1989 Supreme(Ker) 539
High Court of Kerala
U.L. Bhat, P. Krishnamoorthy, JJ.
Government of Kerala - Appellant
Versus
V K Kuriakose - Respondent
M.F.A. No. 605 of 1983
Decided On : 11-08-1989
Important Points
Subject
Arbitration Law - Misconduct and Lack of Evidence
Headnote
Arbitration Misconduct - Construction of a bridge - Arbitration Act - Section 16, 30 - The court set aside the arbitration award on the grounds of misconduct by the Arbitrator and lack of evidence to support the award.
Fact of the Case:
The Government of Kerala and the Superintending Engineer appealed to set aside an arbitration award for the construction of a bridge. The State objected to the award, claiming that the Arbitrator passed the award without giving them an opportunity to present their case or provide evidence.
Finding of the Court:
The court found that the Arbitrator had misconducted himself by not adhering to the principles of natural justice and fair play. Additionally, the award was based on no evidence, making it liable to be set aside.
Issues: The main issue was the misconduct of the Arbitrator in passing the award without giving the State an opportunity to present their case and the lack of evidence to support the award.
Ratio Decidendi: The court held that the Arbitrator's actions constituted misconduct as he did not adhere to the principles of natural justice and fair play. Additionally, the award was set aside due to the lack of evidence to support the amount awarded.
Final Decision: The court set aside the lower court's order and the arbitration award, remitting the matter to the Arbitrator for fresh consideration within four months.
Krishnamoorthy, J-
1. This is an appeal by the Government of Kerala and the Superintending Engineer, P.W.D Buildings and Roads, South Circle, Trivandrum, rejecting an application to set aside an award passed by the Chief Engineer (Arbitration). The respondent herein (the contractor) was entrusted with the work of construction of a bridge at Pulikuttissery crossing in Kallumada-Kallumkathara Road and agreement No. 29/SESC/70-71 was entered into. A supplemental agreement was also executed by the parties which bears No. 29/3/SESC/74-75. For the purpose of this case it is not necessary to give the details of the agreement and other disputes: but it is enough to state that differences and disputes arose between the parties. There was an Arbitration clause in the agreement and the Chief Engineer (Arbitration) was the named Arbitrator. The disputes were referred to the Arbitrator and a non-speaking award was passed by him on 29th May 1982. The award was filed before the Sub Court. The appellants filed objections to the award and prayed for setting aside of the same, and also paid the necessary court fee leviable for an application under section 16 or 30 of the Arbitration Act. The main objection raised by the State against the award was that the Arbitrator posted the matter on 24th May 1982 for a preliminary hearing and that immediately thereafter on 29th May 1982 he passed the award itself, without giving an opportunity to the State to state their case or place the evidence before him. It was also contended in the objection that the Arbitrator passed the award in haste as he was to retire on 31st May 1982 and that he has misconducted himself in passing the award. It is worthwhile to state at this stage that the Chief Engineer (Arbitration) is a Government servant and the normal rules of retirement apply to him also.
2. The Sub Court overruled the objection on the ground that the award being a non- speaking one, the jurisdiction of the civil court to interfere with such an award is limited. It further came to the conclusion that the award is not vitiated by any legal error apparent on the face of the record and that there is no misconduct by the Arbitrator. Consequently, a decree was passed in terms of the award, overruling the objections of the State. The appeal is by the State against the order refusing to set aside the arbitration award.
3. The main contention of learned Government Pleader who appeared for the appellants is that the Arbitrator misconducted himself in passing the award without observing the principles of natural justice. He contended that no opportunity was given to the State to place their case before the Arbitrator nor was there any consideration of the case by him, as can be seen from the records. He further contended that the award is based on no materials of evidence whatsoever and that there is an error apparent on the face of the record.
4. As stated earlier, the contractor made a claim before the Arbitrator alleging that amounts are due to him. The State had filed a defence statement before the Arbitrator contending that the claim itself is barred by limitation and by virtue of other provisions in the agreement and that the claim made by the contractor is unsustainable. In the award, the Arbitrator overruled the preliminary objections regarding limitation etc., and awarded a sum of Rs. 1,50,000 in satisfaction of all claims. The award also provided that the contractor shall be entitled to the release of his security and retention amounts, the former being subject to the rules regarding tax clearance.
5. In order to consider the contention of the learned Government Pleader it is necessary to look into the proceedings of the Aibitrator in the matter. Under the agreement between the parties, the Chief Engineer (Arbitration) is the named Arbitrator. On 5th December 1981 the contractor filed a petition before the Arbitrator to enter on the reference and to issue notice to the Superintending Engineer to file t