State of Rajasthan through Chief Engineer, Public Health and Engineering Department Jodhpur v. Gopal Ram Gumani Ram
2017-04-18
GOVERDHAN BARDHAR
body2017
DigiLaw.ai
JUDGMENT : Goverdhan Bardhar, J. This appeal is filed by the State of Rajasthan under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') challenging the judgment dated 21.05.2015 passed by the District Judge, Jodhpur Metropolitan in Civil Misc. Case No. 50/2010 whereby, the learned court rejected the application of appellants filed under Section 34 of the Act of 1996 for quashing the arbitral award dated 15.07.2010. 2. Briefly stated the facts of the case are that the respondent contractor M/s Gopal Ram Gumani (hereinafter referred to as 'respondent contractor') was granted work order for work of PCC Block lining vide order passed by the Executive Engineer on 24.10.1989 and agreement was executed in this regard. Since there was an arbitration clause in the contract for resolution of dispute, if any, therefore, when dispute arose between the parties, the respondent contractor preferred an application for appointment of arbitrator on 16.03.2000 and also moved to the High Court under Clause 23 of the agreement for appointment of arbitrator and this Court vide order dated 08.01.2008 appointed Shri M.C. Mehta as an arbitrator. 3. The respondent contractor filed claim before the Sole Arbitrator with the prayer that the appellants may be directed to make payment of Rs. 2,08,501/- along with interest @ 18% per annum for the period 11.09.1990 to 10.06.2009. It was stated in the claim that in pursuance of work order dated 24.10.1989, the respondent contractor commenced the work on 09.11.1989 and the date of completion was 08.03.1990 and the respondent contractor completed the work on 10.09.1990 but the final bills were not prepared on time. According to the respondent contractor the tender work in pursuance of NIT No. 1989-90/11 the cost of work was 5.20 lacs and the period of work was four months whereas, in the amended NIT dated 22.09.1989 the cost of work was enhanced to 9.34 lacs but the period was not increased and was kept 04 months only which was not proper whereas, the respondent contractor finished the work in proportion to the cost of work during nine months. 4. A reply to claim was submitted by the appellants before the Arbitrator and it was stated much before passing of the work order, the amount of work was enhanced to Rs.
4. A reply to claim was submitted by the appellants before the Arbitrator and it was stated much before passing of the work order, the amount of work was enhanced to Rs. 9.34 lacs and therefore, it was not the case that the amount of work was increased after passing of work order and therefore, it is a case in which the respondent contractor after accepting the work order, failed to complete the work within stipulated period therefore, in pursuance of terms and conditions of the contract, the penalty was imposed and same was recovered out of the running bill of the respondent contractor. 5. The Arbitrator after hearing both the parties, framed as many as ten issues and the Arbitrator while deciding the issues in favour of the respondent contractor and against the appellants, passed an award dated 15.07.2010 and ordered the appellants to pay a sum of Rs. 1,58,520/- along with interest for the period from 10.03.1991 to 10.06.2009 i.e. in total a sum of Rs. 4,92,205/- along with legal expenses in the sum of Rs. 32,850/-. 6. Feeling aggrieved by the award dated 15.07.2010, the appellants filed an application under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 before the learned District Judge, Jodhpur Metropolitan. However, the learned District Judge after hearing the rival contentions, rejected the application filed by the appellants under Section 34 of the Act of 1996 vide order dated 21.05.2015. It was held by the learned court below that the objections raised by the appellants in the application under Section 34(2) of the Act are beyond the scope of Section 34(2) of the Act. According to the learned counsel for the appellant, none of the ground raised by the appellants falls in any of the categories of the objections which cannot be raised under the said provision. 7. Learned counsel for the appellants submit that out of the total work order in the sum of Rs. 13,55,097.67/-, the respondent contractor has already been paid a sum of Rs. 12,99,533.41/- upto the ninth running and only a sum of Rs. 7155.00/- is due to be paid upto the tenth and final bill and the said bill is pending because the respondent contractor has not produced the no objection certificate from the Department of Mines. It is argued that payment of Rs.
