Northern Coalfields Ltd. v. Saluja Construction Co.
2018-01-02
SUJOY PAUL
body2018
DigiLaw.ai
JUDGMENT : This appeal filed under Section 37 of the Arbitration and Conciliation Act, 1940 (Arbitration Act) is directed against the order dated 27.09.2009, passed in Civil Suit No. 29-B/2002, passed by 1st Additional Judge to the Court of 1st Upper District Judge, Sidhi. 2. Briefly stated, the facts are that the respondent was awarded contract for construction of 100 ‘B Type Quarters’ at Bina and an agreement in this regard was entered into between the parties on 11.01.1986. The schedule date for completion of work was 11.03.1987. On 01.10.1992 the Chief Engineer ordered to stop payment and directed that all payments to be kept in abeyance. The respondent issued a notice under Clause 9 of the Agreement (Terms and Conditions) to appoint an arbitrator in respect of Bina Project only by showing the outstanding amount as Rs.2,23,215/-. This amount was shown as outstanding since 13.03.1988. The notice was issued on 08.12.1992. The appellant by reply dated 15.12.1992 rejected the claim of the respondent. The respondent raised a bill of Rs.2,35,215/- and then filed an application under Section 20 of the Arbitration Act for filing of agreement and appointment of arbitrator. The stand of appellant is that the said application was filed by the respondent only for the work relating to Bina Project. 3. The appellant contends that the learned District Judge by order dated 06.05.1996 appointed an arbitrator. On 06.12.1996, the District Judge, Sidhi wrote a letter to arbitrator to enter into a reference for deciding the dispute between the parties in respect of construction of 100 numbers of ‘B Type Quarters’ at Bina Project and pass an order within a period of six months. The claim of respondent before the arbitrator was in relation to sister concerned M/s. Navtej Builders also. By reply dated 14.04.1997, the appellant denied the claim. The sole arbitrator by letter dated 16.06.1997 asked the parties to appear on 4th & 5th July so that dispute between the respondent and NCL relating to construction of quarters at Bina Project can be decided. 4. The respondent filed a detailed statement of claims on 10.05.1997 before the arbitrator. In the third sitting, on 04.07.1997 a doubt was raised whether the claims relating to other contracts needs to be decided or adjudication should be confined to only one contract.
4. The respondent filed a detailed statement of claims on 10.05.1997 before the arbitrator. In the third sitting, on 04.07.1997 a doubt was raised whether the claims relating to other contracts needs to be decided or adjudication should be confined to only one contract. By subsequent letter dated 08.07.1997, the District Court directed the arbitrator to pass the order by 31.12.1997 and alongwith this letter sent a copy of Annexure-V. Mr. Girishm Jain, learned counsel for the appellant urged that no specific order was passed by District Court to decide the claims in relation to all the contracts. Shri Jain fairly submits that on 19.03.1998 by mutual consent between the parties, it was agreed and that sole arbitrator may pass the award by 15.04.1998. The award could not be passed on or before the said date and it could be passed only on 12.06.1998. An amount of Rs.27,03,786/-was awarded to the respondent. Thereafter, respondent filed an application under Section 14, 17 & 29 of Arbitration Act before the District Court, Sidhi on 06.07.1998. In turn, appellant filed its objection on 22.07.1998. After hearing the parties, the Court below by impugned order dated 27.09.2003 decided the said application which was registered as Civil Suit No. 29-B/2002. The Court awarded Rs.27,03,786/- with 8% interest per annum from the date of award till actual payment. 5. The appellant contended that Claim No.1 was relating to Bina Project and amount claimed was Rs.11,67,231/-whereas the amount awarded by arbitrator in this head was Rs.5,99,158/-. Regarding ‘Amlohri Project’ (Claim No.2), the amount claimed was Rs.16,58,710/- & Rs.10,51,069/- whereas amount awarded by arbitrator was Rs.7,79,580/- (for 304 minor quarters) & Rs.5,41,695/-. In relation to Claim No.3 (Jhingurda Project) amount claimed was Rs.35,19,019/-, whereas amount awarded by the arbitrator was Rs.6,90,765/- (for residential quarters). Thus, in total, the claim amount was Rs.1,09,05,403/-, whereas the amount awarded was Rs.27,03,786/-. 6. The appellant contended that Northern Coalfield Limited (NCL) had invited tenders for construction of 100 numbers of “B Type Quarters” for Bina Project. Tender was opened on 05.07.1985 which was the base date for quoting the price. The agreement was entered into on 18.01.1986 for an amount of Rs.10,79,60,701.21/- and schedule date of completion was 11.03.1987.
