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2005 DIGILAW 917 (RAJ)

Sohan Lal v. Rajasthan Housing Board

2005-03-28

N.P.GUPTA

body2005
Judgment N.P. Gupta, J.-These ten appeals arise under common circumstances and involve common questions, and are, therefore, being disposed of by this common order. 2. Appeals No. 171/1999, 172/1999, 772/2003 and 3/2005, have been filed by both the parties against the same order. Likewise, Appeals No. 173/1999, 5/2005, 174/1999 and 768/2003 and 175/1999 and 4/2005 have been filed by both the parties against the same order. 3. The learned District Judge has decided three cases, being No. 138,139 and 140 of 1997 by a common order which is subject matter of challenge in Appeals No. 173/1999, 174/1999 and 175/1999 and corresponding Appeals No. 5/2005, 768/2003 and 4/2005 respectively. Likewise, case No. 86 and 87 of 1997 have been decided by another common order, which is subject matter of challenge in remaining four Appeals Being No. 171/1999, 172/1999, 3/2005 and 772/2003 respectively. 4. It may be observed, that initially the appeals were filed by the Rajasthan Housing Board (hereinafter referred to as the Board), against the orders, and thereafter, Sohal Lal (hereinafter referred to as the contractor) filed cross objections. Thereupon on objection being raised about the maintainability of the cross objections, an application was filed by the contractor under Section 151, CPC, read with Section 39 of the Arbitration Act, 1940, praying that the cross objections may be treated as appeal under Section 39. This request was not opposed, and therefore, vide separate orders, cross objections were directed to be treated as appeals. Then the Registry reported the appeals of the contractor to be barred by time, and an application under Section 5, Limitation Act was filed, notice whereof was issued, and then vide separate orders, the delay in filing the appeals was condoned. 5. In the appeals of the Board, vide orders dated 22.03.1999, show cause notices were ordered to be issued for final disposal at admission stage, and interim orders were passed; while the appeals of the contractor have also not been admitted so far. The matters were listed before me, and time was sought by the parties for amicable settlement, but then the things could not materialise, and therefore, on 22.02.2005 it was directed that the matters shall be heard on merits. Accordingly, on 14.03.2005 the matters were heard, and at the request of the learned Counsel for the parties, they are being finally disposed of . 6. Accordingly, on 14.03.2005 the matters were heard, and at the request of the learned Counsel for the parties, they are being finally disposed of . 6. Since, the controversy raised by either of the parties is common, and does not involve any separate question of facts, therefore, for deciding these appeals I take the facts of Case No. 139/1997 of the learned trial Court. 7. The factual matrix is, that the contractor was granted various contracts, and in relation to the payments thereof disputes arose between the parties. Since, the contracts contained arbitration clause, therefore, steps were taken for getting the matter referred to the arbitrator. Accordingly, arbitrator was appointed in respect of each of the contracts, and the arbitrator, after entering into the reference passed different awards, finding the contractor to be entitled to different amounts for various items. Since in these appeals before me all those things are not in dispute, I need not detain myself by going into the details thereof . The relevant part of the award is, that the arbitrator awarded interest, on the amount, which the contractor was found entitled to in each case from the date when the amount was required to be paid to the contractor, after expiry of the stipulated period in the contract, uptill the date of the contractor initiating proceedings for appointment of arbitrator. Depending upon the amounts, to which the contractor was found entitled to, different amounts of interest was awarded in different awards. 8. After passing of the award, it was sought to be made the rule of the Court. Thereupon, both the parties submitted their objections, inasmuch as, the contractor prayed, that the arbitrator has awarded interest only till the date of initiation of proceedings under Arbitration Act, while in view of the provisions of Section 34 CPC, the contractor is entitled to interest pendente lite, and future also. On the other hand, the Board submitted its objections, raising various objections to the contractors entitlement to various amounts, to which the arbitrator found the contractor entitled. On the other hand, the Board submitted its objections, raising various objections to the contractors entitlement to various amounts, to which the arbitrator found the contractor entitled. However, after filing of these objections, and counter objections, the matter went on for arguments, and the learned trial Court in its Judgment , deciding Cases No. 138, 139 and 140 of 1997 held , that the award cannot be interfered with unless it is assailed on any of the grounds enumerated in Section 30 and, therefore, the objections filed by the Board were rejected, and at the same time directed, the interest to be payable from the date of award till realisation. While in Cases No. 86 and 87, vide impugned order, the learned trial Court held, that the objections filed by the Board cannot be accepted firstly, because the objections are about the merits of the findings, and not on any of the grounds enumerated in Section 30 of the Arbitration Act, at the same time it was also found, that the objections submitted by the Board are time barred. In the result, the objections of the Board were rejected, and in both these cases also, while making the award rule of the Court, the contractor was held entitled to interest from the date of award till realisation. Thus, in all the five cases, the learned trial Court, while making the award rule of the Court, has not specifically considered the objections of the contractor, and has directed the objections of the Board to be rejected, and also directed the interest to be payable from the date of the award. 