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Rajasthan High Court · body

2013 DIGILAW 2042 (RAJ)

Union of India v. Jitendra Kumar Sharma

2013-11-19

BELA M.TRIVEDI

body2013
Hon'ble TRIVEDI, J.—Both the appeals, one filed by the appellant-Union of India and the other filed by the respondent-claimant Shri Jitendra Kumar Sharma, arise out of the same order dated 15.12.1998 passed by the Additional District Judge, Jaipur City, Jaipur (hereinafter referred to as “the court below”) in Civil Misc. Petition (Arbitration) No.156/1994, whereby the court below has made the award dated 16.05.1994 passed by the sole Arbitrator Shri Shiv Kumar Garg, the Rule of the court. 2. In the instant case, it appears that the respondent-claimant was awarded a contract pursuant to the tender notice dated 28.09.1989 for the work styled as “REWARI-FL Section – complete track renewal from KM 148 to KM 163 of existing 60 R Rails track with 90 R Rails and CST/9 sleepers, etc., vide the Acceptance letter dated 10.04.1990. Since the some disputes had arisen in the execution of the said work and the payments to be made to the respondent-claimant, an application was made by the respondent-claimant seeking appointment of Arbitrator under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as “the said Act”). The court below vide the order dated 20.09.1993 had appointed Shri Shiv Kumar Garg, Advocate as the sole Arbitrator to resolve the said disputes between the parties. The said Arbitrator made the award dated 16.05.1994, by observing as under:- “I have thoroughly considered the claim statement, written replies, rejoinder counterclaim and oral, documentary evidence oral and written arguments of both the parties and have also perused the entire record of the case. After considering all the facts and circumstances I hereby make the award as under :- Claim of Claimant Mr. J.K. Sharma. I award the following sums of money items wise :- Item No.1 Claim disallowed. Item No.2 Rs. 1,20,840.00 Item No.3 (i) Rs.17,681.00 (ii) Rs. 20,000.00 (iii) Rs. 50,000.00 Item No.4 (i) Rs. 4,000.00 (ii) Rs. 3,000.00 (iii) Rs. 8,000.00 Item No.5 Rs.3,48,000.00 Item No.6 Rs.1,14,655.44 Total :- Rs.6,86,176.44 Item No.7 Interest allowed @ 9% per annum from 26.06.1991 to 4.10.1993 Rs.1,40,321,71 Item No.8 Interest allowed @ 9% per annum from 4.10.1993 to 16.5.94 : Rs.38,251.59 Accordingly I hereby award a total claim of Rs. 8,64,749.74 in favour of claimant Mr. J.K. Sharma and against Union of India & others Claims of Opposite Parties i.e. Union of India, (Western Railway) and others. Item No.1 Claim disallowed. 8,64,749.74 in favour of claimant Mr. J.K. Sharma and against Union of India & others Claims of Opposite Parties i.e. Union of India, (Western Railway) and others. Item No.1 Claim disallowed. Item No.2 Rs.2,15,000.00 Interest @ 9% Per annum from 26.6.91 to 16.5.94 Rs.55,898.28 Accordingly I hereby award a total sum of Rs. 2,70,898.28 in favour of Opposite parties i.e. Union of India (Western Railway) & others against Mr. J.K. Sharma Claimant. Made & signed this day the 16th May, 1994 at Jaipur. (SHIV KUMAR GARG) SOLE ARBITRATOR” 3. The respondent-claimant, thereafter, made an application before the court below for making the said award Rule of the Court, to which the appellant-Union of India had filed the objections under Section 30 of the said Act. The court below vide the impugned order dated 15.12.1998 made the said award Rule of the Court, and awarded interest to the respondent-claimant @ 12% per annum from the date of decree till realization. Being aggrieved by the said order, the appellant-Union of India has preferred the Civil Misc. Appeal being No.184/1999 and the respondent-claimant has preferred Civil Misc. Appeal being No.168/2001. 4. It has been sought to be submitted by Mr. Aslam Khan, Railway Panel Counsel, for the appellant-Union of India that the impugned award made by the Arbitrator suffers from gross illegality, inasmuch as the Arbitrator has not assigned any reasons in support of the said award. According to him, the claims made by the respondent-claimant were not legally tenable, and the Arbitrator has not assigned any reasons as to how such claims were allowed. Mr. Khan, has relied upon the decision of the Apex Court in case of State of Uttar Pradesh And Others vs. Combined Chemicals Company Private Limited, (2011) 2 Supreme Court Cases 151, and the decision of Constitutional Bench in case of Raipur Development Authority vs. Chokhamal Contractors, (1989) 2 Supreme Court Cases 721 and also in case of T.N. Electricity Board vs. Bridge Tunnel Constructions, (1997) 4 Supreme Court Cases 121 and further in case of Punjab SEB vs. Punjab Pre-Stressed Concrete Works, (2002) 9 Supreme Court Cases 740, in support of his submissions. 5. However, the learned Senior Counsel Mr. 5. However, the learned Senior Counsel Mr. M.M. Ranjan, for the respondent-claimant relying on the decision of the Apex Court in case of M/s. Kundale & Associates vs. M/s. Konkan Hotels (P) Ltd., AIR 1999 Supreme Court 2010 and in case of M/s. Arosan Enterprises Ltd. vs. Union of India and another, AIR 1999 Supreme Court 3804, submitted that the Arbitrator is not supposed to give reasons in support of the award. He has submitted that the cross appeal has been filed by the respondent-claimant only with regard to the impugned order passed by the court below, to the extent of not granting interest from the date of award till the date of decree. 6. In order to appreciate the rival submissions made by the learned counsels for the parties, it would be beneficial to reproduce the ratio of decisions laid down by the Apex Court in various cases on the issue as to whether the Arbitrator, while deciding the claims of the parties under the said Act was required to assign the reasons or not. In the opinion of the Court, the ratio laid down by the Apex Court in case of State of Uttar Pradesh And Others vs. Combined Chemicals Company Private Limited (supra), clinches the issue, in which it has been held as under:- “31. In our view, the arbitrator was duty-bound to examine the tenability of the claim made by the respondent under different heads and decide the same by assigning some reasons, howsoever, briefly. His failure to do so constituted a valid ground for setting aside the award and the trial court committed a serious error by making the award rule of the court. Unfortunately, the High Court also overlooked this lacuna in the award and approved the judgment of the trial court.” 