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Himachal Pradesh High Court · body

2019 DIGILAW 638 (HP)

State of H. P. v. Ajay Kumar Sood

2019-05-29

CHANDER BHUSAN BAROWALIA

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JUDGMENT : CHANDER BHUSAN BAROWALIA, J. 1. This petition/objection has been filed under Section 34 of the Arbitration & Conciliation Act, 1996 (for short the 'Act'), for setting aside the award passed by the Arbitrator-cum- Superintending Engineer, Arbitration Circle, HP. PWD, Solan, H.P., dated 06.1.2014 and Corrigendum award dated 11.3.2014 on behalf of Arbitration-cum-Superintending Engineer, Arbitration, Circle, HP. PWD, Solan. It has been averred that the work of "Widening including improvement of existing road of two lane of Shimla-Kangra Road NH-88 K.0/0 to 60/600" was awarded in favour of respondent/contractor, M/s Ajay Kumar Sood Engineers & Contractors by the Executive Engineer, National Highway, Division, Solan, vide his award letter No.2983-92, dated 13.06.2007 for Rs.3,59,16,622/- which was to be completed within stipulated period of one year. It has also been alleged that as per this award letter given to the respondent/contractor, the date of commencement of the said work was 07.11.2007, which was to be reckoned from the 15th day after issue of letter of award, hence, date of completion was 27.06.2008. 2. That the respondent filed application for appointment of Arbitrator before the Engineer-in-Chief, HP. PWD, Shimla, raising disputes having arisen between the parties relating to the said work and the disputes were referred to the arbitration pursuant to the office order dated 05.01.2012, issued by the Chief Engineer, National Highway, HP. PWD, Shimla. The claims and counter claims were filed before the Ld. Arbitrator by the respondent/Contractor and objector respectively. It has been alleged that during the proceedings, the respondent/contractor preferred five claims before the Ld. Arbitrator whereas objectors also preferred counter claim. The Ld. Arbitrator after conducting hearings of the arbitration case passed the impugned award dated 06.01.2014 and the signed copy was received by the appellant on 09.01.2014. Subsequently, the Arbitrator carried out corrections of typing mistakes in respect of Claim No.3 of the claimant/contractor in the original award dated 06.01.2014 by issuing a corrigendum in exercise of the powers vested in him under sub-section (3) of Section 33 of the Arbitration & Conciliation Act, vide letter dated 17.01.2004, which was received by the applicant on 20.1.2014. It has been submitted that after receipt of corrigendum, dated 17.01.2014, the applicant filed an application dated 3.3.2014 before the Ld. Arbitrator under Section 33 of the Arbitration & Conciliation Act, 1996 for rectification of some computation errors in the award against Claim No.1. The Ld. It has been submitted that after receipt of corrigendum, dated 17.01.2014, the applicant filed an application dated 3.3.2014 before the Ld. Arbitrator under Section 33 of the Arbitration & Conciliation Act, 1996 for rectification of some computation errors in the award against Claim No.1. The Ld. Arbitrator with the consent of both the parties for the revision of the impugned award read with corrigendum dated 17.1.2014, held 8th hearing of the case on 10.3.2014 and consequently the award against Claim No.1 was revised/reduced from the originally awarded amount of Rs.1,06,20,332/- to Rs.1,01,77,162/-, which was also admitted by the respondent/Contractor. It has been alleged that the award interest against claim No.3 @ 8% for the pre-pendentelite/ pendentelite was also agreed to be revised by both the parties. Hence, the learned Arbitrator vide his letter dated 11.3.2014, issued revised Corrigendum to the impugned award in suppersession of corrigendum of award issued vide letter dated 17.01.2014. It has been averred that the final award dated 11.3.2014, issued by the Arbitrator, was received by the applicant on 14.3.2014. 3. It has been averred that now the Ld. Arbitrator has awarded an amount of Rs.1,01,77,162/- against Claim No.1. Against Claim No.2, an amount of (-) Rs.3,97,764/- has been awarded. Against Claim No.3 of interest an amount of Rs.15,64,703/- @ 8% for a period of two years as pre-pendentelite/pendentelite interest has been awarded and also simple interest @ 18% per annum on the total amount of award for post-pendentelite period (from the date of award to the date of realization) was also awarded. Against Claim No.4 for release of security deposit an amount of Rs.26,62,505/- has been awarded whereas against Claim No.5 of cost of proceedings 'nil' amount has been awarded and against Counter Claim No.1 of applicant, the Ld. Arbitrator has awarded 'nil' amount, as the amount had been included in Claim No.2. Hence, against the award of interest @ 18% for the post pendentelite period from the date of award to the date of realization order Claim No.3 in the impugned award dated 6.1.2014 read with corrigendum, dated 17.01.2014 and final award dated 11.3.2014 the objector has preferred the present petition. 4. It has been averred that the learned Arbitrator has committed grave error and illegality while adjudicating the matter and the award passed by him is also against the public policy of India in as much as the Ld. 4. It has been averred that the learned Arbitrator has committed grave error and illegality while adjudicating the matter and the award passed by him is also against the public policy of India in as much as the Ld. Arbitrator has not considered vital pleas, written submissions and pleadings of the objector. 