6. The appellant contended that Northern Coalfield Limited (NCL) had invited tenders for construction of 100 numbers of “B Type Quarters” for Bina Project. Tender was opened on 05.07.1985 which was the base date for quoting the price. The agreement was entered into on 18.01.1986 for an amount of Rs.10,79,60,701.21/- and schedule date of completion was 11.03.1987. The Chief Engineer on 01.10.1992, directed to stop the payment with further direction to keep all payments in absence for the reason that as labour escalation an additional amount of Rs.12,00,000/-has been paid to the respondent. Aggrieved, on 08.12.1992 the contractor issued a legal notice as noticed above. 7. Shri Jain, learned counsel for the appellant assailed the award and impugned order of Court below by contending that the arbitrator was appointed only for the contract relating to Bina Project. The agreement relating to this project alone was filed before the arbitrator. As per Section 2(a), 8 & 20 of Arbitration Act, the mandatory requirement was to decide the dispute in relation to a written agreement which was filed before the arbitrator. The arbitrator has travelled beyond this contract of Beena Project, thereby committed an error of jurisdiction in passing the award in respect of four contracts and the Court below has failed to notice this illegality. In support of this contention, reliance is placed on AIR 1954 SC 340 [Kiran vs. Chaman Paswan], 1993 (1) SCC 572 [Binod Bihari vs. Union of India], 2001 (3) SCC 277 [Union of India vs. Manager, M/s. Jain], AIR 2002 SC 1157 [Inder Sain vs. Housing Board], 2003 (8) SCC 154 [Bharat Cooking Coal vs. Annapurna], 2007 (1) MPLJ 207 [Gayan Chand vs. Sushila Bai], 2014 (3) MPLJ 28 [Jagmittal vs. Director, Health Services] and orders of this Court passed in FA No. 4011/2000 [WCL vs. BD Sharma] and in MA No.569/2003 [NCL vs. Nand Construction]. 8. In order to elaborate, the appellant urged that an order passed by the Court without jurisdiction is a nullity and its invalidity could be set aside whenever and wherever it is sought to be enforced or relied upon. A bar of limitation may be considered even if such plea has not been specifically raised. Limitation Act is a statute of repose and bar of cause of action in the Court of law.
A bar of limitation may be considered even if such plea has not been specifically raised. Limitation Act is a statute of repose and bar of cause of action in the Court of law. On the basis of judgment of Manager, M/s. Jain (Supra), it is argued that before pronouncing the judgment under Sections 15 & 17 of the Act of 1940, the Court was required to apply its mind to reach to a conclusion whether there exists any clause to modify or remit the award. The judgment must indicate judicial determination by a reasoned order and while doing so the Court is duty bound to examine (i) whether there is any error of law apparent on the face of the award; (ii) the award is incapable of being executed; & (iii) whether it contains any obvious error that a part of award is upon a matter not referred to arbitrator. If ground is based upon breach of mandatory provisions of law, a party cannot be estopped from raising the same in his objections to the award even after his participation in the proceedings. No “estoppel” operates against a statute. It is urged that arbitrator cannot act arbitrarily, irrationally, capriciously or independent of the contract. If no written arbitration agreement exists, the Act of 1940 and its provisions are not applicable. No award can be passed in terms of Section 14 of the Arbitration Act. Jurisdiction cannot be conferred even with the consent of the parties. If authority/court doesn’t have jurisdiction, any such consent or waiver is of no consequence. The contention of appellant is that whether or not such grounds are specifically taken, the objections can be raised. Moreso, when objections are relating to questions of law. 9. The next attack on the impugned order is relating to grant of interest. The appellant contended that the arbitrator and court below have committed illegality in granting interest. Clause 5 of agreement specifically makes it clear that “no interest is payable on the amount withheld under the item of agreement”. The appellant contended that the amount of Rs.2,23,215/- was withheld by Chief Engineer by order dated 01.10.1992 due to over payment regarding labour escalation. The Court below and arbitrator have granted higher rate of interest which was impermissible and such grant was without there being any reason and justification.
The appellant contended that the amount of Rs.2,23,215/- was withheld by Chief Engineer by order dated 01.10.1992 due to over payment regarding labour escalation. The Court below and arbitrator have granted higher rate of interest which was impermissible and such grant was without there being any reason and justification. Reliance is placed on AIR 2002 SC 258 [State of Rajasthan vs. Nav Bharat] and it is submitted that in the said case the Apex Court modified the award qua the rate of interest and reduced the same to 6% per annum. 2016 (6) SCC 36 [Union of India vs. Ambika Construction] is relied upon to contend that if contract expressly bars the award for interest pendente lite, the same cannot be awarded by the arbitrator. 10. The appellant criticized the award and impugned order by submitting that the respondent has made prayer to file the agreement relating to construction of 100 numbers of ‘B Type Quarters’ for Bina Project. This agreement was filed before the arbitrator and court. For this reason, arbitrator was appointed to resolve the dispute relating to Bina Project only. The respondent has filed the claim in relation to three more contracts which were not even entered into with the NCL. These separate three contracts were entered into with Central Coalfield Limited (CCL). The arbitrator has committed an error of law and jurisdiction while dealing with these agreements when the same were not even filed before him. This act of arbitrator was illegal and amounts to a misconduct on his part. In absence of filing the agreements, no decision could have been taken relating to this argument. In support of this contention reliance is placed on AIR 1975 SC 1259 [KP Paulse vs. State of Kerala] and 1997 (4) SCC 121 [TN Electricity Board vs. Bridge Tunnal]. 11. The next ground of attack to the award is that initially arbitrator was given time of six months to pass the award as per letter of District Judge dated 06.12.1997. This time was extended by order dated 08.09.1997 till 31.12.1997. The parties on 19.03.1998 mutually agreed that award may be passed by 15.04.1998. Since award could not be passed upto this last date i.e. 15.04.1998, the award was passed beyond time and became invalid for this reason.
