2001 Supreme(Ker) 70
Judges : S.RAJENDRA BABU,S.N.VARIAVA
George - Appellant
Versus
State of Kerala - Respondent
Case No : C.A. No. 5281 of 1996
Decided On : 02/06/2001
Advocates Appeared :
Tripurary Roy; For Appellant G. Prakash; For Respondent
The Arbitrator's view can be binding if it is reasonable, and interest can be awarded from the date of the Award based on established legal principles.
Headnote:
Supplemental Agreement - Construction Contract - 20th October, 1983 - Clause 32, Jagdish Rao & Brothers v. Union of India (1999 (1) Arb.L.R. 696), M/s. Jagdish Rai & Brothers v. Union of India (UT 1999 (2) SC 268), Hindustan Construction Co. Ltd. v. State of Jammu & Kashmir (UT 1992 (5) SC 325 = AIR 1992 SC 2192), Secretary Irrigation Department, Government of Orissa & Ors. v. G.C. Roy (UT 1991 (6) SC 349 =1992 (1) SCC 508), Executive Engineer Dhenkanal Minor Irrigation Division, Orissa, etc. etc. (UT 2001 (1) SC 486)
Fact of the Case:
The appellant was awarded a construction contract for a Main Canal Driving Tunnel of the Kallada Irrigation Project. Disputes arose, and the matter was referred to arbitration. The respondent filed objections to the arbitration award, which were partly allowed by the High Court.
Finding of the Court:
The High Court's decision to set aside certain claims under the construction contract was not sustained as the Arbitrator's view was reasonable. The High Court's disallowance of interest from the date of the Award was also set aside, as per established legal principles.
Issues: The issues revolved around the binding nature of the Supplemental Agreement, the validity of the claims, and the award of interest from the date of the Award.
Ratio Decidendi: The Arbitrator's view on the Supplemental Agreement and the claims was reasonable and binding. The court upheld the award of interest from the date of the Award based on established legal principles.
Final Decision: The appeal was disposed of with the setting aside of the High Court's decision on certain claims and the award of interest, while upholding the award under Item 120).
1. This appeal is against a judgment dated 15th February, 1989 wherein the appeal filed by the respondent was partly allowed.
2. Briefly stated the facts are as follows:
The appellant was awarded a contract for construction of a Main Canal Driving Tunnel of the Kallada Irrigation Project. The work was to be completed by 4th March, 1983. A Supplemental Agreement date 20th October, 1983 extending the period of completion was entered into. As disputes arose between the parties the same were referred to a sole Arbitrator, who gave a reasoned Award dated 12th August, 1985.
3. The respondent filed objections to the Award, which were rejected by a judgment dated 31st March, 1986 and the Award was made a rule of Court.
4. In the appeal before the High Court challenge was restricted to Award of claims under Items 12(i), 120),12(k) and Award of interest from date of Award. The appeal filed by the respondent was partly allowed by the impugned judgment dated 15th February, 1989. By this judgment the Award of claims under Items 12(i) and 12(k) were set aside. Award of claim under Item 120) was upheld. Further the Award of interest was also set aside. The only ground on which the claims under Items 12 (i) and 12(k) have been set aside are that the Arbitrator could not overlook the terms of the contract or agreement. It is held that the Arbitrator could not have awarded these claims as they were contrary to the Supplemental Agreement dated 20th October, 1983.
5. Mr. Tripurary Ray, pointed out that claim 12(i) was for loss in connection with the price escalation and that it was under Clause.32 of the original agreement. He pointed out that claim 12(k) was for revision of rates. He submitted that under the original contract the time for completion was fixed as 4th March, 1983. He submitted that due to fault of the respondents the work could not be completed by that time. He submitted that the appellant was forced to execute the Supplemental Agreement in a form as dictated by the respondent as otherwise the respondents were not clearing the pending bills of the appellant. He drew attention of this Court to a letter dated 6th October, 1983, addressed by the appellant to the Superintending Engineer wherein the appellant, before execution of the Supplemental Agreement, has recorded that he was protesting execution of the Supplemental Agreement and that he would be executing the Supplemental Agreement without prejudice to his claims. He submitted that even before writing of this letter the appellant had already, by a letter dated 5th October 1983, made his claims. He pointed out that after the Supplemental Agreement dated 20th October, 1983 was executed the appellant addressed another letter dated 24th November, 1983 to the Chief Engineer, stating that the Supplemental Agreement was got executed under coercion and undue influence and that the same was executed without prejudice to his claims.
6. Mr. Tripurary Ray submitted that one of the questions before the Arbitrator was whether this Supplemental Agreement was binding on the appellant and/or whether he had been forced to sign the Agreement and/or whether the appellant was entitled to maintain his claims in view of the Supplemental Agreement. He pointed out that after hearing parties and considering the submissions of the respondents the Arbitrator had by a reasoned Award sanctioned the claims. He pointed out that in the Award the Arbitrator had held that the delay was not due to the fault of the appellant and that the Supplemental Agreement was got executed from the appellant. He pointed out that the Arbitrator had held that the Supplemental Agreement was without prejudice to the claims which had already been made. The Arbitrator held that the Supplemental Agreement did not debar the appellant from making or maintaining his claims. Mr. Tripurary Ray submitted that this was a possible view of the matter. He submitted that the Court should be slow to interfere merely because another view was