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2010 (1) Supreme 94
SUPREME COURT OF INDIA
Tarun Chatterjee and R.M.Lodha,JJ.
State of Rajasthan — Appellant
versus
M/s. Nav Bharat Construction Company — Respondent
Civil Appeal No. 2500 of 2001
Decided on : 8-01-2010
Arbitration Act, 1940 – Section 20,30,33 – Award passed by arbitrator – Application for making the award a rule of the Court filed by State and at the same time the respondent filed an objection under Sections 30 and 33 of the Act – Respondent has claimed compound rate of interest which was not granted by Umpire – The claimant had claimed compound interest with quarterly rest while the respondent had opposed the said rate of interest – While rejecting the said claim of the claimant, the Umpire had rightly observed that there was no necessity for him to fix any other rate of interest because on the basis of the award passed by the Umpire, claimant had to return the substantial amount received by him – In view of that, the Umpire in his award directed that difference of amount which has now become refundable by virtue of the award would be returned back to the State of Rajasthan with interest from the date of recovery by the claimant and the same was allowed by the previous Umpire till the date of repayment/recovery – No reason to differ from the award of Umpire on this score, because the Umpire had rightly considered the entire aspect of interest and passed an award which could never be said to be erroneously rejected by him. (Para 9, 10)
Facts of the Case :
An Award was passed by arbitrator herein in the instant case. An Application was filed for making the award a rule of the Court by State and at the same time respondent filed an objection under Sections 30 and 33 of the Act
Findings of the Court :
Held when the Arbitrator or the Umpire as the case may be, had ignored the specific terms or had acted beyond the four corners of the contract, it is open for court in the exercise of its power under Section 30 of the Act to set aside the award on the ground that the Arbitrator could not ignore the law or misapply the terms of the contract in order to do what he thought was just and reasonable. That apart, the law is also settled that the jurisdiction of the court under Section 30 of the Act is not appellate in nature and the award passed by the Umpire cannot be set aside on the ground that it was erroneous. It is also not open to the court to interfere with the award merely because in the opinion of the court, another view is equally possible. Since Claim Nos.4, 6, 9, 13, 23, 32, 33, 36 and 38 of respondent were accepted by the Umpire and the Award had been passed in respect of the said claims in favour of the respondent, held not necessary to deal with this part of the award any further. So far as Claim Nos. 1, 3, 5, 7, 8, 10, 11, 12, 14-22, 24, 25, 27, 28, 29,30, 31, 34, 35, 37 and 39 were concerned, held that Umpire after going through the objections of the respondent and after hearing the parties in respect of these claims rejected the same . No reason was found to set aside the said award on the ground that the jurisdiction of the court is not appellate in nature nor such an award could be found to be erroneous. Hence no reason was found to accept the objections of the respondent in this regard. The objections were overruled.
Result : Ordered accordingly.
JUDGMENT
Tarun Chatterjje, J. —
1. The appellant, State of Rajasthan, invited tenders for construction of Bhimsagar Dam in which one of the tenderer was the respondent. The tender of the respondent was accepted. Accordingly, a contract was awarded to the respondent and under the contract the work was to be started on 16th of November, 1978 and the date of completion was fixed on 15th of May, 1981. One of the terms of the contract was that if any difference or dispute arises between the parties, such dispute or difference shall be referred to arbitration. However, the work was not completed within the time allotted and time was thereafter extended. Inspite of extension of time, the work was not completed. For that reason, the State of Rajasthan terminated the contract and got the remaining work done from some other contractor.
2. The respondent raised various claims which were rejected by the State of Rajasthan. The respondent, therefore, moved an application under Section 20 of the Arbitration Act, 1940 (in short the ‘Act’) for referring the claims mentioned therein to arbitration. The District Judge, Jhalawar by an order dated 11th of November, 1982 held that only one claim was referable to arbitration and refused to refer the other three claims to arbitration. The respondent filed an appeal before the High Court of Rajasthan at Jaipur and the High Court by its order dated 7th of June, 1984 held that it was for the Arbitrator to decide whether the claims were to be awarded or not and accordingly directed that all the four claims be referred to arbitration. The disputes were referred to two Arbitrators. The respondent, however, filed 39 claims amounting to Rs.42,59,155.56 before the Arbitrators. The parties led oral and documentary evidence. There was a difference of opinion between the two Arbitrators. Therefore, the Arbitrators referred the dispute to an Umpire. The State of Rajasthan, the appellant herein, thereafter filed an application under Section 11 of the Act for removal of the Umpire on the ground of bias. This application was dismissed on 16th of November, 1993. The appellants filed a revision case which also came to be dismissed by the High Court in January, 1995. The Umpire entered into the reference and passed an award on 29th of May, 1995.
3. The State of Rajasthan, the appellant herein, filed objections under Sections 30 and 33 of the Act which were dismissed by the trial court and in appeal the respondent filed a cross appeal claiming compound interest. The High Court by a judgment dismissed both the appeals. Feeling aggrieved, both the parties approached this Court and two Civil Appeals were registered. C.A.No.2500 of 2001 was by the State of Rajasthan which was aggrieved by the dismissal of their objection filed under Sections 30 and 33 of the Act and C.A.No.2501 of 2001 was by the respondent against the dismissal of their claim for compound interest. By a judgment and order dated 4th of October, 2005 passed in the aforesaid two appeals, this Court had set aside the award of the Umpire and the judgment of the High Court by the following directions:
“Under the circumstances and for reasons set out hereinabove, we set aside the award and appoint Justice N.Santosh Hegde, a retired Judge of this Court as the Umpire. The Umpire, Mr.V.K.Gupta shall forthwith forward all papers and documents to Justice N.Santosh Hegde at his residence i.e. 9, Krishna Menon Marg, New Delhi. The parties shall appear before Justice N.Santosh Hegde on 6.10.2005 at 5.p.m. at 9, Krishna Menon Marg, New Delhi. Justice N.Santosh Hegde shall fix his fees which shall be borne by both the parties equally. Justice N.Santosh Hegde is requested to fix the schedule and give his award with a period of 4 months from the date of receipt of all the papers and documents from the outgoing Umpire Mr.V.K.Gupta. The award to be filed in this Court. We leave the question of grant of interest open to be decided by the Umpire in accordance with law.
Lastly, it
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