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2022 Supreme(Ker) 410

IN THE HIGH COURT OF KERALA AT ERNAKULAM
Mary Joseph, J.
N.K.Raman Nair - Appellant
Vs.
State Of Kerala Represented By Secretary, Irrigation Department, Government Secretariat, Thiruvananthapuram - Respondent
ARB.A NO. 12, 21 Of 2007, 6 Of 2008
Decided On : 28-06-2022

Advocates:
Advocate Appeared:
For the Appellant : Sri.Peeyus A.Kottam
For the Respondent: PP Sri Dennis Devassy

Point of Law: While exercising jurisdiction under Section 17 of the Act ought not to have re-appreciated the evidence as it is not sitting in appeal over the award placed before it. Raising contentions of the nature above, the learned counsel urged that interest of justice demands interference of the impugned orders, by this Court.

Headnote:

Arbitration Act, 1940 – Sections 14, 15, 16, 17 and 30 - Revocation of Arbitration Clauses and Re-opening of Awards Act - Kerala Revocation of Arbitration Clauses and Re-opening of Awards Ordinance, 1997- Power to remit award - Award to be signed and filed - Grounds for setting aside award - Whether awards of arbitrator should be made a decree of court or to set aside those - Original Petitions have been filed by one Mr.N.K. Raman Nair who was a contractor for work of 11KIP (MCs) for laying Pipeline and allied works from spouts at Ch.1395 m of RBC minor and at Ch 315m of Edakkunnam RC minor distributory. During the execution of work, disputes and differences arose between claimant and respondents and those were referred to an Arbitrator, who has pronounced awards in the respective petitions. The awards were forwarded to the court for making a decree and those were taken on file respectively as OPs. In meantime respondents filed petitions to reopen the award and to declare the Arbitration agreement ineffective and to dismiss petitions above - Court is not hesitant to hold that the court below is erred and unjustified in setting aside the arbitration awards on the ground that the State Act has cancelled the arbitration clauses and thereby revoked the authority of arbitrators to pass awards.(Para 22)

Finding of the court: That the High Court of Kerala is right in law in holding that the State Act encroaches upon the judicial power of the State and is therefore liable to be struck down as being unconstitutional - The State Act was declared as unconstitutional by the Apex Court in Civil Appeal referred to Supra and therefore, the power of the arbitrator and validity of the awards passed by him are restored - Impugned orders passed by the court below in OP(A)s are set aside. All Original Petitions are remanded to the court below for reconsideration in the backdrop of Sections 15, 16 and 17 of the Act and in case no grounds to modify the award or remit it to the arbitrator are made out, to pass a judgment only in terms of the award and also to draw a decree in terms of it.

Result: Order accordingly.

JUDGMENT :

Appeals are originated from the judgments passed by Principal Sub Court, Thiruvananthapuram on 22.06.2006 dismissing OP(A) No.199/95, OP(A) No.200/95 and OP(A) No.201/95.

2. Original Petitions have been filed by one Mr.N.K. Raman Nair who was a contractor for the work of 11KIP (MCs) for laying Pipeline and allied works from the spouts at Ch.1395 m of RBC minor and at Ch 315m of Edakkunnam RC minor distributory. During the execution of the work, disputes and differences arose between the claimant and respondents and those were referred to an Arbitrator, who has pronounced awards in the respective petitions on 27.07.1995. The awards were forwarded to the court for making a decree and those were taken on file respectively as OP Nos.199/95, 200/95 and 201/95. In the meantime respondents filed petitions to reopen the award and to declare the Arbitration agreement ineffective and to dismiss the petitions above.

3. The Court considered the question, whether the awards of the arbitrator should be made a decree of the court or to set aside those. Time frame was fixed by this Court by order dated 13.02.2006 passed in WP(C) No.2734/2006 to dispose of all the three OPs before 30.06.2006.

4. It was contended by the respondents in the Original Petitions in I.A. No.899/98 filed by them that the Kerala Revocation of Arbitration Clauses and Re-opening of Awards Ordinance, 1997 which obtained assent of the President of India on 14.11.1997 and Revocation of Arbitration Clauses and Re-opening of Awards Act (for short ‘State Act’) came into force in the year 1998 takes away the Arbitration Clauses in agreements and divested the authorities of Arbitrators to decide the disputes. It was contended on its basis that all provisions in the LCB condition with regard to arbitration have become ineffective with the passing of the above enactment. It was contended further that the arbitrator, by passing the awards in question has exceeded his jurisdiction and thus misconducted the proceedings. It was further urged that the remedy of the aggrieved party is to approach the civil court for redressing his grievances and obtaining reliefs. The awards passed by arbitrator are sought to be set aside in the above context.

5. The claimants had filed objection in I.A.No.863/98 and contended that the State Act has no retrospective effect, that the vires and validity of the enactment were challenged before this Court in O.P. No.4206/1998 and an interim order staying further proceedings was passed in CMP No.7607/98, and that as per Section 3 of Act 12 of 1998, the revocation clause will not affect the award passed on 27.07.1995.

6. The arbitrator overruled the objections raised by the respondents with regard to his appointment. He allowed claims A, B and C and awarded a sum of Rs.92,100/- with future interest at the rate of 18% per annum.

7. The court below has considered the preliminary objection of the respondent on appointment of the arbitrator and held that the arbitrator was not justified in overruling the preliminary objection raised against his appointment. The court below further held that the arbitrator being a government servant, was bound by the provisions of the State Act and he ought not to have entered on a reference to adjudicate the disputes raised before it. Accordingly, it was found by the court below that the proceedings before the arbitrator were devoid of jurisdiction and have no validity at all and therefore the award is liable to be set aside. After finding so, the court below has also gone into the merits of the arbitration awards and held that the awards of the arbitrator under claims A, B, C and G are unsustainable and accordingly set aside those. Ultimately the awards, having been passed by the arbitrator without jurisdiction, were set aside.

8. According to Sri.Peeyus A Kottam, the learned counsel for the petitioners the court below is highly unjustified in passing the impugned orders. According to him the court below while passing the imp

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