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2018 DIGILAW 488 (RAJ)

State of Rajasthan v. Murari Lal Singhal

2018-02-08

INDERJEET SINGH

body2018
JUDGMENT Inderjeet Singh, J - Both these appeals have been filed by the appellant against the judgment dated 17.03.2008 passed by District Judge, Dholpur in application under Section 34 of the Arbitration and Conciliation Act,1996 (to be referred as Act of 1996). 2. Brief facts of the case are that the State of Rajasthan (to be referred as Department) allotted the work of restoration of existing damaged CD Works of Dholpur-Soneka Gurja Road Via Van Vihar vide Agreement No.29/1990-91 to M/s Murari Lal Singhal (to be referred as contractor). Department vide order dated 12.11.1990 directed the contractor to start the work amounting to Rs.11,80,922/-, the schedule date to start the work was 06.12.1990 and completion date was 05.06.1991. The contractor started the work however the work could not be completed and the prescribed time therefore the claimant requested for extension of time and the time was extended by the Department. When the department failed to pay the running bills submitted by the contractor then the contractor filed an application for appointment of an arbitrator to the department and the department vide order dated 20.05.2004 appointed Shri N.P. Mathur Retd., Chief Engineer P.W.D. as sole arbitrator. That after appointment of arbitrator, the claimant filed its statement of claim before the Learned Arbitrator and total five claims were submitted by the contractor amounting to Rs.6,84,584/-. The contractor also requested for awarding 18% interest per annum. The department submitted reply to the claim and denied the averments. The Learned Arbitrator framed following issues:- "1. Whether the claimant was prevented from the execution of work due to hindrances and non fulfillment of contractual obligation by the department as alleged in the statement of Facts and Claims which party is responsible for prolongation of contract or not? 2. Which party to the contract Claimant/Respondent is responsible for substantial or part breach of contract? 3. Whether the contract has been finalized and determined by payment of final bill under acceptance of Claimant to close it by the Respondent or not?, if so, what are the reasons and consequences thereof on both the parties? 4. Is the Claimant in view of issues No.1 to 3 above entitled for payment of final bill for Rs.1,56,481/- within the prescribed period upto 6.1.93 or not? 5. 4. Is the Claimant in view of issues No.1 to 3 above entitled for payment of final bill for Rs.1,56,481/- within the prescribed period upto 6.1.93 or not? 5. Whether the Claimant is entitled to receive from the Respondent a sum of Rs.56,481/- or any other sum towards refund of security amount or not from 6.1.93? 6. Whether the recovery by Respondent against Claimant for total cost of material supplied is due or not?, if so its amount with detail if not what is the burden on the Respondent and Claimant? 7. Whether the delay in completion of work by the Claimant due to alleged delay on the part of Department entitled the Claimant for grant of payment of price escalation amounting to Rs.1,25,002/- or not?' if not under what reasons and justification? 8. Whether the Claimant is entitled to receive from the respondent a sum of Rs.2,36,184/- including interest or any other sum towards extra overhead charges and loss of profit due to prolongation of work beyond stipulated date of prolongation of work beyond stipulated date of completion in view of issue No.1 to 3 above or not? 9. Whether the Claimant is entitled to receive from the Respondent interest @ 18% per annum on the principal amount of claims as referred in various claims above submitted by Claimant from 6.1.93 to actual date of payment? 10. Any other relief demanded by each party during arbitration proceedings." 3. The Learned Arbitrator after considering the evidence submitted by both the parties allowed the claim for a sum of Rs.3,55,349/- in favour of the contractor along with interest @ 18% per annum. 4. Aggrieved by the award dated 03.11.2006, the department filed objections under Section 34 of the Act of 1996 before the Learned District Judge. The Learned District Judge partly accepted the objections and modified the award for the interest part only. The Learned District Judge awarded the interest @ 10% per annum prior to passing of the award i.e. 03.11.2006 and awarded the interest @ 15% after passing of the award and accordingly modified the award vide order dated 17.03.2008. Being aggrieved by the order dated 17.03.2008 passed by Learned District Judge, the department has filed Appeal No.3443/2008 and the contractor has also filed Appeal No.4765/2011 only against the modification of the award regarding payment of interest. 5. Heard learned counsel for the parties and perused the record. 6. Being aggrieved by the order dated 17.03.2008 passed by Learned District Judge, the department has filed Appeal No.3443/2008 and the contractor has also filed Appeal No.4765/2011 only against the modification of the award regarding payment of interest. 5. Heard learned counsel for the parties and perused the record. 6. Counsel for the Department submitted that the Learned District Judge has wrongly dismissed the objections submitted by the department under Section 34 of the Act of 1996. Counsel further submits that the Learned Arbitrator has not considered the evidence submitted by the department before him and wrongly passed the award. Counsel further submits that at the initial stage hindrance free site was given to the contractor and the department provided all the drawings and detailed designs of the work at the initial stage to the contractor. Counsel further submits that the Learned Arbitrator failed to consider the reply submitted by the department. Counsel further submits that the Learned Arbitrator has favoured the contractor while passing the award which comes under the definition of misconduct. Lastly counsel further submits that the award as well as order passed by the Learned District Judge deserves to be quashed and set aside. 