This time was extended by order dated 08.09.1997 till 31.12.1997. The parties on 19.03.1998 mutually agreed that award may be passed by 15.04.1998. Since award could not be passed upto this last date i.e. 15.04.1998, the award was passed beyond time and became invalid for this reason. Reference is made to 1985 (2) SCC 629 [State of Punjab vs. Hardayal] and judgment of this Court reported in 2008 (1) MPLJ 484 [Ashok vs. KK Saxena]. The award is also called in question by contending that certain claims were bared by limitation. The claim of Appendix-2 of minor quarters, the agreement was entered into on 19.12.1983 and final payment was to be made by 30.04.1987. The claim was hopelessly bared by time. Similarly, the claim of Appendix-3 of Amlohri Workshop was of 15.12.1984 and contract was terminated on 22.06.1985. Similarly, claim of Appendix-4 was relating to construction of quarters at Jhingurda and agreement regarding this was entered on 26.09.1980 and work was completed on 11.09.1983. All these claims were made much beyond the period of limitation. The claim petition before the arbitrator was filed on 20.02.1997 and for this reason alone, the claims could not have been entertained. At the cost of repetition, Shri Jain relied on the judgment of Binod Bihari (Supra). 12. Lastly, it is submitted that the gazette notification dated 29.06.1985 came into force from the date of publication i.e. 29.06.1985. The arbitrator wrongly held that it could be possible that notification might have been published in the newspaper between 01.07.1985 and 15.07.1985. Attention of this Court is drawn on para 9 of the award. It is argued that the said finding runs contrary to the provisions of General Clauses act as well as the settled principle that the publication of gazette gives a knowledge to all concerned and this principle can be diluted only in certain criminal cases. AIR 2000 SCC 1102 [Union of India vs. M/s. Ganesh Das] is referred to in this regard. Shri Jain submits that the arbitrator has erred in holding that rate of labour on the date of submitting tender was Rs.10.50/- and not Rs.16.50/-. 13. Per contra, Shri N.S. Ruprah, learned counsel for the respondent/Contractor supported the award and the impugned order of Court below. It is argued that there is no jurisdictional error in the award passed by the Arbitrator, which got a stamp of approval by the Court below.
13. Per contra, Shri N.S. Ruprah, learned counsel for the respondent/Contractor supported the award and the impugned order of Court below. It is argued that there is no jurisdictional error in the award passed by the Arbitrator, which got a stamp of approval by the Court below. The appellant cannot be permitted to raise the issues/objections, which were not raised before the Arbitrator and before the Courts below. Reliance is placed on (2011) 10 SCC 573 (MSK Projects India (JV) Ltd. vs. State of Rajasthan). The respondents further contended that a long delay defeats the objection relating to the appointment of Arbitrator. Reference is made to (2004) 5 SCC 314 (Sathyanarayan Brothers (P) Ltd. vs. T.N. Water Supply & Drainage Board). It is argued that a plausible view taken by the Arbitrator need not be interfered in view of (2009) 10 SCC 63 (Sail vs. Gupta Brothers Steel Bulbs Ltd.). The stand of the respondent is that after due participation in arbitration proceeding, it is no more open to the appellant to contend that arbitration award was void. A question depending on investigation of facts is a question of fact and in absence of categorical pleading in this regard before the trial Court, no interference is warranted by the High Court in (1980) SCC 5 (Nirod Baren Benerjee vs. Dy. Commissioner of Hazaribagh). 14. The contention of respondent is that arbitration proceeding were for all the agreements and this point was clarified by the District Court while sending Annexure 5 for adjudication/resolution of dispute to the Arbitrator. There is no error in the arbitration proceeding. At the time the basic agreement was entered into, the area was within the jurisdiction of Northern Coalfields Ltd (NCL). However, some of the area of NCL was later on carved out and given to a newly formed company namely Central Coalfields Ltd. (CCL). Hence, CCL was nothing but a newly formed company carved out of the jurisdiction of NCL. 15. The respondents further submitted that the interest was rightly awarded by the Arbitrator and Court below. Shri Ruprah placed heavy reliance on Clause 5 of Agreement (Page 52) and contended that the language employed in this clause is very important. The language so used in the agreement will determine the liability for grant of interest for the parties.
