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2001 Supreme(Cal) 328

High Court Of Calcutta
A. N. RAY, PRANAB KUMAR CHATTOPADHYAY
BOARD OF TRUSTEES FOR THE PORT OF CALCUTTA - Appellant
Versus
MAHALAKSHMI CONSTRUCTIONS - Respondent
A. P. O.  19  Of  2000
Decided On : 06/14/2001

Advocates Appeared:
B.MONDAL, P.C.DATTA, RUMA SIKDAR, S.K.DHAR, S.P.MAJUMDER, SKAKRANIA

The arbitrator's jurisdiction is derived from the arbitration clause in the contract, and the arbitrator can award anything that a court of law can decree, including awards that go against specific provisions of the contract.

Headnote:

ARBITRATION - AWARD - SETTING ASIDE - JURISDICTION OF ARBITRATOR - SCOPE - ARBITRATOR'S POWER TO GRANT INTEREST - INTEREST ON AMOUNT SPENT BY CONTRACTOR - GRANT OF INTEREST FROM DATE PRIOR TO REFERENCE.

Fact of the Case:

Appellant challenged an award passed by an arbitrator in favor of the respondent contractor in a construction contract dispute. The appellant argued that the arbitrator exceeded his jurisdiction by granting awards contrary to express provisions of the contract, such as payment for escalation of price hike and unfinished work, and by awarding interest from a date prior to the termination of the contract.

Finding of the Court:

The court upheld the arbitrator's award, holding that the arbitrator has the jurisdiction to interpret the contract and make awards even if they go against specific provisions of the contract. The court noted that the arbitrator's jurisdiction is derived from the arbitration clause in the contract, which is a separate contract from the commercial contract, and that the arbitrator can award anything that a court of law can decree.

Issues: 1. Whether the arbitrator exceeded his jurisdiction by granting awards contrary to express provisions of the contract? 2. Whether the arbitrator had the power to grant interest from a date prior to the termination of the contract?

Ratio Decidendi: 1. The arbitrator's jurisdiction is derived from the arbitration clause in the contract, which is a separate contract from the commercial contract. 2. The arbitrator can award anything that a court of law can decree, including awards that go against specific provisions of the contract. 3. The arbitrator has the power to grant interest from a date prior to the termination of the contract if the contractor can prove completion of work at that time and expenditure of money.

Final Decision: The court dismissed the appellant's appeals and upheld the arbitrator's award, including the grant of interest from a date prior to the termination of the contract.

AJOY NATH ROY, P. K. CHATTOPADHYAY, J.

( 1 ) THERE are two appeals before us, one from a judgment and order refusing to set aside an award, and another from the decree passed after such refusal. Although an appeal from the decree itself does not lie and is wholly unnecessary, we propose to dispose of both the appeals by this common judgement and order

( 2 ) AT the outset we make it clear that we are in full agreement with the conclusions reached by the Hon'ble Mr Justice Ronojit kumar Mitra and we are of the opinion that the award passed should not be set aside and decree thereupon should also remain untouched. The award was passed by the Hon'ble Mr monoranjan Mallick, after his Lordship retired from the Judgeship of this Court

( 3 ) THE award sets out the different heads of claim and counterclaim put forward on be half of the constructing contractor and the port authorities. Thereafter the award proceeds to grant a lumpsum award of Rs 13 lac in fa vour of the contractor and another lumpsum of Rs 1 lakh in favour of the Port authorities in the result the principal sum awarded in favour of the contractor logically comes to Rs. 12 lac. The heads under which this sum of Rs. 12 lac has been awarded are not exactly ascer-tainable from the award itsrlf. The position is the same with regard to the award of Rs. 1 lakh. Retired Justice Mallick has also awarded interest from 1984 and interest runs as per the award and the decree until payment should be completed by the Port authorities.

( 4 ) MR. Majumdar appearing for the appellant submitted that amongst the several heads of claim appearing from the award itself, there is an amount of approximately Rs. 10 lac for work already done by the contractor but not paid for, and also a claim for price hikr between Rs. 7 lac and Rs. . 8 lac which is in the nature of an excalation claim. According to Mr. Majumder unless substantial awards are made on these two heads, it is impossible to reach the figure of Rs. 13 lac Thus, according to him although the award does not expressly state so, it is implied in the terms of the award that the claims for escalation and unfinished work have been entertained favourably by the Hon'ble Arbitrator mr, Majumdar points out to us that as per clauses of the contract, payment is, to be made only on R A. Bills as per details found from the M. B 's; and further that the contract expressly contains a clause prohibiting payment of escalation of price hike excepting only for the price rise of steel.

( 5 ) ACCORDING to Mr. Majumdar, since the arbitrator made awards contrary to express provisions of the contract, the award is bad and the learned Arbitrator must be held to have exceeded his jurisdiction Mr. Majumdar sub-mitted that the learned Arbitrator is a creature of the contract and if the contract itself contains prohibitory clauses their the learned Arbitrator has no jurisdiction to go outside those prohibitory clauses and grant awards none-the-less against the spirit and letter of those clauses

( 6 ) MR. Majumdar also submitted that the award of interest from 1984 is in supportable and it would mean a very large extra additional amount to be paid by the Port authorities to the contractor. According to him the contract itself was terminated only in 1986 and therefore award of interest from a date even prior to that is illegal and harsh.

( 7 ) ALTHOUGH Mr. Majumdar's submissions as above, excepting on the point of interest, are backed up by authorities, arid even high authorities, we were greatly troubled and disturbed to hear those submissions are wholly contrary to long and well-settled principles followed by the arbitration Court. What, we are about to say, should not be necessary, excepting for a mere handful of lawyers, and even that handful should be found only amongst that class who have thick hair without a speak of grey, perfect skin, no reading glasses, no dental work. However, the situation now prevailing in our country is such,that this is not so and


















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