JUDGMENT
M.Y. Eqbal, J.
1. This appeal under Section 39(1)(vi) of the Arbitration Act, 1940 at the instance of the appellant-Food Corporation of India is directed against the judgment and decree dated 14.12.1994 passed by Sub-Judge I, Daltonganj in Money Suit No. 18/82 refusing to set aside the award dated 14.7.1994 passed by the sole arbitrator and making the same rule of the court.
2. The facts of the case lie in a narrow compass : The plaintiff-appellant floated a tender in the year, 1977 for handling and transporting the contract at Food Storage Depot, Daltonganj from the rail head to the depot at Daltonganj. The tender submitted by the defendant-respondent was accepted and contract was allotted to him on the terms of conditions contained therein. The defendant alleged to have continued the work for some time but left the work without giving any information to the plaintiff. The Railway Department claimed the amount of demurrage and warfare from the plaintiff and the plaintiff had to incur ex-gratia payment to the labourers. The plaintiff alleged to have sent several letters to the defendant for resuming the work but the defendant failed to carry out the work. The plaintiff sustained loss of Rs. 55,449/-. The plaintiff-appellant, therefore, filed Money Suit No. 18/82 for a decree for recovery of the aforesaid amount.
3. In the said suit the defendant-respondent appeared and filed a petition under Section 34 of the Arbitration Act which was rejected by the trial Court but the same was allowed by this court and the matter was referred to arbitration. On 15.5.1992 the respondent filed written statement and counter claim before the arbitrator. The said counter claim was objected by the plaintiff on the ground, infer alia, that as per Clause 13 of the contract any claim ought to have been made within one year.
It was the case of the appellant that the counter claim was made after 14 years of the termination of the contract which is beyond the terms of the agreement.
4. The arbitrator, after completion of the arbitration proceeding, submitted his award whereby the claim made by the plaintiff was rejected and on the contrary the counter claim made by the respondent was allowed. After submission of the award the appellant filed an objection under Section 30 of the Arbitration Act challenging the validity of the award. The learned court below, after hearing the parties, passed the impugned judgment rejecting the objection filed by the appellant under Section 30 of the said Act and made the award rule of the court.
5. I have heard Mr. N.N. Tiwari, learned counsel appearing for the appellant and Mr. Nawal Kishore Prasad, learned counsel appearing on behalf of the respondent.
6. Admittedly the contract commenced in 1977 and the work discontinued in 1978. The plaintiff-appellant filed the aforementioned suit in 1982 for the recovery of Rs. 55,449.80 paise being the loss and damages sustained by it. The respondent did not invoke the arbitration clause nor filed a suit for recovery of the amount allegedly claimed by him before the arbitrator for about 14 years. When the matter was referred to the Arbitrator in 1992 the respondent for the first time made a counter claim by filing a written statement. The Arbitrator although rejected the claim made by the appellant in the suit but allowed the counter claim by recording the following in the award :
“So far as the counter claims of the contractor are concerned, the contractor will be entitled to a sum of Rs. 15651.50 paise towards his outstanding bills as mentioned in item No. 1 of his letter dated 31.5.1980 and also a sum of Rs. 45,679.32 paise after adjustment of payment of Rs. 8,000/- on 20.8.1978 towards outstanding balance of the bill amounts referred to in item No. 2 of the said letter dated 31.5.1980 and a further sum of Rs. 1,000/- being the
amount mentioned in item No. 3 of the said letter and a sum of Rs. 7361.25 paise being the amount mentioned in item No. 4 of the said letter. The contractor will also be entitled to interest @ 10% per annum on the amounts awarded as aforesaid from the date hereof. Further in the facts and circumstances of the case each party will pay and bear his or its own costs.”
7. It is worth to mention here that in support of the plaintiff’s claim various documents were filed but in support of his counter claim the defendant did not produce any evidence. The arbitrator without considering the materials produced by the appellant, rejected the claim of the appellant whereas in absence of any material, the arbitrator allowed the counter claim of the respondent without any basis. The learned court below upheld the award simply holding that the court cannot review the award by sitting over the award as an appellate Court.
8. As noticed above the appellant instituted the suit in the year 1982 for the recovery of the loss and damages sustained by it due to breach of contract by the respondent but the respondent neither took any step for recovery of the bill amount by instituting a suit nor invoked the arbitration clause for about 14 years. It was only after the matter was referred to the arbitrator, a counter claim was made which was allowed by the arbitrator without any basis.
9. I am conscious of the law that normally an award given by the arbitrator is not be interfered with and the court cannot sit in appeal to adjudicate the validity of the award but at the same time if it is found that the arbitrator has given the award in respect of the claim which is not only barred by limitation but also beyond the scope of arbitration then certainly it can be held that the arbitrator has committed legal misconduct in giving the award. This aspect of the matter has not at all been considered by the court below in upholding the award and making the same rule of the court.
10. Taking into consideration the entire facts of the case I am of the opinion that
the arbitrator has misconducted himself in allowing the counter claim made by the respondent and passing the award. Consequently the impugned judgment suffers from serious illegality and infirmity which cannot be sustained in law.
11. For the aforesaid reasons this appeal is allowed and the impugned judgment and the award given by the court and the arbitrator are set aside.