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1985 Supreme(Cal) 57

High Court Of Calcutta
PRABIR KUMAR MAJUMDAR
E.AND N.E.F.RLY.CO-OP.BANK LTD. - Appellant
Versus
M/S.B.GUHA AND CO - Respondent
Award Case 156  Of  1983
Decided On : 02/14/1985

Advocates Appeared:
Bhaskar Gupta, Jayanta Mitra

An arbitrator has the jurisdiction to award interest if such a claim is before him, but the arbitrator must indicate the rate and period for which interest is awarded. The arbitrator also has the discretion to award costs under Rule 8 of Schedule 1 of the Arbitration Act, but the party seeking costs must provide evidence of the costs incurred.

Headnote:

ARBITRATION - Setting aside award - Grounds - Error of law apparent on the face of the award - Interest awarded without indicating basis and period - Cost awarded without evidence of cost incurred.

Fact of the Case:

An application was filed under Sections 30 and 33 of the Arbitration Act, 1940, to set aside an arbitral award made in respect of disputes arising from a construction contract. The petitioner challenged the award on the grounds that the arbitrator had erred in law by awarding interest and costs without a proper basis.

Finding of the Court:

The court held that the arbitrator had jurisdiction to award interest if such a claim was before him, and that the arbitrator had the authority to grant interest from the date of the award to the date of the decree. However, the court found that the arbitrator had not indicated the rate or period for which interest was awarded, and that this constituted an error of law apparent on the face of the award. The court also held that the arbitrator had the discretion to award costs under Rule 8 of Schedule 1 of the Arbitration Act, but that the petitioner had failed to provide evidence of the costs incurred.

Issues: 1. Whether the arbitrator erred in law by awarding interest without indicating the basis and period for which it was awarded? 2. Whether the arbitrator erred in law by awarding costs without evidence of the costs incurred?

Ratio Decidendi: 1. The court held that the arbitrator had erred in law by awarding interest without indicating the basis and period for which it was awarded. This constituted an error of law apparent on the face of the award. 2. The court held that the arbitrator had the discretion to award costs under Rule 8 of Schedule 1 of the Arbitration Act, but that the petitioner had failed to provide evidence of the costs incurred.

Final Decision: The court dismissed the application to set aside the award, but made no order as to costs.

PRABIR KUMAR MAJUMDAR, J.


( 1 ) THIS is an application under Ss. 30 and 33 of the Arbitration Act, 1940 for setting aside an Award dt. 11th July, 1983 made by a sole arbitrator in respect of disputes and claims arising out of Agreement No. PRE-34-A/ V-1 dt. 27th March, 1971.

( 2 ) THE respondent entered into an agreement being Contract No. PRE-34-4/ V-1 dt. 27th March, 1971 with the petitioner for construction, addition and alteration of the building at Nos. 34a and 34b Sashi Bhusan Dey Street, Calcutta. By a subsequent agreement dt. 30th June, 1972 the rates of work mentioned in the agreement dt. 27th March, 1971 were revised and the date of the completion of the work was extended till 15th September, 1972.

( 3 ) THE works under the said contract were completed on or about 31st March, 1973. By a letter dt. 23rd Aug. , 1973 addressed to the petitioner the respondent claimed from the petitioner the final bill amount of Rs. 40,950. 49 p. and refund of security deposit. By another letter dt. 8th Jan. , 1974 addressed to the petitioner the respondent made a further claim of Rs. 58,500/- under the head "other claims and dues". This figure was later on revised upon giving full particulars by the letter dt. 1st March, 1974 to a sum of Rs. 57,563. 01 p. By a letter dt. 3rd September, 1974 the petitioner informed the respondent that the said claim of Rs. 57,563. 01 p. was placed before the Board of Directors of the petitioner Bank for consideration and the Board was unable to consider as there was no work order for the work for which the said bill was presented. In a meeting held thereafter on 5th April, 1975 between the parties it was stated by the respondent that there were some addition and alteration work which had to be attended on the instruction for which said Bill for Rs. 59,563. 01 p. was submitted and there was no work order for the said work. The petitioner, however, denied and disputed the validity and legality of the said claim of the respondent, and as such refused to make any payment in respect thereof. The petitioner paid the other sums claimed by the respondent.

( 4 ) THE disputes and differences arose between the parties which were referable to the arbitration under an Arbitration Agreement contained in the said contract between the parties. The respondent made an application in this Court under S. 20 of the Arbitration Act for filing of the said arbitration agreement and for reference of said disputes and differences. The said application was marked as Special Suit No. 24 of 1976. By an order dt. 24th Jan. , 1976 this Court directed filing of the said arbitration agreement and further ordered that all matters and differences in the special suit be referred to the arbitration of an arbitrator to be appointed in terms of the said arbitration agreement. An appeal preferred by the petitioner from the said order was dismissed by the Court of Appeal.

( 5 ) THEREAFTER, another application was made by the respondent to this Court for revoking the authority of the General Manager of the petitioner Bank to appoint an arbitrator, and for an appointment of an arbitrator by this Court for adjudication of the said disputes between the parties. By an order dt. 9th February, 1982 this Court allowing the application appointed one Brigadier Mihir Kumar Basu (Retd.) as sole arbitrator to adjudicate the disputes between the parties.

( 6 ) THE said sole arbitrator duly entered into reference and issued necessary directions regarding submissions of the statements and counter-statements of the case by the respective parties. After setting out the reference and reciting the fact that the parties were given equal opportunities to present their respective cases in detail with all supporting documents and arguments in several sittings and the arbitrator had examined and considered the pleadings, documents produced by the parties the said sole arbitrator made the following Award :"1. I award and direct that E and N. F. Rly. C. B. Ltd. , 34














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