IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Kaushal Jayendra Thaker, J.
State – Appellant
Versus
Gauri Shankar Singh – Respondent
First Appeal From Order No. 817 of 1993
Decided On : 01-12-2022
Arbitration Act, 1939 - Section 14, 16, 20, 30, 33, 39 - First Appeal - Facts as culled out from the record, memo of appeal and judgment are where separate contracts were executed on behalf of Government of U.P. by Superintending Engineer, Constructions Division, P.W.D., Gorakhpur, for work which were connected with constructions of Clinic Block, Academic Block and Hostel Building in Regional Health and Family Planning Welfare Training Centre at B.R.D. Medical College -Held, Authorities were also of view that no interest could have been charged from appellant but they reviewed their own decision which became subject matter of arbitration and arbitrator gave cogent reasons for allowing the appellant's application and held that no interest was payable - This well reasoned arbitral award was interfered by court on ground that finding is bad though he referred to several judgments he himself embarked on fact finding mission and appreciated on basis that arbitrator had committed an error and relying on misread award as if there was an error apparent on face of record - Appeal dismissed.
JUDGMENT :
1. Heard Sri Rathor for the appellant-state.
2. The State is aggrieved by the order dated 1.5.1993 passed by VIth Additional District Judge, Gorakhpur, whereby the application for setting aside the award dated 5.2.1993 given by the Arbitrator has aggrieved the State.
3. On hearing the matter, the appellant-State was directed to deposit the amount within 3 months vide order dated 13.8.1993 and which was to be paid to the respondent.
4. The brief facts as culled out from the record, memo of appeal and the judgment are where separate contracts were executed on behalf of Government of U.P. by the Superintending Engineer, Constructions Division, P.W.D., Gorakhpur, for the work which were connected with the constructions of Clinic Block, Academic Block and Hostel Building in the Regional Health and Family Planning Welfare Training Centre at B.R.D. Medical College, Gorakhpur.
5. The litigation began when the respondent instituted a Suit under Section 20 of the Arbitration Act, 1939 and an Arbitrator was appointed so as to dispute the lis between the parties. The court below appointed Sri D.N. Srivastava, Gorakhpur and Sri S.C. Srivastava, Chief Personal Officer, North Eastern Railway, Gorakhpur, as Arbitrator that was also challenged which was number as F.A.F.O. No.746 of 1993.
6. The claim petition came to be filed before the Arbitrator. The appellant also contested the same. The Arbitrator by their award dated 5.2.1993 directed the Contractor -respondent to pay Rs. 4,47,875/-to the Public Works Department, Construction Division, Gorakhpur and Rs. 97,650/-was directed to be paid by the appellant to the respondent and made the award rule of the Court.
7. After the elaborate order of the Arbitrators it was made the award of the Court which is under challenge under Section 39 of the Arbitration Act. There were 5 contract bonds between the parties for performing certain works and the procedure for appointment of Arbitrator, in case of dispute between the parties, was laid down in clause 34 of the conditions of contract and the procedure for appointment of Arbitrator on a suit filed by the plaintiff under Section 20 of the Arbitration Act and the appointment of Arbitrators against the provisions of clause 34 of the conditions of contract, was illegal and without jurisdiction.
8. It is submitted that under Section 34, on a dispute being referred, the Chief Engineer has the jurisdiction to appoint an Arbitrator and the procedure having not been followed in accordance with the terms and conditions of Contract, the appointment of Arbitrators as nominated by the Board was illegal and the award given by such Arbitrators is void.
9. While just submitting that there is misconduct of the Arbitrator, this Court does not find any such argument before the court below. The judgment is a well reasoned judgment of the learned court below on the contors of the arbitration.
10. This is an appeal under Arbitration Conciliation Act, 1940.
11. It is submitted by learned Advocate that judgment of the Apex Court in K.Marappan (Dead) Versus Superintending Engineer T.B.P.H.L.C. Circle Anantapur, 2019 JX(SC) 391 and in Raveechee and Company Versus Union of India, AIR 2018 SC 3109, has interpreted the role of the Courts while hearing matters under the arbitration Act. The judgment goes to show that pendentelite-interest will depend upon several factors such as; phraseology used in the agreement clauses conferring power relating to arbitration, nature of claim and dispute referred to arbitrator, and on what items power to award interest has been taken away and for which period. The Court observed:
Raveechee and Company Versus Union of India
Puri Construction Pvt. Limited Versus Union of India
State of Orissa Versus B.N. Agarwalla
FCI Versus Joginderpal Mohinderpal
Hind Builders Vs. Union of India
Dandasi Sahu Versus State of Orissa
Raipur Development Authority and other Vs. Chokhamaland others
The court emphasized that arbitral awards should not be interfered with solely based on disagreements with findings, affirming the limited grounds for appeal under Section 34 of the Arbitration Act.
An arbitrator's authority is confined to the terms of the contract, and interest cannot be awarded if explicitly barred, reaffirming limited grounds for judicial review of arbitral awards.
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