JUDGMENT
Kalyan Jyoti Sengupta, J.
1. This is an application for setting aside of an award passed by the learned arbitrator in the arbitration between the aforesaid parties. The award is a speaking one and proceeding commenced when the Arbitration Act, 1940 (since repealed), was in force. Therefore, the provisions of Sections 30 and 33 of the aforesaid Act has been invoked. There is no dispute as to the applicability of the aforesaid provision nor do I find under the law any doubt about it. Going by the grounds made in the said petition there is no substance under the law to entertain the application. All the grounds mentioned in the petition relate to the alleged wrong appreciation of the facts by the learned arbitrator. On what ground the application can be accepted is precisely mentioned in Section 30 of the said Act. None of the grounds specifically allege in the petition. However, Clause (c) of Section 30 of the said Act enables the court to examine whether the award is otherwise invalid or not. The short facts of the case for appreciating the problem properly are to be stated hereunder :
The respondent contractor agreed to carry out a civil construction work worth value of Rs. 19,47,050. The time limit for completion was fixed for one year from the date of awarding contract. The work was to be completed by February 10, 1990. However, it was actually completed on June 13, 1991, as such there was a delay of more than 16 months in completing the works. The claimant/contractor after completion of the works submitted bills and there was dispute with regard to the quantum of the final bill. The final bill was not paid for a long time despite repeated request and representation. The petitioner received such payment and the same was received “under protest” and without prejudice to its claim for further sum. The final payment was made when the petitioner was forced to strike out the endorsement “with protest”. The respondent is said to have recorded full and final satisfaction and certificate of clearance of all dues. It is contended that such endorsement was compelled to be made in view of withholding of the amount of final bill. On the aforesaid background the dispute arose between the parties and constitution of forum of arbitration was demanded but refused. Ultimately, with the intervention of the court under Section 20 of the aforesaid Act, the learned arbitrator was appointed. I find from the records initially a retired judge of this court Mr. Justice Satya Brata Mitra was appointed arbitrator, however, this appointment was later on proved to be infructuous so his appointment was set aside. A departmental arbitrator was appointed thereafter and this learned arbitrator made and published award and the same was set aside eventually by the court. Thereafter the court appointed hon’ble retired Chief Justice Mr. Sambhu Chandra Ghose as sole arbitrator, in place and instead of the departmental arbitrator. Before Justice Ghose could conclude he had expired. Mr. Partha Bihari Mukhapadhyaya, since deceased, had later on appointed arbitrator in his place and stead, who ultimately made and published the award and the same is brought under challenge.
2. Mr. I. P. Mukherjee the learned advocate appearing for the petitioner contends that the learned arbitrator had committed legal misconduct while entertaining the dispute and claim of Rs. 2,48,766.99 on account of final bill. As the contractor/respondent struck out the remark “under protest” and further endorsed thereon “accepted as full and final”. He therefore, contends there was no arbitration agreement in existence in view of agreeing and recording satisfaction of the claim and discharge of the agreement. When there has been no agreement between the parties and no dispute under arbitration agreement did exist.
3. He contends that the learned arbitrator did not reach any finding that the respondent exercised duress and coercion over the petitioner which resulted in the petitioner striking out of the remark “under protest” and endorsing the remark as above. The learned arbitrator merely holds that the respondent was made to do so “under compelling circumstances”. According to him in the absence of such findings the above endorsement of according satisfaction stands. As such, there has been no arbitrable dispute between the parties and the arbitrator had no jurisdiction to hold that according and satisfaction was of no effect.
4. He submits, referring to this aspect of the matter that this constitutes an error of law apparent on the face of the record. He has placed reliance on two decisions of the Supreme Court in P.K. Ramaiah and Co. v. Chairman and Managing Director, National Thermal Power Corporation [1994] (Suppl.) 3 SCC 126 and Jaspal Singh v. State of U. P. [1995] (Suppl.) 3 SCC 234. A portion of the claim consists of damages and compensation on account of delay in completion of the works due to the fault of the petitioner. He contends that by virtue of Clause 17(3) of the General Conditions of Contract such claim is not entertainable and allowable. The learned arbitrator committed a patent mistake in law while passing an award of this kind. He has drawn attention of the court to the following decisions of the Supreme Court :
Associated Engineering Co. v. Government of Andhra Pradesh ; Steel Authority of India Ltd. v. J.C. Budharaja, Government and Mining Contractor and Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises.
5. His next contention is against the award of interest by the learned arbitrator. Clause 16(2) of the General Conditions of Contract prohibits payment of interest of any amount payable by the Railways to the contractor. He had no jurisdiction to award interest in any form either pendente lite or otherwise. He further contends that the arbitrator can grant interest only if there is no prohibition in the contract. The aforesaid clause in the contract operates as a prohibition against granting interest. He has referred to, in this question, two Supreme Court decisions in Secretary, Irrigation Department v. G.C. Roy, and also Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa v. Budharaj N. C. [2001] 2 SCC 721.