7. Counsel for the contractor submits that the Learned District Judge has wrongly modified the interest part of the award. 8. Heard learned counsel for the parties. 9. The contention raised by counsel for the department regarding non-consideration of their reply as well as nonconsideration of evidence submitted by the department before the Arbitrator is not acceptable because in the opinion of this court, the Arbitrator is the master of quality and quantity of evidence. This court while applying the public policy test to an arbitration award cannot act as a court of appeal and consequently errors of fact cannot be corrected. 10. The Hon'ble Supreme Court in the matter of Associate Builders Vs. Delhi Development Authority reported in 2015 (3) SCC 49 , wherein para no. 33, has held as under:- "33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. Delhi Development Authority reported in 2015 (3) SCC 49 , wherein para no. 33, has held as under:- "33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score1 . Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P .R. Shah, Shares and Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd ., this Court held: (SCC pp. 601-02, para 21) "21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second Respondent and the Appellant are liable. The case as put forward by the first Respondent has been accepted. Even the minority view was that the second Respondent was liable as claimed by the first Respondent, but the Appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Bye-law 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The finding of the majority is that the Appellant did the transaction in the name of the second Respondent and is therefore, liable along with the second Respondent. Therefore, in the absence of any ground Under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at." 11. The Division Bench of Delhi High Court in the matter of Jhang Co-operative Group Housing Society Ltd. Vs. Pt. Munshi Ram and Associates Limited reported in 2014(1)R.A.J. 252(Del) wherein para no. 16 & 17 has held as under:- "16. The Division Bench of Delhi High Court in the matter of Jhang Co-operative Group Housing Society Ltd. Vs. Pt. Munshi Ram and Associates Limited reported in 2014(1)R.A.J. 252(Del) wherein para no. 16 & 17 has held as under:- "16. If the Arbitrator has taken a view which the court finds reasonable and plausible, the court would certainly not interfere. 17. The extent of judicial scrutiny under Section 34 of the Arbitration Act 1996 is limited and scope of interference is narrow. Under Section 37, the extent of judicial scrutiny and scope of interference is further narrower. An appeal under Section 37 is like a second appeal, the first appeal being to the court by way of objections under Section 34. Where there are concurrent findings of facts and law, first by the Arbitral Tribunal which are then confirmed by the court while dealing with objections under Section 34, in an appeal under Section 37, the Appellate Court would be very cautious and reluctant to interfere in the findings returned in the award by the Arbitral Tribunal and confirmed by the court under Section 34." 12. A complete reading of the award as well as the order passed by the Learned District Judge clearly shows that the Arbitrator has passed the award based on the evidence before him supplied by both the parties and this court cannot re-appreciate the evidence at appellate stage. 13. The next contention raised by counsel for the department regarding misconduct committed by the Arbitrator while passing the award as he has favoured the contractor is also not acceptable because after starting of the arbitration proceedings, the department at no point of time has challenged the appointment of arbitrator. Even otherwise, the contractor has claimed Rs.6, 84,584/- whereas against the said claims, the Learned Arbitrator has awarded only Rs. 3,55,349/-. Thus it cannot be said that the Learned Arbitrator has committed any misconduct. 14. The argument raised by counsel for the contractor regarding reducing of the interest as awarded by the Learned Arbitrator has no force. The Learned District Judge considering the economic reforms in our country and also considering the fact that rates of interest have been substantially reduced therefore in my opinion the order passed by Learned District Judge requires no interference by this court. 15. The Learned District Judge considering the economic reforms in our country and also considering the fact that rates of interest have been substantially reduced therefore in my opinion the order passed by Learned District Judge requires no interference by this court. 15. Thus in view of the above discussion, all the arguments raised by counsel for the parties relates to fact therefore I am not inclined to disturb the findings given by the Arbitrator. 16. In view of the legal position with regard to interference with the award passed by Arbitrator as recorded above, I am of the considered view that the appellant-department as well as contractor has not been able to make out any case in these appeals and the learned court below has rightly rejected the objections submitted by the appellants as no ground within the scope of Section 34 (2) of the Act of 1996 was made out. 17. In that view of the matter, both the appeals stands dismissed.