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Calcutta High Court
RAMENDRA MOHAN DATTA
Life Insurance Corporation of India - Appellant
Versus
M.L.Dalmia - Respondent
Award Case No.150 of 1971
Decided On : 01/31/1972
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - JURISDICTION OF ARBITRATOR - CLAIM UNDER SECTION 70 OF INDIAN CONTRACT ACT - WHETHER OUTSIDE SCOPE OF ARBITRATION CLAUSE - LEGAL MISCONDUCT - FAILURE TO ADDUCE EVIDENCE - FAILURE TO INTIMATE PARTIES ABOUT CLOSURE OF CASE.
Fact of the Case:
The petitioner, Life Insurance Corporation of India, entered into a contract with the respondent, M.L. Dalmia and Co. Ltd., for the construction of a building in New Delhi. The contract included an arbitration clause providing for the resolution of disputes arising out of the contract. A dispute arose between the parties regarding the payment of certain claims made by the respondent. The respondent filed a statement of claim before the arbitrator, who made an award in favor of the respondent. The petitioner filed an application to set aside the award on various grounds, including lack of jurisdiction of the arbitrator, legal misconduct, and failure to intimate the parties about the closure of the case.
Finding of the Court:
The court held that the claim made by the respondent under category 'B' was not outside the scope of the arbitration clause. The court found that the claim arose out of the contract and was related to damages claimed for breach of contract. The court also held that the arbitrator did not act in excess of his jurisdiction by entertaining the claim. The court further held that the arbitrator was not guilty of legal misconduct in arriving at the compensation without any evidence. The court found that there was sufficient documentary evidence before the arbitrator to enable him to make the award in the manner he did. The court also held that the arbitrator was not guilty of misconduct in not intimating the parties that the case was closed and that he was going to consider the making of the award. The court found that the parties' representatives had instructed the arbitrator that they had concluded their respective arguments and neither party had anything further to add. On that basis, the arbitrator closed the reference and proceeded to make his award.
Issues: 1. Whether the claim made by the respondent under category 'B' was outside the scope of the arbitration clause? 2. Whether the arbitrator acted in excess of his jurisdiction by entertaining the claim? 3. Whether the arbitrator was guilty of legal misconduct in arriving at the compensation without any evidence? 4. Whether the arbitrator was guilty of misconduct in not intimating the parties that the case was closed and that he was going to consider the making of the award?
Ratio Decidendi: 1. The claim made by the respondent under category 'B' was not outside the scope of the arbitration clause because it arose out of the contract and was related to damages claimed for breach of contract. 2. The arbitrator did not act in excess of his jurisdiction by entertaining the claim because the arbitration clause provided for the resolution of disputes arising out of the contract. 3. The arbitrator was not guilty of legal misconduct in arriving at the compensation without any evidence because there was sufficient documentary evidence before him to enable him to make the award in the manner he did. 4. The arbitrator was not guilty of misconduct in not intimating the parties that the case was closed and that he was going to consider the making of the award because the parties' representatives had instructed him that they had concluded their respective arguments and neither party had anything further to add.
Final Decision: The court dismissed the petitioner's application to set aside the award.
ORDER :- This is an application for an order that the award dated April 29, 1971 be declared null and void and/or be set aside.
2. The facts are that on or about 1955 the then National Life Insurance Company Limited (hereinafter called the said company) accepted the tender of the respondent for the construction of a building at New Delhi. The work orders were issued and the respondent was asked to commence the work on the understanding that the formal contract would be issued in due course. In the matter of the said agreement the petitioner's architects Messrs. Ballardie, Thompson and Matthews acted as the agent of the petitioner all throughout. The petitioner from time to time made various payments against the running bills submitted by the respondent on the certificate of the said architects in terms of the said agreement. In 1956 the Life Insurance Corporation of India came into existence and the said Corporation duly took over the said contract on behalf of the said National Insurance Co. Ltd.
3. The building was admittedly completed in April, 1959. On or about October 7, 1959 the respondent made out the final bill wherein it claimed for the balance price of work by calculating the price of the additional work and the deviations and described the said claim as their claim under category "A". The respondent also put forward another claim by describing the same as claim under category "B". As stated above, under the terms of the said agreement the said architects were to give a certificate to enable the respondent to receive payment. On or about June 1, 1960 the said architects issued a certificate for payment of Rupees 3,70,632.44 paise in respect of the claim under category "A" and in respect of the claim under category "B" the said architects recommended the sum of Rupees 1,14,385.06 paise. The said architects recommended payments in respect of various items which were mentioned in their letter dated June 1, 1960 addressed to the petitioner. Out of the total sum so recommended for payment the petitioner agreed to pay a sum of Rs.3,50,107.00 and actually paid a sum of Rs.3,50,000.00 by leaving a balance sum of Rs.107.00 but refused to pay the balance sum of Rupees 20,632.44 paise claimed under category "A". As regards category "B" the petitioner did not act in terms of the said recommendation of their architects and rejected the entire claim of Rs.1,14,385.08 paise.
4. The formal contract was executed by and between the parties herein on or about October 26, 1960, i.e., long after the work was completed. The said formal contract provided various terms and conditions including the arbitration clause as follows:-
"30. Provided always that in case any dispute or difference shall arise between the employer, or the architects on his behalf, and the contractor, either during the progress of the works, or after the determination, abandonment or breach of the contract, as to the constructions of the contract or as to any matter or thing arising thereunder (except as to the matters left to the sole discretion of the architects under clauses 1, 4, 5, 16, 19, 19A and 29, and as to the exercises by them under clause 18 of the right to have any work opened up) or as to the withholding by the architects of any certificates to which the contractor may claim to be entitled, then either party shall forthwith give to the other written notice of such dispute or difference, which notice shall specify the matters which are in dispute, and such dispute or difference of which such notice has been given, and no other, shall be and is hereby referred to the arbitration and final decision of the chief engineer C.P.W.D. department, Government of India if he is able and willing to act, otherwise to some person to be mutually agreed upon between the contractor and the architects, and the award of such arbitration shall be final and binding on the parties. Such reference shall not be entered upon until after the completion, or alleged completion,
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