15. The respondents further submitted that the interest was rightly awarded by the Arbitrator and Court below. Shri Ruprah placed heavy reliance on Clause 5 of Agreement (Page 52) and contended that the language employed in this clause is very important. The language so used in the agreement will determine the liability for grant of interest for the parties. To bolster his submission, he submits that in the manner Clause 5 is worded, the expression that “no interest is payable” is confined to the “amount withheld under the item of agreement.” This clause/expression can not be treated as a blanket expression for not awarding interest on any other head. In support of grant of interest, the reliance is placed on (2001) 2 SCC 721 (Dhenkanal Minor Irrigation Division vs. N.C. Budharaj), AIR 1992 SC 332 (Secy. Irrigation vs. G.C. Roy), (2002) 3 SCC 175 (Inder Sain Mittal vs. Housing Board), (2001) 8 SCC 482 (Maharashtra State Electricity Board vs. Sterilite Industries), (2016) 6 SCC 36 (Union of India vs. Ambika Construction), AIR 2001 SC 816 (T.P. George vs. State of Kerala), (2005) 6 SCC 462 (Bhagwati Oxygen vs. Hindustan Copper), (2011) 7 SCC 279 (Union of India vs. Krafters Engineering2012) 12 SCC 10 (Tehri Hydro Development Corpn. Ltd. vs. Jai Prakash Associates) & (1999) 4 SCC 327 (Oil & Natural Gas Commission vs. M.C. Clelland Engineers). 16. Further more, it is stated that the time was extended periodically by mutual consent of the parties by the Arbitrator. Section 3 of the Act shows that if a different intention is expressed by the parties, time can be extended. Section 28 also recognizes the consent of the parties to the agreement for enlarging time for making award. It is stated that on 08-09-1997, the District Judge forwarded Annexure 5 to the Arbitrator by giving complete idea regarding ambit and scope of arbitration. On 19-03-1998 the claimant/respondent and employer submitted a joint submission indicating the gross amount to the claimant and also the net amount. The NCL while filing objection before the Court below did not utter a single word regarding the consumption of more time than the permissible limit. In the impugned judgment, a finding is given that the Arbitrator has passed the award within the permissible time limit.
The NCL while filing objection before the Court below did not utter a single word regarding the consumption of more time than the permissible limit. In the impugned judgment, a finding is given that the Arbitrator has passed the award within the permissible time limit. It is emphasized that even in the present memo of appeal filed under Section 39 before this Court, no plea is taken that award is vitiated because it is passed beyond the prescribed time limit. Assistance is taken from (1987) 4 SCC 93 (Hindustan Steel Works Construction Ltd. vs. C. Rajeshwar Rao) to contend that such time limit can be extended even by the Appellate Court. For the same purpose (1973) 2 SCC 510 (Hari Krishna Wattel vs. Vaikunth Nath Pandya & Anr.) is relied upon. 17. The counsel for the Contractor urged that for the first time in the instant appeal, it is contended that the Court below has failed to appreciate that there were various contracts executed between the parties on various dates which give different cause of action and, therefore, separate references were required to be raised. It is contended that no such objection has been raised before the Court below or before the Arbitrator. In absence of any objection regarding misjoinder of cause of action or impermissibility of reference, this plea for the first time, at this stage, cannot be entertained. 18. The counsel for the respondent has taken pains to submit that the starting point of whole dispute is issuance of order dated 01-10-1992 (Page 48 of Paper Book) passed by NCL Singrauli. Based on this order, it is submitted that this order was placed before the Arbitrator and the appellant NCL never treated the Saluja Construction and Navtej Builders as separate entities. Thereafter, reliance is placed on arbitration agreement in which it is mentioned that all dispute or differences whatsoever arising between the parties or relating to construction were arbitrable. The respondents while approaching the District Judge through application filed under 8/20 of Arbitration Act requested to address the matters mentioned in Annexure 5. Annexure 5 includes four different works which resulted in issuance of various bills total of which was Rs.15,52,434/-. These bills were relating to Bina Project, Amlohri Work and construction at Jhingurda Colliery. On 06-05-1996, the District Judge sent copy of Annexure 5 to the Arbitrator. On 15-02-1997, the Arbitration commenced.
Annexure 5 includes four different works which resulted in issuance of various bills total of which was Rs.15,52,434/-. These bills were relating to Bina Project, Amlohri Work and construction at Jhingurda Colliery. On 06-05-1996, the District Judge sent copy of Annexure 5 to the Arbitrator. On 15-02-1997, the Arbitration commenced. On 05-07-1997 the Arbitrator stated that a doubt has been created as to whether he has to adjudicate upon all disputes mentioned in Annexure A 5 to the petition filed by the claimant, or he has to confine himself to the dispute relating to construction of hundred number 'B' type quarters at Beena. The claimant was directed by Arbitrator to seek clarification from the Court. In turn, 08-09-1997, the District Judge forwarded Annexure 5 to the Arbitrator giving him guidance regarding ambit and scope of arbitration. Shri Ruprah contended that the note sheet of Arbitrator shows that Annexure 5 was included as a claim and thereafter the parties submitted their respective claims. Thus, no fault can be found in the award passed by the Arbitrator which is in consonance with the Arbitration Act. The appellant raised only two points before the Court below namely (a) interest could not be awarded prior to the date of reference; (b) deduction was rightly done by the NCL because the respondent used 50 “B” bricks provides instead of 75 “B” bricks. 19. At the cost of repetition, it is argued that the expression “disputes and differences whatsoever arising between the parties” or relating to the construction are wide enough to cover all the projects and agreement. 20. In support of aforesaid contentions, learned counsel for the parties filed their written submissions. 21. This Court heard the parties at length and perused the record. 22. In view of aforesaid factual backdrop, the following issues emerge for decision in the present appeal:- (1) Whether the learned Arbitrator has committed any misconduct/error in passing the award in relation to different firms and different contracts ? (2) Whether the learned Arbitrator and Court below have erred in not considering the aspect of limitation ? (3) Whether the award can be upheld if it is delivered beyond the maximum period agreed upon by the parties ? (4) Whether the finding regarding the date of gazette notification is correct ? (5) Whether the grant of interest to the respondent was legal and justified? (6) Relief ? Issue No. 1 23.
