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IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR BENCH
SUJOY PAUL, J.
Northern Coalfields Ltd. - Appellant
Vs.
M/s. Saluja Construction Co. - Respondents
Arbitration Appeal No. 30 of 2012
Decided On : 02-01-2018
Arbitration Act - Construction Contract - Section 37 of Arbitration and Conciliation Act, 1940 - Summary of Acts and Sections: The court discussed the applicability of Section 2(a), 8 & 20 of the Arbitration Act, and the provisions implied in the arbitration agreement under the First Schedule. The court also considered the relevance of the Limitation Act, Section 3 and Section 28 of the Arbitration Act, and the Uttar Pradesh General Clauses Act, 1904. The court examined the grant of interest in light of the agreement's Clause 5.
Fact of the Case:
The respondent was awarded a construction contract for 100 'B Type Quarters' at Bina. Disputes arose regarding payments and the appointment of an arbitrator. The appellant contended that the arbitrator exceeded jurisdiction by deciding disputes related to multiple contracts and firms. The appellant also raised objections on limitation, the extension of time for passing the award, the date of enforcement of a gazette notification, and the grant of interest.
Finding of the Court:
The court found that the claim was not entertainable due to the absence of filing relevant agreements/documents and that the arbitrator had mis-conducted himself. The court also held that the learned arbitrator and courts had committed a serious error of law in not examining the claim on the touchstone of prescribed limitation. However, the court upheld the extension of time for passing the award and the date of enforcement of the gazette notification. The court also ruled that the claimant was entitled to interest on the entire amount on delayed payment except for one half of the security deposit which could be retained under the agreement's Clause 5.
Issues: The issues included the arbitrator's jurisdiction, the examination of the claim on the touchstone of prescribed limitation, the extension of time for passing the award, the date of enforcement of a gazette notification, and the grant of interest.
Ratio Decidendi: The court held that the claim was not entertainable due to the absence of filing relevant agreements/documents and that the arbitrator had mis-conducted himself. The court also ruled that the learned arbitrator and courts had committed a serious error of law in not examining the claim on the touchstone of prescribed limitation. However, the court upheld the extension of time for passing the award and the date of enforcement of the gazette notification. The court also ruled that the claimant was entitled to interest on the entire amount on delayed payment except for one half of the security deposit which could be retained under the agreement's Clause 5.
Final Decision: The court set aside the award and order of the Court below and allowed the appeal.
This appeal filed under Section 37 of the Arbitration and Conciliation Act, 1940 (Arbitration Act) is directed against the order dated 27.09.2009, passed in Civil Suit No. 29-B/2002, passed by 1st Additional Judge to the Court of 1st Upper District Judge, Sidhi.
2. Briefly stated, the facts are that the respondent was awarded contract for construction of 100 ‘B Type Quarters’ at Bina and an agreement in this regard was entered into between the parties on 11.01.1986. The schedule date for completion of work was 11.03.1987. On 01.10.1992 the Chief Engineer ordered to stop payment and directed that all payments to be kept in abeyance. The respondent issued a notice under Clause 9 of the Agreement (Terms and Conditions) to appoint an arbitrator in respect of Bina Project only by showing the outstanding amount as Rs.2,23,215/-. This amount was shown as outstanding since 13.03.1988. The notice was issued on 08.12.1992. The appellant by reply dated 15.12.1992 rejected the claim of the respondent. The respondent raised a bill of Rs.2,35,215/- and then filed an application under Section 20 of the Arbitration Act for filing of agreement and appointment of arbitrator. The stand of appellant is that the said application was filed by the respondent only for the work relating to Bina Project.
3. The appellant contends that the learned District Judge by order dated 06.05.1996 appointed an arbitrator. On 06.12.1996, the District Judge, Sidhi wrote a letter to arbitrator to enter into a reference for deciding the dispute between the parties in respect of construction of 100 numbers of ‘B Type Quarters’ at Bina Project and pass an order within a period of six months. The claim of respondent before the arbitrator was in relation to sister concerned M/s. Navtej Builders also. By reply dated 14.04.1997, the appellant denied the claim. The sole arbitrator by letter dated 16.06.1997 asked the parties to appear on 4th & 5th July so that dispute between the respondent and NCL relating to construction of quarters at Bina Project can be decided.
4. The respondent filed a detailed statement of claims on 10.05.1997 before the arbitrator. In the third sitting, on 04.07.1997 a doubt was raised whether the claims relating to other contracts needs to be decided or adjudication should be confined to only one contract. By subsequent letter dated 08.07.1997, the District Court directed the arbitrator to pass the order by 31.12.1997 and alongwith this letter sent a copy of Annexure-V. Mr. Girishm Jain, learned counsel for the appellant urged that no specific order was passed by District Court to decide the claims in relation to all the contracts. Shri Jain fairly submits that on 19.03.1998 by mutual consent between the parties, it was agreed and that sole arbitrator may pass the award by 15.04.1998. The award could not be passed on or before the said date and it could be passed only on 12.06.1998. An amount of Rs.27,03,786/-was awarded to the respondent. Thereafter, respondent filed an application under Section 14, 17 & 29 of Arbitration Act before the District Court, Sidhi on 06.07.1998. In turn, appellant filed its objection on 22.07.1998. After hearing the parties, the Court below by impugned order dated 27.09.2003 decided the said application which was registered as Civil Suit No. 29-B/2002. The Court awarded Rs.27,03,786/- with 8% interest per annum from the date of award till actual payment.
5. The appellant contended that Claim No.1 was relating to Bina Project and amount claimed was Rs.11,67,231/-whereas the amount awarded by arbitrator in this head was Rs.5,99,158/-. Regarding ‘Amlohri Project’ (Claim No.2), the amount claimed was Rs.16,58,710/- & Rs.10,51,069/- whereas amount awarded by arbitrator was Rs.7,79,580/- (for 304 minor quarters) & Rs.5,41,695/-. In relation to Claim No.3 (Jhingurda Project) amount claimed was Rs.35,19,019/-, where
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