6. Mr. Surajit Nath Mitra learned advocate appearing for the respondents submits on the question of existence of arbitrable dispute, that the endorsement of final satisfaction in the final bill and further striking out of the words “under protest” was made under compelling circumstances and in order to receive the payment. The situation was such that unless the aforesaid words were struck out and endorsement as above was made, no payment could be received. This factual aspect was stated in the statement of claim and proved by oral evidence. The petitioner did not examine any witness to rebut this factual aspect. The learned arbitrator upon analysis of evidence found that the striking out of the words “without protest” was made under compelling circumstances and/or duress, as such there had been arbitrable dispute. The learned arbitrator has given detailed fact-finding and this court with a limited jurisdiction will not substitute its own finding nor correct such finding. As far as the objection to the award and the claim on account of the damages and compensation is concerned, he contends that the claim was made due to wrongful suspension of work by the petitioner causing undue prolongation of the period and inappropriate performance of the contract, the claim was founded under four heads :
(i) Idle establishment charges.
(ii) Idle mechanical charges.
(iii) Idle machinery hire charges, and
(iv) Escalation as per RBI Indices.
7. The aforesaid claims however, was not seriously denied and/or disputed in the counter statement. According to Mr. Mitra, Clauses 17(2) and 17(3), if read harmoniously, of the General Condition of Contract it will appear that the compensation on account of damages can be awarded. He submits that the aforesaid Clause 17(3) will be applicable when there is a delay before commencement of the works but after commencement of the works if there has been any delay on account of the fault of the petitioner Railway then the general law for awarding damages will be applicable.
8. On the point of interest he submits that the claimant in the statement of claim filed before the learned arbitrator had claimed interest from February 19, 1992, that is from the date of payment of final bill to February 23, 1994, that is to say “pre-reference period” and thereafter interest pendente lite from February 24, 1994, till the publication of the award and future interest from the date of the award, till such payment. The petitioner never argued before the learned arbitrator this point namely that learned arbitrator is having no authority in view of Clause 16(2) of the General Condition of Contract to award interest. According to him this clause prohibiting payment of interest can only be binding for “pre-reference period”, hence the learned arbitrator has jurisdiction to award interest. He has relied on the following decision of this court and also a decision of the apex court :
Jiwani Engineering Works (P.) Ltd. v. Union of India, and George (T. P.) v. State of Kerala, .
9. Having considered the rival contention in this matter I find following three basic points have been raised in this matter for decisions :
(i) Can the respondent after having accepted the amount of final bill of Rs. 2,48,766.90 with endorsement has “accepted as full and final” and further having struck out the remark “under protest” raise a dispute with regard to its further claim.
(ii) If so, whether the claim on account of damages incurred due to suspension of work causing undue prolongation of the period of performance for long 18 months and 21 days, as specifically mentioned in the statement of claim in paragraph 12(iv) can be admissible under Clause 17(3) of the General Conditions of Contract or not.
(iii) Whether the learned arbitrator had jurisdiction to award the amount of interest in view of the provision contained in Clause 16(2) or not.
10. Mr. Mukherjee says the learned arbitrator had decided wrongly as he did not come to a fact finding that there was no free consent by the claimant/respondent in accepting the final bill and the petitioner railway authority exercised duress and/or coercion which resulted in the petitioner striking out of the remark “under protest”. I have examined the award, on this aspect, I find, the learned arbitrator has come to a fact finding to the effect that the claimant/respondent was forced to strike off the endorsement “under protest since the claimant was intimidated that unless the remark” “under protest” was struck off no payment would be made under the said bill. The learned arbitrator has recorded that the claimant has adduced oral evidence in support of his contention that the claimant was compelled to strike out the remark “under protest” since the respondent refused to make any payment unless the remark “under protest” was withdrawn. The learned arbitrator recorded that the respondent did not examine any witness to rebut the evidence of the claimant. The learned arbitrator further found on evidence that the allegation of the claimant that the respondent refused to make payment till such time the remark “under protest” was withdrawn, appeared to be correct. He further found that the claimant struck off the remark “under protest” because of non-payment of final bill for months together under compelling circumstances.