(3) Whether the award can be upheld if it is delivered beyond the maximum period agreed upon by the parties ? (4) Whether the finding regarding the date of gazette notification is correct ? (5) Whether the grant of interest to the respondent was legal and justified? (6) Relief ? Issue No. 1 23. This is not in dispute between the parties that the claim No.1 was regarding Beena Project and the respondent initially sent a demand notice claiming an outstanding amount of Rs.2,23,215/- only. The respondent later on filed an application before the Court under Section 8 r/w Section 20 of the Arbitration Act. This application contains 15 paragraphs out of which only in Para 14 the Contractor contended that a huge amount of Rs.15,52,434/- exclusive of interest is outstanding. The claims of different works are detailed in schedule annexed as Annexure P/5. A simple reading of this petition shows that the petitioner has contended that by order dated 01-10-1992, the payments of petitioner and another concern M/s. Navtej Builders Ranchi were kept in abeyance. Except in Para 14 aforesaid, in the entire petition, the Contractor has averred about construction of hundred number of “B Type” quarters at Beena or criticized the action of present appellant/NCL in withholding the amount and in not resolving the dispute etc. Pertinently, the petition aforesaid was filed exclusively by M/s. Saluja Construction Company, the present respondent. The NCL filed its response before the Court stating that there exists no dispute between the petitioner and respondent. There may be calculation mistake or wrong billing etc. which can be resolved but cannot be referred for arbitration. The NCL is ready to pay the remaining amount, if any error is found in the mathematical calculation. It is averred that since there exists no dispute between the parties, the Court has no jurisdiction to appoint an Arbitrator to resolve the dispute. The NCL raised objection that the dispute as per claimant's own saying arose in the year 1987 and, therefore, petition is clearly barred by time. 24. The Contractor filed the statement of claim before the Arbitrator contending that the proposed recovery of a substantial amount is on account of erroneous escalation payment made by the NCL against the Contractor under reference i.e. construction of hundred number of “B Type” quarters at Beena.
24. The Contractor filed the statement of claim before the Arbitrator contending that the proposed recovery of a substantial amount is on account of erroneous escalation payment made by the NCL against the Contractor under reference i.e. construction of hundred number of “B Type” quarters at Beena. In Para 10, it is pleaded that the respondents have not only withheld the final bill of Contractor for this work, they ordered to stop all the payments against other works being done by this firm, as well as to withhold all the payments of M/s. Navtej Builders which is a sister organization/firm having some of the partners common in both the firms. It is specifically stated that the main dispute is about labour escalation payment made by the NCL during the course of construction of buildings under the Contract. On more than one occasion in this statement of claim, the Contractor averred that M/s. Navtej Builders is a sister concern. It is clearly pleaded that an amount of Rs.5,85,627/- approximately of M/s. Navtej Builders is withheld since last 8 to 10 years. The non-payment of huge amount due to M/s. Navtej Builders is aring out of main dispute for construction of hundred number of quarters for Beena. The NCL filed its reply before the Arbitrator and raised preliminary objection. The objection is relating to maintainability of the claim on the ground that it is not arbitrable. In addition, it is averred that the claim is barred by stopple waver, acquiescence. A specific objection raised that claim of Contractor are de horse the contract and hence such claims are not arbitrable. The NCL pleaded that the claims of Contractor are against express prohibitions stipulated in the contracts. The Arbitrator cannot ignore such prohibitions and award the amount. In Page 3 of this reply, it is stated that last payment was processed at Beena on 21-07-1987. The Contractor has erroneously mentioned the date of last payment as 30-03-1988. The stand of NCL was that payment of Contractor and M/s. Navtej Builders was kept in abeyance due to over payment made to them based on misleading information given by them. 25. Before going in detail, it is apposite to refer certain provisions of Arbitration Act.
The Contractor has erroneously mentioned the date of last payment as 30-03-1988. The stand of NCL was that payment of Contractor and M/s. Navtej Builders was kept in abeyance due to over payment made to them based on misleading information given by them. 25. Before going in detail, it is apposite to refer certain provisions of Arbitration Act. Section 2 (a) defines “arbitration agreement” which reads as under:- “2.(a) “arbitration agreement” means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not.” 26. Section 3 of Arbitration Act reads as under:- “3. Provisions implied in arbitration agreement-An arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference.” 27. Entry 6 of First Schedule is reproduced as under:- “6. The parties to the reference and all persons claiming under them shall, subject to the provisions of any law for the time being in force, submit to be examined by the arbitrators or umpire on the oath or affirmation in relation to the matters in difference and shall, subject as aforesaid, produce before the arbitrators or umpire all books, deeds, papers, accounts, writings and documents within their possession or power respectively, which may be required or called for, and do all other things which, during the proceedings on the reference, the arbitrators or umpire may require.” 28. Section 20 (1) is also relevant to decide the present appeal, which is reproduced as under:- “20. Application to file in Court arbitration agreement-(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.” 29. As noticed above, it is crystal clear that the Contractor initially put-forth his claim through legal notice relating to Beena Project only. However, subsequently, he added some more claims in relation to other projects and specifically contended that such claims are also arising out of withholding of payment of M/s. Navtej Builders, a sister concern/firm.
