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1989 Supreme(Del) 109

High Court Of Delhi
JAGDISH CHANDER - Appellant
Versus
HINDUSTAN VEGETABLE OILS CORPN - Respondent
Suit 1985-A of 1986
Decided On : 03/01/1989

Advocates Appeared:
J.K.SIBAL, R.L.PAL

An arbitrator has the jurisdiction to award interest prior to the initiation of the proceedings but not pendente lite interest.

Headnote:

ARBITRATION - AWARD - OBJECTIONS - VALIDITY - ARBITRATOR MISCONDUCT - PRINCIPLES OF NATURAL JUSTICE - NON-SPEAKING AWARD - INTEREST - AWARD OF FUTURE INTEREST.

Fact of the Case:

The petitioner, a civil works contractor, entered into a contract with respondent No. 1 for the execution of certain civil works. The petitioner started working on the site and had done work worth Rs. 67,79,059. However, due to non-payment of bills, the petitioner stopped working with effect from 30th April 1985. The petitioner appointed Shri A.P. Paracer, Additional Director General (Works), Central Public Witness D, as the Sole Arbitrator in terms of clause 43 of the agreement between the parties. The arbitrator entered upon the reference on 1st November 1985 and after hearing the parties and examining the evidence, made and published his award on 15th September 1986. The petitioner filed an application under sections 14, 17, and 29 of the Arbitration Act, inter alia, praying that the Arbitrator should be directed to file the award and the award should be made the rule of the Court. Respondent No. 1 filed detailed objections to the award, which were framed into issues.

Finding of the Court:

The Court held that the arbitrator did not misconduct the proceedings and that the principles of natural justice were not violated. The Court further held that the award was not a non-speaking award and that the arbitrator had the jurisdiction to award interest prior to the initiation of the proceedings but not pendente lite interest. The Court also held that the award of future interest was valid.

Issues: 1. Whether there was a valid arbitration agreement between the parties? 2. Is the award liable to be set aside for the reasons stated in objections? 3. Relief.

Ratio Decidendi: 1. The Court held that the arbitrator did not misconduct the proceedings and that the principles of natural justice were not violated. The Court relied on the fact that the arbitrator was a serving officer of the Government of India holding a very high rank, namely, he was a Chief Engineer of the Public Works Department. The Court also noted that the arbitrator was selected by the agreement of the parties and that the selection of a Chief Engineer showed that the parties wanted to appoint a person who was an expert in the line. 2. The Court held that the award was not a non-speaking award. The Court relied on the fact that the arbitrator had stated in the preamble of the award that he had taken into consideration all the evidence on the record, both oral and documentary. The Court also noted that the Supreme Court had held that non-speaking awards are valid. 3. The Court held that the arbitrator had the jurisdiction to award interest prior to the initiation of the proceedings but not pendente lite interest. The Court relied on the decision of the Supreme Court in Gujarat Water Supply and Sewarage Board v. Unique Erectors (Gujarat) (P) Ltd. and Aur.

Final Decision: The objections were dismissed and the award of Rs. 32,65,017.00 was made the rule of the Court. The award regarding payment of simple interest at 15 per cent on Rs. 22,31,745.00 was set aside as the arbitrator did not have the jurisdiction to award this. In its place, the Court awarded future interest, at the rate of 15 per cent per annum on a sum of Rs. 22,31,745.00 with effect from the date of the award till the date of payment.

B. N. KIRPAL, J. (Oral ).

( 1 ) THIS judgment will dispose of the objections filed by the respondents to the award dated 15th September, 1986 given by the Sole-Arbitrator in favour of the petitioner.

( 2 ) BRIEFLY stated, the facts are that the petitioner and respondent No. 1 entered into a contract dated 12th November, 1984 whereby certain civil works had to be executed by the petitioner. It appears that the work to the petitioner was awarded by respondent No. 1 on the recommendations of the respondent s Architects M/s. M. R. Wareekar and Associates Private Limited.

( 3 ) AFTER the award of the work the petitioner entered upon the site and started working. The gross value of the work was Rs. 1,87,22,415. 00 In order to assist the petitioner, and in terms of the contract, a mobilisation advance of Rs 56,16,724. 00 was given by respondent No. 1 to the petitioner. This advance was not to bear any interest and was adjustable against the bills of the petitioner. After 50 per cent of gross work had been done.

( 4 ) ACCORDING to the petitioner, he had done work worth Rs. 67,79,059. 00 and because payments were not being made by respondent No. 1, he stopped working with effect from 30th April, 1985. According to the petitioner, even the tills which had been certified as payable by the Architects were not paid to him. It is further the case of the petitioner that as there were some disputes with regard to measurements, remeasurements took place in October, 1985 but on 1st November, 1985 respondent No. I terminated the contract of the petitioner.

( 5 ) BEFORE the termination of the work, as disputes between the parties had already arisen by letter dated 5th June 1985 written by the aforesaid Architects, Shri A. ,p. Paracer, Additional Director General (Woks ). Central Public Witness D. was appointed as the Sole-Arbitrator in terms of clause 43 of the agreement between the parties.

( 6 ) THE arbitrator entered upon the reference on 1st November, 1985 and the parties filed their claims and counter claims before him.

( 7 ) IT is not necessary to refer to the counter-claims of the respondent but I may here notice the claims which were finally put forth before the arbitrator, after the same were enhanced on the termination of the contract :the respondents, of course, did not accept their liability to pay the aforesaid amounts claimed by the petitioner and, as has already been indicated, they preferred their counter claims before the Sole Arbitrator.

( 8 ) BEFORE the Arbitrator, documentary evidence was filed. In addition thereto, affidavits by way of evidence were also filed and some witnesses were also examined. It appears that arguments were heard and thereupon the arbitrator made and published his award. In the award it was, inter alia, stated as follows :

"whereas, I have read and applied my mind to the pleadings of both the parties, their claims and Counter claims, the oral and documentary evidence, the arguments of the Learned Counsels and the authorities cited by them support of their arguments and I have given due weight and consideration to all the above and I have reached my conclusions only after deep and careful consideration.

NOW, therefore, I hereby make and publish my Award as follows : On due adjustment of the amount held justified under the counter Claims made by the Respondents (M/s. Hindustan Vegetable Oils Corporation Limited) against the amount held justified under the claims made by the Claimants (Shri Jagdish Chander) I hereby award that the respondents shall pay to the Claimants a sum of Rs 32,65,017. 00 (Rupees Thirty Two Lakhs Sixty Five Thousand and Seventeen only) including admissible interest.

I further award that in case the above mentioned amount is not paid by the Respondents to the Claimants within thirty days. of making of this award, the Respondents shall further pay simple interest @ 15 per cent per annum on the amount of Rs. 22,31,745. 00 (Rupees Twenty Two Lakhs, Thirty One Thousand, Seven Hundred, Forty
























































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