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2014 DIGILAW 108 (JK)

United Builders v. Union Of India

2014-03-13

M.M.Kumar, MUZAFFAR HUSSAIN ATTAR

body2014
M.M. Kumar, CJ. 1. A short issue raised in this appeal is whether the Arbitrator is required to a pass a reasoned award by virtue of arbitration Clause 70 of the IAFW 2249 or such an award could be without reason. The matter is no longer res integra. The arbitration clause 70 of IAFW 2249 came up for consideration of their Lordships of Hon'ble the Supreme Court in the case of M/S Gora Lal v. Union of India, AIR 2004 SC 4956 . The expression `finding' used in arbitration Clause 70 of IAFW 2249 has been interpreted in para 7 of the judgment, which is set out below in extenso:- "7. The point for determination in this case is: Whether the Arbitrator ought to have given reasons in support of his findings, along with the sums awarded, on each items of dispute. To decide this point, we have to go by the text and the context of Clause 70 of the arbitration agreement quoted above. Under the said Clause, the Arbitrator was required to identify each individual item of dispute and give his findings thereon along with the sum awarded. In this context, one has to read the word "findings" with the expression "on each item of dispute" and if so it is clear that the word "finding" denotes "reasons" in support of the said conclusion on each item of dispute. The word "finding" has been defined in Words and Phrases, Permanent Edition 17, West Publishing Co. to mean "an ascertainment of facts and the result of investigations". Applying the above test to Clause 70, we are of the view that the Arbitrator was required to give reasons in support of his findings on the items of dispute along with the sums awarded. We make it clear that this order is confined to the facts of this case and our interpretation is confined to clause 70 of the arbitration agreement in this case." (emphasis added) 2. The aforesaid view taken by Hon'ble the Supreme Court in M/s Gora Lal's case (supra) has also been followed by this Court in the case of Union of India and anr. V. Wazir Chand Bhatia 2008 (2) JKJ 536 [HC]. 3. In the present case, Clause 70 of IAFW 2249 is also the arbitration clause and the view taken by Hon'ble the Supreme Court in respect of the aforesaid Clause is obviously binding. V. Wazir Chand Bhatia 2008 (2) JKJ 536 [HC]. 3. In the present case, Clause 70 of IAFW 2249 is also the arbitration clause and the view taken by Hon'ble the Supreme Court in respect of the aforesaid Clause is obviously binding. As the issue goes to the roots of the matter and the fate of the award dated 22.09.1975 has to be decided in accordance with the law laid down by Hon'ble the Supreme Court, it would be necessary to consider whether the award is a reasoned award or it is a non-speaking award. In that regard, a part of the award is set out in extensor as a sample which represents the nature of the award announced by the Arbitrator and the same reads as under: "Dealing with each claim separately, I award and direct as under: A. Claims of the Claimant : 1. Claim No. 1 Payment for doing surface digging in Strata consisting of hard soil, ordinary rock and hard rock instead of surface dressing of earth surfaces specified Rs. 30,89,003.00/- The claim is allowed for Rs. 56,100.00/- (Rupees fifty six thousand one hundred only). 2. Claim No. 2 Payment for excavation in strata consisting of hard soil/soft rock/hard rock instead of ordinary soil Rs. 21,, 543.00/- The claim is allowed for Rs. 6,400.00/- (Rupees six thousand four hundred only). 3. Claim No. 3 Reimbursement of extra expenditure incurred in bringing boulders/broken stone from else-where due to failure of the department to issue it under Schedule `B' Rs. 5,, 82,, 534.59/- The claim is allowed for Rs. 49,200.00/- (Rupees forty nine thousand two hundred only). 4. Claim No. 4 Compensations for loss suffered on account of issue of very old and defective plant by the department under Schedule `C' of the contract Rs. 3,00,000.00/- The claim is rejected. 5. Claim No. 5 Refund of hire charges for the period the plaint was out of order Rs. 1,21,970 .06/- The claim is rejected. 6. Claim No. 6 Payment of extra thickness of bitumen concrete binder course provided Rs. 6,79,644.00/- The claim is rejected. 7. Claim No. 7 Reimbursement of cost of replacement of parts and repairs to the plant issued under Schedule `C' in order to make it functional during the period of hire Rs. 2,45,061.81/- The claim is rejected. 8. 6. Claim No. 6 Payment of extra thickness of bitumen concrete binder course provided Rs. 6,79,644.00/- The claim is rejected. 7. Claim No. 7 Reimbursement of cost of replacement of parts and repairs to the plant issued under Schedule `C' in order to make it functional during the period of hire Rs. 2,45,061.81/- The claim is rejected. 8. Claim No. 8 Payment of extra surface dressing carried out over a width of 30' along the farther side of shoulders at both ends Rs. 78.261.00/- The claim is rejected. 9. Claim No. 9 Payment of extra consumption of cement due to richer mix of quality concrete approved by the respondent because of issue of sub-standard cement Rs. 2, 35,807.60/- The claim is rejected. 