State of Rajasthan v. M/s. Om Metals & Minerals (P) Ltd. , Kota
2001-04-13
J.C.VERMA
body2001
DigiLaw.ai
JUDGMENT 1. 1. The State of Rajasthan has filed the present civil misc. appeal against the order dated 2.6.2000 passed by the District Judge, Kota whereby the objections filed by the appellant against the award dated 24.11.1995 passed by the sole Arbitrator had been dismissed. 2. Vide order dated 3.5.1991, one Prabhakar Sharma was appointed as sole Arbitrator who was Deputy Secretary to the Government and T.A. to the Chief Engineer, Irrigation Department. The statement of claim was filed by the respondent. Even the counter claim was filed by the appellant. According to the appellant, the work assigned to the respondent No.1 was in regard to the work of designs, fabrication, supply and erection of gates of Bhim Sagar Dam in District Jhalawar which work was to be completed within 12 months; because of certain clarification and omissions, the work order had to be revised and, therefore, superseding the earlier work order, the date of completion was also reivsed. Claims were filed on account of many heads an most of the claims related to the delay caused by the appellant. Ultimately, the arbitrator had given an award on 24.11.1995, wherein an amount of Rs. 21,72,410/- was awarded along with interest @ 12% p.a. 3. Award was filed in the civil court for making it rule of court. It was objected to by the appellant by filing objections. 4. It was the contention that the award was not only contrary to the provisions of law but also against the terms and conditions of the agreement. 5. It is one of the contention that in regard to claim No.1(B) to the tune of Rs. 9,33,518/-, the awarding of interest thereupon was beyond the scope of agreement. It is also argued that the refund of the security along with interest on it was not warranted in view of the fact that the work had not been finished by the respondent in time. Certain other items have also been disputed in the ground of appeal. The court below had observed that even though certain objections were taken but nothing had been shown to the court as to how the Arbitrator had misconducted and it had been observed by the court below that the civil court cannot sit and decide as an appellate court on the award given by the Arbitrator.
The court below had observed that even though certain objections were taken but nothing had been shown to the court as to how the Arbitrator had misconducted and it had been observed by the court below that the civil court cannot sit and decide as an appellate court on the award given by the Arbitrator. Except the mere allegations, nothing was brought on record to show that the Arbitrator had misconducted in giving the award. 6. I have gone through the award. It has been mentioned by the Arbitrator that even the claimant (respondent before the Arbitrator) had partially admitted the fact that the site for erection was not even handed over to the Contractor for number of years and three years delay was caused by the appellant itself. It was also admitted fact that even though the date of completion was 11.5.1982, but still the civil works were not ready for execution and ultimately erection work was taken up in hand in January 1987. Arbitrator had rejected as many as nine claims out of 16 claims; Interest of 12% was awarded. Even before this court, nothing has been brought on record to show as to how Arbitrator had misconducted except the bare allegation. 7. The parties rely on judgments (1) 2000(3) SCC 27 , (2) 1993(3) SCC 762, (3) 1999(9) SCC 514 , (4) 1998(1) SCC 418, (5) 2000(3) SCC 26 and (6) 2000(1) Supp. SCC 205. 8. Counsel for the appellant states that the award is likely to be set aside on the ground that it is not speaking award and that the interest has been unwarrantedly awarded by the Arbitrator. 9. In the case of (7) Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa etc. etc. Vs. N.C. Budharaj (dead) by L.Rs. etc. etc.-2000(1) Supreme 205, it was held that the arbitrator appointed with or without intervention of Court has jurisdiction to award interest on sums found due and payable for pre-reference period in absence of any specific stipulation or prohibition in contract to claim or grant any such interest. 10. In (8) State of J & K and another v. Dev Dutt and another AIR 1999 Supreme Court 3196, the claim raised by the contractor on the basis of measurement made by local commissioner of work done was held not to be outside terms of contract.
10. In (8) State of J & K and another v. Dev Dutt and another AIR 1999 Supreme Court 3196, the claim raised by the contractor on the basis of measurement made by local commissioner of work done was held not to be outside terms of contract. The arbitrator had jursidiction to grant interest pendente lite and future interest. Interest @ 10% was held to be reasonable interest. 11. In the case of (9) Secretary, Irrigation Department, Government of Orissa and others v. G.C. Roy (1992) 1 SCC 508 , while over ruling the judgment in (10) Executive Engineer (Irrigation), Balimela Vs. Abhaduta Jena (1998) 1 SCC 418 , the Supreme Court had held that the arbitrator after having held that the parties entitled to certain amount were also entitled to interest and it was within jurisdiction of arbitrator to grant interest where the agreement between the parties does not prohibit grant of interest and where a party claims such interest. 12. In the case of (11) M.K. Shah Engineers & Contractors v. State of M.P. (1999) 2 SCC 594 , it was held that the arbitration award is not vitiated merely because the arbitrator has not given an itemwise award and has chosen to give a lumpsum award. A lumpsum award is not a bad award. An award need not formally express the decision of the arbitrator on each matter of difference, nor is it necessary for the award to be a speaking one. It will be presumed that the award disposes of finally all the matters in difference. It was further held that the award of interest pendente lite by the arbirator, therefore, deserves to be sustained. 13. In the case of (12) Hindustan Construction Co. Ltd. Vs. State of Jammu & Kashmir 1999 Arbitration Law Reporter 412 , it was held that the scope of the court's jurisdiction in interfering with a non-speaking award on the ground that there is an error apparent on the face of the award is very limited. An error of law on the face of the award means that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbirator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can say is erroneous. The arbitrators have just awarded amounts to the contractor.
