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2013 DIGILAW 494 (UTT)

U. P. Avas Evam Vikas Parishad v. H. C. Ahuja

2013-07-29

PRAFULLA C.PANT

body2013
Judgment Prafulla C. Pant, J. Both these revisions are directed against the judgment and order dated 03.03.2012 passed by Additional District Judge/VIIth Fast Track Court, Dehradun, in Civil Appeal No.93 of 2006 and Civil Appeal No.97 of 2006, whereby the said Court has partly allowed the appeal No.93 of 2006 modifying the order dated 07.10.2006 of Trial Court [Civil Judge (Sr. Div.), Dheradun] in arbitration case No.675 of 2002, and dismissed the appeal No.97 of 2006. 2. Heard learned counsel for the parties and perused the papers available on record. 3. Brief facts of the case are that the parties to this case entered into an agreement No.7/EE/88-89 on 04.06.1988 for construction of semi finished type-I and type-II residences in Nehru Nagar, Dehradun. The work was required to be completed by 03.04.1989. However, a dispute arose between the parties on which suit No.482 of 2000 was instituted by Contractor Mr. H.C. Ahuja in which vide order dated 03.12.2001, an order was issued for appointing an Arbitrator to decide the dispute between the parties to the agreement. Sri Girish Chandra Garg, Retired Chief Engineer, Public Works Department was appointed as Arbitrator. He, after recording the evidence and hearing the parties, gave his award dated 30.09.2002 and directed that Rs. 3,13,805.39 shall be paid after deducting counter claim in respect of various items by Uttar Pradesh Avas Evam Vikas Parishad to the contractor. The award was challenged by Uttar Pradesh Avas Evam Vikas Parishad before Civil Judge (Sr. Div.), Dehradun by moving an application under sections 30 and 33 of Arbitration Act, 1940. After hearing the parties, learned Civil Judge (Sr. Div.), Dehradun vide his order dated 07.10.2006 partly accepted the objections of Uttar Pradesh Avas Evam Vikas Parishad and reduced the rate of interest payable on the principal sum from 12% to 6 % and further directed to set aside the amount of Rs.1.00 lac awarded by Arbitrator on account of mental agony and financial harassment to the contractor. 4. Aggrieved by the said order dated 07.10.2006 passed by Civil Judge (Sr. Div.), Derhadun, appeal No.93 of 2006 was filed by the contractor (H.C. Ahuja), and appeal No.97 of 2006 was filed by Uttar Pradesh Avas Evam Vikas Parishad. 4. Aggrieved by the said order dated 07.10.2006 passed by Civil Judge (Sr. Div.), Derhadun, appeal No.93 of 2006 was filed by the contractor (H.C. Ahuja), and appeal No.97 of 2006 was filed by Uttar Pradesh Avas Evam Vikas Parishad. The lower Appellate court (Additional District Judge/VIIth Fast Track Court) vide impugned order dated 03.03.2012 partly allowed the appeal of the contractor restoring the rate of interest awarded by Arbitrator but in respect of Rs. 1.00 lac awarded by Arbitrator on account of mental agony and financial harassment of the contractor, the appellate court did not interfere with the order of trial court setting aside the same. Appeal of Uttar Pradesh Avas Evam Vikas Parishad was dismissed by the Appellate court. Hence, these revisions by both the parties. 5. Admittedly, Uttar Pradesh Avas Evam Vikas Parishad entered into an agreement with Sri H.C. Ahuja (contractor) for semi finished construction of Type-I and Type-II residences in Nehru Nagar, Dehradun in terms of agreement dated 04.06.1988. It is also not disputed that the work was to be completed by the contractor by 03.04.1989. Admittedly a dispute arose between them relating to the payment for the work done. It is also not disputed that contractor took the matter to the court by filing suit No.482 of 2000 H.C. Ahuja Vs. Uttar Pradesh Avas Evam Vikas Parishad before Civil Judge (Sr. Div.), Dehradun and the said court vide its order dated 13.12.2001 directed that Arbitrator be appointed for resolution of the dispute. It is also not disputed between the parties that Housing Commissioner of Uttar Pradesh Avas Evam Vikas Parishad vide his order dated 15.01.2002 appointed Sri Girish Chandra Garg, Retired Chief Engineer of Public Works Department as Arbitrator. The Arbitrator entered into arbitration and vide order dated 30.09.2002 awarded Rs. 3,13,805.39 on account of nine different items to the contractor after adjusting counter claim made by Uttar Pradesh Avas Evam Vikas Parishad. But Uttar Pradesh Avas Evam Vikas Parishad filed application/objections under sections 30 and 33 of Arbitration Act, 1940 before Civil Judge (Sr. Div.), Dehradun for setting aside the same, and the said court after hearing the parties made award rule of Court, partly modifying the same by allowing of the some objections