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2011 DIGILAW 519 (CAL)

UNION OF INDIA v. Premier Engineering Corporation

2011-04-08

I.P.MUKERJI

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Judgment I.P. Mukerji, J. 1. UNION of India made an application being G.A. No. 1551 of 1997. It was taken out sometime in April, 1997. They wanted setting aside of a judgment and decree dated 26th March, 1997 in Award case No. 7 of 1997. 2. THE award was for Rs.94,893/-. It was made and published on 18th October, 1995. The ground on which this application was taken out is that the notice under section 14(2) of the Arbitration Act, 1940 was not received by the petitioner. Hence, there could not be any judgment upon award, unless they received the notice and were given an opportunity under the Arbitration Act, 1940 to make an application to it set aside. 3. WHEN this application appeared before me on 16th September, 2010, I observed that if the application succeeded then a fresh section 14(2) notice had to be issued. The Union of India would thereafter have the right to file a setting aside application. The award could only be realized after dismissal of that setting aside application. In my opinion, to permit such an exercise, when the award was made on 18th October, 1995 would be unjust. 4. THEREFORE, by that order I treated this application as an application to set aside the award. I gave an opportunity to the Union of India to file a supplementary affidavit to bring forth any grounds that they would like to urge to set aside the award so that the challenge to the award may be made complete. Such supplementary affidavit affirmed on 1st December, 2010 has been filed by them. 5. BY the award dated 18th October, 1995 it appears that the arbitrator considered numerous claims, rejected many and granted sundry awards for the rest. 6. IT appears that the only substantial award was for claim No. 55 where Rs.1,80,000/- was claimed and which was awarded to the extent of Rs.43,250/-. I have gone through the award of the learned Arbitrator. The contract was of 1989. The petitioner was to construct a transmission building for All India Radio at Amtala. This contract was terminated by the Union of India on 10th October, 1989. 7. MR. Partha Sarathi Bose, learned Senior Advocate, appearing for the Union of India argued against awards being made for claim Nos. 1, 2, 6, 45 and 55. 8. The petitioner was to construct a transmission building for All India Radio at Amtala. This contract was terminated by the Union of India on 10th October, 1989. 7. MR. Partha Sarathi Bose, learned Senior Advocate, appearing for the Union of India argued against awards being made for claim Nos. 1, 2, 6, 45 and 55. 8. ACCORDING to the supplementary affidavit filed by the Union of India the awarded claims were unacceptable to them. But, this affidavit does not show as to how the award is illegal or improper. It should be remembered that this award is under the Arbitration Act, 1940. Under the old act, the Arbitrator was not obliged to give reasons for the award, unless the agreement specifically required him to do so. But, I find that the learned Arbitrator has given reasons for each and every claim that he has awarded. 9. I will deal with the reasons given by the learned Arbitrator for the heads of Award which were actively challenged before me. 10. THE claim in claim No. 1 was the cost of dewatering the pits for Rs.7,200. THE reason for making such claim was unprecedented rain fall which was not contemplated by the contractor respondent at the time of award of the contract. THE learned Arbitrator has granted the cost of such dewatering for a particular period, that is, 13th July, 1988 to 28th July, 1988, that is for sixteen days at Rs.200/- per day aggregating to Rs.3,200/-. He relies upon the records of heavy rain and flooding and awards that amount. I find no infirmity in that award. The reason for making claim No. 2 for idle labour of 106 days, aggregating to Rs.19,610/- was that an underground electric cable had to be removed. The need for such removal was not indicated to the contractor respondent at the time of execution of the contract. For such removal the contractor's labourers remained idle for 106 days. The learned Arbitrator has specifically held that work in the "H.E. room was partially still and affected". He allowed such claim for the period 21st August, 1988 to 4th October, 1988 (45days) for one mason and two mancollies @ Rs.60/- and Rs.50A, respectively aggregating to Rs.110/- per day. The awarded sum for 45 days was Rs.4950/-. The reasons, in my opinion are adequate and the award is also commensurate with such finding. He allowed such claim for the period 21st August, 1988 to 4th October, 1988 (45days) for one mason and two mancollies @ Rs.60/- and Rs.50A, respectively aggregating to Rs.110/- per day. The awarded sum for 45 days was Rs.4950/-. The reasons, in my opinion are adequate and the award is also commensurate with such finding. I find no reason to interfere with that award. 11. CLAIM No. 6 was a claim for Rs.25,300/- for idle labour for the period 1st December, 1989 to 15th January, 1990. The case of the claimant was that they were asked to do some work after termination of the contract. The learned Arbitrator has come to a finding that only part of the period can be justified. In my opinion, such reasons are adequate as he has come to that finding after referring to records like gate passes and so on. Hence, I find no infirmity in that award. 12. IN claim No. 45, the respondents claimed refund of Rs.9,129/-, as according to them no materials of that value were supplied. Such amount appears to have been deducted. The learned Arbitrator found that measurement was done and thereafter, payment was made. So the claim was untenable. This reason, in my opinion, is adequate. I am not at all satisfied with the award for claim No. 55. It appears that according to the claimant respondent their tools, appliances, equipments and other materials were not allowed to be removed by the petitioner and that is why they suffered loss in value. In the award, there is no discussion as to who was in custody of these goods, and for what period whose responsibility it was to remove them, and so on. There is no assessment of their value before and after the alleged depreciation. There is also no finding as to whether these goods were lost or handed over to the respondent. Therefore, this particular award has to be set aside. 13. I have gone through the other heads of award. There is adequate justification for them. Hence, there is no infirmity in those parts of the award. 14. THEREFORE, the award is modified as follows:- Awarded amount : Rs.94,893/- Amount disallowed : Rs.43,250/- Net award : Rs.51,643/- The judgment upon award dated 26th March, 1997 is formally set aside. This application is partly allowed. 15. There is adequate justification for them. Hence, there is no infirmity in those parts of the award. 14. THEREFORE, the award is modified as follows:- Awarded amount : Rs.94,893/- Amount disallowed : Rs.43,250/- Net award : Rs.51,643/- The judgment upon award dated 26th March, 1997 is formally set aside. This application is partly allowed. 15. I order judgment and decree in terms of the award as modified above. 16. FURTHERMORE, I find that no interest has been granted in the award. I am of the opinion that interest ought to have been granted. Though it was not argued before me, the Court has the power to grant interest, when the justice of the case so demands. According to me, 8% simple interest on the said net awarded sum from the date of the award till the date of this judgment and decree will sub serve the ends of justice. There will also be further simple interest @ Rs.10% per annum on the award from the date of the decree till payment. Another justification for granting interest on the award is that the respondent obtained the judgment upon award on 26th March, 1997 by which they were entitled to interest on judgment. That judgment had to be set aside today and replaced by the present judgment. Let the decree in terms of this judgment drawn up expeditiously. 17. URGENT certified photocopy of this judgment and order, if applied for, to be provided upon complying with all formalities. N.M.R.