High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE S.S SUBRAMANI THE HONOURABLE MR. JUSTICE SRINIVASAN
Gounder and Company - Appellant
Versus
B. S. Hegde - Respondents
O.S.A. Nos. 156 & 157 of 1993
Decided On : 17 July 1996
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - MISCONDUCT - INTERPRETATION OF CONTRACT - RESIDUARY CLAUSE - APPLICATION.
Fact of the Case:
The appellant entered into contracts with the 2nd respondent for handling and transporting goods at the Coimbatore Main Depots of the 2nd Respondent and the Sub-depots around Coimbatore City. Disputes arose between the Parties regarding the claims made by the appellant, and the matter was referred to arbitration. The arbitrator accepted some of the appellant's claims and passed an award. The appellant filed a petition for filing the award into Court and for passing a decree in terms of the award, while the 2nd respondent filed a petition for setting aside the award. A learned Judge of this court set aside the award of the arbitrator with reference to three matters and confirmed the same in other respects.
Finding of the Court:
The court found that the arbitrator had correctly interpreted the terms of the two contracts and found that the claim would fall under the residuary Clause 5(b) in the contract. Therefore, there was no misconduct whatever on the part of the arbitrator to bring the matter within Section 30(a) of the Arbitration Act.
Issues: 1. Whether the arbitrator was justified in awarding additional remuneration for stocks handled at M.G. 7 and M.G. 8 godowns? 2. Whether the arbitrator was justified in directing the 2nd respondent to refund demurrage charges deducted from the appellant? 3. Whether the arbitrator was justified in awarding additional transport charges for transporting goods from the main depot of the 2nd respondent to the sub-depots?
Ratio Decidendi: 1. The court held that the contractor must have acquainted itself with the location of the Railway siding and the two godowns and the distance thereto before entering into the contract. It is not open to Contractor to make a separate claim therefore after entering into the contract. Hence, the award in that regard, of the Arbitrator would tantamount to bringing into existence a new agreement, inasmuch as there was no provision in the contract for the payment of a separate charges for transporting the goods between the Railway siding to the said godowns. 2. The court held that the arbitrator having found that the Contractor was liable for negligence, ought not to have directed the 2nd respondent to refund any amount, which had already been deducted by way of demurrage charges on the footing that it was in excess of one half of the total demurrage. 3. The court held that the arbitrator has not travelled beyond the scope of the two agreements. He has only considered the terms of the agreements and the contentions of the parties based on such terms. He has correctly interpreted the terms of the two contracts and found that the claim would fall under the residuary Clause 5(b) in the contract. Therefore, there is no misconduct whatever on the part of the arbitrator to bring the matter within Section 30(a) of the Arbitration Act.
Final Decision: The court set aside the judgment of the learned Judge in so far as it relates to Claim No. 3 and restored the award of the arbitrator in that regard. The appeals were partly allowed to the extent of Claim No. 3 and dismissed with regard to Claims Nos. 8 and 14.
SRINIVASAN, J.
In these two appeals, three matters are in dispute. The appellant entered into contracts with the 2nd respondent for the purpose of handling and transporting goods at the Coimbatore Main Depots of the 2nd Respondent and the Sub-depots around Coimbatore City for the period 16-11-1978 to 15-11-1980. As some disputes arose between the Parties regarding the claims made by the appellant, the matter was referred to arbitration.
2. The arbitrator accepted the claims made by the appellant to some extent and passed an award. The appellant filed Original Petition for filing the award into Court and for passing a decree in terms of the award, while the 2nd respondent filed a petition for setting aside the award. Both the petitions were heard together by a learned Judge of this court, who set aside the award of the arbitrator with reference to three matters and confirmed the same in other respects. The three claims, with regard to which, the award has been set aside, are referred to, for the sake of convenience, as Claim Nos. 3, 8 and 14. We will deal with Claim No. 3 at the end as it relates to a large amount.
3. Claim No. 8 is a claim made by the appellant for additional remuneration for stocks handled at M.G. 7 and M.G. 8 godowns. He has made a claim for a sum of Rs. 21, 195.50. According to the appellant, it was stated in the contract that the two godowns M.G. 7 and M.G. 8 were served by Railway siding, but it was found that the same were situated at a distance of 24 feet from the Railway Siding and the Contractor had to remove the goods on head-loads. The appellant claimed that the charges incurred by it for removing the goods on head-loads to the said Godowns, are to be paid by the 2nd Respondent. The contention of the 2nd respondent is that as per the contract, the appellant is bound to take the goods to M.G. 7 and M.G. 8 godowns and the appellant must have taken note of the location before it entered into a contract and it is not open to the appellant to make a separate claim for removing the goods on head-loads from the Railway siding to the said godowns. The arbitrator negatived the contention of the 2nd respondent and observed that the 2nd respondent was not justified in resorting to pedantic interpretation of the terms of the agreement. The arbitrator awarded the claim made by the appellant in a sum of Rs. 21, 195.50.
4. The learned Single Judge has aside that part of the award on the ground that it was the duty of the contractor to have acquainted itself with the location of the Railway siding and the said godowns of the 2nd Respondent and if it had desired that separate charges should be paid for removing the goods from the Railway siding to those godowns, it should have made such a demand before entering into the contract. The learned Judge found that, according to the contract, the Contractor was bound to take the goods to those godowns of the 2nd respondent and therefore, it cannot claim a separate charge for removing the goods from the Railways siding to the said godowns. The learned Judge has discussed the said question in Paragraph 6 of his judgment. On a perusal of the said reasoning of the learned Judge, we find that he is justified in holding that the Contractor must have acquainted itself with the location of the Railway siding and the two godowns and the distance thereto before entering into the contract. It is not open to Contractor to make a separate claim therefore after entering into the contract. Hence, the award in that regard, of the Arbitrator would tantamount to bringing into existence a new agreement, inasmuch as there was no provision in the contract for the payment of a separate charges for transporting the goods between the Railway siding to the said godowns. Hence, the learned Judge is perfectly justified in setting aside that part of the award.
5. The second claim, which is now in dispute is Claim No. 14, under this clause, the Contractor is claiming a sum of Rs. 75, 219.35, wh
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