9. Assailing these orders, the contractor has filed the appeals, contending that the contractor was entitled to interest pendente lite also. On the other hand, the Board has filed the appeals, contending that when the Court has not modified the award, it had no jurisdiction to direct the interest to be payable from the date of the award, and the award was required to be made rule of the Court as such, or in any case even if the Court felt inclined to award interest, then at best, it could be ordered to be awarded from the date of the order, when the award was made rule of the Court, and not from any date anterior to it. 10. 10. Thus, the precise controversy, required to be decided by me in these two sets of appeals is, as to whether the learned trial Court should have directed the award of interest pendente lite and future also, or it could at best direct award of interest, only from the date of the order directing the award to be made rule of the Court. In the event of my coming to the conclusion in favour of the first proposition, then the appeals of the contractor would succeed, and the appeals of the Board would fail, while on the other hand, if I were to come to the conclusion in favour of the second proposition then the appeals of the contractor would fail, and the appeals for the Board would succeed. Thus, I am required to consider the aforesaid legal question. 11. At the opening of the arguments, the learned Counsel for the Board raised is preliminary objection, to the effect, that the appeals filed by the contractor are not maintainable, in view of the language of Section 39 of the Arbitration Act, inasmuch as, in substance the grievance of the contractor is, that the learned trial Court declined to modify the award, which order is not appealable under Section 39, as under Section 39 the appeal lies only against the following orders: "39. Appealable orders:-(1) An appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order:- .(i) superseding an arbitration; .(ii) on an award stated in the form of a special case; (iii) modifying or correcting an award; (iv) filing or refusing to file an arbitration agreement; (v) staying or refusing to stay legal proceedings where there is an arbitration agreement. .(vi) setting aside or refusing to set aside an award" and since the order declining to modify the award is not one of them, the appeal is not maintainable. .(vi) setting aside or refusing to set aside an award" and since the order declining to modify the award is not one of them, the appeal is not maintainable. To this preliminary objection the learned Counsel for the contractor, on the authority of the Judgment of Honble Supreme Court in Shyam Sunder vs. Union of India, reported in 1996 .(2) SCC132, submitted that even if the appeal does not lie under Section 39, or is even barred, on the face of Sections 39,40,41,and 47 that will not take away the revisional jurisdiction of the High Court, as the Act does not contain any express bar against the exercise of revisional powers by the High Court and, therefore, this Court should be pleased to treat the appeals as revisions, as the limitation for either of the remedies is same, and the Court fee paid is also not deficit, and interference be made in favour of the contractor. 12. I have considered the submission and find, that without going into the question as to whether the appeal is maintainable or not, since in view of the Judgment of Honble Supreme Court in Shyam Sunders case even if the appeal is not maintainable under Section 39, revisional jurisdiction can be exercised by this Court, therefore, the preliminary objection raised by the learned Counsel for the Board need not detain me any more. 13. Arguing the appeals, the learned Counsel for the Board contended, that though the contractor submitted objections before the learned trial Court, claiming interest pedente lite and future, but then, those objections were not pressed. Not only this, after passing of the impugned orders, the contractor did not file appeal, and only filed cross objections, which shows, that the contractor is not serious about the claim sought to be made; in this regard, relying upon the Judgment of the Honble Supreme Court in Paradip Port Trust & Ors., vs. Unique Builders, reported in 2001 WLC (SC) 196, it was contended, that in para 18 thereof , while dismissing one appeal and allowing the other, it was held, that only award of future interest is justified. Then, on the authority of the Judgment of this Court, in Ram Singh vs. Ram Singh, reported in AIR 1985 Raj. Then, on the authority of the Judgment