IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
Vijay Bishnoi, Rekha Borana, JJ.
Executive Engineer, Survey And Investigation, Lift Division First and ors. - Appellants
Versus
M/s Ashok Kumar - Respondent
D.B. Civil Misc. Appeal No. 1481 of 2019
Decided On : 03-11-2023
Arbitration - Commercial Court - Arbitration and Conciliation Act, 1996 - Section 34 - Order 6 Rule 17, CPC - Order 41 Rule 27, CPC
Fact of the Case:
The dispute arose from an agreement for 'Earth Work Excavation and Double Tile Lining of Sahwa Lift Canal' between the appellant and respondent firm. The arbitrator awarded an amount in favor of the claimant-firm, which was challenged by the appellant. The court rejected the appellant's objections under Section 34 of the Act of 1996.
Finding of the Court:
The court found that the arbitrator's application of enhanced BSR Rates for certain claims was beyond the terms of the contract and modified the award accordingly. The court affirmed the award for other claims and the rejection of the counter claim of the appellant State.
Issues: Scope of interference under Section 34 of the Act of 1996, application for amendment of the appeal, and taking documents on record under Order 41 Rule 27, CPC.
Ratio Decidendi: The court held that the arbitrator's authority is derived from the contract and is bound by its terms. The arbitrator cannot travel beyond the contract, and any award beyond the terms of the contract would be arbitrary and beyond jurisdiction.
Final Decision: The court partly allowed the appeal, modifying the award for certain claims and affirming the award for other claims and the rejection of the counter claim of the appellant State.
JUDGMENT :
Rekha Borana, J.
1. The present appeal has been preferred against the order dated 22.01.2019 passed by the Commercial Court, Jodhpur (hereinafter referred to as ‘the learned Court below’) in Civil Misc. ‘A’ Case No.47/2018 (NCV No.31/2018) whereby the objections under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act of 1996’) preferred by the appellants against the award dated 30.07.2016 passed by learned Arbitrator have been rejected. Vide the award, the learned Arbitrator had proceeded on to pass an award for an amount of Rs.30,23,450/-in favour of the claimant-firm with interest @ 9% per annum till the date of award which, the non-claimant was directed to pay within 3 months failing which, further interest was awarded @ 9% per annum till the date of actual payment. The counter claim as preferred by the respondent State was rejected.
2. Before proceeding on merits of the present appeal, it is relevant to note that an application under Order 6 Rule 17 of the Code of Civil Procedure for amendment of the present appeal and an application under Order 41 Rule 27, CPC with a prayer for taking certain documents on record have been filed by the appellants. Replies to both the applications have been filed on behalf of the respondents.
Vide order dated 01.04.2022, it was observed that both the applications would be considered at the time of admission/hearing of the appeal.
3. So far as the application under Order 6 Rule 17, CPC is concerned, this Court does not find any ground to entertain the same for the following reasons :
Secondly, the new grounds as sought to be added in the present appeal vide the amendment application clearly pertain to the facts which were not pleaded during the arbitral proceedings. Further, all the grounds as sought to be raised now are totally factual in nature. The facts, in terms of law, are not only to be pleaded but even to be proved. Admittedly, the new facts/grounds sought to be added vide amendment application were not pleaded before the Arbitrator and hence were not proved on record. Therefore, the same cannot be permitted to be raised at this stage.
The application is therefore, rejected.
4. The application under Order 41 Rule 27, CPC also cannot be entertained as the documents sought to be brought on record vide the said application are the ones which were although in possession of the Department during the arbitral proceedings, but were not placed on record at that point of time. It is not the case of the Department that these documents were not in their possession during the arbitral proceedings. The Department, having participated in and contested the complete arbitral proceedings and having even raised objections against the arbitral award before the Commercial Court, cannot, now at this stage, be permitted to place on record the documents which were never even a part of the arbitral proceedings. This Court, in its limited scope under Section 37 of the Act of 1996, cannot permit any such document to be taken on record in excess of jurisdiction.
The application under Order 41 Rule 27, CPC is therefore, rejected.
5. Before proceeding on to the merits o
The court confirmed the validity of the Arbitrator's findings regarding excess work claims and the correct application of interest, highlighting that overlapping interest claims were erroneous.
Point of Law : None of the objections as raised, fell within the purview of Section 34 of the Act and therefore, the award impugned did not deserve any interference.
An arbitrator may award escalated costs due to employer delay despite prohibitory clauses, reinforcing that delays affecting contractor performance can lead to compensatory claims.
The court reaffirmed that interference with arbitral awards is restricted to specific legal grounds, emphasizing the finality of arbitrator decisions based on contractual terms.
The court affirmed that an arbitral award can be set aside if it contravenes the terms of the contract or exceeds the jurisdiction of the arbitrator, emphasizing the importance of notified claims.
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