As noticed above, it is crystal clear that the Contractor initially put-forth his claim through legal notice relating to Beena Project only. However, subsequently, he added some more claims in relation to other projects and specifically contended that such claims are also arising out of withholding of payment of M/s. Navtej Builders, a sister concern/firm. During the course of arguments, Shri Jain, learned counsel for the appellant contended that before the Arbitrator and Court, only one agreement relating to Beena Project was filed by the Contractor. Hence, the Arbitrator and Court below were not justified in entertaining the claim of contract or in relation to different contracts and different firms. 30. Shri Ruprah, learned counsel for the respondent was unable to show any material to establish that all the relevant agreements were filed before the Arbitrator and Court. Putting it differently, if claims of more than one project arising out of different agreements and relating to different firms were raised in single application, the question is whether said claim was tenable and whether learned Arbitrator and Court below were required to examine this aspect ? This point requires serious consideration. Section 3 r/w Item 6 of Schedule 7 shows that the parties are under an obligation to produce the relevant books, deeds, papers, accounts, writings and documents which are required in the proceedings on the reference. 31. Section 20 is about an application to be filed in Court. The expressions “where a difference has arisen to which the agreement applies” and “that the agreement to be filed in the Court” are very relevant and important. The application must be in relation to a difference arising out of an agreement which applies. At the cost of repetition, it may be remembered that in response to application filed under Section 8 r/w Section 20 of the Act, the NCL took objection about the arbitrability, jurisdiction, limitation and existence of dispute. In this backdrop, the learned Arbitrator and the Court below were required to examine the relevant agreements and in all fairness, the Contractor himself should have filed all relevant agreements before the Arbitrator and Court below. 32. Annexure 5 in which claims is described is reproduced for ready reference :- “Annexure-5 M/s Saluja Construction company S.No. Name of Work Agreement No. Claims Bill Amount 1. 100 Nod. type 'B' quarters at Bina SE (C) B/85/14019 2,23,215-00 dt. 11-1-86 2. 304 minor qutrs.
32. Annexure 5 in which claims is described is reproduced for ready reference :- “Annexure-5 M/s Saluja Construction company S.No. Name of Work Agreement No. Claims Bill Amount 1. 100 Nod. type 'B' quarters at Bina SE (C) B/85/14019 2,23,215-00 dt. 11-1-86 2. 304 minor qutrs. at Amlohri P.0/AML/84923 dt. 23-2-84 (i) Bricks sub clause 50-2.01 lac (ii) Transportation of cement – 0.10 lac Rs. 2,89,308-09 2.11 lac 3. Workship at Amlohri Work order No. PO/US/(C) (i) 4.2 lac 94/3117-29/dt.13-12-84 work termination (ii) Earnest money Rs. 0.20 lac (iii) Work done Rs.0.25 lac Rs. 4.65 lac 4. Under group 3 Singrouli CE(C) work Bulk const. Programme -Rs.3, 63, 911-00 913-19 dt. Sth Feb.1981 Total Rs. 6.76 lac Rs. 8, 75, 434-09 Grand Total Rs. 15, 52, 434-09" 33. Annexure 5 itself shows that the claims are based on different agreements and relating to different works carried out at Beena, Amlohri and Singrauli etc. In view of specific objection raised by NCL before the Court and Arbitrator, both of them should have ensured the existence of agreements, arbitrability and existence of dispute. In addition, the question of limitation and estoppel were also required to be examined. Since a single claim preferred by respondent is pregnant with claims of another firm (Navtej Builders), the Arbitrator and Court were duty bound to examine the tenability of such claim. 34. In the case of K.P. Poulose (supra), the Apex Court held that Ex.P/11 and P/16 were material documents to arrive at a just and fair decision to resolve the controversy between the parties. The parties did not produce these documents before the Arbitrator. Hence, it was incumbent upon him to get all the relevant documents including Ex.P/11 and P/16. It is further held that misconduct under Section 30 (a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if Arbitrator on the face of award arrives at an inconsistent conclusion even on his own finding and arrives at a decision by ignoring very material documents which throw abundant light on a controversy. 35. In the case of T.N. Electricity Board (supra), their Lordships held that the Arbitrator while deciding the dispute may decide the dispute in reference to the agreement.