of this Court, in Ram Singh vs. Ram Singh, reported in AIR 1985 Raj. 148 , it was contended, that Section 29 of the Arbitration Act does not grant power to the Court, as is conferred by Section 34, CPC, and the Court can grant interest only from the date of decree, at such rate as the Court deems reasonable. It was pointed out, that it has been held in this Judgment , that Section 41 deals with the procedure and powers of the Court, and if provisions of Sections 29 and 41 are read together, the inevitable conclusion is, that Section 34 CPC, cannot be applied to a case of award brought before the Court, and Section 29 does not confer any power on the Court to award interest prior to the date of the decree. For the same proposition reliance was also placed on the Judgment of this Court in Banwari Lal vs. Om Prakash, reported in 1986 RLR 982. Some Judgment s of other High Courts were also referred to, in support of the above proposition. Then a Judgment of the Honble Supreme Court, in M/s. Jagdish Rai and Bros. vs. Union of India, reported in AIR 1999 SC 1258 , was also referred, to contend, that therein also the Honble Supreme Court modified the decree of the Sub-Judge, and directed for payment of interest from the date when the award was made the decree of the Court of Sub-Judge till realisation. 14. On the other hand, the learned Counsel for the contractor, on the authority of a Constitutional Bench Judgment of the Honble Supreme Court, in The Secretary, Irrigation Department, Government of Orissa vs. G.C. Roy, reported in 1992 (1) SCC 508 , contended that overruling the previous Judgment in Executive Engineer, Irrigation, Galimala & Ors., vs. Abnaduta Jena, reported in AIR 1988 SC 1520 , Honble Supreme Court has held, that even in a case where the agreement between the parties is silent as to award of interest, 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, or compensation, or damages. This basic consideration is followed for the period the dispute is pending before the arbitrator, as it is for the period prior to the arbitrator entering upon the reference. It was held, that this is the principle of Section 34, CPC, and there is no reason, or principle, to hold otherwise, in the case of arbitrator. It was also held, that if the arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the Court for that purpose, even though he may have obtained satisfaction in respect of other claims from the arbitrator, which would lead multiplicity of proceedings. It was then held, that the interest pendente lite is not a matter of substantive law like interest for a period anterior to reference, for doing complete justice between the parties as such power has always been inferred. Then, reliance was also placed on the Judgment in Jagdish Rais case (Supra), to contend, that according to the Honble Supreme Court, there are four stages of grant of interest, i.e. Firstly, from the stage of accrual of cause of action till filing of the arbitration proceedings, secondly, during pendency of the proceedings before arbitrator, thirdly, future interest arising between date of award and date of decree; and fourthly, interest arising from date of decree till realisation of a award, and that the award of interest under Section 34, CPC, is a matter of procedure, and ought to be granted in all cases where there is a decree for money unless there are strong reasons to decline the same. It was pointed out, that in that case the contractor did not file appeal against the order of the Sub-Judge, who made the award rule of the Court, but did not grant any interest. Even then, it was held that there is no impediment to grant the same by bringing the decree of the subordinate Court in conformity with law, namely, by awarding appropriate interest. 15. I have considered the submissions, and have gone through various Judgment s, cited at the Bar. 16. To start with, so far the Judgment s cited by the learned Counsel for the Board, being those in Ram Singh and Banwari Lals cases are concerned, they are very old Judgment s, and are based on the earlier Judgment of the Bombay High Court in S.N. Srikantia & Co. 16. To start with, so far the Judgment s cited by the learned Counsel for the Board, being those in Ram Singh and Banwari Lals cases are concerned, they are very old Judgment s, and are based on the earlier Judgment of the Bombay High Court in S.N. Srikantia & Co. vs. Union of India & Anr., reported in AIR 1967 Bombay 347, and take the view, that the Court has no power to award interest pendente lite, as Section 34, CPC, does not apply, and Section 29 of the Act does not confer any such power. With all respect and humility at my command, on the face of the subsequent Judgment s of Honble Supreme Court, being in G.C. Roys case, and even in Jagdish Rais case, the reasonings given by this Court, in Ram Singh and Banwari Lals cases, cannot be said to be any more good law. 17. Before going to any other Judgment , I feel better advised to straightway refer to, any reply upon, the Constitutional Bench Judgment of Honble Supreme Court in G.C. Roys case. In this Judgment , the Honble Supreme Court, in no less categoric terms, overruled the previous Judgment in Abnaduta Jenas case, and propounded the basic principle of Section 34, CPC, upheld the rights of the person deprived of the money to which he is entitled, to be compensated for the deprivation, may be