Geol Bitumens India v. Jaipur Development Authority
2007-02-02
R.S.CHAUHAN
body2007
DigiLaw.ai
JUDGMENT 1. - The appellant is challenging the judgment and decree dated 22.7.1992 passed by the District Judge, Jaipur City, Jaipur whereby the learned Judge has modified the award dated 31.12.1991 passed by the Sole Arbitrator. 2. The brief facts of the case are that the Jaipur Development Authority, Jaipur (henceforth to be referred to as 'the J.D.A.', for short) had given the work contract for the construction of a commercial complex at Raja Park, s Jaipur vide order dated 1.8.1986 to the appellant (henceforth to be referred to as the claimant', for short). According to the said work order, the work was to commence on 10.8.1986 and was to be completed by 9.2.1988. However, for the reasons beyond the control of the claimant, the work could not be completed till 10.10.1988. But nonetheless the work was completed to the satisfaction of the J.D.A. Although, the work was completed to the satisfaction of the J.D.A., certain disputes arose between the J.D.A. and the claimant. Therefore, Mr. S.S. Dungar, Additional Chief Engineer, P.W.D. Department, Rajasthan was appointed as the learned Sole Arbitrator by the District Judge, Jaipur City, Jaipur vide its order dated 13.8.1981. The claimant filed his claim petition on 29.9.1991 before the said learned Arbitrator, the J.D.A. filed its reply and the claimant filed its rejoinder. After going, through the pleadings of both the parties, the learned Arbitrator framed as many as five issues. After going through the entire evidence, vide award dated 31.12.1991, the learned Sole Arbitrator passed an award of Rs. 6,24,546/- along with an interest @ 13% per annum w.e.f. 18.5.1989 to 9.9.1991 as the interest for pre-reference period calculated at Rs. 1,87,641/-, further interest @13% per annum from 9.9.1991 to 31.12.1991 as the interest pendente lite calculated at Rs. 6,24,5461-. Thus, a total award of Rs. 8,37,545.28 was passed in favour of the claimant. Subsequently, the claimant filed an 25 application before the District Judge, Jaipur City, Jaipur for making the award a rule of the . The J.D.A. also submitted its objections to the said award. After hearing both the parties, vide order dated 22.7.1992, the learned Judge modified the award by disallowing the pre-reference and the post-award interest and also by reducing the amount of compensation paid under claim No. 2, which relates to the escalation of the prices. The compensation award amount was reduced from Rs. 8,37,545.28 to Rs. 5,64,165.73.
After hearing both the parties, vide order dated 22.7.1992, the learned Judge modified the award by disallowing the pre-reference and the post-award interest and also by reducing the amount of compensation paid under claim No. 2, which relates to the escalation of the prices. The compensation award amount was reduced from Rs. 8,37,545.28 to Rs. 5,64,165.73. Hence, this appeal before this . 3. Mr. Deepak Asopa, the learned counsel for the appellant, has vehemently argued that the scope of judicial review of an award is extremely 35 limited. Therefore, while reducing the compensation amount under claim No. 2, the learned Judge has overstepped his jurisdiction. For, it is a settled position in law that the Arbitrator is appointed by the parties. Therefore, he is a Judge appointed by the parties. Hence, the parties are bound by his award. Moreover, the interpretation of a document is the sole territory of the Arbitrator. Even if two views are possible, the cannot interfere with the award dated 31.12.1991. Therefore, once the escalation of the price was interpreted in terms of Clause 45 of the Contract by the learned Sole Arbitrator, the could not have substituted its interpretation in place of learned Sole Arbitrator. Secondly, that according to the Hon'ble Supreme in the case of Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa v. N.C. Budharaj and others, (2001) 2 SCC 721 , the Sole Arbitrator has the power to award interest for the pre-reference, pendente lite period and the post-award period. Once the power was exercised by the learned Sole Arbitrator, the learned Judge was not justified in depriving the claimant of the interest of pre-reference and the so post award period. 4. On the other hand, Mr. J.L. Sharma, the learned counsel for the respondent-J.D.A., has strenuously argued that in case a clause is mis-interpreted by the learned Sole Arbitrator, the learned Judge has ample power to re-interprete the clause. But the learned counsel has fairly conceded that according to the Constitutional Bench decision in N.C. Budharaj and others (supra), the Hon'ble Apex had certainly held that in a case there is no prohibition contained in the agreement with regard to the payment of interest, then the Sole Arbitrator does have ample power to award the interest of the pre-reference and post-award period.