35. In the case of T.N. Electricity Board (supra), their Lordships held that the Arbitrator while deciding the dispute may decide the dispute in reference to the agreement. If the Arbitrator decides a dispute which is beyond the scope of reference or beyond the subject matter of the reference or he makes the award disregarding the terms of reference or the arbitration agreement or terms of contract, it would be a jurisdictional error beyond the scope of reference, he cannot clothe himself to decide conclusively that dispute as it is an error of jurisdiction which requires to be ultimately decided by the Court. In this judgment, it was further decided that once a finding is recorded that Arbitrator has committed error of jurisdiction, two course are open viz either to remit the award to Arbitrator for reconsideration or to set aside the award in toto. 36. Learned counsel for the Contractor relied on the judgments of Supreme Court in the case of Indar Sen Mittal, Maharashtra State Electricity Board and Hindustan Construction (supra) to contend that if no objections are raised at appropriate level, the doctrine of waver would apply. These judgments cannot be pressed into service in the instant case for the simple reason that that the response of NCL before the Arbitrator and Court is pregnant with relevant objections. The objection regarding existence of dispute, arbitrability, limitation and tenability of claim at the behest of two firms were raised and, therefore, the question of waver does not arise. 37. In view of this discussion, in my opinion, Issue No.1 must be decided against the Contractor. Thus, it is held that in absence of filing relevant agreements/documents, the claim was not entertainable. The Arbitrator has mis-conducted himself while awarding the claim without examining the aspect of existence of dispute, arbitrability, limitation etc. Issue No.2 38. This issue is regarding limitation in filing the claim. Article 137 of the Limitation Act provides that when no period of limitation is provided elsewhere, the period of limitation will be three years from the date right to apply accrues. The objection regarding limitation was taken by NCL before arbitrator/Court. In the case of Binod Bihari (supra) based on Arbitration Act, it was poignantly held that a bar of limitation can be considered even if such plea has not been specifically raised.
The objection regarding limitation was taken by NCL before arbitrator/Court. In the case of Binod Bihari (supra) based on Arbitration Act, it was poignantly held that a bar of limitation can be considered even if such plea has not been specifically raised. The limitation bars a cause of action in a Court of law, which is otherwise lawful and valid, because of undesirable lapse of time, as contained in Limitation Act. It has been made on a well accepted principle of jurisprudence and public policy. In the present case, the Appendix I (Page 87) filed by the Contractor contains the claim based on agreement dated 11-01-1986 and period was between 11-01-1986 to August, 1987. The Appendix II shows that the date of agreement is 19-12-1983 and it relates with construction of 304 quarters at Amlohri. The Appendix III shows that the date of agreement is 15-12-1984. The document Appendix III (Page 4) shows that the contract was terminated by Management on 22-06-1985. Thus, the objection raised by Management regarding limitation should have been dealt with by the arbitrator/court. 39. In view of aforesaid, I am constrained to hold that learned Arbitrator and Courts have committed a serious error of law in not examining the claim on the touch stone of prescribed limitation. Issue No.3 40. This issue is regarding extension of time in passing the award. In the instant case, admittedly, the initial period fixed for resolving dispute by the Court was extended on mutual agreement of the parties. Before last date fixed as per mutual agreement, the award could not be passed. However, in view of (1985) 2 SCC 629 (State of Punjab vs. Hardayal), the Appellate Court is also entitled to exercise the powers based on Section 28 and 3 of the Act and in such circumstances, the power for extension of time can be exercised. Thus, no fault can be found in the award to this extent. To clarify, it is held that the time stands extended and award cannot be interfered on the ground that it was not passed within stipulated time granted by the Court and extended by mutual consent of the parties. Issue No.4 41. This issue is regarding the date of enforcement of gazette notification.
To clarify, it is held that the time stands extended and award cannot be interfered on the ground that it was not passed within stipulated time granted by the Court and extended by mutual consent of the parties. Issue No.4 41. This issue is regarding the date of enforcement of gazette notification. The pleadings of Contractor and award of Arbitrator shows that as per their understanding, the whole controversy resolves around this aspect i.e. actual date when the notification came into being. The notification itself shows that it was published in official gazette of State of U.P. on 29-06-1985. The learned Arbitrator has taken pains to give a contrary finding. The said finding is recorded on the basis of certain depositions/evidence etc. In the opinion of this Court, when the date of publication of notification is clear on the forehead of the notification, no amount of evidence can alter such date of publication or its implementation. The learned arbitrator on more than one occasion opined that the main issue to be sorted out and to be decided was whether on the date of opening of the tender for the construction of 100 numbers Type “B” quarters at Bina, the revised minimum rates for un-skilled labour was notified and what was the base rate for the labour payment. Once this issue is sorted out, other claims are only matter of record. The arbitrator held that gazette notification dated 29.06.1985 was actually printed and published after the crucial dated i.e. 05.07.1985 (date of tender). In my view on the forehead of the notification, the date of publication is mentioned as 29th June, 1985. A careful reading of the notification shows that it was published in the official gazette (extra ordinary) of Government of Uttar Pradesh on 29th June, 1985. This is not in dispute between the parties that the said notification is governed by the Uttar Pradesh General Clauses Act, 1904 (UP Act No. I of 1904). Section 4(18) defines the word “Gazette” which shall mean the official gazette for Uttar Pradesh. Section 23(i)(e) of the said Act of 1904 provides that the publication in the official gazette of a rule made in exercise of a power after publication shall be conclusive proof that the rule has been duly made. 42.