called by whatever name, and held, that there is no reason or principle to hold otherwise in case of arbitrator. Then in para 44, it was clearly held, that where agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute is referred to arbitrator, the arbitrator shall have power to award interest pendente lite, as in such case, it must be presumed that interest was an implied term of agreement between the parties. Then I may refer to previous Judgment of Honble Supreme Court, in Gujarat Water Supply and Sewerage Board vs. Unique Erectors (Gujarat) Pvt. Ltd. and Anr., reported in AIR 1989 SC 973 , wherein also the Honble Supreme Court recognised the power of the Court to direct award of interest from the date of award till the date of decree. Then I may refer to previous Judgment of Honble Supreme Court, in Gujarat Water Supply and Sewerage Board vs. Unique Erectors (Gujarat) Pvt. Ltd. and Anr., reported in AIR 1989 SC 973 , wherein also the Honble Supreme Court recognised the power of the Court to direct award of interest from the date of award till the date of decree. To say the least, this Judgment in Gujarat Water Supplys case is sufficient to uphold the impugned order, so far as the appeals of the Board are concerned. Then, even in Unique Builders case (Supra) also, the Honble Supreme Court had upheld the power of the arbitrator to award interest pendente lite. Some dates of that case make it more convenient to understand the propositions propounded in that case. In that case the award of arbitrator was passed on 01.06.1985 holding the Company to be entitled to receive the amount with interest from 28.09.1992 (sic. 28.09.1982). The Sub-Judge upheld the objections and set aside the award. The company filed appeal before the High Court which was allowed, and the award was made rule of the Court subject to the modification of the award of interest as indicated in the order of the High Court, against which Appeal No. 4144 was filed before the Honble Supreme Court, to the extent it denied the interest, while Appeal No. 3683 was filed challenging the award. In this back ground after laying down the scope of interference in the award, in para 18 the Honble Supreme Court upheld the power of the arbitrator to award interest pendente lite, and noticed, that the High Court denied the interest on the ground that there was no claim for interest pendente lite before it, nor any argument was advanced in that behalf . Therefore, denial of interest pendente lite before High Court was not upset. But then the future interest was upheld and the award of interest for the period 28.09.1982 to 10.01.1985 was also upheld, on the ground that 28.09.1982 was the date when the Trust repudiated the contract and forfeited deposit made by the Company. The arbitrator had entered into the reference on 10.01.1985. Likewise, even in Jagdish Rais case also, question was gone into in detail, about the applicability and scope of Section 29 of the Act and so also 34, CPC. The arbitrator had entered into the reference on 10.01.1985. Likewise, even in Jagdish Rais case also, question was gone into in detail, about the applicability and scope of Section 29 of the Act and so also 34, CPC. What is significant to note in this case is, that the contractor had not laid any claim for interest before the Court of Sub-Judge, when the proceedings, were pending for making the award rule of the Court, and when the appeal was pending before the High Court, an application was made for grant of interest, which was rejected, on the ground, that such claim was not made before Sub-Judge, and when interim relief was granted to make payment to the extent of 50% which could be withdrawn on security, and having withdrawn the money, the appellant would not be entitled to interest. It is in this factual matrix, that Honble Supreme Court in para 2 held as under : "There are four stages of grant of interest. Firstly, from the stage of accrual of cause of action till filing of the arbitration proceedings; Secondly, during pendency of the proceedings before arbitrator; thirdly, future interest arising between date of award and date of decree; and fourthly, interest arising from date of decree till realisation of award." 18. Then, in para 3, it was held, that not having made the claim for interest before the Court would disentitle to make such a claim during the first three stages, of pre-arbitration, and post-arbitration, but then it was noticed, that the Courts have taken a view, that award of interest under Section 34, CPC, is a matter of procedure and ought to be granted in all cases when there is a decree for money unless there are strong reasons for declining the same. Then it was noticed, that in the case in hand, the appellant had made a claim for interest before the arbitrator, and the same had been denied, and no reasons are forthcoming thereof . Then it was noticed, that in the case in hand, the appellant had made a claim for interest before the arbitrator, and the same had been denied, and no reasons are forthcoming thereof . Thereafter, in para 4 it was also observed, that the Court is conscious of the fact that appellant had not preferred any appeal against the order made by the Sub-Judge, who made the award rule of the Court but did not grant any interest, even so, the grant of interest being a matter of procedure, and the appellant therein also having moved the application