High Court Of Calcutta
SALIL KUMAR ROY CHOWDHURY
JIWANI ENGINEERING WORKS (P.) LTD - Appellant
Versus
UNION OF INDIA - Respondent
Suit 206 Of 1979
Decided On : 04/16/1980
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - NO CLAIM CERTIFICATE - INTEREST PENDENTE LITE - ARBITRATOR'S JURISDICTION - ARBITRATION ACT, 1940, SECTIONS 30 AND 33.
Fact of the Case:
The Union of India (petitioner) challenged an arbitration award on two grounds: (1) the respondent had executed a no-claim certificate, indicating no disputes or differences relating to the arbitration agreement, and (2) the arbitrator lacked the authority to grant interest pendente lite.
Finding of the Court:
The court dismissed the petition, holding that: (1) the no-claim certificate did not prevent the contractor from raising claims before the arbitrator, as the question of the certificate's validity was itself a dispute within the arbitration clause; (2) the arbitrator had the jurisdiction to grant interest pendente lite from the date of entering upon the reference till the award was made.
Issues: 1. Whether the execution of a no-claim certificate by the respondent barred the arbitration proceedings and rendered the award a nullity. 2. Whether the arbitrator had the authority to grant interest pendente lite.
Ratio Decidendi: 1. The court held that the no-claim certificate did not deprive the contractor of the right to refer disputes to arbitration under the arbitration clause. The question of the certificate's validity was itself a dispute within the scope of the arbitration clause, and the arbitrator had the jurisdiction to decide it. 2. The court relied on Supreme Court precedents to establish that arbitrators have the authority to award interest pendente lite from the date of entering upon the reference till the award is made.
Final Decision: The court dismissed the application to set aside the arbitration award with costs.
( 1 ) THIS is an application for setting aside an award under Sections 30 and 33 of the Arbitration Act.
( 2 ) PURSUANT to a contract for execution of earth work in formation, bridge work, building and other miscellaneous works, a tender was called by the Union of India represented by the South Eastern Railway, and the petitioner's tender was accepted on the 17th of April, 1964, and a formal con-tract was entered into being dated 21st may, 1964.
( 3 ) IT appears that disputes arose in respect of the said contract and the same was referred to arbitration after the respondents made an application under Section 20 of the Arbitration Act before this Court being Matter No. 66 of 1976 dated 20th August, 1976. Thereafter it appears several extensions were obtained for making the award. The last extension was obtained up to 30th Nov. , 1979. It also appears that the arbitrator entered upon the reference pursuant to the said order of reference dated 20th August, 1976, by their letter dated 13th Nov. , 1976, and both the parties appeared before the arbitrator and filed their statement of claim and counter statement and, ultimately, the award was made on the 30th Nov. , 1979, which was filed before this Court by the arbitrator by its letter dated 30th Nov. , 1979, which was forwarded to this Court by the arbitrator by letter dated 30th Oct. , 1979, and the same was filed on the 11th Dec. , 1979, and the Court duly served notice on the parties for filing the arbitration agreement dated 12th Dec. , 1979, and stated that the matter will appear in the list for judgment upon award on 29th Jan. , 1980. The petitioner, Union of India, filed its objection for setting aside the award on 3rd March, 1980 and, thereafter, directions were given for filing affidavits and the matter is now being heard.
( 4 ) MR. D. K. Sen with Mr. P. K. Sen appeared for the petitioner and challenged the award mainly on two grounds; firstly, that the respondent, the award holder, has executed a no claim certificate which is annexure 'a' to the petition and, therefore, he is not entitled to any claim in the reference as he has mentioned specifically in no unequivocal terms that there was no dispute or difference relating to the agreement contained in the arbitration clause in the arbitration agreement. He submitted that on the basis of the said no claim certificate the order of reference and the award become a nullity as the arbitrator has no jurisdiction to enter into the reference and as there was no difference or dispute between the parties arising out of the said contract. But I am afraid the same cannot be accepted as whether there was no claim certificate or not that itself is a dispute which was referred to arbitration and covered under the arbitration clause in the agreement as it is for the arbitrators to decide such question. The said point was taken by the Union of India in so many arbitrations which were couched in the same language and it is so well known and a notorious fact that unless a no claim certificate is issued by the contractor payment of the final bill will not be made. But that does not prevent the contractor from raising his claim before the arbitrator in terms of the arbitration clause for the value of his work or other claims within the scope of the agreement between the parties. The said question came up before this Court from time to time and in one of the unreported decisions of the appeal Court in Award Case No. 124 of 1978 (Union of India v. D. Bosc) of C. J. and S. C. Ghose, J. dated 15th Feb. , 1980 (), the same contention of Mr. P. K. Sen, who is appearing before me, as to the no claim certificate, has been rejected and, therefore, in my view, there is no substance in the said contention. Mr. Sen thereafter referred to Clause 16 (2) of the Contract which disentitled the respondent award holder from any interest. But, in my view, that clause docs not prevent the arbitrator from granting pendente lite inter
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