12,99,533.41/- upto the ninth running and only a sum of Rs. 7155.00/- is due to be paid upto the tenth and final bill and the said bill is pending because the respondent contractor has not produced the no objection certificate from the Department of Mines. It is argued that payment of Rs. 27102/- was stopped since the respondent contractor failed to complete the work within stipulated time and in this regard various communications were sent by the department and thereafter a penalty of 1% each was imposed on the respondent contractor vide order dated 19.04.90 and 25.5.90. It is further argued that the payment of remaining bill was delayed due to deficiency of the respondent contractor itself and therefore, respondent contractor is not entitled to interest @ 18% whereas, the learned arbitrator has awarded 18% interest from 11.06.09 till date of payment. Learned counsel further argued that the learned District Judge has also not appreciated the contentions raised by the appellants in the appeal filed against the award passed by the Arbitrator. Learned counsel for the appellants relied on a decision of High Court of Bombay in the case of M/s Environmental Engineers Inc v. M/s Raipur Alloys & Steels Ltd (S.B. First Appeal No. 580/2003) decided on 12.01.2017. 8. Per contra, learned counsel for the respondent argued that the learned District Judge has rightly dismissed the appeal filed by the appellants as none of the ground as provided in Section 34 of the Act was available. It is also submitted that once dispute is submitted and referred for decision of the arbitrator, the party before the arbitrator is bound by the decision and cannot challenge the decision of the arbitrator. According to the learned counsel for the respondent, the appellants being legally bound by the award had no right to challenge the award and therefore, the Court below had rightly refused to hear the objections being beyond the scope of Section 34(2) of the Act. Learned counsel placed reliance on decision of this Court in the case of 'State of Rajasthan v. Gopal Ram Gumani & Anr.' (S.B. Civil Misc. appeal No. 1310/2014 decided on 03.04.2017. 9. Heard learned counsel for the parties and perused the record. 10.
Learned counsel placed reliance on decision of this Court in the case of 'State of Rajasthan v. Gopal Ram Gumani & Anr.' (S.B. Civil Misc. appeal No. 1310/2014 decided on 03.04.2017. 9. Heard learned counsel for the parties and perused the record. 10. A bare perusal of Section 34 of the Act, it is clear that award can be set aside only if any one of the five grounds as contained in Section 34(2)(a) or any one of two grounds as contained in Section 34(2)(b) of the Act exist. 11. Learned Court below also noticed that the award is a reasoned one and based on due appreciation of evidence on record after affording sufficient opportunity to State Govt. In considered opinion of this Court, the appellants had failed to make out any ground under Section 34 of the Act of 1996 before the learned court below for setting aside the award, which is a well considered and reasoned order and liable to be upheld. 12. Moreover, there is a catena of judgments of the Hon'ble Supreme Court on the limitation of the courts interfering with an arbitral award both in the exercise of power under Section 34 as also Section 37 of the Act of 1996. In J.G. Engineers Pvt. Ltd. (Supra), it was held by the Apex Court as under :- "Interpreting the said provisions, this court in Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd. held that a court can set aside an award under section 34(2) (b)(ii) of the Act, as being in conflict with the public policy of India, if it is (a) contrary to the fundamental policy of Indian Law; or (b) contrary to the interests of India; or (c) contrary to justice or morality; or (d) patently illegal. This Court explained that to hold an award to be opposed to public policy, the patent illegality should go to the very root of the matter and not a trivial illegality. It is also observed that an award could be set aside if it is so unfair and unreasonable that it shocks the conscience of the court, as then it would be opposed to public policy." 13.
It is also observed that an award could be set aside if it is so unfair and unreasonable that it shocks the conscience of the court, as then it would be opposed to public policy." 13. It is thus clear that the court hearing an application under Section 34 of the Act of 1996 does not act as an appellate court and where an award passed by an Arbitrator is a reasoned one not contrary to any substantive provisions of law or terms the contract or perverse to the evidence on record or not ex facie indicative of non-application of mind or is not in contravention of principles of natural justice or is not palpably illegal, it cannot be set aside. In the matter in hand, the appellants have failed to show that the finding recorded by the Arbitrator is contrary to the material on record. Upon examination of the impugned award as well as the judgment passed by the learned District Judge, it cannot be said that the award on the face of it suffers from any perversity. Accordingly, while upholding the judgment dated 21.05.2015 passed by the District Judge, Jodhpur Metropolitan in Civil Misc. Case No. 50/2010, the present appeal is hereby dismissed.