before the High Court in that regard, the Honble Supreme Court did not think there to be any impediment to grant the same by bringing the decree of the Subordinate Court in conformity with law, namely, by awarding appropriate interest. As against this, present is a case where the contractor had specifically raised the objection before the learned trial Court, claiming to be entitled to be awarded interest pendente lite arbitration, and has filed the present appeals as well, I may then refer to a latter Judgment of the Honble Supreme Court in T.P. George vs. State of Kerala, reported in 2001 DNJ SC 100, wherein the Honble Supreme Court was examining the question, as to whether the High Court was right in setting aside the award of interest from the date of award, and relying upon Jagdish Rais Judgment the four stages were reiterated, then power of the arbitrator to award interest was reitereated, by referring to a Judgment in Hindustan Construction Co. Ltd. vs. State of Jammu & Kashmir, reported in AIR 1992 SC 2192 , and G.C. Roys case, and a later Judgment in Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa vs. N.C. Budhraj, reported in JT 2001 (1) SC 486, about the arbitrators power to award interest for pre-reference period, and held, that as per law laid down by this Court (Honble Supreme Court), interest can be awarded at all the four stages, and a direction to pay interest from the date of award was also upheld. This Judgment in T.P. Georges case, read with the Judgment referred to in para 10 of that Judgment , in my view, clearly convey the definite philosophy of Section 34, CPC, to the effect, that a person deprived of the use of money, to which he is legitimately entitled, has a right of compensation for deprivation, under whatever nomenclature i.e. whether interest, compensation or damages; and is not to be deprived of this compensation in absence of strong reasons therefor. 19. In the present case, even a look at the award does show that the arbitrator has found the contractor entitled to interest for the pre-reference period, which award of interest is not challenged before me. Admittedly, no reasons are given by the arbitrator, or even the learned trial Court, to deny grant of interest to the contractor for the period pendente lite arbitration, and the contractor has clearly claimed this right to get interest, by way of raising objections against the award, and the learned trial Court has not even chosen to deal with that part of the objections. This does show, that there is no reason, or even logic, much less any ground, to deprive the contractor of the interest, for the period pendente lite arbitration. I have not been able to persuade myself to agree with the submissions of the learned Counsel for the Board, that the contractor did not press his claim of award of interest pendente lite arbitration. There is no material whatever, available on record, where from this could be so inferred, rather on the other hand it is clearly from the record that the contractor was represented before the learned trial Court by an advocate, and in the opening para of the Judgment , the contention of the Board was specifically noticed, that the delay in making payment to the contractor occurs in the Government department, because the funds are to be obtained from the head office. Noticing this contention, in my view, does clearly indicate that the claim for interest was seriously pressed, and the submissions made on behalf of the contractor, in this regard, were sought to be contested on the side of the Board. Notwithstanding this, no findings have been given by the learned Judge in the impugned orders, Thus it cannot be said that the claim was not pressed. Notwithstanding this, no findings have been given by the learned Judge in the impugned orders, Thus it cannot be said that the claim was not pressed. So far the other limb of the argument of the learned Counsel for the respondent, about the contractor not filing appeal is concerned, suffice it to say, that the contractor had filed cross objections, and I have not been shown any law, to the effect, that by mere filing of cross objections, and not filing any appeal, as such, tantamounts to any mental frame of the litigant to give up the claim. It is a different story, that with the consent of the learned Counsel for the Board, the cross objections of the contractor were treated to be appeals, and after hearing Counsel for the Board the delay in filing the appeal were also condoned. The obvious result is, that there are very much appeals of the contractor. 20. The net result of the aforesaid discussion is that I have no option but to accept the appeals of the contractor, may be by alternatively treating them as revisions, and to dismiss the appeals of the Board. 21. Accordingly, the appeals of the Board are dismissed, and the appeals of the contractor are allowed. The impugned orders of the learned trial Court are modified, in the manner, that the contractor shall be entitled to interest pendente lite arbitration proceedings, at the same rate at which it has been awarded by the learned trial Court, from the date of award till realisation, and this entitlement of interest shall be on the principal amount of award i.e., the amount of award awarded by the artibrator, excluding the element of interest included therein. 22. The parties shall bear their own costs of these appeals.