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2002 DIGILAW 551 (ORI)

National Aluminium Company Ltd. v. G. C. Kanungo

2002-08-28

B.P.DAS

body2002
JUDGMENT B. P. DAS, J. — This miscellaneous appeal is filed under Sec. 39 of the Arbitration Act, 1940 challenging the order dated 23.7.2001 passed by the Civil Judge (Senior Division), Angul, in M.J.C. No. 2 of 2001 making the award a rule of the Court. 2. National Aluminium Company Ltd. (‘NALCO’ in short), which is an existing company under the Companies Act, 1956, and its Chairman-cum-Managing Director, the appellants herein, challenge the aforesaid order dated 23.7.2001 on the ground that the learned Civil Judge has lost sight of the aspect that the claim raised by the respondent was barred by limitation under Sec. 137 of the Limitation Act. In this regard it is argued that even though the learned Civil Judge in paragraph 8 of his order observed that the claim was barred by limitation, yet he did not interfere with the award. 3. Before going into the merits of the case, it is worthwhile to briefly narrate the facts giving rise to the present proceeding. The present respondent, who is a contractor, entered into a contract with the NALCO for construction of road, culvert and storm water drainage at NALCO Nagar in Angul and an agreement to that effect was signed between both the parties on 18.2.1985. National Industrial Development Corporation (‘NIDC’ in short) was appointed by the NALCO as its Consultant Engineer to supervise the aforesaid work. The respondent raised certain claims for which the Chairman-cum-Managing Director of NALCO appointed Shri S. Misra, a retired Executive Director of Bhilai Steel Plant as the Arbitrator to adjudicate the dispute between the parties in terms of the agreement. On being appointed, the Arbitrator called upon the parties to file their pleadings in shape of claim and counter-claim. While the respondent-claimant filed his claim statement, the appellants filed an application before the Arbitrator praying therein to reject the claim of the respondent on the ground of limitation. The Arbitrator rejected the said objection and against such rejection, an application under Sec. 33 of the Arbitration Act was filed before the learned Civil Judge. On the aforesaid application being rejected, a revision being Civil Revision No. 347 of 1996 was preferred and this Court disposed of the said revision application holding that it was for the Arbitrator to decide whether the question of limitation raised was a pure question of law or mixed question of facts and law. On the aforesaid application being rejected, a revision being Civil Revision No. 347 of 1996 was preferred and this Court disposed of the said revision application holding that it was for the Arbitrator to decide whether the question of limitation raised was a pure question of law or mixed question of facts and law. This Court further directed the Arbitrator to proceed with the matter if it was a mixed question of facts and law. Upon scrutiny of the documents, the Arbitrator found that the issue was a mixed question of facts and law and accordingly directed the appellants to file their counter claim/counter statement. Ultimately the appellants filed their counter claim and docu¬ments. It is worthwhile to mention here that the Arbitrator was appointed with the condition that such appointment was without prejudice to the limitation, arbitrability and maintainability of the claim and the arbitration proceeding. The Arbitrator ultimately, after hearing both the parties, dealt with the question of limitation and passed the award in favour of the claimant-respondent awarding a sum of Rs. 56,79,561.91 along with interest @ 15% per annum on the aforesaid amount payable from 25.5.1992 and rejecting the counter claim of the appellants. The Arbitrator while dealing with the question of limitation held that the claim was not barred by limitation. It is pertinent to mention here that while the appellants did not adduce any evidence in support of their case, the claimant-respondent adduced both oral and documentary evidence in the arbitration proceeding before the Arbitrator on the basis of which the Arbitrator came to the aforesaid conclusion. The learned Civil Judge accepted the award and made the same a rule of the Court. 4. According to the appellants, while the work was completed on 15.6.1987, final bill was submitted on 17.6.1987 and final payment was made on 30.3.1989. As the claimant’s further demand was refused by the appellants on 9.10.1990, the claimant's demand for appointment of an arbitrator made on 20.5.1995 was barred by limitation. 