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HIMACHAL PRADESH HIGH COURT
Kamalesh Sharma, R.L. Khurana, JJ.
ANSAL PROPERTIES & INDUSTRIES LTD. - APPELLANT
v.
HIMACHAL PRADESH STATE ELECTRICITY BOARD - RESPONDENT.
F.A.O. No. 43 of 1997 Cross Obj. No. 98 of 1997,
Decided on : June 12, 1997.
ARBITRATION - AWARD - REASONS - INTERPRETATION OF AGREEMENT - INTEREST - JURISDICTION OF ARBITRATOR - SETTING ASIDE OF AWARD - REMISSION OF AWARD TO ARBITRATOR.
Fact of the Case:
The plaintiff, a second lowest tenderer, was invited by the defendant to execute and complete 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. 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 disputes between the parties was referred for determination to the sole arbitrator. The arbitrator made his award on 21-8-1995. 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.
Finding of the Court:
The court held that the award was not liable to be set aside under Section 30 of the Act and that it only requires to be remitted to the arbitrator under Section 16(1)(c) of the Act.
Issues: 1. Whether the award is a reasoned award ? 2. Whether the award on having been set aside, the proceedings can be referred back to another arbitrator under Sections 16(1)(c) of the Arbitration Act, 1940 ? 3. Whether an oral objection raised for the first time in the court be taken cognizance of and especially when the period of limitation has expired ? 4. Whether the arbitrator was debarred from awarding interest in view of Clause 9-C of the agreement ? 5. Whether an arbitrator, who is an expert in the filed of engineering be denied the right to interpret the conditions of the agreement ?
Ratio Decidendi: 1. A reasoned award is one which contains the reasons for the conclusions arrived at by the arbitrator. In the present case, the arbitrator has merely reproduced the various contentions raised before him by the parties, whether orally or in writing and after the reproduction of such contentions he had given his conclusions issuewise by merely observing that he had gone through the statements/documents of both the parties and had carefully considered the same. 2. The court can remit the award to the arbitrator for reconsideration only in three cases specified in Section 16(1) of the Act. Clause (c) of Section 16(1) provides that the award shall be remitted to the arbitrator by the court where an objection to the legality of the award is apparent on the face of it. In the present case, the arbitrator has failed to give reasons for his conclusions, which reasons he was under an obligation to give in view of the condition contained in Clause 25 of the agreement. This amounts to an objection to the legality of the award apparent on the face of it. 3. An objection to the award cannot be taken if such an objection was not taken in the application, under Section 33 of the Act within the prescribed period of limitation. 4. Clause 9-C of the agreement does not prohibit the arbitrator to award pendente lite interest. Besides, the dispute whether under the term of the agreement the arbitrator was prohibited from awarding pendente lite interest, was a matter which fell within the jurisdiction of the arbitrator, as the arbitrator has to interpret the clause in question and to decide whether that clause prohibits him from awarding pendente lite interest. 5. An arbitrator, who is an expert in the field of engineering, cannot be denied the right to interpret the terms and conditions of the agreement.
Final Decision: The appeal was partly allowed. The impugned order of the learned single Judge setting aside the award and directing the defendant-Board to appoint, another arbitrator to go into the disputes between the parties and to give a reasoned award was modified to the extent that the award dated 21-8-1995, is remitted to the arbitrator, Shri O. C. Kaushal, under Section 16(1)(c), Arbitration Act, 1940, for reconsideration and to give reasons for the conclusions arrived at by him, after affording an opportunity to the parties of being heard.
R. L. Khurana, J. - This appeal, under Section 39 of the Arbitration Act, 1940, has been 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 tenderer, 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 plain 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 them 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 12-2-1991. 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 disputes 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.
4. 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 claimant 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 claimant are entitled to claim for deviated quantities at market rates and if so, to what extent ?
(7) Whether the claimant 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 ?
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. 19,86,655/-. The plaintiff was found entitled to a sum of Rs. 90,000/-, under issue No. 4. The arbitrator did not find the plaintiff to be entitled to any amount under issues Nos. 3 and 5 to 7. Resultantly, an award 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 23-8-1993 to 21-6-1995 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.
6. The plaintiff, in its objections, prayed for :
(a) the setting aside of the award;
(b) appointment of an impartial and independent arbitrator fo
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