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2018 DIGILAW 127 (RAJ)

STATE OF RAJASTHAN v. ISHWAR CHAND GUPTA

2018-01-09

DINESH MEHTA

body2018
JUDGMENT : Dinesh Mehta, J. The present appeal under Section 96 of the Code of Civil Procedure has been preferred by the appellant-State of Rajasthan against the judgment dated 11.10.1989 passed by learned District Judge, Sri Ganganagar, whereby the award dated 31.03.1983 passed by the sole arbitrator Mr. K.L. Bhatia has been made rule of the Court. 2. Though, instant appeal under Section 96 of the Code of Civil Procedure challenging an order passed by the Court, making an award rule of the Court is not maintainable and an appeal under Section 39 of the Arbitration and Conciliation Act, 1940 ought to have been filed, nevertheless, as the present appeal had been admitted and is pending consideration before this Court since 1990, it would not be appropriate to dismiss it on this count. 3. In view of the above, the present appeal, though filed under Section 96 of the Code of Civil Procedure is being decided within the contours and parameters of Section 39 read with other provisions of the Arbitration Act, 1940. 4. Assailing the order dated 11.10.1989, Mr. N.A. Rajpurohit, learned counsel appearing for the State submitted that the Court below has seriously erred in making the award dated 31.03.1983 as a rule of the Court, despite substantial objections raised by the appellant regarding the award. He further submitted that the award passed by the learned arbitrator was absolutely non-speaking and did not conform to the principles of adjudication of the disputes. 5. Before adverting to the arguments advanced by Mr. Rajpurohit, it would be appropriate to narrate the facts in a nutshell: An agreement came to be executed between the appellant - State and the respondent - Contractor Ishwar Chand Gupta being agreement number - 45, for the manufacture and supply of 'Kacchi' tiles and bricks at killa near RD-262-L of Suratgarh Branch. Due to delay in providing the land and other reasons, the work could be commenced in time and despite extension granted the contractor abandoned the work giving rise to a dispute between the contractor and the State Government, for which, the former requested referring of the dispute to an arbitrator. In pursuance of such request, the Superintendent Engineer - Mr. K.L. Bhatia was appointed as a sole arbitrator to adjudicate the same. 6. During the arbitral proceedings, the appellant - State had lodged their counter claim seeking an amount of Rs. In pursuance of such request, the Superintendent Engineer - Mr. K.L. Bhatia was appointed as a sole arbitrator to adjudicate the same. 6. During the arbitral proceedings, the appellant - State had lodged their counter claim seeking an amount of Rs. 36,240/-, for the delay in execution of work. The Claim lodged by the contractor as well as the counter claim submitted by the State of Rajasthan came to be decided by the sole Arbitrator vide award dated 31.03.1983, in a rather slipshod manner, vide an unreasoned order. 7. The relevant part of the aforesaid order is reproduced below :- "After hearing, examining and considering statements of both the parties and the oral and documentary evidence produced before me by each of them, and having given due consideration to all the facts, records, documents and arguments with due care, I made my award as follows :- 1. Claims put forth by Shri Ishwarchand Gupta. S. No. Particulars of claim Amount Claimed Amount Admitted 1. Payment of the final bill recorded at page 93 of measurement book No. 271. 800.00 800.00 2. Cost of 3,01,750 Nos. calculated @ Rs. 82/25p% Nos. 24,818.93 9,177.00 3. Carriage of 767.21 tonnes of slack coal from places other than specified in the contract agreement. 13,896.45 10,908.25 4. Supply of clean tibba sand and mixing of the same with the local clay. 32,062.50 Nil 5. Refund of cost of 124.16 tonnes of slack coal. 11,174.40 Nil 6. Refund of Rs. 600/- deducted with respect to earnest money under other supply orders. 600.00 600.00 7. Refund of royalty recovered in excess. 4,553.57 4,553.57 8. Refund of security deposit deducted from the running bills. 25,000.00 325,000.00 Total 1,12,905.85 51,038-82 The interest pendente lite @ 12% per annum has also been claimed by Shri Ishwarchand Gupta. Against it, interest @ 9% per annum is allowed from 27.1.1979 until award. 