5. It is a fact that the claimant submitted final bill on 17.6.1987. It is also not disputed that while the final bill was pending, on 5.9.1988 Shri K. C. Chatwal, the Addl. Chief Engineer of NALCO, intimated the claimant that in regard to final bill certain clarifications from the NIDC were awaited for finalisa¬tion of the final bill. 5. It is a fact that the claimant submitted final bill on 17.6.1987. It is also not disputed that while the final bill was pending, on 5.9.1988 Shri K. C. Chatwal, the Addl. Chief Engineer of NALCO, intimated the claimant that in regard to final bill certain clarifications from the NIDC were awaited for finalisa¬tion of the final bill. Prior to 30.3.1989, i.e. the date on which final bill was alleged to have been paid to the claimant, on 30.1.1989 one T.K.Sivashnmuga, Asst. Manager of NALCO, who was in charge of the work in question, recorded in the note-sheets about the final bill and endorsed that a part had been processed and that item Nos. 12 to 28 of the final bill were being examined and processed separately. The copy of the aforesaid note-sheet was also filed before the Arbitrator by the claimant. According to the claimant-respondent, except item Nos. 12 to 28, the bill in respect of other items was paid on 30.3.1989. On 26.5.1992, when the claimant again reminded the NALCO authorities about finalisation of the balance items of the final bill, NALCO on the same day replied that the case was still under consideration and decision awaited. At last, on 24.9.1994 the claimant by referring to the NALCO’s letter dated 26.5.1992 requested the NALCO author¬ities for finalisation of the payment. When NALCO authorities maintained a sphinx-like silence over the matter, the claimant invoked the arbitration clause of the agreement. 6. As I find, the Arbitrator dealt with the question of limitation in his award and held that finalisation of the final bill was being processed by NALCO itself; on 30.3.1989 only a part of the final bill was paid and the entire final bill had not been paid; and as the matter was under discussion and a part of the claim was pending, the question of the claim being barred by limitation did not arise. 7. Learned counsel for the appellants vehemently argued that the notes made in the note-sheets cannot be construed to be the basis for postponing the period of limitation because those notes are the internal discussions between the officers of the NALCO and the same had not been communicated to the claimant basing upon which it can be said that the claim raised by the claimant was pending. Be that as it may, the note-sheets which have not been disputed by the NALCO before the Arbitrator, indi¬cate that there were certain claims recommended by the NALCO authorities for payment. This amply shows that the NALCO authori¬ties were in seisin of the matter and payment in regard to some items of the final bill was under consideration till 25.2.1992, i.e., after the final bill was paid, and accordingly letter was issued on 26.5.1992, much after the final bill was paid, by Shri B.S.P.Panda, Addl. Chief Engineer (C), indicating therein as follows : “The case file for consideration of your different claims for the above said work is processed. The decision is awaited. After the decision is known, the same shall be communicated to you. xxx xxx " 8. Law is well settled in regard to the scope of interfer¬ence by the Court with an award passed by arbitrator. The Apex Court in Indu Engineering & Textiles Ltd. v. Delhi Development Authority, AIR 2001 SC 2688, indicated some of the well-recognised grounds on which interference was permissible, and the same are extracted hereunder : “(1) Violation of principles of natural justice in passing the award; (2) Error apparent on the face of the award; (3) The arbitrator has ignored or deliberately violated a clause in the agreement prohibiting dispute of the nature entertained; (4) The award on the face of it is based on a proposition of law which is erroneous, etc.” Taking a cue from this, learned counsel for the appellants submitted that this is a case where the award on the face of it is based on a proposition of law which is erroneous. Counsel for the appellants relied upon a decision of the Madras High Court in the Union of India v. Sayadu Beedi Co., AIR 1970 Madras 108, wherein a suit was filed against the Railway for compensation for losing goods and the Court held that the statement made by the Railway authorities that the plaintiff’s claim was under investigation and calling upon him to abstain from rushing to Court could not be said to be acknowledgment of the liability. Learned counsel for the appellants also pressed into service a decision of the apex Court in Inder Singh Rekhi v. Delhi Development Authority, AIR 1988 SC 1007 , wherein it was held that the period of limita¬tion has to be computed from the date the claim was asserted and payment was denied. Relying upon the aforesaid decision, an argument was advanced that a party could not postpone the accrual of cause of action by writing reminders, but where the bill had not been finally prepared, the claim made by a claimant was the accrual of the cause of action. Further, a dispute arises where there is a claim and a denial and repudiation of the claim. The aforesaid decisions will have no application to the facts of the present case because here is a case where final bill was made but the same was partly paid and the claimant was asked to wait till decision on the rest part of the bill and on 24.9.1994 when reminder was issued, NALCO authorities maintained silence over the matter. This aspect was also duly taken care of by the Arbitrator in his award. That apart, an argument was