2019 Supreme(UK) 127
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
SUDHANSHU DHULIA, R.C. KHULBE, JJ.
State of Uttar Pradesh - Appellant
Vs.
M/s Phool Chandra - Respondent
Appeal from Order No. 584 of 2001 (Old No. 97 of 1997)
Decided On : 11-03-2019
Advocate Appeared:
For the Appellant : Ms. Beena Pande, learned Standing Counsel
For the Respondent:Mr. Nandan Arya, Advocate
Headnote:
Arbitration - Delay in Disposal - Arbitration Act, 1940 - Section 30, 33, 39 - The court discussed the unique and chequered history of the case, which had been in the Courts for nearly 25 years. The matter involved an agreement executed between the contractor and the Irrigation Department of the State of Uttar Pradesh, a dispute, and subsequent arbitration. The court highlighted the grounds for setting aside an award under Section 30 of the Arbitration Act, 1940, and the specific clauses of the contract (1.45, 1.46, 1.47) that were referred to. The court analyzed the objections raised by the appellant and the respondent, and the application of mind by the Arbitrator in adjudicating the dispute. The court also discussed the award of interest by the Arbitrator and the limitations imposed by the specific clauses in the agreement.
Fact of the Case:
The case involved a dispute arising from an agreement between the contractor and the Irrigation Department of the State of Uttar Pradesh for civil and engineering work, which led to arbitration. The matter had a unique and chequered history, being in the Courts for nearly 25 years.
Finding of the Court:
The court found that the objections raised by the appellant regarding the time-barred claims and the lack of reasons assigned by the Arbitrator were not valid. The court also modified the award of interest by the Arbitrator based on the specific clauses in the agreement.
Issues: The issues involved the grounds for setting aside an award under Section 30 of the Arbitration Act, 1940, the application of specific clauses of the contract, and the award of interest by the Arbitrator.
Ratio Decidendi: The court's decision was based on the analysis of the objections raised, the application of mind by the Arbitrator, and the limitations imposed by the specific clauses in the agreement.
Final Decision: The appeal was partly allowed, and the respondent was entitled to an interest at the rate of 6% on the amount awarded by the arbitrator from the date of the decree.
SUDHANSHU DHULIA, J.
1. One of the main purposes for arbitration is to have quick disposal of cases, by doing away with the strict procedural laws. It was intended to be a fast track system. Yet we have a case before us, which has a unique and chequered history, as it has been in the Courts for nearly 25 years!
2. An agreement dated 22.03.1985 was executed between the contractor i.e., M/s Phool Chandra and the Irrigation Department of the State of Uttar Pradesh, for civil and engineering work. Later a dispute arose between the parties and the matter was referred for arbitration, as per the terms of the Arbitration clause which was a part of the contract. The Arbitrator gave its award on 29.08.1994. Thereafter, an application to set aside the award was moved by the State of Uttar Pradesh under Sections 30/33 of the Arbitration Act, 1940, which was dismissed by the court vide judgment and order dated 10.05.1996 and the award was made Rule of Court.
3. The State of U.P. challenged the order dated 10.05.1996 in an appeal under Section 39 before the High Court of Judicature at Allahabad in the year 1997, where it remained pending, and later after creation of the State of Uttarakhand, (which was carved out from the erstwhile State of Uttar Pradesh under the U.P. Reorganization Act, 2000), the matter stood transferred to this Court on grounds of territorial jurisdiction.
4. A Division Bench of this Court allowed the appeal vide order dated 25.06.2007 and the order of the Civil Judge (Senior Division) dated 10.05.1996 was set aside and the matter was remanded to Court below with directions to decide the matter afresh. This was done because the Division Bench of this Court was of the opinion that the learned Civil Judge had decided the matter in a “cursory manner”, without considering the issues which were before him. This order dated 25.06.2007 was challenged by the contractor (M/s Phool Chandra) before the Hon’ble Apex Court. The Hon’ble Apex Court allowed the appeal setting aside the order of the High Court. While doing so, it was observed by the Hon’ble Apex Court, that the High Court was not right in setting aside the order, on ground that it was “cursory”. The Hon’ble Apex Court was of the view that the learned Civil Judge had considered all the relevant facts. It was observed as under:-
“Our above view is based on the fact, that while considering the objections raised under Section 30 of the Act, the Civil Judge (Senior Division), Dehradun had factually adjudicated upon all the issues raised by the respondents before this Court. In fact, all the issues highlighted by the High Court in paragraph 8 (extracted hereinabove) were individually considered by the Civil Judge (Senior Division), Dehradun. It is another matter whether the aforesaid consideration was valid and legitimately decided. The issue of legitimacy of the determination rendered by the Civil Judge (Senior Division), Dehradun is not the subject matter of consideration before us. The only issue which falls for our consideration is, whether the remand of the matter by the High Court for re-adjudication by the Civil Judge (Senior Division), Dehradun was justified or not.
Since, we are of the view, that the Civil Judge (Senior Division), Dehradun had taken into consideration all the objections pointed out by the respondents in paragraphs 8 of the impugned order, and specially Clauses 1.45,1.46 and 1.47, the High Court was not justified in remanding the matter to the Civil Judge (Senior Division), Dehradun, for re-adjudication.”
5. Thus, the matter was remanded back to the High Court, for fresh adjudication. When the matter came up again before this Court, the Division Bench of this Court this time dismissed the appeal vide its order dated 14.03.2014. The operative portions read as under:
“4. The Hon’ble Supreme Court, however, remitted the matter before us. Accordingly, the Appeal is re-heard. We have heard the learned counsel for the appellant and considered the submiss