2. Counter-claim filed by the State of Rajasthan. S. No. Particulars of counter-claim Amount Claimed Amount allowed 1. Claim for recovery of excess amount of carriage of coal from places other than Jetsar Railway Station already previously, paid. 11240 Nil 2. Compensation for late completion of work. 25000 Nil (Written orders produced) Total 36240 Nil In result, the State of Rajasthan shall pay to Shri Ishwarchand Gupta, Rs. 51,038.82 (Rupees Fifty one thousand thirty eight and Eighty two paisa only). 11240 Nil 2. Compensation for late completion of work. 25000 Nil (Written orders produced) Total 36240 Nil In result, the State of Rajasthan shall pay to Shri Ishwarchand Gupta, Rs. 51,038.82 (Rupees Fifty one thousand thirty eight and Eighty two paisa only). The said sum will carry interest also @ 9% per annum from 27.1.1979, until award." 8. The respondent - contractor submitted the said award in the Court with the request to make the same as a rule of Court, as required under the provisions of Section in the Arbitration Act, 1940. 9. On receipt of the notices of the application for making the award as a rule of Court, the appellant - State of Rajasthan submitted its reply/objections and requested the Court to make the award as a rule of Court. 10. The learned Court below had however did find any reason to set-aside the award passed by Arbitrator and vide a detailed order dated 11.10.1989 made the said award as a rule of the Court holding that no ground to set aside the award enumerated under Section 30 of the Arbitration Act, 1940, existed. 11. Feeling aggrieved with the said judgment and order dated 11.10.1989, the State has preferred the present appeal under Section 96 of the Code of Civil Procedure, which is being decided on the touchstone of Section 30 of the Arbitration Act, 1940 treating the same to be an appeal under Section 39 of the Act of 1940. 12. Mr. Rajpurohit, while navigating this Court through the arbitral award, pointed out that the Arbitrator has passed an unreasoned award and it does even disclose the reasons warranting passing of such award, while contending that the Arbitrator has even laid out the manner, in which, the calculation had been done or the amount of award had been determined. 13. Advancing his arguments further, learned counsel contended that the respondent had moved applications before the Arbitrator on 27.01.1983 and 15.02.1993 for grant of time, which requests had been turned down by him, resulting in failure of justice. 14. While reiterating the grounds taken in the present appeal, learned counsel for the State argued that in allowing the time and refusing to grant adjournment, the learned Arbitrator had conducted the proceedings in non-judicious manner, for which, the award deserves to be set-aside. 15. Mr. 14. While reiterating the grounds taken in the present appeal, learned counsel for the State argued that in allowing the time and refusing to grant adjournment, the learned Arbitrator had conducted the proceedings in non-judicious manner, for which, the award deserves to be set-aside. 15. Mr. S.G. Ojha, learned counsel appearing for the respondent - contractor submitted that it is a settled proposition of law that an award of Arbitrator need contain reasons. In support of his arguments, learned counsel relied upon a judgment of Hon'ble Supreme Court reported in AIR 1990 (SC) 1426 in the matter of Raipur Development Authority etc. etc v. M/s. Chokhamal Contractors etc. etc.. 16. While reading paragraph 38 of the judgment aforesaid, learned counsel argued that an arbitral award cannot be set-aside being non-speaking. Mr. Ojha, further contended that the appellants - State had simply filed the objections in response to the application under Section 17 filed by the respondent-contractor for making the award as a rule of the Court instead of moving a separate application seeking annulment of the award dated 31.03.1983. Without prejudice to above, he maintained that the objections raised do depict that the Arbitrator has misconducted the proceedings. 17. After hearing learned counsel for the parties and upon perusal of the material available on record. This Court finds that learned Court below has considered and dealt with all the relevant aspects of the matter, including the objections filed by the State Government while making the award as a rule of the Court. 