advanced by the learned counsel for the appellants that repudiation of the claim had been made when final bill was made. This argument does not hold good because from the facts revealed from the record, it appears that even after the final bill was made, there are communications and note-sheets from which it appears that final bill paid was not in full and final settlement and that the authorities had processed the final bill of the claimant and clarifications from the NIDC, i.e., the Consult¬ant Engineer of the project, were awaited. In this regard reference may be made to a decision of this Court in the case of State of Orissa v. B.C.Pasayat, AIR 1983 Orissa 29, wherein it was held that from the conduct of the Irriga¬tion Department, repudiation and denial of the claim asserted by the contractor could justly be inferred, and such repudiation or denial gave rise to a dispute and an arbitrator could be appoint¬ed under Section 8(2) of the Arbitration Act. In coming to the aforesaid conclusion, this Court relied upon a decision of the Calcutta High Court in Nandaram Hanutram v. Raghunath and Sons Ltd., AIR 1954 Cal. 245 , and quoted the following observations: “............ In coming to the aforesaid conclusion, this Court relied upon a decision of the Calcutta High Court in Nandaram Hanutram v. Raghunath and Sons Ltd., AIR 1954 Cal. 245 , and quoted the following observations: “............ The claim of right need not necessarily be express. It may and should justly be inferred against the defend¬ant, from his sphinx-like silence in an appropriate case......” Present is a case where arbitration clause was invoked after the NALCO authorities maintained a sphinx-like silence over the letter dated 24.9.1994 made by the claimant. The Apex Court in the case of Hindustan Construction Co. Ltd. v. Governor of Orissa, (1995) 3 SCC 8 : (1995 AIR SCW 1575), observed on the scope of interference by the Court as follows : “It is well known that the Court while considering the question whether the award should be set aside, does not examine the question as an appellate Court. While exercising the said power, the Court cannot re-appreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case the award in question could have been made. Such award can be set aside on any of the grounds specified in Section 30 of the Act.” Relying upon the aforesaid judicial pronouncement, the apex Court in the case of B.V.Radha Krishna v. Sponge Iron India Ltd., AIR 1997 SC 1324 , held thus : “Bearing in mind the principles laid down by this Court in the abovesaid case, if we look into disposal of the matter by the High Court, it would be evident that the High Court has substituted its own view in place of the Arbitrator’s view as if it was dealing with an appeal. That is exactly what is forbidden by the decision of this Court. Therefore, we have no hesitation to set aside the judgment of the High Court on this issue.” 9. Referring back to the question of limitation, it cannot be said that the claim of the claimant-respondent was barred by limitation because payment of the final bill was made on 30.3.1989. The fact remains that the claimant’s case was under consideration by the NALCO authorities and correspondence was made with the claimant to wait till decision on the subject was taken. The fact remains that the claimant’s case was under consideration by the NALCO authorities and correspondence was made with the claimant to wait till decision on the subject was taken. Right from the beginning the appellants were well aware of the fact and the movement of the files and the note-sheets are the glaring evidence to support the case of the claimant that there was an outstanding claim and the same was calculated, quantified and reflected in the note-sheets which were not disputed by the appellants before the Arbitrator. Even though a ground was taken that the appellants had replied to the letter of the claimant dated 24.9.1994, yet no evidence was led in order to prove that such repudiation of the claim was issued to the claimant. The apart, the claimant had also filed a counter-claim which was also duly entertained. The Arbitrator has also found that the counter statement was filed before him in December, 1997 which was indicative of the fact that accounts had not been finalised until December, 1997. The Arbitrator has clearly and cogently recorded a finding regarding limitation indicating that it was a continuing and recurring cause of action. The Arbitrator has given cogent reasons not only on the question of limitation but also on each item of the claims, which are not open to scru¬tiny and further appreciation by this Court as if sitting in appeal. 10. In view of the discussions made above, I am of the opinion that the ground basing upon which interference with the award passed by the Arbitrator is permissible has not been made out by the appellants. Accordingly, the impugned order passed by the learned Civil Judge (Senior Division), Angul, in M.J.C. No. 2 of 2001 is legal and justified and there is no error in the same. The misc. appeal is accordingly dismissed having no merit. There shall be no order as to costs. Appeal dismissed.