IN THE HIGH COURT OF KERALA AT ERNAKULAM
MFA.No. 954 of 1998()
1. K.M.ACHUTHAN
... Petitioner
Vs
1. UNION OF INDIA REP.BY COMMANDER WORKS EN
... Respondent
For Petitioner :SRI.V.RAJGOPAL
For Respondent :SRI.K.RAMAKUMAR (SR.)
The Hon'ble MR. Justice J.B.KOSHY
The Hon'ble MR. Justice P.N.RAVINDRAN
Dated :30/07/2008
O R D E R
J.B.KOSHY & P.N.RAVINDRAN, JJ.
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M.F.A.NOS.954 OF 1998
&
1093 OF 2002 (D)
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Dated this the 30th day of July, 2008
J U D G M E N T
KOSHY,J.
Appellant is a registered Contractor. He undertook
contract for Provision of Residential Accommodation for DAD
Staff at Cannanore under an arbitration agreement
No.CWE/Cochin/8 of 1984-85 was signed. While the work
was in progress, appellant raised disputes, as according to
him, he is entitled to the amounts on the basis of the
escalation actually occurred and O.S.No.213/1985 was filed
before the Additional Sub Court, Thalassery. He also prayed
that an arbitrator may be appointed to decide that question.
A written statement was filed by the respondents to the effect
that the delay was caused due to the act of the appellant.
They are not liable to pay any escalation and they also
M.F.A.NOS.954 OF 1998
&
1093 OF 2002 (D)
2
contended that the stage has not come for raising arbitration
dispute as contract was not yet completed. So the main
contention was that the suit itself was premature as the stage
for arbitration has not reached. The civil court considered the
matter, allowed the suit and directed to appoint the
arbitrator. The court by its judgment dated 31.1.1989,
directed that the disputes should be referred to the Sole
Arbitrator to be appointed by the Chief Engineer, Cochin
Zone, Cochin, of the appellant as provided in the agreement.
Hence, Sri.H.K.Nagaraja, Additional Chief Engineer, was
appointed as the Sole Arbitrator. In the general conditions of
the contract, there was a specific provision to refer all
disputes to the Sole Arbitration to the Engineer/Officer to be
appointed by the Chief Engineer, Cochin Zone, Cochin, whose
decision shall be final, conclusive and binding. The agreement
further provides as follows:
“The Arbitrator shall give his award on all
matters referred to him and shall indicate his
findings, along with sums awarded, separately
on each individual items of disputes.”
M.F.A.NOS.954 OF 1998
&
1093 OF 2002 (D)3
It shows that both the parties agreed that the disputes are to
be referred to arbitration, to the Engineer/Officer appointed
by the Chief Engineer. In fact, arbitrator was appointed at
the request of the appellant. The order appointing the
arbitrator was not challenged. Accordingly, arbitrator was
appointed and both parties participated in the proceedings.
Claims and counter claims were filed. Evidence was adduced.
Documents were filed and some of the claims of the petitioner
amounting to Rs.63,798/- were allowed. Among the counter
claims also, two claims were allowed amounting to
Rs.5,42,680/-. Both claims are awarded with 18% interest.
Appellant filed O.P.(Arb).No.11/1991 with the following
prayers:
“a) this Honourable Court may be pleased
to direct the 4th respondent, Sole Arbitrator
to file the original award with all the
documents taken by him into this Court and
thereafter pass an order and consequently
a decree in terms of the award on the
claims preferred by the petitioner and to
set aside the award in so far s it relates toM.F.A.NOS.954 OF 1998
&
1093 OF 2002 (D)4
the claims preferred by the respondents 1
to 3.”
The respondents also filed O.P.No.129/1995 for passing the
decree in terms of the award. The court below passed the
judgment and decree in terms of the award making it a rule of
the court. In other words, O.P. was filed by the respondent
was allowed and O.P filed by the claimants in so far as to set
aside the award in the counter claims were rejected. Hence,
these appeals were filed.
2. Three main contentions are raised by the appellant.
First contention raised is that as a Sole Arbitrator,
Sri.H.K.Nagaraja, should not have been appointed as he is an
Engineer connected with the works. We are unable to accept
the above contention because petitioner himself filed the suit
and as per the decree, Chief Engineer was directed to appoint
the arbitrator in terms of the agreement and terms of the
agreement itself provides for appointing an Engineer/Officer.
So the arbitrator was appointed in terms of the agreement.
M.F.A.NOS.954 OF 1998
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1093 OF 2002 (D)
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After agreeing for such a clause, this contention cannot be
raised. Secondly, even though it is stated that an oral
objection was filed, no written objections were filed and the
petitioner as well as the respondent participated in the
proceedings, filed claims and counter claims, adduced
evidence without any murmur and the award was passed.
When the award is against the appellant, appellant cannot
question the appointment of the sole arbitrator. Therefore,
the above contention fails. Next contention is that arbitrator
travelled beyond the terms of the reference, and therefore,
award was passed without jurisdiction and therefore, it is
liable to be set aside. According to the appellant, he only filed
the suit for claiming escalation benefits because of the delay
of the contract. On his application, arbitrator was appointed,
and therefore, arbitrator can decide only the question
regarding escalation etc. raised in the suit. We are unable to
accept that point. Under the agreement, arbitrator can
decide the entire disputes. In the written statement,
respondents had clearly contended that appellant was himself
M.F.A.NOS.954 OF 1998
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1093 OF 2002 (D)
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responsible for the delay. Other contentions raised was that,
at that stage, no arbitral dispute has arisen and claim was
premature. The court after considering the above objections,
found that in view of the arbitration clause, matter can be
referred to the arbitrator with regard to the disputes arising
out of the agreement. If there was no arbitration clause and
petitioner filed a suit claiming some amounts before the civil
court, respondent would be free to file his counter claim also.
Here, when arbitration clause is there and arbitrator is
appointed and the counter claims were filed as the term of
reference as per the court order, he has to decide all disputes
arising out of the contract. Therefore, it cannot be stated that
arbitrator travelled beyond the scope of reference or his
award is without jurisdiction. Next contention is that interest
awarded is very high. 18% interest awarded was as per
commercial practice. Under the provisions of the agreement,
there was no obligation for the arbitrator to pass a speaking
award but arbitrator only should give findings in each issue
with amounts. That was devised on him and therefore,
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1093 OF 2002 (D)
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reasons for the findings of the arbitrator for awarding the
amount need not be detailed by him and such award cannot be
interfered by the court unless the arbitrator has committed
misconduct or on the specific ground mentioned in the Act.
Such grounds are not made out. However, considering the
facts and circumstances of the case, we are of the opinion that
instead of 18%, 9% interest from the date of the award for the
claims and counter claims will serve the ends of justice and
after deducting the amount payable to him as per the award,
balance amount as decreed in the counter claim should be
paid by the appellant with 9% interest from the date of award
till the date of deposit. Appeals are accordingly allowed to the
above limited extent. In the circumstances of the case,
parties have to bear their costs.
J.B.KOSHY, JUDGE
P.N.RAVINDRAN, JUDGE
prp
J.B.KOSHY & P.N.RAVINDRAN, JJ.
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M.F.A.NOS.954 OF 1998
&
1093 OF 2002 (D)
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J U D G M E N T
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30th July, 2008