Research › Search › Judgment

Kerala High Court · body

2003 DIGILAW 136 (KER)

State of Kerala v. O. V. George

2003-02-19

K.A.ABDUL GAFOOR, K.THANKAPPAN

body2003
Judgment :- Abdul Gafoor, J. The appellant State filed petition under Sec.33 of the Arbitration Act.1940 to set aside the arbitration award. It was dismissed. The petition filed under Sections 14,17 and 29 by the Contractor was allowed. It was in the above circumstances this appeal has been filed. 2. The subject matter of the contract was construction of a building for Taluk Headquarters Hospital at Peermade. The contract was entered into between the parties for an amount of Rs.15,20,538/-. Agreement was executed on 24.10.1980 and as per the stipulations in the agreement, the work had to be completed by 26.11.1982. It has been extended thrice and work has been completed on 30.6.1987. Extension was based on three supplementary agreements specifically providing for extension of time. There was additional work also done by the Contractor as covered by two other supplementary agreements dated 23.1.1984 and 25.11.1987. The amount base on final bill was received by the Contractor on 11.12.1987. It was thereafter he issued a notice of claim on 27.1.88. He did not receive any reply. It persuaded him to approach the Arbitrator raising 16 claims altogether. 3. Though the respondent did not respond to the notice of claim directly to the contractor, when the matter was taken up before the Arbitrator apart from disputing the claims, two preliminary objections were raised with regard to the arbitrability of the matter; (1) on limitation and (2) on estoppel. 4. The Arbitrator passed on non-speaking award to the effect that preliminary objections were over ruled and claims under heads 1,2,4,6,9,10 and 13 were upheld. It is an admitted case before us that the contract between the parties provides for a non-speaking award. Therefore the award cannot be challenged merely on the reason that it is a non-speaking award. In the petition under Sec.33 a grounds was raised before the Court below that “the petitioners have specifically raised two preliminary objections before the Arbitrator regarding limitation and estoppel”. However the Arbitrator has overruled the same without assigning any reason there of. The court below also did not advert to this aspect in the judgment impugned. Therefore it is contended that the Arbitrator ought to have considered whether there had been any material to reject the preliminary objections. The decision on arbitrability affects the jurisdiction of the Arbitrator itself. However the Arbitrator has overruled the same without assigning any reason there of. The court below also did not advert to this aspect in the judgment impugned. Therefore it is contended that the Arbitrator ought to have considered whether there had been any material to reject the preliminary objections. The decision on arbitrability affects the jurisdiction of the Arbitrator itself. In such circumstances even though the agreement provides for a non-speaking award, the point of arbitrability ought to have been decided as if it give some sense, so that the person receiving the award understands how these points have been, atleast answered, if not considered. 5. On the other hand, it is contended on behalf of the contractor that the grounds raised before the court below was with reference to the absence of reasons contained in the award for rejecting the preliminary objections. There was no contention before the Court below that there was no material before the Arbitrator to come to the finding on the question of arbitrability. Therefore now the appellant cannot raise a question in the appellate court that the Arbitrator had misconducted himself or had committed a jurisdictional error in not deciding in so many words, on arbitrability, giving some conclusion on that aspects. 6. It is further contended that, there were materials before the Arbitrator that the preliminary objections were not sustainable. When materials are available on record, if the Arbitrator had not given reasons for his conclusion with regard to the question of arbitrability, award on that point cannot be stated to be faulty to invite interference by a court in a proceedings under Sec.33 or in an appeal under Sec.39. It is further contended that, even if the Arbitrator was obliged to decide on material on the point of arbitrability, when raised an preliminary issue, in all matters where non-speaking award is contemplated, the arbitrator need only indicate his mind, he need not give any reason at all. He had, as seen from item No.1 in the award indicated his mind that he had come to the conclusion that a preliminary objections have been overruled. Therefore it is no way vitiated due to misconduct or due to non-consideration of the jurisdictional aspect or by jurisdictional error as contended by the Government Pleader. He had, as seen from item No.1 in the award indicated his mind that he had come to the conclusion that a preliminary objections have been overruled. Therefore it is no way vitiated due to misconduct or due to non-consideration of the jurisdictional aspect or by jurisdictional error as contended by the Government Pleader. In support of this contention two Supreme Court decisions in Premier Fabricators, Allahabad v. Heavy Engineering Corporation Ltd. Ranchi (1997(4) SCC 319) and Tamil Nadu Electricity Board v. M/s.Bridge Funnel Constructions (AIR 1997 SC 1876) are cited. The latter specifically with regard to arbitrability which has been raised before the Arbitrator. The Arbitrator did not enter into a findings with regard to arbitrability; but rendered a non-speaking award allowing the claim to certain extent. It was in the above circumstances, the counsel contended that, the Supreme Court found that there was jurisdictional error so far as the award is concerned and the matter was remitted back to the arbitrator for consideration. There the arbitrator did not express his mind at all on the preliminary issues. In this case it is contended that in clause (1) of the arbitration award itself, the Arbitrator had come to a finding indicating his mind on the point of arbitrability raised by the appellant. 