Andhra Pradesh High Court
Judges : G.V.L.NARASIMHA RAO, S.S.M.QUADRI
Superintending Engineer - Appellant
Versus
Kehar Singh - Respondent
Decided On : 02-25-93
ARBITRATION - AWARD - VALIDITY - CONDITION IN AGREEMENT REQUIRING CLAIMS TO BE SUBMITTED WITHIN 15 DAYS - WHETHER JURISDICTIONAL FACT - CLAIM FOR DAMAGES FOR LOSS OF EARNINGS AND CONSEQUENTIAL DAMAGES - WHETHER TOO REMOTE - INTEREST AWARDED BY ARBITRATOR - WHETHER COURT CAN REDUCE - ARBITRATION ACT, 1940, SECTIONS 17, 39.
Fact of the Case:
A contract for earthwork excavation and banking was awarded to the contractor. Disputes arose between the parties and were referred to arbitration. The arbitrator allowed ten out of sixteen claims preferred by the contractor, including a claim for damages for loss of earnings and consequential damages. The government filed a petition to set aside the award, contending that the claims were barred by limitation as they were not submitted within 15 days as required by the agreement. The contractor filed a petition to make the award rule of the court.
Finding of the Court:
The court held that the condition in the agreement requiring claims to be submitted within 15 days was not a jurisdictional fact and did not make it incompetent for the arbitrator to decide the claims filed beyond that period. The court also held that the claim for damages for loss of earnings and consequential damages was too remote and could not be awarded under Section 73 of the Indian Contract Act. However, the court upheld the arbitrator's award of interest at 12% from the date of the award till the date of the decree.
Issues: 1. Whether the condition in the agreement requiring claims to be submitted within 15 days was a jurisdictional fact? 2. Whether the claim for damages for loss of earnings and consequential damages was too remote? 3. Whether the court could reduce the interest awarded by the arbitrator?
Ratio Decidendi: 1. The court held that the condition in the agreement requiring claims to be submitted within 15 days was not a jurisdictional fact because it was meant for the convenience of both parties and did not lay down a rule of limitation or a pre-condition for the arbitrator to entertain the claim. 2. The court held that the claim for damages for loss of earnings and consequential damages was too remote because it was not a loss that naturally arose out of the breach of contract or that the parties knew when they made the contract to be likely to result from the breach. 3. The court held that the court could not reduce the interest awarded by the arbitrator because Section 17 of the Arbitration Act provides that the court shall pronounce judgment according to the award and no appeal shall lie from such decree except on the ground that it is in excess of or not otherwise in accordance with the award.
Final Decision: The court partly allowed the government's petition to set aside the award and set aside the part of the decree relating to claim No. 2 for damages for loss of earnings and consequential damages. The court also partly allowed the contractor's petition to make the award rule of the court and upheld the arbitrator's award of interest at 12% from the date of the award till the date of the decree.
( 2 ) THE petitioner in C. R. P. No. 2526/86 and the appellant in C. M. A. No. 1229 of 1986 which arise out of O. S. No. 452/84 and O. P. No. 181/84, is the Government of Andhra Pradesh. The respondent in these cases (hereinafter referred to as "the contractor") is the petitioner in C. R. P. No. 2775 of 1987 which arise out of O. P. No. 181/84, referred to above. We may briefly refer to the facts which led to the filing of these cases.
( 3 ) THE work relating to Nagarjunasagar Left Canal II (I. C. B.) earth work excavation and banking of 21st M. B. C. from Km. 44/0 to Km. 49/9 including construction of structures, valued at Rs. 8. 75 lakhs, was given to the contractor. The agreement relating to the said work hearing No. 38/se/k77-78, was entered into between the parties on 15. 12. 1977. The site was handed over two days earlier to the execution of the contract i. e. , 13. 12. 1977. The work was to be completed on or before 14. 12. 1979. In execution of the said work disputes arose between the parties. The said disputes were referred to a panel of three arbitrators on 11. 7. 1983. Time was extended with the consent of parties for passing of the award and the award was made on 31. 3. 1984. The contractor preferred as many as 16 claims in addition to general claims 1 to 5. Out of the said claims the arbitrator allowed ten claims. The suit O. S. No. 452 of 1984, was filed under Section 14 of the Arbitration Act, by the arbitrator, to pass a decree in terms of the award and O. P. No. 181 of 1984 was filed by the Government under Section 30 of the Act to set aside the award. By a common order dated 17. 3. 1983 the learned Second Additional Judge City Civil Court, Hyderabad, made the award rule of the court by decreeing the suit and dismissed the O. P. The validity of the said judgment is now assailed in the above said three cases.
( 4 ) THE learned Advocate General appearing for the Government in C. M. A. No. 1229 of 1986 and C. R. P. No. 2526 of 1986, contends that in the agreement there is a specific condition which provides that the claim made beyond fifteen days from the date of cause of action shall not be entertained and all the claims preferred by the contractor were made beyond fifteen days and therefore entertainment of the claims itself is without jurisdiction and therefore the award is liable to be set aside. Mr. P. R. Ramachandra Rao, the learned counsel for the contractor, on the other hand contends that Condition No. 83 of the agreement does not stipulate any limitation for preferring the claims, therefore the claims cannot be said to be barred by limitation. In any event, submits the learned counsel, the award being a non-speaking award the court cannot go into the reasons for entertaining the claim.
( 5 ) IT is no doubt true that in case of non-speaking award the court cannot go into the validity of the reasons because no reasons appear in the award. It is not permissible for the court to speculate as to what reasons could have impelled the arbitrator to pass the award and then venture to decide the validity of the supposed reasons. It is one thing to give reasons in the award; but it is different thing to record a finding on a jurisdictional question. If the terms and conditions of the agreement provide that a claim could be entertained only when preferred within fifteen days and not thereafter, the arbitrator has to determine the jurisdiction factor. Whether Condition No. 83 prescribes the jurisdictional fact and makes it incompetent for the arbitrator to decide the claims filed beyond any specified period can be determined by reading the said condition which reads as follows :"83 Claims and disputes. Any claims or disputes out of the contract should be submitted in writing to the Superintending
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