The arbitrators have just awarded amounts to the contractor. They make no reference to the contract or any of its clauses. They have interpreted the clauses of the contract which they can do. Their interpretion, whether right or wrong, cannot be interferred with. Arbitration (sic arbitrator ?) is also empowered to award interest post lite. 14. In the case of (13) M/s A.T. Brij Paul Singh and Bros. Vs. State of Gujarat AIR 1984 Supreme Court 1703 , it was held that the contractor is entitled to claim damages on basis of expected profit on balance of works contract. Where in a works contract, the party entrusting the work commits breach of the contract, the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract. Such claim under this head is certainly admissible. 15. In the case of (14) M/s. Tarapore and Company v. Cochin Shipyard Ltd., Cochin and another AIR 1984 Supreme Court 1072 , it was held that even the question of jurisdiction of an arbitrator can be the subject matter of a specific reference. If the parties agree to refer the specific question whether the dispute raised is covered by the arbitration agreement, it becomes a specific question of law even if it involves the jurisdiction of the arbitrator and if it is so, a decision of the arbitrator on specific question referred to him for decision even if it appears to be erroneous to the court is binding on the parties. Where a reference of the dispute was made to arbitration without prejudice to right of company to the contrary and the company had participated in arbitation proceedings and had taken a chance of a decision, it was held that the company could not be permitted to contend that reference was without prejudice to right of company to the contrary. 16. It was further held in the case of M/s. Taraport & Com. (supra) that the claim for compensation due to increase in price of pile driving equipment and technical know-how fees, claim arising while implementing contract and in relation to contract and, therefore, the arbitration clause was of the widest amplitude and the claim of contractor would be covered by arbitration clause. 17. In the case of (15) Continental Construction Co. Ltd. Vs.
17. In the case of (15) Continental Construction Co. Ltd. Vs. State of Madhya Pradesh AIR 1988 Supreme Court 1166 , it was held that if no specific question of law is referred, the decision of the arbitrator on that question is not final however much it may be within his jurisdiction and indeed essential for him to decide the question incidently. The arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. The arbitrator is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law, and if he does not he can be set right by the court providing (sic provided ?) his error appears on the face of the award. 18. In the case of (16) P.M. Paul v. Union of India AIR 1989 Supreme Court 1034 , it was held that the award can only be set aside under Section 30 of the Arbitration Act, which enjoins that an award of an arbitrator/umpire can be set aside, interalia, if he has misconducted himself or the proceeding. Adjudicating upon a matter which is not the subject matter of adjudication is a legal misconduct for the arbitrator. The matter referred to the arbitrator was, as to who is responsible for the delay, what are the repercussions of the delay in completion of the building and how to apportion the consequences of the responsibility. The arbitrator found that there was escalation, and, therefore, he came to the conclusion that it was reasonable to allow 20% of the compensation under the claim. It was held that the arbitrator had not misconducted himself in awarding the amount of compensation and therefore, award could not be set aside on that ground. It was further held that it could not be said that if the work was not completed within the stipulated time and on failure to grant extension of time, the contractor can claim difference in prices. 19. In (17) AIR 1997 Supreme Court 1324 and (18) 1991(1) SCC 63 , it was held that the arbitrator was within power to grant interest for the pre-reference period after commencement of the Interest Act, 1978. 20. In (19) AIR 1999 Supreme Court 2010 it was held that the arbitrator was not bound to give reasons. 21.
19. In (17) AIR 1997 Supreme Court 1324 and (18) 1991(1) SCC 63 , it was held that the arbitrator was within power to grant interest for the pre-reference period after commencement of the Interest Act, 1978. 20. In (19) AIR 1999 Supreme Court 2010 it was held that the arbitrator was not bound to give reasons. 21. It is settled law that unless there is a clause in the agreement itself for barring the payment with interest, the Arbitrator acts within its jurisdiction to award the interest and agreement is binding on the parties and if the delay has been caused by the appellant, the other party is positively entitled to claim interest/damages. Nothing has been brought to the notice of the court that as to why the Arbitrator had misconducted.In view of the above-said discussion, I do not find any merit in the misc. appeal so as to warrant the interference. The misc. appeal is dismissed at admission stage.Appeal dismissed. *******