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2006 Supreme(Cal) 387
High Court Of Calcutta
Before: Vikash Sridhar Sirpurkar, CJ And Soumitra Sen, J.
SARASWAT TRADING AGENCY - Appellant
Versus
UNION OF INDIA - Respondent
A. P. 325 Of 1998
Decided On : 07/04/2006
I.P.MUKHERJI, P.K.DAS
Headnote:
S. SEN, J. ( 1 ) THIS appeal is directed against a Judgment dated 2001, november, 2001 (Union of India v. Saraswat Trading Agency and Anr.)whereby the learned Judge has partly set aside an award passed by the arbitrator dated 9th September, 2000.
Fact of the Case:
The appellant, a lowest tenderer, was awarded a contract for handling of goods, parcel and booked luggage at Itwari and other group stations on South Eastern Railway for a period of three years from 3rd August, 1991. Due to increase in the rate of wages to be paid by the appellant to the labourers engaged by it, the appellant demanded enhancement and/or revision of rates which was refused by the respondent on the ground that the contract was a "firm price contract" and that there was no clause for enhancement of rate in the contract. On termination of the contract by the appellant with effect from 31st December, 1992, the appellant continued with the work on the same terms and conditions of the contract so that the work of handling of goods is not disrupted till August 1994.
Finding of the Court:
The Arbitrator appointed by the Court by the order dated 1st of july, 1999 entered upon reference on 3rd August, 1999 and thereafter made and published his award on 9th September, 2000. The respondent filed an application under section 34 of the said act on 2nd January, 2001. By the impugned order the learned Trial Judge set aside the claim in respect of items No. 3 and 5 but upheld the claim in respect of item No. 4.
Issues: 1. Whether the Arbitrator has exceeded his jurisdiction under the contract; 2. Whether there is any bar for grant of escalation under the contract; and 3. whether the appellant is entitled to interest in the instant case.
Ratio Decidendi: 1. The Arbitration Clause, which was under consideration before the Supreme Court is almost similar in nature to the Arbitration Clause in the instant case whereby any claim or dispute arisen out of or relating to the contract would be covered by the Arbitration Clause. 2. In the case of First Tarapore (supra), the Supreme Court has interpreted the expressions "claim arising out of contract" or "relating to the contract" or "concerning the contract" appearing in the arbitration Clause. 3. The crux of the matter, in our opinion, is the agreement between the parties and how the parties understood it and conducted themselves in execution of the contract. 4. The Supreme Court in the case of Oil and Natural Gas Corporation ltd. (supra) has held that in order to hold that an award is patently illegal because it is against public policy of India, it is to be found that the award is contrary to fundamental policy of Indian law, or the interest of India, or contrary to justice or morality or if it is otherwise patently illegal, which illegality must go to the root of the matter.
Final Decision: The impugned judgment is liable to be set aside and is hereby set aside. The award passed by the Arbitrator is upheld on all counts. There will, however, be no order as to costs.
( 1 ) THIS appeal is directed against a Judgment dated 2001, november, 2001 (Union of India v. Saraswat Trading Agency and Anr.)whereby the learned Judge has partly set aside an award passed by the arbitrator dated 9th September, 2000.
( 2 ) THE facts leading to the disputes in this present appeal are briefly enumerated as under: on or about 16th of May, 1990, the South Eastern Railway opened a tender for handling of goods, parcel and booked luggage at Itwari and other group stations. The appellant was declared as the lowest tenderer.
( 3 ) THE contract was ultimately awarded in favour of the appellant on 22nd August, 1991 and became effective on and from 3rd August, 1991 for a period of three years.
( 4 ) DUE to increase in the rate of wages to be paid by the appellant to the labourers engaged by it by reason of the circulars published by the respondent from time to time, the appellant demanded enhancement and/or revision of rates which was refused by the respondent on the ground that the contract was a "firm price contract" and that there was no clause for enhancement of rate in the contract.
( 5 ) ON or about 31st of December, 1992 due to the non-enhancement of the rate of wages, the appellant terminated the contract by giving notice in terms of clause 1 (i) of the contract and such termination was accepted by the respondent with effect from 31st of December, 1992. The claimant, however, was requested by the respondent to continue with the work on the same terms and conditions of the contract so that the work of handling of goods is not disrupted. The appellant continued with the contract under protest.
( 6 ) THE appellant continued with the work as required under the contract up to August 1994.
( 7 ) THE claim of the appellant was considered by the respondent and the appellant was offered a sum of Rs. 6,848/- for the period commencing from 16th January, 1993 up to 31st August, 1994.
( 8 ) THE appellant requested the respondent to reconsider its claim and ultimately a high level committee of the respondent considered the claim of the appellant for the period commencing from 1st of january, 1993 till 31st of August, 1994 and offered to pay to the claimant a sum of Rs. 3,61,058/- which was, however, not accepted by the appellant; and, as such the disputes and differences arose between the parties.
( 9 ) A departmental Arbitrator was appointed who made and published his award on 4th of June, 1998. Being dissatisfied with the said award with regard to certain items of claim, the appellant filed an application under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'said Act' ). By an order dated 12th of february, 1999 the said award was set aside, and by the said order, a learned Senior Advocate of this Court was appointed as an Arbitrator to adjudicate upon the disputes with regard to the items of claims No. 3, 4 and 5.
( 10 ) AS the Arbitrator was appointed in an application under section 34 for setting aside of the award, an application under section 11 of the said Act was filed by the appellant and by an order dated 1st of July, 1999 another Advocate of this Court was appointed as an Arbitrator to adjudicate upon the disputes and differences that had arisen between the parties in terms of the order dated 12th February, 1999.
( 11 ) THE Arbitrator appointed by the Court by the order dated 1st of july, 1999 entered upon reference on 3rd August, 1999 and thereafter made and published his award on 9th September, 2000.
( 12 ) THE respondent filed an application under section 34 of the said act on 2nd January, 2001.
( 13 ) BY the impugned order the learned Trial Judge set aside the claim in respect of items No. 3 and 5 but upheld the claim in respect of item No. 4.
( 14 ) THE claims referred to the Arbitrator were as follows:
"claim No. 3: Claim for increase in rates from 3. 8. 91 to 31. 12. 92 during the contractual period being sum of rs. 10,74,408/ -. Claim No. 4:
