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High Court Of Himachal Pradesh
KAMLESH SHARMA,R L.KHURANA
ANSAL PROPERTIES AND INDUSTRIES LTD. - Appellant
Versus
HIMACHAL PRADESH STATE ELECTRICITY BOARD - Respondent
F.A.O. No. 43 of 1997 with Cross Objection No. 98 of 1997
Decided On : 06/12/1997
ARBITRATION - AWARD - REASONS - VALIDITY - INTERPRETATION OF AGREEMENT - EXPERTISE OF ARBITRATOR - INTEREST - LIMITATION.
Fact of the Case:
The plaintiff and defendant entered into an agreement for the construction of a civil work project. Disputes arose between the parties, and the matter was referred to arbitration. The arbitrator made an award in favor of the plaintiff, but the defendant filed objections to the award under sections 30 and 33 of the Arbitration Act, 1940. The single judge allowed the objections and set aside the award, directing the defendant to appoint another arbitrator. The plaintiff appealed against the order, and the defendant filed cross-objections.
Finding of the Court:
The court held that the award was not valid as the arbitrator had failed to give reasons for his conclusions, as required by the arbitration agreement. The court also held that the award could not be set aside on the ground of misconduct or error apparent on the face of the record. The court further held that the arbitrator, being an expert in the field of engineering, could not be denied the right to interpret the terms and conditions of the agreement. The court also held that the arbitrator was not prohibited from awarding interest pendente lite, as the arbitration agreement did not prohibit such an award. The court also held that an oral objection raised for the first time in court could not be taken cognizance of, especially when the period of limitation had expired.
Issues: 1. Whether the award was valid as the arbitrator had failed to give reasons for his conclusions? 2. Whether the award could be set aside on the ground of misconduct or error apparent on the face of the record? 3. Whether the arbitrator, being an expert in the field of engineering, could be denied the right to interpret the terms and conditions of the agreement? 4. Whether the arbitrator was prohibited from awarding interest pendente lite? 5. Whether an oral objection raised for the first time in court could be taken cognizance of, especially when the period of limitation had expired?
Ratio Decidendi: 1. An award is not valid if the arbitrator fails to give reasons for his conclusions, as required by the arbitration agreement. 2. An award cannot be set aside on the ground of misconduct or error apparent on the face of the record unless the misconduct or error is apparent from the record itself. 3. An arbitrator, being an expert in the field of engineering, cannot be denied the right to interpret the terms and conditions of the agreement. 4. An arbitrator is not prohibited from awarding interest pendente lite, unless the arbitration agreement specifically prohibits such an award. 5. An oral objection raised for the first time in court cannot be taken cognizance of, especially when the period of limitation has expired.
Final Decision: The court partly allowed the appeal and modified the order of the single judge. The court remitted the award to the arbitrator for reconsideration and to give reasons for his conclusions. The court also directed the parties to appear before the arbitrator on a specified date.
R.L Khurana, J.—This appeal, under section 39 of the Arbitration Act, 1940, has been directed by plaintiffs against the order dated 12-12-1996 of the learned single Judge (Surender Sarup, J,), passed in Civil Suit No 227 of 1995. The defendants have preferred cross-objections.
2. The defendants Himachal Pradesh State Electricity Board, invited tenders for the construction of civil works of Baner Project Five tenders were received Being the lowest, the tender of M/s. Sutlej Construction Company Ltd, Chandigarh, was accepted and the work was accordingly awarded to the said company. Subsequently, the contract came to be rescinded and the plaintiff being the second lowest tendered, was invited by the defendant to execute and complete the remaining work at the rates and on the terms and conditions which were earlier contracted with M/s. Sutlej Construction Company Ltd. The plaintiff accepted the invitation, except for revision of their rates of open excavation, underground excavation and final concreting The plaintiff required that the rates as quoted by thin in their original tender in respect of these works should be applicable. After considerable correspondence, an agreement came to be entered into between the parties on 21-2-1991. As per the agreement, the plaintiff was to execute the remaining work of Baner Hydel Project at a cost of Rs. 4.20 lakhs within a period of 24 months on the rates quoted by M/s Sutlej Construction Company Limited.
3. During the execution of the work, disputes and differences arose between the parties relating to performance as also with regard to the application and interpretation of certain terms and conditions of the agreement. Therefore, in terms of clause 25 of the agreement, the dispute between the parties was referred for determination to the sole Arbitrator. Shri O.C. Kaushal. Chief Engineer, Larji Hydel Project, Sarabhai, Bhuntar, District Kullu, thus came to be appointed as the sole Arbitrator. On the basis of claims and counter-claims submitted by the parties, the Arbitrator framed the following issues :—
1. Whether there is a valid and binding contract between the parties and whether the claim filed by the claimant is arbitrable ?
2. Whether the claimants are entitled to claim revised rates of tunneling and if so, to what extent ?
3. Whether the claimants are entitled to claim on account of provision of steel supports and if so, to what extent ?
4. Whether the claimants are entitled to claim on account of disposal of soil beyond specified limits and if so, to what extent ?
5. Whether the claimants are entitled to claim on account of provision of centering and if so, to what extent ?
6. Whether the claimants are entitled to claim for deviated quantities at market rates and if so, to what extent ?
7. Whether the claimants are entitled to claim for deviated quantity of steel reinforcement at market rates and if so, to what extent ?
8. Whether the claimants are entitled to interest on account of the claims and if so, at what rates ?
4. The Arbitrator made his award on 21-8-1995. Under issue No.1, the claim preferred by the plaintiff was held to be arbitrable,. While deciding issue No.2, the Arbitrator held that the plaintiff was entitled to a sum of Rs 19,86,635. The plaintiff was found entitled to a sum of Rs 90 000/-, under issue No. 6 The Arbitrator did not find the plaintiff to be entitled to any amount under issues No. 3 and 5 to
1. Resultantly, an awaed for a sum of Rs 20,76,655 was made in favour of the plaintiff Pendente-lite interest at the rate of 15% per annum was also allowed to the plaintiff for the period 238-1993 to 21-8-1995, on the amount awarded.
5. On the award having been filed in this court, both the parties preferred objections under sections 30/33 of the Act to the award being made the rule of the court. The plaintiff, in its objections, prayed for : (a) the setting aside of the award ; (b) appointment of an impartial and independent Arbitrator for the fair adjudication of th
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