11. Therefore, the contention of Mr. Mukherjee in this regard is not correct. Obviously the correctness of the fact finding of the learned arbitrator cannot be examined by this court while exercising jurisdiction under Sections 30 and 33 of the said Act. Therefore, when it is held by the learned arbitrator that the payment of final bill was received by the claimant “under protest” this payment cannot be said to be the full payment in relation to the said contract. As such there existed arbitrable dispute between the parties, and the learned arbitrator has rightly proceeded to decide the same. In a recent decision of the Supreme Court rendered in the case of Chairman and MD, NTPC Ltd. v. Reshmi Constructions, Builders and Contractors it has been observed in paragraph 27 amongst other as follows (page 676) :
“Even when rights and obligations of the parties are worked out, the contract does not come to an end inter alia for the purpose of determination of the disputes arising thereunder, and, thus the arbitration agreement can be invoked. Although it may not be strictly in place but we cannot shut our eyes to the ground reality that in case where a contractor has made huge investment, he cannot afford not to take from the employer the amount under the bills, for various reasons which may include discharge of his liability towards the banks, financial institutions and other persons. In such a situation, the public sector undertakings would have an upper hand. They would not ordinarily release the money unless a ‘no demand certificate’ is signed. Each case, therefore, is required to be considered on its own facts.”
12. It is observed further in paragraph 28 of the said judgment as follows (page 676) :
“Further, necessitas non habet legem is an age-old maxim which means necessity knows no law. A person may sometimes have to succumb to the pressure of the other party to the bargain who is in a stronger position.”
13. Therefore, when the agreement was subsisting the dispute relating thereto naturally was subsisting and the arbitration agreement would take care of the same. Accordingly, I reject the contention of Mr. Mukherjee and hold that the learned arbitrator has correctly proceeded with the arbitration.
14. As far as the second point is concerned I think that the contention of Mr. Mitra is correct. The claim of his client under the heading “damages” as mentioned in paragraph 12(iv)(a), (iv)(b) and (iv)(d) is not hit by the Clause 17(2) of the General Conditions of Contract. I accordingly set out the aforesaid Clause 17(3) as follows :
“(3) Extension of time on Railway account.–In the event of any failure or delay by the Railway to hand over to the contractor possession of the lands necessary for the execution of the works or to give the necessary notice to commence the works or to provide the necessary drawings or instruction or any other delay caused by the railway due to any other cause whatsoever, then such failure or delay shall in no way affect or vitiate the contract or alter the character thereof or entitle the contractor to damages or compensation therefor but in any such case, the Railway may grant such extension or extension of the completion date as may be considered reasonable.”
15. From the above clause, it appears to me that if there is any delay on part of the Railway administration in the circumstances mentioned therein the resultant damages cannot be compensated, only period of the contract can be extended for completion of the works. The learned arbitrator has found that it is not the question of the delay on the part of the Railway administration for damages suffered by the agreement but it is sheer failure on the part of the Railway administration in not de-watering the work site on two occasions. The learned arbitrator found and so also I do that under the condition of contract the Railway administration was responsible for pumping out of accumulated water in excess of three feet. Due to heavy shower during monsoon Railway authority failed to discharge this obligation on two occasions, as such the work was hampered and the claimant/ respondent had to keep their machines and material idle at the work site and without utilisation.
16. The delay in discharging contractual obligation cannot be equated with the total failure. By the above clause Railways are exempted from payment of any compensation on account of damages suffered by the claimant due to delay in doing the job as mentioned in the said clause. This clause does not cover the claim of damages on account of the total failure to perform on the part of the Railway administration.
17. It is rightly contended by Mr. Mitra that this point has not been taken in the counter statement of fact by the Railway. I have examined the statements and averment made in this regard, in the statement of claim and also in the counter-statement and I find that these questions have not been raised at all by the Railway.
18. Accordingly, I hold that the learned arbitrator has jurisdiction to decide the question of damages and he was not precluded by the said clause. In view of this finding the decisions cited by Mr. Mukherjee namely Associated Engineering Co. v. Government of Andhra Pradesh , Steel Authority of India Ltd. v. J.C. Budharaja, Government and Mining Contractor and Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises have no manner of application in this case.
19. As far as the third point is concerned the arbitrator has power to award interest pendente lite. The learned arbitrator has granted pendente lite interest and the interest for the period computed from the date of passing of the award till the date of the decree. I am of the view that the learned arbitrator is perfectly within his jurisdiction to award interest for the period as he has done. I have examined the agreement relating to awarding of interest and I think that the said clause namely Clause 16(2) will be applicable relating to “pre-reference period” meaning thereby from the date of raising the bills and till the date of accrual of cause of action and filing statement of claim. The arbitrator cannot grant such interest in view of the aforesaid clause. In the award I find the learned arbitrator has not done so. The law relating to the jurisdiction of the arbitrator to award interest has been well settled by the apex court by a judgment in T.P. George v. State of Kerala, . In paragraph 19 it is held amongst others that:
“The learned arbitrator can award interest for the pre-reference period.”
20. In this case the learned arbitrator did not forget the legal position. Therefore, I do not find any justification to interfere with the award. Consequently, the learned arbitrator did not commit any mistake, nor do I find any other reason to hold as such. Thus, the application fails.
21. Therefore, there will be a decree in terms of the award. Therefore, this decree will carry interest at the rate of 9 per cent. per annum from the date of passing of the decree and till the date of payment.
22. There will be no order as to costs.