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1994 Supreme(J&K) 15
IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
S.C. Mathur,T.S. Thakur, JJ.
Manjit Johl - Appellant
Versus
Dewan Modern Brewines Ltd. - Respondent
CIMA No. 43/1989
Decided On : 01 March, 1994
Advocate For Appellant: S.P. Gupta
Advocate For Respondent: R.K. Gupta
An arbitrator has the power to award interest, including pre-reference, pendente lite, and future interest, if the agreements between the parties do not prohibit the award of such interest.
Headnote:
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - EXPARTE AWARD - NON-APPEARANCE OF PARTY - REASONABLE OPPORTUNITY OF BEING HEARD - DISTURBED CONDITIONS - EXTENSION OF TIME FOR MAKING AWARD - NOTICE TO PARTIES - INTEREST - POWER OF ARBITRATOR TO AWARD - PRE-REFERENCE, PENDENTE LITE AND FUTURE INTEREST - AGREEMENT BETWEEN PARTIES - TRADE USAGE - INTEREST ACT - APPLICABILITY - COSTS - POWER OF ARBITRATOR TO AWARD.
Fact of the Case:
The appellant and the respondent entered into two agreements that provided for the settlement of disputes through arbitration. Disputes arose, and a reference was made to an arbitrator. The arbitrator made an award in favor of the respondent, but the appellant challenged the award and had it set aside. A new arbitrator was appointed, but the appellant failed to appear before him despite being given an opportunity. The arbitrator proceeded ex parte and made a second award in favor of the respondent. The appellant filed an application to set aside the second award, which was dismissed by the Single Judge. The appellant appealed the Single Judge's decision.
Finding of the Court:
The court held that the appellant's non-appearance before the arbitrator was not due to disturbed conditions in the state and that she had been given a reasonable opportunity to be heard. The court also held that the arbitrator had the power to extend the time for making the award without issuing a notice to the parties. The court further held that the arbitrator had the power to award interest, including pre-reference, pendente lite, and future interest, as the agreements between the parties did not prohibit the award of such interest. The court also held that the arbitrator had the power to award costs, which he had quantified at Rs. 6,000/-.
Issues: 1. Whether the appellant was given a reasonable opportunity to be heard before the arbitrator? 2. Whether the arbitrator had the power to extend the time for making the award without issuing a notice to the parties? 3. Whether the arbitrator had the power to award interest, including pre-reference, pendente lite, and future interest? 4. Whether the arbitrator had the power to award costs?
Ratio Decidendi: 1. The court held that the appellant was given a reasonable opportunity to be heard before the arbitrator, as she had been given an opportunity to appear before the arbitrator and had been represented by counsel. The court also held that the appellant's non-appearance before the arbitrator was not due to disturbed conditions in the state. 2. The court held that the arbitrator had the power to extend the time for making the award without issuing a notice to the parties, as the request for extension was made by the arbitrator himself and not by the respondent. The court also held that the appellant had the right to seek the supersession of the arbitration or the removal of the arbitrator if she did not want the proceedings to continue. 3. The court held that the arbitrator had the power to award interest, including pre-reference, pendente lite, and future interest, as the agreements between the parties did not prohibit the award of such interest. The court also held that the arbitrator had the power to award costs, which he had quantified at Rs. 6,000/-.
Final Decision: The court dismissed the appeal and upheld the Single Judge's decision. The court also dismissed the appellant's application to set aside the second award and vacated the stay granted on the award.
1. This appeal under Section 39 of the Arbitration Act is directed against the judgment and order of a Single Judge of this Court dated 8.4.1989, whereby the appellant™s application for setting aside of the Award made by the Arbitrator has been dismissed and the award made a rule of the Court after partial modification.
2. The brief facts in the back-ground may be stated thus:
3. The parties entered into two agreements dated 18.4.1977 and 22.5.1978, which inter-alia envisaged the settlement of all disputes arising between them by way of arbitration. Certain disputes have arisen, a reference appears to have been made to Shri G.C. Dewan, the chairman of the respondent-Company in terms of the aforesaid agreements. In the said reference, the respondent-Company claimed a sum of Rs. 79,963.24 Paise on account of the price of the goods supplied to the appellant from time to time, besides, a sum of Rs.336.73 paise on account of Sales Tax and Rs.27,118.12 paise on account of interest on the outstanding amount calculated upto 31st of August 1979.
4. The Arbitrator Shri Dewan entered upon the reference and made an award in favour of the respondent for a total sum of Rs. 1,07,418.09 paise with interest at the rate of 24 per cent per annum till its realization. This award was successfully challenged by the appellant and was set aside by judgment and order dated 26.3.1987 of a Single Judge of this Court. By the same order, the nominated Arbitrator was removed and in his place Shri T.N. Bhat, the District & Sessions Judge, Jammu appointed as the new Arbitrator with the direction that he shall adjudicate upon the disputes between the parties and submit his award within the statutory period of four months. The counsel for the appellant was directed to cause the appearance of the appellant before the Arbitrator on the 17th of April, 1987. The appellant, however, did not appear before the newly appointed Arbitrator with the result that he set her exparte. It was at this stage that the appellant moved an application being C.M.P No.442 of 1987 in this Court praying for modification of the order dated 26th March, 1987. This application was, however, dismissed by the learned Single Judge on 28.8.1987 with liberty given to the appellant to appear before the Arbitrator on 5.10.87 and also to make an application for setting aside exparte proceedings initiated by the Arbitrator. Significantly the counsel for the respondent had expressed his no objection to the setting aside of the exparte proceedings by the Arbitrator, in case the appellant appeared before him and made a prayer to that effect.
5. The appellant did not appear before the Arbitrator despite the opportunity given to her nor did she make any application for setting aside the exparte proceedings. It was in this background that the Arbitrator after recording exparte evidence and taking into consideration the material produced by the Claimant-respondent herein made an award in favour of the respondent on 31st of December, 1987, by which he awarded in favour of the respondent, besides the principal amount claimed, a sum of Rs.1,74,318.12 paise on account of interest at the rate of 24 per cent per annum from the date of the despatch of goods till 30th of April, 1987, a sum of Rs.336.00 paise on account of Sales Tax and an amount of Rs.6,000/-on account of cost of litigation. The award so made when filed in this Court, objections to the same were filed by the appellant alleging mis-conduct against the Arbitrator. On the basis of the objections and the respondent™s reply to the same, the following two issues were framed by the learned Single Judge: -
1) Whether the arbitrator has misconducted himself in the proceedings or the award is otherwise invalid justifying its quashing? OPR
2) Relief? OP Parties.
6. After giving the parties an opportunity of producing evidence by way of affidavits, the learned Single Judge modified the award to the extent of dis-a