He has also to fairly conceded that in the agreement entered into between the claimant and the J.D.A., there is no such prohibition. 5. We have heard the learned counsels for the parties and have perused the impugned judgment. 6. The scope and ambit of judicial review over an award passed by an arbitrator and over an order passed by the District Judge under Section of the Act are now well settled. The arbitrator is a Judge appointed by both the parties after reaching a consensus, or he is appointed by a under the provisions of the Act. Since the Arbitrator is a Judge appointed by the parties, the parties are bound by his decision even if the award is wrong either on law or on facts. Even an error of law on the face of the award cannot nullify the award. Thus, his decision is final unless the reasons given by him are totally perverse or the award is based on wrong proposition of law. But once it is found that the view of the Arbitrator is a plausible one, the cannot reverse it by interfering with the award. Moreover, the interpretation of a contract is a matter solely within the purview of the arbitrator to determine. Therefore, the should be very weary of interpretating the contract. Similarly, the s are precluded from reappraising the evidence produced before the arbitrator. The does not sit in an appeal over the verdict of an arbitrator by re-examining and reappraising the materials placed before him. In case two views are possible, the is not justified in interfering with the award by adopting its own interpretation. Even it could be proved that the arbitrator has committed some mistake for arriving at his conclusion, such a proof would not invalidate the award. Moreover, it is not a misconduct on the part of the arbitrator to give a reasoned decision, where his error is one of the factor of law. Furthermore, even if there is an error of construction of the agreement by the arbitrator, the same is not amenable to correction. Lastly, the reasonableness of an award is not a matter for the to consider unless the award is preposterous or absurd.
Furthermore, even if there is an error of construction of the agreement by the arbitrator, the same is not amenable to correction. Lastly, the reasonableness of an award is not a matter for the to consider unless the award is preposterous or absurd. (Refer to Maharashtra State Electricity Board v. Sterlite Industries (India) & Anr., 2001(8) SCC 482 , Bharat Coking Coal Ltd. v. L.K. Ahua, 2001(2) WLC (SC) Civil 400 : 2004 (5) SCC 109 , Rajasthan State Electricity Board v. M/s. Gammon India Ltd., (1998 DNJ (Raj.) 680 , lndu Engineering & Textiles Ltd. v. Delhi Development Authority, AIR 2001 SC 2668 , State of U.P. v. Allied Constructions, 2003(2) WLC (SC) Civil 568 : 2003(7) SCC 396 , Rajasthan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises, 1999 (9) SCC 283 and D.D. Sharma v. Union of India, 2004 (5) SCC 325 . Thus the power of this to interfere with an award is, indeed, very limited. 7. A bare perusal of the award passed by the learned Sole Arbitrator 50 clearly reveals that he had interpreted Clause in great detail. He has not only taken a note of the rival contention, but has given cogent reasons for granting a compensation amount of Rs. 2,67,3731- in favour of the appellant. Similarly, he has given cogent reasons while discussing the claim No. 2, which also relates to Clause of the contract agreement. For claim No. 2, he had granted a total of Rs. 3,57,173/-. Since cogent reasons have been stated by the Sole Arbitrator, the learned Judge was not justified in modifying 5 the award with regard to the claim Nos. 1 and 2. The interpretation of a contract is within the purview of the Sole Arbitrator. In catena of case, the Hon'ble Supreme has held that even if a contract has been interpreted erroneously, still the could not have substituted its interpretation in place of the learned Sole Arbitrator. Hence, the learned Judge was not 10 justified in modifying the award to this extent. 8. In case of N.C. Budharaj and others (supra), the Constitution Bench of the Hon'ble Apex has clearly held that in case there is no bar in the contract for the payment of interest, the Sole Arbitrator has ample power to grant interest for the pre-reference, pendente lite and post-award period.
8. In case of N.C. Budharaj and others (supra), the Constitution Bench of the Hon'ble Apex has clearly held that in case there is no bar in the contract for the payment of interest, the Sole Arbitrator has ample power to grant interest for the pre-reference, pendente lite and post-award period. A bare perusal of the award clearly shows that the learned Sole Arbitrator had granted the interest for the said three periods after considering the evidence on record and after applying his mind. Therefore, the learned Judge was not justified in disturbing the said finding. 9. In the result, this appeal is allowed and the impugned judgment 20 dated 22.7.1992 passed by the learned below is quashed and set aside and the award dated 31.12.1991 passed by the learned Sole Arbitrator is, hereby, confirmed.Appeal Allowed-Award Restored. *******