation Department, Govt. of Orissa and Ors. vs. G. C. Roy, AIR 1992 SC 732 , the Supreme Court took the view in para 43 (i) and 45 as under: 43 (I) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of S. 34, Civil Procedure Code. , and there is no reason or principle to hold otherwise in the case of arbitrator. (45) Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (along with the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes - or refer the dispute as to interest as such - to the arbitrator, he shall have the power to award interest. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes - or refer the dispute as to interest as such - to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view. "5. 2 In The Board of Trustees for the Port of Calcutta v. Engineers-De-Space-Age, AIR 1996 SC 2853 , the Supreme Court observed as under: "strictly construed the term of the contract merely prohibits the Commissioner from paying interest to the contractor for delayed payment but once the matter goes to arbitration the discretion of the Arbitrator is not, in any manner, stifled by this term of the contract and the Arbitrator would be entitled to consider the question of grant of interest pendente lite and award interest if he finds the claim to be justified. " 5. 3 The arbitrator has certainly a right to award interest from the date of award till the date of decree or realisation whichever is earlier specially after coming into force of Interest Act, 1978. THE arbitrator was accordingly justified in awarding interest at the rate of 12% per annum on the amounts awarded against claim N 1, 3 and 6 simple interest from 2. 12. 1992 at the rate of 12% per annum till the date of publishing of award as pendente lite and future interest at the rate of 14% per annum from the date of award till the date of its payment or decree whichever may be earlier. Therefore this objection has to be rejected. ( 6 ) POINT 3 It appears that the objection has been filed on 30th January, 1996 but from the inspection application on record it appears that counsel for UOI inspected the record on 14. 11. 1995. At least it is evident that the inspection was intended on 14. 11. 1995. If it is taken that the Union of India had received notice even on 14. 11. 1995 the objections which were filed on 30. 1. 1996 are barred by time. 11. 1995. At least it is evident that the inspection was intended on 14. 11. 1995. If it is taken that the Union of India had received notice even on 14. 11. 1995 the objections which were filed on 30. 1. 1996 are barred by time. There is yet another interesting thing. The verification itself is dated 16. 10. 1995 while the application is dated 16. 10. 1995 and below it date of 10. 1. 1996 has been put. No application for condonation of delay has been moved so far. Consequently this objection of the claimant is upheld. ( 7 ). The award given by Shri S. S. Juneja dated 26th October, 1994 is made rule of the Court with simple interest @ 12% per annum from 2. 12. 92 till the date of publishing of award as pendente lite interest. The claimant is also entitled to simple interest @ 14% per annum on the principal awarded amount on item 1, 3 and 6 from the date of award till the date of decree as well as till the date of realisation.