PATNA HIGH COURT
Lakshmikanta Jha and Chatterji JJ.
Union Of India
Versus
Premchand Satram Das
Appeal From Original Order No. 252 of 1950 ; 253 of 1950 ;
Decided On : MAY 11, 1951
ARBITRATION - AWARD - JUDICIAL MISCONDUCT - ERROR OF LAW - APPARENT ON THE FACE OF THE AWARD - INTERPRETATION OF CONTRACT - CONSTRUCTION OF CLAUSE - LEGALITY OF AWARD.
Fact of the Case:
The plaintiff, a contractor, entered into an agreement with the Union of India to supply bricks for the Sindri Fertiliser project. Disputes arose between the parties, and the matter was referred to arbitration. The arbitrator awarded the plaintiff certain sums of money under various heads. The Union challenged the award, contending that it was illegal and ought to be set aside.
Finding of the Court:
The court held that the award was bad in law in respect of certain claims, namely, claims Nos. 4, 8, 13 and 17. The court found that the arbitrator had committed an error of law in holding that the Union was liable to pay the plaintiff compensation for the loss suffered by the plaintiff due to the non-availability of controlled rations for the coolies employed by the plaintiff. The court also found that the arbitrator had erred in interpreting clause 6 (additional) of the agreement, which absolved the Union from any liability for damage to unburnt bricks due to any cause whatsoever.
Issues: 1. Whether the award was illegal and ought to be set aside. 2. Whether the arbitrator had committed an error of law in holding that the Union was liable to pay the plaintiff compensation for the loss suffered by the plaintiff due to the non-availability of controlled rations for the coolies employed by the plaintiff. 3. Whether the arbitrator had erred in interpreting clause 6 (additional) of the agreement.
Ratio Decidendi: 1. An award can be challenged for judicial misconduct, which includes making a mistake in law and letting it be visible on the face of the award. 2. The court can interfere with an award if there is an error of law apparent on the face of the award. 3. The arbitrator had erred in law in holding that the Union was liable to pay the plaintiff compensation for the loss suffered by the plaintiff due to the non-availability of controlled rations for the coolies employed by the plaintiff, as there was no contractual obligation on the part of the Union to supply rations for the coolies at controlled rates. 4. The arbitrator had erred in interpreting clause 6 (additional) of the agreement, which absolved the Union from any liability for damage to unburnt bricks due to any cause whatsoever.
Final Decision: The court allowed the appeals in part. In appeal No. 252, the decree of the lower court was modified by excluding claims Nos. 4 and 17. In appeal No. 253, the decree of the lower court was modified by excluding claims Nos. 5, 8 and 17.
Lakshmikanta Jha, J.
1. This is an appeal by the defendant (the Union of India) in a suit instituted by the plaintiff-respondent for the enforcement of an award given by an arbitrator appointed under an arbitration clause in an agreement between the parties which provided for settlement of all disputes arising between them.
2. The Central Public Works Department invited tenders for the manufacture and supply of four crores of bricks on the 23rd September, 1945 for what is known as the Sindri Fertiliser project Seth Prem Chand Satram Das, the plaintiff in the present suit, was one of the persons who offered to manufacture and supply bricks at certain rates. His tender was accepted by the Superintending Engineer, Bihar Central Circle, by his letter dated the 1st November, 1945, and he was given a contract for the supply of 1 1/2 crores of bricks at his tender rates. A deed of agreement was executed and signed by the plaintiff and the Additional Chief Engineer, New Delhi, on behalf of the appellant, and a delivery schedule was appended: showing the number of bricks to be supplied by the plaintiff month by month from January to May, 1946.
3. The case of the plaintiff is that he performed, his part of contract and kept bricks in readiness for supply according to the schedule appended, to the contract. But for certain reasons the* bricks were not removed from the kiln sites, though they were manufactured and made ready for delivery, as required by the delivery schedule, and this caused, according to the plaintiff, serious dislocation in the manufacture of bricks. His case-is that he had to acquire 10 big has of land at the rate of Rs. 200.00 per big has which included the cost of preparing and levelling the land for the stacking of the bricks of which delivery could not be taken. It is not disputed that the plaintiff was paid, at the contract rate, the full price of the bricks which he was ordered to manufacture, but his case is that he suffered loss on various counts by reason of the defendants failure to remove the bricks according to the agreement. He therefore submitted his claims under various heads and submitted a bill to the Chief Engineer for the reimbursement of the losses suffered by him. The Chief Engineer refused to make any payment on account of any loss. Thereupon the plaintiff applied for arbitration according to the arbitration clause of the agreement. It appears from the Additional Chief Engineers letter that he appointed Mr. Dixon, the Superintending Engineer of the Circle, as the arbitrator and the plaintiff was asked to submit his case to the arbitrator on the date to be fixed by him. The plaintiff accordingly submitted his claims in writing to Mr. Dixon, for his decision, and preferred his claims under eighteen heads. A sum of Rs. 1,65,893/- was claimed by the plaintiff before the arbitrator under different heads and a further sum was also claimed by way of interest at 6 per cent., per annum for two years in all Rs. 2,01,371/- was claimed by the plaintiff before the arbitrator, including interest. No objection was filed in writing on behalf of the appellant, but the Executive Engineer appearing before the arbitrator on behalf of the Central Public Works Department objected to the claims orally. Mr. Dixon, after hearing the parties, awarded a sum of Rs. 1,20,560/97- as against the plaintiffs claim of Rs. 2,01,371/-, by his order dated the 1st May, 1949, and directed the amount to be paid on or before the 1st June, 1949, failing which interest at 6 per cent per annum from the 1st June, 1949, was to be paid by the appellant.
4. The plaintiff filed the present suit for enforcement of the award and prayed that the award be accepted and a decree passed in terms of the award. The suit was contested and the objection of the Union was only in respect of claims Nos. 3, 4, 6, 8, 13 and 17. The award regarding claim No. 6 relating to sale tax was set aside, but the rest of the award was affirmed. With this modificat
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