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High Court Of Calcutta
A. K. SEN, SUDHIR RANJAN ROY
UNION OF INDIA - Appellant
Versus
UNION BUILDERS - Respondent
Appeal 62 Of 1983
Decided On : 02/22/1985
ARBITRATION - AWARD - SETTING ASIDE - LIMITATION - CALCULATION - NOTICE UNDER S. 14(2), ARBITRATION ACT, 1940 - SERVICE BY PARTY ABOUT FILING OF AWARD - WHETHER SUFFICIENT - JURISDICTION OF UMPIRE - REFERENCE UNDER S. 20, ARBITRATION ACT, 1940 - WHETHER UMPIRE CAN ENTERTAIN CLAIMS ALREADY ADJUDICATED - AWARD - VALIDITY - JURISDICTION - PERVERSE - SETTING ASIDE.
Fact of the Case:
Contractor filed an application under S. 20 Arbitration Act, 1940 for fresh arbitration with regard to additional claims put forward by him in his letter dt. Aug. 10, 1976. The railway administration appointed an arbitrator and proposed to refer to him for arbitration the additional claim of the contractor in respect of item 3 and item 11 as specified in the contractor's letter dt. Aug. 10, 1976. The contractor objected. A lot of correspondence was entered into and ultimately on June 27, 1980, the contractor moved a fresh application in this court under S. 5 read with S. 8, Arbitration Act, 1940, which was registered as O. S. Matter No. 1321 of 1980. In this application, the contractor claimed that since the railway administration had failed to comply with the court's order dt. Jan. 19, 1979, and refer the entire claim put forward by them for arbitration the court should make the appointment of an arbitrator so that the contractor may refer their claim to such an arbitrator.
Finding of the Court:
1. The notice referred to in Art. 119, Limitation Act, is a notice under S. 14 (2), Arbitration Act, 1940, and such a notice may be formal, informal or constructive but it must emanate from the court. 2. The Umpire had no jurisdiction to entertain any of the claims so entertained by him in terms of reference made under S. 20, Arbitration Act, 1940 and hence it cannot but be held that the Umpire had no jurisdiction to entertain any of the claims adjudicated by him or make an award as made by him. 3. The award as made in the present case by the Umpire is materially beyond his jurisdiction and is otherwise perverse on the face of record. Such an award is invalid in law because it does not conform to the submission in the present case on a reference under S. 20, Arbitration Act, 1940.
Issues: 1. Whether the notice served by the contractor about the filing of the award is sufficient to start the limitation period under Art. 119 of the Limitation Act? 2. Whether the Umpire has jurisdiction to entertain claims already adjudicated in a previous arbitration? 3. Whether the award passed by the Umpire is valid and enforceable?
Ratio Decidendi: 1. The notice referred to in Art. 119, Limitation Act, is a notice under S. 14 (2), Arbitration Act, 1940, and such a notice may be formal, informal or constructive but it must emanate from the court. 2. The reference in the present case is a reference under S. 20 and must be limited to the order of reference by the court. The Umpire should not have assumed jurisdiction to arbitrate on any item which was earlier adjudicated. 3. The award as made in the present case by the Umpire is materially beyond his jurisdiction and is otherwise perverse on the face of record. Such an award is invalid in law because it does not conform to the submission in the present case on a reference under S. 20, Arbitration Act, 1940.
Final Decision: Appeal allowed. The order dt. May 20, 1983, passed by the learned single Judge in Award Case No. 200 of 1982 being set aside, we allow the appellant's application under Ss. 30 and 33, Arbitration Act, 1940, and set aside the award passed by the Umpire on July 28, 1982. We further supersede the reference in exercise of our power under S. 19, Arbitration Act, 1940, since, in our opinion, the disputes are all covered by the previous arbitration and there is utter lack of bona fides on the part of the contractor to refer the disputes, as referred, to fresh arbitration.
( 1 ) THIS is an appeal which has lately been assigned to us after remand from the Supreme Court of India. Union of India representing the railway administration is the appellant before us and the appeal is directed against an order dt. May 20, 1983, passed by a learned single Judge of this Court dismissing the appellant's application under S. 30 read with S. 33 Arbitration Act, which was registered as Award Case No. 200 of 1982. The application has been dismissed solely on the ground of limitation. In order to appreciate and decide the points at issue it would be necessary to refer to certain facts which may be set out briefly as follows :
( 2 ) THE respondent, Union Builders, entered into an agreement dt. Dec. 29,1965, with the South Eastern Railway administration for supply and loading of ballast at two stations, namely, Ghatsila and Dhalbhumgarh. The work under the contract was completed on June 30, 1969, but certain disputes and differences arose between the respondent (hereinafter referred to as the contractor) and the authorities of the South Eastern Railway with regard to certain claims put forward by the contractor. Those claims were put forward in the contractor's letter dt. May 5,1972, and those were set out in 12 items as follows :1) claim for refund of balance security deposit : Rs. 2,082. 00 2)claim on account of outstanding bills : Rs. 9,520. 00 3)claim for payment of excess quantity supplied : Rs. 63,000. 00 4)claim towards the cost for preparing stacking grounds : Rs. 25,000. 00 5)claim of payment for additional lead involved : Rs. 1,98,000. 00 6)claim for demurrage : Rs. 10,025. 00 7)claim of damages for loss due to stoppage of work : Rs. 1,20,000. 00 8)claim of damages for loss due to irregular supply of rakes : Rs. 4,80,000. 00 9) Claim of payment for extra work done with regard to cleaning, levelling and dressing of stacking grounds : Rs. 25,000. 00 10)claim of damages for loss due to non-supply of rakes from July 1967 to September 1967 : Rs. 50,000. 00 11)claim of damages for loss due to insufficient provision of stacking grounds : Rs. 25,000. 00 12)interest Rs. 10,07,627. 00
( 3 ) SINCE the contract incorporated an arbitration clause the dispute so raised by the contractor by the letter, as aforesaid, was referred to arbitration by the joint arbitrators, Sri N. Gopalakraishna and Sri K. S. Guha.
( 4 ) WHEN the arbitration proceeding was pending on August 10, 1976, the contractor put forward a claim of additional amounts on items 3,4,7 and 11 as above and the contractor further proposed to claim interest at 6% with effect from 1-7-1969 to 31-8-1974 assessed at Rs. 3,47,937/- and for further interest from 1-9-1974 until the payment to be assessed by the arbitrators. The additional amounts claimed on items 3, 4, 7 and 11 were Rs. 8,250/-, Rs. 95,000/-, Rs. 5,000/- and Rs. 6,500/-respectively. The sum total of such additional amounts claimed together with the quantified interest of Rs. 3,47,937/- amounted to Rs. 4,62,687/ -. Such additional claim was opposed on behalf of the railway administration and the railway administration insisted that the arbitration should stand limited to the reference already made and the arbitration did proceed accordingly.
( 5 ) ON Sept 22,1977, the arbitrators made an award for a sum of Rs. 6,50,778/- for payment by the railway administration in full and final settlement of all the claims of the contractor and further directed that the said amount should be paid within two months failing wherein they directed payment of interest at 10% on the awarded amount until the date of payment. There is no dispute that a judgment was passed on the award and the railway administration paid not only the amount awarded, namely, Rs. 6,50,778/- but also a sum of Rs. 19,220. 48 towards the interest and the contractor received the same in the year 1978 in full and final settlement of all claims forming the subject matter of reference including interest payable thereon.
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