Section 4(18) defines the word “Gazette” which shall mean the official gazette for Uttar Pradesh. Section 23(i)(e) of the said Act of 1904 provides that the publication in the official gazette of a rule made in exercise of a power after publication shall be conclusive proof that the rule has been duly made. 42. There was a cleavage of opinion amongst two Judges Bench of Supreme Court on the aspect as to when a notification comes into force and this aspect was dealt with by a Larger Bench in the case reported in AIR 2000 SC 1102 [Union of India vs. M/s. Ganesh Das Bhojraj]. In this case, it was poignantly held that for bringing notification into operation, the only requirement of the section is its publication in the official gazette and no further publication is contemplated. In para 18, the Apex Court held that the notification was produced before the Court. The gazette notification is admissible being official record evidencing public affairs and the Court is required to presume its contents as genuine under Sections 35, 38 & 81 of the Evidence Act unless contrary is proved. R.C. Lahoti, J clarified that there may be cases where on account of breach of a rule made by notification issued in exercise of delegated power to legislate, a person may incur criminal liability. Such cases can also be divided into two classes- (i) where mens rea is a essential ingredient of an offence; (ii) where expressly or by necessary implication mens rea is ruled out as an ingredient of offence. In the present case, the question of mens rea and criminal liability etc. is not in question. Hence, the date of publication of gazette mentioned on the forehead of notification cannot be doubted. At the cost of repetition, it may be remembered that the stand of contractor and finding of arbitrator is that the whole controversy is relating to the rate of minimum wages payable to the workers. For the reasons stated above, I am constrained to hold that the gazette notification came into being on 29.06.1985 and therefore on the base date (05.07.1985) the said notification and rates mentioned therein were applicable. Thus, it cannot be said that the NCL has erred in applying the rate as per notification dated 29.06.1985 on the base date i.e., 05.07.1985. Issue No. 5 43.
Thus, it cannot be said that the NCL has erred in applying the rate as per notification dated 29.06.1985 on the base date i.e., 05.07.1985. Issue No. 5 43. Parties were at loggerheads on yet another issue relating to grant of interest. Shri Ruprah, during the course of arguments, relied on several judgments of Supreme Court about grant of interest. However, during the course of arguments, Shri Jain and Shri Ruprah fairly contended that the judgment of Supreme Court in the case of T.P. George (supra) is the authoritative pronouncement of law and question of grant of interest can be decided on the basis of this judgment. Thus, I am not inclined to deal with all the other judgments cited separately on this issue. In T.P. George (supra), the Apex Court held that Arbitrator can award interest for all four stages-(1) from the stage of accrual of cause of action till filing of arbitration proceeding, (2) during the pendency of the proceeding before the Arbitrator, (3) future interest arisen between the date of award and date of decree; and (4) interest arisen from the date of decree till the realization of award. Thus, the power of Arbitrator is very wide and he was well within his jurisdiction to grant the interest in the present case. 44. This Court will be failing in its duty if objection of Shri Greeshm Jain based on Clause 5 of the agreement is not considered. The said clause is reproduced as under:- “5. PAYMENT “On account” payment may be made at intervals. When the completion of the entire work is certified then one half of the total security deposit will be refunded to the contractor. The total accounting will be made and the contractor/contractors shall draw final payment of all the money due or payable to them under or by virtue of the contract. The other half of the security deposit will be retained and paid to the contractor/contractors after a period of six months, or as soon as after the expiration of such period of six months. Provided that in case of building work the above said amount shall be refunded after a period of six months or at the end of one full monsoon which ever is later in point of time.
Provided that in case of building work the above said amount shall be refunded after a period of six months or at the end of one full monsoon which ever is later in point of time. During the period of six months or one full monsoon season mentioned above the contractor shall be responsible to set right any defect or defects that might appear in the work and in case of building work, the above amounts shall be paid only after the buildings have proved to be completely water tight during one full monsoon and all defects have been made good. In case anything is found to have been paid in excess, the contractor/contractors shall return the same. No interest if payable on amounts withheld under the item of the agreement.” 45. A bare reading of this provision shows that there is substantial force in the argument of Shri Ruprah that the clause is couched in a different language which only prohibits payment of interest on the amount withheld under the item of agreement. The said clause shows that after completion of entire work, one half of the total security deposit will be refunded, whereas remaining half of security deposit will be retained for a stipulated time and after completion of that period, the other half of security deposit or amount withheld shall be paid. The interest cannot be claimed on this amount which was withheld. In other words, the clause deprives the claimant from claiming interest on other half of the security deposit which could be retained under first portion of Clause 5. Thus, there is no scintilla of doubt that claimant is entitled to get interest on the entire amount on delayed payment except one half of the security deposit which can be retained. This issue is answered accordingly. 46. In the case of (2012) 12 SCC 10 Tehri Hydro Development Corporation ltd. vs. Jai Prakash Association Lts.), it was held that the question of grant of interest would depend on the nature of relevant clause in the contract. Hence, it is to be seen whether as per Clause 5 aforesaid, the grant of interest is permissible ? In the considered opinion of this Court, a careful reading of Clause 5 shows that there is no blanket prohibition on award of interest.
Hence, it is to be seen whether as per Clause 5 aforesaid, the grant of interest is permissible ? In the considered opinion of this Court, a careful reading of Clause 5 shows that there is no blanket prohibition on award of interest. The clause only shows that no interest is payable on amount withheld under the items of the agreement. Part 1 of Clause 5 shows that certain amounts can be withheld. 47. In view of aforesaid analysis, the appellant deserves to succeed. Accordingly, the award passed by the Court below dated 12.06.1998 and order of Court below dated 27.09.2009 are set aside. Resultantly, the appeal is allowed. No cost.