High Court of Kerala
K. HEMA & A. HARIPRASAD, JJ.
The Central Warehousing Corporation Kochi & Another
Versus
Varghese K. Pulayath (Deceased) & Others
Arb. A.No. 24 of 2009 & Cross Objection No. 68 of 2009
Decided On : 19-03-2013
Arbitration Act - Refusal to Set Aside Award - Sec. 30 - Summary
Fact of the Case:
The appellants awarded a construction contract to the predecessor-in-interest of the respondents. Disputes arose, resulting in the rescission of the contract by the appellants. The predecessor-in-interest of the respondents invoked arbitration under Sec.20 of the Act. The court appointed an Arbitrator, and after conducting arbitration, the Arbitrator made an award. Dissatisfied with the award, the appellants filed a petition to set aside the award under Sec.30 of the Act. The lower court dismissed the petition and passed a decree in favor of the respondents. The appellants challenged this order in the appeal.
Finding of the Court:
The court found that the Arbitrator did not commit any misconduct and did not exceed her jurisdiction. The court also found that the Arbitrator was legally justified in granting interest and that there was no legal infirmity in the award. The court held that the lower court erred in granting amounts in the decree that were in conflict with the award. The court dismissed the appeal and allowed the respondents' petition for correction of the decree.
Issues: 1. Whether the Arbitrator erred in law by considering 'excepted matters' contained in the contract? 2. Whether the Arbitrator was legally right in granting interest for the amounts awarded? 3. Whether the court below legally went wrong in disallowing the claim of the appellants to set aside the award? 4. Whether the plea raised by the respondents to amend the decree passed by the lower court is legally allowable?
Ratio Decidendi: The Arbitrator is the sole judge of the quality and quantity of evidence, and the court cannot sit in appeal on the award. The named adjudicator should have taken a decision in the matter after complying with the legal requirements and principles of natural justice. The court has the power to amend the judgment and decree to cure clerical or arithmetical mistakes.
Final Decision: The appeal is dismissed, confirming the order of dismissal of the petition to set aside the award. The court allowed the respondents' petition for correction of the decree.
Hariprasad, J.
1. This appeal, filed under Sec.39 of the Arbitration Act, 1940 (in short, "the Act"), is against the order passed by the learned Subordinate Judge refusing to set aside an award by invoking power under Sec.30 of the Act.
2. Admitted facts, briefly stated, are the following:
The predecessor-in-interest of the respondents was a contractor. He submitted a tender to the appellants for construction of 20,000 MTC godowns with ancillary buildings, road, electric installation, internal and external services at Central Ware House, Thrissur. Estimated cost of civil works was `30,75,144.14. The tendered amount was 72,41,968.75, being 127% above the estimated cost. Tender for electrical works was for1,46,028.80, being 79% above the estimated cost of `1,15,362.75. Appellants awarded the contract to the predecessor-in-interest of the respondents. An agreement was executed in this respect on 18.03.1984. Date of commencement of work was fixed on 04.11.1984 and that of completion was on 03.09.1985. Thereafter the work commenced and proceeded to a considerable extent. However, the work could not be completed as scheduled and either side accused the other for the default. Disputes between the parties resulted in the rescission of the contract by the appellants on 13.08.1988. The predecessor-in-interest of the respondents invoked Clause 25 of the contract agreement and referred the dispute/claim to the Managing Director, CWD, New Delhi. Managing Director of the appellants scrutinized the claims (disputes) and found that they fell within "excepted matters" and therefore no Arbitrator was appointed. Hence the contractor (predecessor-in-interest of respondents) filed Arbitration O.S. No.772 of 1989 before the court of Subordinate Judge, Thrissur. The suit was filed under Sec.20 of the Act. Prayer in the suit, inter alia, was to appoint a sole Arbitrator to adjudicate upon the disputes between the parties regarding the issues mentioned in the plaint.
3. Appellants filed a written statement refuting the allegations in the plaint. Appellants prayed for dismissal of the suit. Learned Subordinate Judge appointed an Arbitrator by judgment dated 11.07.1996. That judgment was challenged in revision before this Court in C.R.P. No.2003 of 1996. Two questions raised before this Court in the said revision were considered and decided. First question was whether a revision was maintainable against the order passed by the lower court referring the disputes to arbitration in a suit filed under Sec.20 of the Act? This Court found that the revision was maintainable. Second question was relating to the legality and propriety of reference of certain clauses for arbitration. This Court considered that question also and found that since the persona designata enjoined under the contract had either refused to exercise or abdicated his authority to appoint an Arbitrator as provided in the contract, the court has jurisdiction to appoint an Arbitrator to adjudicate the issues involved. It was also found that the question whether some of the issues were arbitrable or not had to be decided by the Arbitrator appointed in the case. It is seen from the records that the order passed in C.R.P.No.2003 of 1996 by this Court has attained finality. Thereafter, the arbitration was conducted with due notice to both sides. Both sides produced evidence before the Arbitrator to establish their contentions. Both sides were heard by the Arbitrator. When the matter was pending before the Arbitrator, the original contractor (predecessor-in-interest of the respondents) died. Respondents were impleaded as additional claimants An award was made by the Arbitrator and after giving notice in writing to both sides, she filed it before the court under the provisions of the Act. After passing the award, Arbitrator discovered clerical and typographical errors in the award. Therefore, the Arbitrator invoking power under Sec.13(d) of the Act made necessary corrections in the ori
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