of the Uttar Pradesh Avas Evam Vikas Parishad. But Uttar Pradesh Avas Evam Vikas Parishad filed application/objections under sections 30 and 33 of Arbitration Act, 1940 before Civil Judge (Sr. Div.), Dehradun for setting aside the same, and the said court after hearing the parties made award rule of Court, partly modifying the same by allowing of the some objections of the Uttar Pradesh Avas Evam Vikas Parishad. One part of the amount which stood deducted from award was Rs.1.00 lac which was awarded by the Arbitrator to the contractor under the head of mental agony and financial harassment. The second part which was deduced from the award was that only 06% interest per annum was payable on the principal sum instead of 12% awarded by Arbitrator for pre reference and pendente lite. 6. As far as the deduction of amount of Rs.1.00 lac on account of mental agony suffered by contractor is concerned, there is concurrent finding of the fact recorded by trial court and appellate court that he was not entitled to the same in terms of agreement as such this court is not inclined to interfere with the same. 7. Now another point, in these revisions is as to whether the lower appellate court was justified in setting aside the order passed by trial court to the extent of reducing the rate of interest from 12% to 6%. 8. Perusal of the impugned order passed by the lower Appellate court shows that it has observed that para 7A in Schedule-I of Arbitration Act, 1940, inserted by State of U.P., is not applicable in State of Uttarakhand. The said observation made by learned Appellate court appears to be erroneous in Law. Para 7A inserted in Schedule I of the Arbitration Act, 1940 of the State of U.P., vide U.P. Act 57 of 1976 (w.e.f. 1.1.1977) reads as under:- “7A. The said observation made by learned Appellate court appears to be erroneous in Law. Para 7A inserted in Schedule I of the Arbitration Act, 1940 of the State of U.P., vide U.P. Act 57 of 1976 (w.e.f. 1.1.1977) reads as under:- “7A. – Where and in so far as an award is for the payment of money, the arbitrators or umpire may, in the award, order interest at such rate as the arbitrators or umpire may deem reasonable to be paid on the principal sum awarded, from the date of commencement of the arbitration, as defined in sub section (3) of Section 37, to the date of award, in addition to any interest awarded on such principal sum for any period prior to such commencement, with further interest at such rate not exceeding six percent per annum as the arbitrators or umpire may deem reasonable on such principal sum from the date of the award to the date of payment or to such earlier date as the arbitrators or umpire may think fit, but in no case beyond the date of the decree to be passed on the award.” 9. Section 86 of U.P. Re-organization Act, 2000 (by which the State of Uttarakhand was created) provides that all laws in force immediately before the appointed day (9.11.2000) shall continue to apply to the successor State of Uttarakhand until otherwise provided by competent legislature of such State. 10. In view of the said provision, this Court is of the view that lower Appellate court erred in holding that para 7A of Schedule I of Arbitration Act, 1940 is not applicable in State of Uttarakhand. However, keeping in mind, the principle of law laid down in M/s. Manalal Prabhudayal Vs. Oriental Insurance Co. Ltd. 2006 AIR SCW 4160 read with para 7-A as inserted by State of U.P. in Schedule-I of Arbitration Act, 1940, Arbitrator could not have awarded interest on the principal sum beyond 6% from the date of commencement of arbitration (pendente lite). 11. Oriental Insurance Co. Ltd. 2006 AIR SCW 4160 read with para 7-A as inserted by State of U.P. in Schedule-I of Arbitration Act, 1940, Arbitrator could not have awarded interest on the principal sum beyond 6% from the date of commencement of arbitration (pendente lite). 11. For the reasons as discussed above, Civil Revision No.87 of 2012 filed by H.C. Ahuja (contractor), is dismissed and Civil Revision No.83 of 2012 filed by Uttar Pradesh Avas Evam Vikas Parishad is partly allowed with the direction that said party shall pay awarded amount as mentioned in the award of the Arbitrator only with 6% interest per annum from the date of commencement of the award till the payment is actually made. It is further directed that amount, if any, deposited by Uttar Pradesh Avas Evam Vikas Parishad in pursuance of the award may be withdrawn by the contractor to the extent as above. (Money Withdrawal application No.7967 of 2012 stands disposed of). It is also clarified that rate of interest awarded by Arbitrator for the period prior entering into arbitration is not interfered with.