5. It has been further averred that the Ld. Arbitrator had exceeded his jurisdiction and passed the impugned award contrary to the provisions of Contract Agreement by making an award and giving reasons, which are only perfunctory and which do not consider the pleadings of defence of the objector as placed on record relating to Claim Nos.1 to 3 and the reasons given by the Ld. Arbitrator do not satisfy the test laid down for "REASONS" by the Hon'ble Apex Court and this Court. Therefore, the impugned awards dated 06.01.2014 and 11.3.2014 cannot be said to be reasoned award as required by Section 31 of Arbitration and Conciliation Act, 1996 and the agreement. 6. It has been alleged that the Ld. Arbitrator while adjudicating Claim No.3 has acted contrary to the public policy of India and travelled beyond jurisdiction and provisions of the contract agreement by awarding a very high rate of interest i.e. @ 18% on the awarded amount for the post-pendentelite period (from the date of award to the date of realization). Further, it has been alleged that under Section 31.7 (b), there is statutory provisions of 18% interest, but, if the award attains the status of decree. 7. It has been submitted that the Ld. Arbitrator has travelled beyond his jurisdiction disregarding the settled law and terms of contract, while allowing simple interest @ 18% for the post-pendentelite period on the amount of award and had failed to consider the averments made by the objector to the effect that there was no provision of payment of interest amount in the contract agreement. Moreover, the claimant/contractor had not adduced any documentary evidence during hearings of the case as to his having borrowed any loan on interest @ 18% from the date of award to the date of realization against the demand of claim. 8. It has been averred that the Ld. Arbitrator has not considered the counter claim filed by the department and these counter claims have been decided without giving any reasons and that no proper opportunities have been given by the Ld. 8. It has been averred that the Ld. Arbitrator has not considered the counter claim filed by the department and these counter claims have been decided without giving any reasons and that no proper opportunities have been given by the Ld. Arbitrator to the Objectors/Department and has passed the award without affording proper opportunities. 9. It has been alleged that the dispute between the parties is for more than Rs.One crore and this Court has original jurisdiction to entertain the objections. 10. It has been alleged that the impugned award was passed on 06.1.2014 and copy was received by the Executive Engineer on 19.01.2014, thereafter, the matter was sent to the higher authorities for proper direction and the matter remained in the various offices of Government level and that in between the Ld. Arbitrator again passed the additional award/corrected award on 17.3.2014 and the same was again received on 17.3.2014 in the office of the Executive Engineer and the objection was filed within the period of limitation 90 days from 17.03.2014 and if the date of receipt of award is to be taken from 19.01.2014, as received by the office of Executive Engineer, the same could not be filed in 90 days, reason being that corrected award was received on 17.03.2014 and was again examined at various government level offices alongwith the original award passed on 11.01.2014, but the same has been filed within 120 days, hence, requested for condonation of delay. 11. In the reply filed by the respondent, it has been submitted that the grounds, as taken in the petition, do not constitute any legal ground for setting aside the award and that the respondent as well as the petitioner filed claims and counter-claim before the Ld. Arbitrator and that an award was passed by the Arbitrator after hearing both the parties. The respondent has admitted that a corrigendum was issued by the Ld. Arbitrator. It has been submitted that the facts relating to the issuance of the corrigendum and the revised corrigendum are admitted in so far as the same are in consonance with the record of the Ld. Arbitrator. However, the dates of the receipt of the award and the corrigendum(s) by the petitioner are not admitted. The authenticity of the documents filed by the petitioner with the application are not admitted since no copies thereof have been made available to the respondent. 12. Arbitrator. However, the dates of the receipt of the award and the corrigendum(s) by the petitioner are not admitted. The authenticity of the documents filed by the petitioner with the application are not admitted since no copies thereof have been made available to the respondent. 12. It has been submitted that the dispute between the parties is commercial in nature and claimant/respondent has suffered huge financial loss due to the act and conduct of the petitioner, therefore, the Ld. Arbitrator has awarded interest as warranted by the facts of the case and the prevailing law. Further, it has been submitted that the Arbitrator has passed a well reasoned award after affording adequate opportunity to the parties and considering the terms of agreement between the parties. The Ld. Arbitrator has made award after examining the pleadings raised by the parties during the arbitration proceedings. It has also been submitted that the Ld. Arbitrator has passed the award with sufficient reasons. It is denied that the reasons, as given by the Ld. Arbitrator do not satisfy any test laid down for the reasons as alleged and that the award is against the public policy of India. 