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1994 Supreme(All) 332
IN THE HIGH COURT OF ALLAHABAD
ASHIM KUMAR BANERJEE
UNION OF INDIA, NORTH EASTERN RAILWAY - Appellant
Versus
OM CONSTRUCTION AND SUPPLY COMPANY - Respondents
Civil Revision 206 Of 1993
Decided On : 04/13/1994
H.S.N.TRIPATHI, PREM SHANKAR TRIPATHI, V.K.Goel
The civil court lacks jurisdiction to direct the arbitrators to pass an interim award for a specific sum, as this power is vested solely with the arbitrators under Section 27 of the Arbitration Act.
Headnote:
ARBITRATION - INTERIM AWARD - JURISDICTION OF CIVIL COURT - APPOINTMENT OF ARBITRATOR - LIMITATION FOR FILING OBJECTION TO AWARD - ARBITRATION ACT, 1940 - SECTIONS 27, 37, 41, 119(B).
Fact of the Case:
Plaintiff and defendant entered into a building contract with an arbitration clause. A dispute arose, and the plaintiff filed a suit under Section 20 of the Arbitration Act for referring the dispute to arbitration. The court appointed two arbitrators, one nominated by each party. Due to the transfer of one arbitrator, the court directed the remaining arbitrator to pass an interim award of Rs. 2 lakhs in favor of the plaintiff. The defendant challenged this order and the subsequent order making the interim award a rule of the court.
Finding of the Court:
1. The civil court lacked jurisdiction to direct the arbitrators to pass an interim award for a specific sum, as this power is vested solely with the arbitrators under Section 27 of the Arbitration Act. 2. The interim award passed by a single arbitrator was invalid as both arbitrators were still functioning, and the court could not authorize one arbitrator to act alone. 3. The order making the interim award a rule of the court was illegal as it was passed without giving the defendant an opportunity to file objections and without waiting for the statutory period of 30 days under Section 119(b) of the Limitation Act.
Issues: 1. Whether the civil court had the jurisdiction to direct the arbitrators to pass an interim award for a specific sum. 2. Whether the interim award passed by a single arbitrator was valid. 3. Whether the order making the interim award a rule of the court was legal.
Ratio Decidendi: 1. The court held that the civil court lacked jurisdiction to direct the arbitrators to pass an interim award for a specific sum, as this power is vested solely with the arbitrators under Section 27 of the Arbitration Act. The court's role is limited to aiding the arbitration proceedings by making orders under Section 41(b) read with the matters set out in the Second Schedule, for the purpose of, and in relation to, proceedings before the arbitrator. 2. The court held that the interim award passed by a single arbitrator was invalid as both arbitrators were still functioning, and the court could not authorize one arbitrator to act alone. An interim award must be made in the same manner as an award, after hearing the parties and considering the evidence adduced by them. 3. The court held that the order making the interim award a rule of the court was illegal as it was passed without giving the defendant an opportunity to file objections and without waiting for the statutory period of 30 days under Section 119(b) of the Limitation Act. The court is required to wait for 30 days from the date of notice of filing of the award before passing an order making the award a rule of the court.
Final Decision: Both Civil Revisions were allowed, and the impugned orders dated 12-1-1993 and 3-4-1993 passed by the VIth Additional District Judge, Gorakhpur were set aside. The court below was directed to proceed with the matter in accordance with law in light of the observations made by the court.
( 1 ) CIVIL Revision No. 206 of 1993 is directed against the order dated 12-1-1993 passed by the VIth Additional District Judge, Gorakhpur allowing the plaintiffs application (Paper No. 64c) and directing the arbitrators to grant interim award of rupees 2 Lakhs in Original Suit No. 215 of 1991. Civil Revision No. 292 of 1993 is directed against the order dated 3-4-1993 passed by the VIth Additional District Judge, Gorakhpur allowing the plaintiffs application (Paper No. 85c) and confirming the interim award and making the same rule of the court in Original Suit No. 215 of 1991. Both these revisions which arise out of the same proceedings have been connected and are being heard and decided together.
( 2 ) BRIEF facts of the case so far as relevant for purposes of the present revision, are that Om Construction and Supply Co. (hereinafter referred to as the plaintiff-opposite party) by means of two agreements dated 13-2-1989 and 10-11-1989 entered into a building contract with the defendant-applicant. The said agreements had an arbitration clause. Due to certain reasons which are not important for purposes of the present revisions, the contract could not be completed and a dispute arose between the parties regarding measurement of the work and payment to be made to the plaintiff-opposite party. Invoking the arbitration clause the plaintiff-opposite party filed Suit No. 215 of 1991 in the court of Civil Judge, Gorakhpur under Section 20 of the Arbitration Act for referring the dispute for arbitration in respect of the claim of the plaintiff-opposite party. The suit was contested by the defendant-applicant by filing a written statement. Vide the order dated 21-2-1992 the court below directed the parties to submit their lists of arbitrators and out of the respective lists submitted by the parties appointed one Shri Judgal Kishore Verma, retired Deputy Chief Engineer, N. E. Railway, Gorakhpur and Shri B. Ram, F. A. and C. A. O. (E and B), N. E. Railway, Gorakhpur as arbitrators. The former was appointed out of the list submitted by the plaintiff-opposite party and the latter out of the list submitted by the defendant-applicant. The court further directed the arbitrators to decide the dispute within three months from the date of receipt of information. According to the defendant-applicant, the arbitrators entered into reference on 30-4-1992 on which date they had their first meeting. Subsequently one of the arbitrators, namely Shri B. Ram was transferred to New Delhi and the award could not be made within the time granted by the court. The plaintiff as well as the other arbitrator, Shri J. K. Verma, filed applications before the court below for appointing another arbitrator in place of Shri B. Ram whereas Shri B. Ram filed an application for extending the time for the submission of the award till April, 1993. In the meantime, the plaintiff-opposite party filed an application (paper No. 64c) for a direction to the arbitrators to make an interim award of Rs. 2,38,000/ -. The defendant-applicant filed objections to the said application, inter alia, on the ground that no interim award could be made in favour of the plaintiff-opposite party as the defendant-applicant had a cross claim against the plaintiff-opposite party for a sum of Rs. Seven Lacs and odd on account of loss suffered by the defendant-applicant. By the impugned order dated 12-1-1993 the court below directed the arbitrators to make an interim award of Rs. Two lacs in favour of the plaintiff-opposite party. It is this order which has been challenged by the defendant-applicant by means of revision No. 206 of 1993 before this Court. It appears that on the basis of the said order dated 12-11-1993 passed by the court below, the arbitrator Shri J. K. Verma, nominated by the plaintiff-opposite party, on 31-3-1993 submitted an interim awards of Rs. Two lacs in favour of the plaintiff-opposite party. The court below thereafter vide the order dated 3-4-1993 ma
