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CALCUTTA HIGH COURT
Monoranjan Mallick, J.
Union of India
Vs.
M/s. Dayaram Parmar & Co & Anr.
Award Case No. 459 of 1989
Decided On : February 27, 1991
ARBITRATION - AWARD - CHALLENGE - GROUNDS - MISCONDUCT - ADMISSIBILITY OF EVIDENCE - INTERPRETATION OF CONTRACT - EXCEPTION MATTERS - JURISDICTION - INTEREST - COUNTERCLAIM.
Fact of the Case:
The petitioner, Union of India, challenged the award passed by the arbitrator in an arbitration proceeding initiated by the respondent, M/s. Dayaram, Parmer & Company. The petitioner raised several grounds of challenge, including misconduct of the arbitrator, inadmissibility of evidence, and errors in the interpretation of the contract.
Finding of the Court:
The court held that the arbitrator did not commit any misconduct in admitting the copy of the report submitted by the Special Officer appointed by the High Court to take measurements of the work done by the respondent. The court also held that the arbitrator did not err in interpreting the contract and that the claims awarded by the arbitrator were not excepted matters. However, the court held that the arbitrator had no jurisdiction to award pendente lite interest and that the award of interest from the date of the award till the date of payment or the date of the decree was also invalid.
Issues: 1. Whether the arbitrator committed misconduct in admitting the copy of the report submitted by the Special Officer appointed by the High Court to take measurements of the work done by the respondent? 2. Whether the arbitrator erred in interpreting the contract and whether the claims awarded by the arbitrator were excepted matters? 3. Whether the arbitrator had jurisdiction to award pendente lite interest?
Ratio Decidendi: 1. The court held that the arbitrator did not commit any misconduct in admitting the copy of the report submitted by the Special Officer appointed by the High Court to take measurements of the work done by the respondent. The court reasoned that the Evidence Act was not applicable to the arbitration proceeding and that the arbitrator was not required to follow the provisions of the Evidence Act in admitting evidence. 2. The court held that the arbitrator did not err in interpreting the contract and that the claims awarded by the arbitrator were not excepted matters. The court reasoned that the interpretation of the contract was a matter for the arbitrator to decide and that the arbitrator's interpretation was not erroneous. 3. The court held that the arbitrator had no jurisdiction to award pendente lite interest. The court reasoned that the arbitrator was not a court within the meaning of Section 34 of the Civil Procedure Code and that the reference to arbitration was not made in the course of a suit.
Final Decision: The court allowed the petition in part. The court deleted the award of interest amounting to Rs. 9,25,303.23 as per Item 20 of the claim and the award of interest from the date of the award till the date of payment or till the date of the decree whichever is earlier. The court directed the parties to bear the respective costs of the proceeding themselves.
This is an application under s. 30 read with s. 33 of the Arbitration Act filed by the Union of India represented by General Manager, Eastern Railway, Calcutta praying for setting aside the Award dated 20th July, 1989 passed by Shri A.N. Banerjee, Judge (Retired:, High Court Calcutta. the Sole Arbitrator.
2. The facts may be briefly stated as follows :-
By a formal Agreement No. CE/Con/971 dated August 27, 1980 by and between the petitioner and the respondent no. 1, under Article 299 of the Constitution the respondent no. 1 was required to execute the residual work of section IV from KM 5,900 to KM 6,850 for earthwork in formation and construction of catch water drains and side drains etc. for the proposed new Broad-gauge lines between Karaila Road and Jayant (Proposed station in Singrauli Coalfield) within February 21, 1981. The monetary va1ue of the said Agreement was Rs. 55,98.938. The respondents commenced the work on or about July 28, 1980 after obtaining several extensions from time to time between February 21,1981 and October 15,1982, The petitioner claimed by their letter dated June 13, 1982 that the said work was completed prior to June 30, 1982. However, the petitioner by their letter dated June 3, 1982 directed the respondents to widen the gullet to a width of 3 meters on either side of central line and for that to submit a programme for completion of the widening of the gullet to 6 meters wide before taking up, the linking in the said section. Even though at first the respondents admitted by their letter dated December I, 1981 that they would try to widen The base and would make it to the minimum of 6 meters wide but ultimately changed their mind and motivatedly took the unlawful plea that they were not under obligation to execute the extra/additional work desired by the petitioner unless the rates for the same were not settled beforehand. In the circumstances, the petitioner had no other alternative but to take recourse to the express provision of the Agreement for terminating the said Agreement by serving on them due notices as stipulated in the said Agreement which would appear from the letter of the petitioner dated October 13, 1982 issued under Clause 61 of the General Conditions of Contract, 1969, which was incorporated in the Agreement. As 1 he said Agreement was lawfully determined by the petitioner, the respondent no. 1 has no claim to any payment either by compensation or otherwise under clause 60 of General Conditions of Contract, 1969. Even clause 61(2)(d) entitles the petitioner to pay to the respondents any amount on account of the contract until expiration period of work and thereafter until the cost of completion and maintenance/damage for delay in completion (if any) and all other expenses incurred by the petitioner have been ascertained and the amount thereof certified by the Engineer. Inasmuch as the respondents admittedly failed to complete the said work within the extended time as aforesaid, the petitioner -rescinded the said Agreement but the said respondents by their letter dated 19th October, 1982 purportedly raised the pretended dispute and demanded an Arbitration under Clauses 62 and 63 of the General Conditions of the Contract. As, according to the petitioner, the said claim made under pretended dispute by the respondents are mostly "excepted matters" which are not at all arbitrable as would appear from Clause, 62 and 63(1)of the General Conditions of Contract, the petitioner did not consider to appoint any Arbitrator in the matter The respondent no. 1, however made an application under s. 20 of the Arbitration Act and another application under s. 41 of the Act for appointment of an Engineer for taking measurement of works executed by the respondents. On the said application for appointment of an Arbitrator under s. 20 of the Arbitration Act, High Court at Calcutta appointed Mr. Salil Kumar Roy Chowdhury Retired Judge as Sole Arbitrator to adjudicate on the dispute between the partie
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