18. Though the State Government had filed separate application for setting-aside the award, yet the examination of the objections filed by them reveals that no circumstances or reasons had been set out to conclude that the Arbitrator had committed any misconduct while taking up the proceedings. In this regard, it would be apt to refer to Section 30 of the Arbitration Act, 1940, which enumerated the grounds for setting aside the award, which reads thus :- "S.30. Grounds for setting aside award. In this regard, it would be apt to refer to Section 30 of the Arbitration Act, 1940, which enumerated the grounds for setting aside the award, which reads thus :- "S.30. Grounds for setting aside award. - An award shall be set aside except on one or more of the following grounds, namely :- (a) than an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35, (c) that an award has been improperly procured or is otherwise invalid." 19. A perusal of the aforesaid provision contained in Section 30 of the Act of 1940 leaves no room for ambiguity or doubt that the impugned award could be set-aside only in the event, the Arbitrator had misconducted himself or conducted the proceedings in irregular or capricious manner. 20. In the present case, the State has failed to demonstrate, much less prove that the Arbitrator was involved in misconduct and the award was culmination of such misconduct. As such, even if the objections filed by the State are taken into account, the same do constitute grounds for set-aside the award dated 31.03.1983. In such circumstances, the learned Court below has committed no error of law, in making the award dated 31.03.1983 as a rule of the Court or passing the decree in terms of said award. 21. Adverting to the arguments advanced by Mr. Rajpurohit that the award impugned deserves to be set-aside, as the same was unreasoned or non-speaking; suffice it to observe that the award of the Arbitrator was in tune with the law in vogue, as the provisions of the Act of 1940 did require an award of the Arbitrator to be a reasoned one. 22. The aforesaid position of law is more than settled, as observed in para No.38 of the judgment of Hon'ble Supreme Court in case of Raipur Development Authority (Supra), which is reproduced hereunder :- "38. Having given our careful and anxious consideration to the contentions urged by the parties we feel that law should be allowed to remain as it is until the competent legislature amends the law. Having given our careful and anxious consideration to the contentions urged by the parties we feel that law should be allowed to remain as it is until the competent legislature amends the law. In the result we hold that an award passed under the Arbitration Act is liable to be remitted or set aside merely on the ground that no reasons have been given in its support except where the arbitration agreement or the deed of submission or an order made by the Court such as the one under Section 20 or Section 21 or Section 34 of the Act or the statute governing the arbitration requires that the arbitrator or the umpire should give reasons for the award. These cases will now go back to the Division Bench for disposal in accordance with law and the view expressed by us in this decision. Order accordingly." 23. On overall appraisal of facts and law obtaining in the present case, this Court does find any infirmity or error in the order impugned dated 11.10.1989, for which the appeal at hand is rejected. 24. Dismissed accordingly. Cross-Objection:- 25. Mr. Ojha, learned counsel for the appellant arguing his cross objection contended that the objector-contractor was entitled to interest at the rate of 9% from the date of award till the date of recovery. 26. It is true that in view of various judgments of Hon'ble Supreme Court and in light of the provisions of Interest Act and Section 34 of the CPC, a contractor-claimant is entitled to period prior interest, interest pendente lite and also for the period after the award till the recovery, but since the respondent - contractor had challenged the award of the arbitrator on these grounds and had simply applied for making the award as a rule of the Court, this Court is of the firm view that such request and cross-objection at hand cannot be entertained. 27. The contractor had abandoned such right to claim interest and is therefore estopped/acquiesced from raising such plea, more particularly at this stage. 28. In view of above, this Court holds that the cross-objections filed by the contractor under Order XLI Rule 22 of the Code of Civil Procedure are not maintainable and the same are rejected on the principles of estoppel. 29. The appeal as well as cross-objections are dismissed.