13. It has been submitted that the award of interest is not liable to be questioned by the petitioner since it is purely discretionary with the Arbitrator and the agreement between the parties was commercial in nature and respondent has suffered huge financial loses due to the act of the petitioner. Therefore, the learned Arbitrator has rightly awarded interest @ 18% as per law. It has been submitted that the Ld. Arbitrator is free to fix rate of interest and there is no legal bar under the Arbitration Act. Further, it has been submitted that the petitioner has wrongly withheld the amount due to the claimant and deprived the beneficial use of amount due to the respondent. The Ld. Arbitrator has duly considered the counter claim of the petitioner in Paras 19 and 20 of the award and sufficient reasons are recorded in these paras for making the award on the basis of the statement of the representative of the petitioner. 14. It has been submitted that the learned Arbitrator has granted adequate opportunity to the parties to present their case and proceeding was concluded with the consent of the parties and the petitioner has not made any objection before the Ld. 14. It has been submitted that the learned Arbitrator has granted adequate opportunity to the parties to present their case and proceeding was concluded with the consent of the parties and the petitioner has not made any objection before the Ld. Arbitrator mentioning that it had not been granted opportunity to present his case. 15. Heard. Mr. S.C. Sharma, learned Additional Advocate General appearing for the petitioner-State has argued that the order passed by the Ld. Arbitrator is liable to be set aside, as it is against the public policy of India. Further, he has argued that the Ld. Arbitrator has granted interest @ 18% per annum from the date of passing the award till its realization. On the other hand, Mr. J.S. Bhogal, learned Senior Counsel appearing for the respondent has argued that the Ld. Arbitrator has taken into consideration each and every aspect of the matter and the Award is rightly passed. 16. To appreciate the arguments of the learned counsel for the parties, I have gone through the record in detail. 17. The claimant/Contractor has made the following claims:- Claim No.1: On account of payment price escalation Rs.1,24,72,741/- Claim No.2: Payment of work done Rs.19,78,810/-. Claim No.3: On account of interest on the over due payment @ 24%. Claim No.4: Release of security deposit Rs.26,62,505/- Claim No.5: Cost of proceedings. 18. The respondent has made the following Counter Claim:- Counter Claim No.1: Counter Claim for outstanding amount of Rs.2,84,006/- 19. The Ld. Arbitrator after taking into consideration each and every aspect of the matter has considered each and every claim and against Claim No.1 passed the following order:- "During the 7th hearing, the respondent/EE admitted that payment of Rs.1,06,20,332/- is due to contractor under Clause 10CC of the agreement. The claimant/contractor also agreed with this amount of price escalation submitted by respondent/EE. Thus, an amount of Rs.1,06,20,332/- is awarded in favour of claimant/contractor against this claim." 20. Against Claim No.2 i.e. Payment of work done he has awarded Rs.19,78,810/-. Against Claim No.3, he has awarded interest @ 18%. He has awarded 8% simple interest on the amount due. 21. As such this Court finds that as far as the other claims are concerned, the Ld. Arbitrator has considered the claim in its right perspective and nothing abnormal was found. Against Claim No.3, he has awarded interest @ 18%. He has awarded 8% simple interest on the amount due. 21. As such this Court finds that as far as the other claims are concerned, the Ld. Arbitrator has considered the claim in its right perspective and nothing abnormal was found. This Court also finds that the award passed by the learned Arbitrator is just reasoned, as per the material, which has come on record and after appreciating the same correctly. The Ld. Arbitrator has considered all the pleas raised by the parties. The corrigendum issued by the Ld. Arbitrator was also to correct the amount against Claim No.1 and the amount against Claim No.1 after amending the award the Ld. Arbitrator has awarded it from Rs.1,06,20,332/- to Rs.1,01,77,162/- and the amount as per the respondent/EE's letter against Claim No.3 was worked out to Rs.15,64,703/-. Hence, this Court do not find any mischief or misconduct in passing the corrigendum. 22. In these circumstances, the award dated 06.1.2014 and the corrigendum award dated 11.3.2014 cannot be said to be passed against the public policy of India or passed on the mischief or misconduct on the part of the Arbitrator. There is no infirmity otherwise also in the Award. So, the objections of the Objector are without any basis and the same are required to be dismissed and are accordingly dismissed. 23. In view of the above stated observations, the petition stands disposed of. Pending application, if any, also stands disposed of. No costs.