10. Claim No. 10 Reimbursement of loss suffered on account of idle labour due to delay in issue of cement Rs. 48, 360.00/- The claim is rejected. Claim no. 11 to 18 .......................................... B. Claims of the Respondent 1. Claim no. 1 Extra expenditure in completing left over works and recoveries on account of payment made Rs. 20.79.486.62/- The claim is allowed for Rs. 17, 24, 800/- (Rupees seventeen lakhs twenty four thousands eight hundred only). 2. Claim no. 2 Cost of stone boulders/broken stone Rs. 24,546.13/- The claim is rejected. 3. Claim no. 3 Use of oversize stone metal in WBM Rs. 3,727.99/- The claim is rejected. 4. Claim no. 4 Less weight of GI Pipes used in expansion joint Rs. 4, 274.33/- The claim is allowed for Rs. 4,200.00/- (Rupees four thousand two hundred only). 5. Claim no. 5 Quality concrete not of required strength R. 3,92,518,81/- The Claim is allowed for 1,96,200/- (Rupees one lac ninety six thousand two hundred only). 6. Claim no. 6 Non employment of an Engineer at the site of work Rs. 20,000/- 7. Claim no. 7 Non realization of income tax at source Rs 70,593.00/- 8. Claim no. 8 Removal of spoils left over by the contractor Rs. 3,360.00/- The claim is rejected. 9. Claim no. 9 Cost of rectification of defects against S1. item 18, 19 & 20 of Schedule `A' Rs. 40,507.96/- The claim is allowed for Rs. 20,500.00/- (Rupees twenty thousand five hundred only). 10. Claim no. 10 Rectification of WBM damaged Rs. 14,661.74/- The claim is rejected. The claim is rejected. Claim no. 11 to 22 ................................ 4. 9. Claim no. 9 Cost of rectification of defects against S1. item 18, 19 & 20 of Schedule `A' Rs. 40,507.96/- The claim is allowed for Rs. 20,500.00/- (Rupees twenty thousand five hundred only). 10. Claim no. 10 Rectification of WBM damaged Rs. 14,661.74/- The claim is rejected. The claim is rejected. Claim no. 11 to 22 ................................ 4. A perusal of the aforesaid award made by the Arbitrator makes it evident that after noticing the claim made by the appellant, the Arbitrator has merely recorded his decision allowing or rejecting the claim. In some items he has partially accepted the claim as against the whole claim made by the appellant, whereas in another cases he has completely rejected the claim. The reasons which are necessary links between the evidence adduced and the findings recorded on each item of dispute are obviously missing. Therefore, it is necessarily hit by the vice of Section 30(a) of the Jammu and Kashmir Arbitration Act, 1945 (for brevity the Act). It has to be concluded that the Arbitrator has misconducted the proceedings and has not passed a reasoned award as per the judgment of Hon'ble the Supreme Court in M/s Gora Lal's case (supra). 5. The learned Single Judge has primarily taken the view that no misconduct has been committed and it cannot constitute a ground for setting aside the award. It is obvious that the aforesaid view was expressed by the learned Single Judge on 31.05.2001 while delivering the impugned judgment and the view taken by Hon'ble the Supreme Court in 2002 in M/s Gora Lal's case (supra) was not available at that time. Obviously same could not have been applied to hold that the Arbitrator misconducted the proceedings within the meaning of Section 30(a) of the Act. The law laid down by Hon'ble the Supreme Court in M/s Gora Lal's case (supra) goes to the roots of the matter and necessary consequence is that the award is liable to be set aside by virtue of the provisions of Section 30(a) of the act. 6. Mr. Choudhary, learned counsel for the respondents has, however, argued that a plea of this nature should have been raised by the appellant before the learned Single Judge and having failed to raise the same it would not be available before the appellate Court in the instant appeal filed Section 39(i) (vi) of the Act. 7. Mr. 6. Mr. Choudhary, learned counsel for the respondents has, however, argued that a plea of this nature should have been raised by the appellant before the learned Single Judge and having failed to raise the same it would not be available before the appellate Court in the instant appeal filed Section 39(i) (vi) of the Act. 7. Mr. Ajay Pal Singh, learned counsel for the appellant has on the other hand pointed out that the plea was set up in para 54 of the application filed under Section 30 while challenging the award, which reads thus: "54. The Arbitrator has not only misconducted the proceedings but also did not comply with the mandatory provisions of clause 70 of General Conditions of Contract which provides that the Arbitrator shall give his award on all matters referred to him and shall indicate his findings along with the sums awarded separately on each individual item of dispute." 8. A perusal of the aforesaid para would show that specific plea in fact has been set out in the application. Even otherwise, this is a purely legal issue which does not involve appreciation of facts. The award dated 22.09.1975 is on the record. The issue raised before us goes to the roots of the matter as already observed. Therefore, we do not find any merit in the objection raised by Mr. Choudhary. 9. As a sequel to the above discussion, we find that the view taken by the learned Single Judge in the judgment and order dated 31.05.2001 is set aside. Consequently, the award dated 22.09.1975 is also set aside. The Engineer-in-Chief who is competent authority shall appoint a new Arbitrator in accordance with the provisions of eth Arbitration Agreement. The needful shall be done within a period of one month from today. 10. Appeal stands disposed of in the above terms.