7. In case of Raipur Development Authority vs. Chokhamal Contractors, (supra), the Apex Court has observed as under:- “35. ...We do appreciate the contention, urged on behalf of the parties who contend that it should be made obligatory on the part of the arbitrator to give reasons for the award, that there is no justification to leave the small area covered by the law of arbitration out of the general rule that the decision of every judicial and quasi-judicial body should be supported by reasons. But at the same time it has to be borne in mind that what applies generally to settlement of disputes by authorities governed by public law need not be extended to all cases arising under private law such as those arising under the law of arbitration which is intended for settlement of private disputes.. ... 37. ...The trappings of a body which discharges judicial functions and is required to act in accordance with law with their concomitant obligations for reasoned decisions, are not attracted to a private adjudication of the nature of arbitration as the latter, as we have noticed earlier, is not supposed to exert the State's sovereign judicial power. But arbitral awards in disputes to which the State and its Instrumentalities are parties affect public interest and the matter of the manner in which the Government and its Instrumentalities allow their interest to be affected by such arbitral adjudication involved larger questions of policy and public interest. Government and its instrumentalities cannot simply allow large financial interests of the State to be prejudicially affected by non-reviewable_except in the limited way allowed by the statute-non-speaking arbitral awards. Indeed, this branch of the system of dispute resolution has, of late, acquired a certain degree of notoriety by the manner in which in many cases the financial interests of the Government have come to suffer by awards which have raised eyebrows by doubts as to their rectitude and propriety. It will not be justifiable for Governments or their instrumentalities to enter into arbitration agreements which do not expressly stipulate the rendering of reasoned and speaking awards. Governments and their instrumentalities should, as a matter of policy and public and public interest-if not as a compulsion of law-ensure that wherever they enter into agreements for resolution of disputes by resort to private arbitrations, the requirement of speaking awards is expressly stipulated and ensured.” 8. In case of Punjab SEB vs. Punjab Pre-Stressed Concrete Works (supra), the Apex Court in para 11 has held as under:- “11. After hearing counsel on both sides, we are of the view that the award is liable to be set aside because when it is a non-speaking one, it is not known whether any part of the Award made by the arbitrator related to Claim I. In our view, the price of the poles was firm and not liable to be increased. The fact that the delivery schedule was changed cannot be a ground to get over the clause prohibiting increase in the price of the poles. Once Claim I is not tenable, the award has to be set aside inasmuch as it is not possible to say that the award did not relate to Claim I. This is a sufficient reason for setting aside the award and remitting the matter back to the arbitrator.” 9. In view of the above-stated settled legal position, which clinches the issue in the instant case, there remains no shadow of doubt that the Arbitrator in the instant case has committed an illegality and misconducted himself by not assigning any reasons for allowing or disallowing the claims in the impugned award. As observed by the Apex Court, the award would be liable to be set-aside if the Arbitrator had failed to assign reasons, howsoever brief they may be, for allowing and disallowing the claims of the parties. In that view of the matter, it is held that the court below had also committed an error of law in not considering the above-stated settled legal position, and in not setting-aside the impugned award made by the Arbitrator. 10. In that view of the matter, the impugned order dated 15.12.1998 passed by the court below, and the impugned award dated 16.05.1994 made by the sole Arbitrator are set-aside. The matter is remanded to the Arbitrator, who is still available, as stated by the learned Senior Counsel Mr. Ranjan, for the respondent-claimant, for deciding the disputes afresh in accordance with law, after giving an opportunity of hearing to the respective parties and after assigning reasons. However neither of the parties shall be entitled to lead any further evidence in the matter. The Arbitrator shall decide the respective claims of the parties within three months from the date of receipt of copy of this order. Both the parties shall remain present before the sole Arbitrator on 13.12.2013 alongwith copy of this order, at the time that may be convenient to the Arbitrator as well as the parties. Both the appeals stand allowed accordingly. 11. Both the parties shall remain present before the sole Arbitrator on 13.12.2013 alongwith copy of this order, at the time that may be convenient to the Arbitrator as well as the parties. Both the appeals stand allowed accordingly. 11. Office is directed to send one copy of this order to the Arbitrator at the address mentioned in the impugned award and also directed to send back the record of the case to the court below, who shall in turn send it to the Arbitrator as and when a request in this behalf is made by the Arbitrator or the parties. A copy of this order be placed in the connected Civil Misc. Appeal No.168/2001.