7. It is true that when the contract between the parties provides for a non-speaking award the Arbitrator has got a privilege to come to a conclusion based on the material presented to him and to reduce his conclusion in the minimum words itself without stating any reason. When he does so, if his conclusions could be supported by the materials on record and if the conclusions are possible conclusions, there arises no question of interference by a court under Sec.33 or in appeal under Sec.39 of the Arbitration Act, 1940. But before the arbitrator decides the claims in terms of the agreement between the parties as to whether either of the party is entitled for any amount from the other, the Arbitrator has to decide, if raised, the arbitrability of the claims. This is a preliminary issued to be decided before he is getting jurisdiction to decide the claims one way or other. This is a preliminary issued to be decided before he is getting jurisdiction to decide the claims one way or other. In such circumstances the Arbitrator has to indicate his mind as held by the Supreme Court in Tamil Nadu Electricity Board v. M/s.Bridge Funnel Constructions (1997 SC 1376) as to the point raised with regard to the arbitrability. That indication of the mind of the Arbitrator shall be in so many minimum words that the party who receives the award understands that he had considered the materials on record. It is in this perspective that we have to consider whether the two preliminary objections raised by the appellant had been considered, with reference to the materials available, by the Arbitrator. 8. The first objection was with reference to limitation to raise a claim. The limitation is as provided in clause 24 of the notice inviting tender which forms part of the agreement. As per the said clause claim, if any, has to be raised by the contractor within 90 days from the date of communication to the contractor that the bill has been made ready for disbursement. Admittedly no such notice had been issued. Nothing of that sort is on record. It was the duty of the appellant to provide such materials from which date of commencement of limitation can be gathered. There was nothing. In such circumstances limitation beings from the date of receipt of the bill amount; viz 11.12.1987. Such material had been provided to the arbitrator. The claim was raised on 27.1.1988, as is discernible from Ext.C28, a material record before the Arbitrator. This date is within 90 days from 11.12.1987, the date of receipt of the bill amount. In the absence of any material provided by the appellant that there was an earlier communication about the intimation of the bill to the contractor, it could not have been found that the claims were barred by limitation. Thus there was sufficient materials before the Arbitrator to come to the conclusion that the proceedings were not hit by the rule of limitation contained in clause 24 of the notice inviting tenders which forms part of the agreement. 9. Thus there was sufficient materials before the Arbitrator to come to the conclusion that the proceedings were not hit by the rule of limitation contained in clause 24 of the notice inviting tenders which forms part of the agreement. 9. Clause 23 (c) of the notice inviting tenders specifically mentioned that when bill amount have been received in full and final settlement without any objection, it will absolve the State and its Officer from any further claim to be made by the Contractor. 10. The second among the preliminary objection, as admitted before us is with regard to estoppel, in so far as the contractor did not raise any objection at the time of full and final payment of the bill amount on 11.12.1987. It is contended by the contractor that there were materials before the Arbitrator that Ext.C29 letter dated 9.12.11997 had been sent to the awarder as well as disbursing officer that he was receiving the bill amount under objection to raise his claim separately. Later when notice of claim, Ext.C28 dated 27.1.88 has been served on the appellants, there was specific reference therein about Ext.C29. It remained unanswered. That means, the State itself is estopped from raising any objection regarding the arbitrability on this count. There was no whisper, at any point of time, by the State that Ext.C27 had not been received by them. 11. The question now to be considered is whether there was any material before the arbitrator to come to the conclusion that the second objection with regard to the arbitrability could be overruled. 12. Though Ext.C29 is a copy of the letter said to be sent by contractor to the awarder as well as the disbursing officer under registered post, no materials have been produced before the Arbitrator inspite of the dispute regarding the arbitrability on that count, to show that the communication Ext.C29 was atleast complete so far as the contractor is concerned, much less it is complete so far as the Govt, is concerned on service of it. Merely for the reason that Ext.C29 had been referred to in the notice of claim, Ext.C28, it cannot be contended that there was material before the Arbitrator that Ext.C29 had been served on the State or its officers so that communication became complete, so far as they are concerned. Merely for the reason that Ext.C29 had been referred to in the notice of claim, Ext.C28, it cannot be contended that there was material before the Arbitrator that Ext.C29 had been served on the State or its officers so that communication became complete, so far as they are concerned. In other words it was incumbent on the contractor to provide some material that communication of Ext.C29 intimation had been completed on the respondent; so that the claim does not have the vice of hitting clause 23(c) mentioned above. In such circumstances if reference about C29 in C28 had been taken by the contractor as sufficient completion of communication with reference to the objection regarding the receipt of bill, necessarily that ought to have been supported by materials, to show that it had been served on the State or its Officers so that the Arbitrator can enter into a finding with reference to the rejection of the preliminary objection on the ground of estoppel. To that extent the Arbitrator has not indicated his mind in the award. Necessarily, there is no finding with regard to the preliminary objection No.2 viz estoppel. Necessarily the award has to be set aside on that ground. We do so and remand it back to the very same Arbitrator (the concerned incumbent himself) for a decision afresh on that point, even if he is retired. The file shall be immediately transferred to the court below. The parties shall appear before the court below on 25.3.2003. The court below shall transmit the files on or before 10.4.2003, to the Arbitrator. The Arbitrator shall render a decision within three months thereafter. Appeal is remanded. No order as to costs.