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1996 Supreme(Raj) 213
RAJASTHAN HIGH COURT
R.L. Khurana, J.
SHIV KUMAR CHOPRA - PETITIONER
v.
BEAS CONSTRUCTION BOARD AND ANOTHER - RESPONDENTS.
Civil Revision No. 7 of 1993
Decided on : April 18, 1996.
Sh. Ramakant Sharma & Ms. Devyani Kulhiala, Advocates, for the Petitioner.
Sh. P. A. Sharma Advocate, for the Respondents.
A court lacking pecuniary jurisdiction cannot appoint an arbitrator or make an award the rule of the court, and an award made by such an arbitrator is invalid.
Headnote:
ARBITRATION - JURISDICTION - APPOINTMENT OF ARBITRATOR AND MAKING AWARD RULE OF COURT - PECUNIARY JURISDICTION - COURT LACKING PECUNIARY JURISDICTION CANNOT APPOINT ARBITRATOR OR MAKE AWARD RULE OF COURT - AWARD MADE BY SUCH ARBITRATOR IS INVALID.
Fact of the Case:
A dispute arose between the petitioner and the respondent regarding the construction of a structure foundation, cable trenches covers, and retaining walls for a 132 KV Switchyard. The matter was referred to arbitration, and an arbitrator was appointed by the Senior Sub-Judge, Mandi. The arbitrator made an award in favor of the petitioner, which was challenged by both parties. The Senior Sub-Judge dismissed the objections of both parties and made the award the rule of the court. The respondent appealed to the District Judge, Mandi, and the petitioner filed cross-objections. The District Judge dismissed the appeal and partly allowed the cross-objections.
Finding of the Court:
The High Court held that the Senior Sub-Judge lacked pecuniary jurisdiction to appoint the arbitrator and make the award the rule of the court. The court noted that the claim made by the petitioner was beyond the pecuniary jurisdiction of the Senior Sub-Judge and that the pecuniary jurisdiction of a court is determined based on the claim involved, not the amount awarded under the award.
Issues: 1. Whether the Senior Sub-Judge had pecuniary jurisdiction to appoint the arbitrator and make the award the rule of the court. 2. Whether the award made by the arbitrator was valid.
Ratio Decidendi: The High Court relied on the provisions of the Arbitration Act, 1940, and the definition of "Court" in Section 2(c) of the Act. The court held that the jurisdiction of a court for passing a decree in terms of an award depends on the questions that form the subject matter of the reference to arbitration, not on the terms of the award. The court also referred to several case laws supporting this proposition.
Final Decision: The High Court allowed the petition, set aside the orders of the District Judge and the Senior Sub-Judge, and declared the award dated 25.5.1988 invalid.
R. L. Khurana, J. - This petition for revision has been directed against the judgment dated 1.9.1992 of the District Judge, Mandi, passed in Appeal under Section 39(1) of the Arbitration Act, 1940, against the judgment dated 8.3.1990 of the Senior Sub-Judge, Mandi.
2. The work of "construction of structure foundation, cable trenches covers and retaining walls for 132 KV Switchyard at Slapper" was awarded in favour of the petitioner by the respondent-Beas Constructions Board vide agreement No. 5/1976 dated 8.12.1976.
3. On a dispute having arisen between the parties, the matter was referred to arbitration, Initially vide order dated 3.5.1982 of the Senior Sub-Judge, Mandi, the matter was referred to the arbitration of Shri S. T. Minhas of Dehar Power Circle, Sundernagar. The said arbitrator entered upon the reference but he could not make his award. Therefore, one Shri H. S. Baweja came to be appointed as an arbitrator. He too could not make the award. Ultimately, the Senior Sub-Judge, Mandi, on 22.8.1986 appointed Shri J. R. Kainath, Superintending Engineer (Arbitration), Solan as arbitrator. The said arbitrator after having entered upon the reference made his award on 25.5.1988, whereby a sum of Rs. 42,488 was awarded in favour of the petitioner. This award was filed in the court of Senior Sub-Judge, Mandi for being made the rule of the court.
4. Objections to the award were preferred by both the parties inter alia on the ground that the arbitrator had mis-conducted himself and the proceedings. While the respondents had challenged the competency of the arbitrator to award interest, the petitioners had averred that interest ought to have been awarded from the year 1977.
5. On the pleading of the parties, issues were framed by the Senior Sub-Judge. No evidence was led by the petitioner in support of his objections. One witness was examined on behalf of the respondent. The Senior Sub-Judge, Mandi, vide his judgment, dated 8.3.1990 had dismissed the objections of both the parties. The award was accordingly made the rule of the Court and a decree in terms thereof was passed in favour of the petitioner and against the respondents. The Senior Sub-Judge also allowed future interest on the amount awarded from the date of the award till the date of payment of the amount by the respondents.
6. Both the parties felt dissatisfied with the award. The respondent went up in appeal before the District Judge, Mandi, while the petitioner had filed cross-objections to the appeal filed by the respondent. The appeal as well as cross-objections were disposed of by a common judgment dated 1.9.1992, which is under challenge in this petition. The District Judge dismissed the appeal of the respondent. The cross-objections of the petitioner were partly allowed to the extent that the petitioner was held entitled to interest on the amount of Rs. 20,380 with effect from 5.5.1982 to the date of award at the rate of 12% per annum instead of from 17.8.1986 as awarded by the arbitrator.
7. The petitioner still feeling dissatisfied, has come up before this court by virtue of the present petition. It has been averred that the two Courts below have not properly appreciated the evidence with regard to misconduct on the part of the arbitrator. Besides, interest was payable with effect from 7.1.1977 when the amount of Rs. 20,380 had become due.
8. I have heard Shri Ramakant Sharma, Advocate with Ms. Devyani Kuthiala, Advocate, for the petitioner and Shri P. A. Sharma, Advocate, the learned Senior Standing Counsel for the respondents and have also gone through the record of the case.
9. The learned Senior Standing Counsel for the respondents at the very outset has raised an objection with regard to the jurisdiction of the Senior Sub-Judge, Mandi, firstly, in appointing an arbitrator under Section 20, Arbitration Act, 1940 and secondly, in making the award the rule of the court. According to the learned counsel the Senior Sub-Judge did not possess the pecuniar j
