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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors.
Vs.
M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
Date : 19.9.2008
HON'BLE MR. PRAKASH TATIA, J.
Mr.Arvind Samdariya, for the appellants.
Ms.Rekha Borana, for the respondent.
– – – – –
Heard learned counsel for the parties.
This appeal is against the order dated 8.4.2004
passed by the Court of District Judge, Sri Ganganagar
in Civil Misc. Case No.122/1996 by which the court
below rejected the objections of the appellants filed
under Section 30 read with Section 33 of the
Arbitration Act, 1940 (for short ‘the Act of 1940’).
The contract in question is No.CEBTZ-13/1983-84.
It had arbitration clause and when dispute was raised
after rescinding of the contract by the appellant Union
of India on 17.11.1987, the appellant itself initially
appointed Mr.AV Gopalakrishna, then Shri BM Gupta was
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
appointed and lastly, he too was substituted by
Arbitrator Shri Vidhya Bhushan by letter of reference
dated 14.2.1995. The Arbitrator passed the award on
4.3.1996. The Arbitrator considered the claims of the
contractor as well as of appellant Union of India. The
claims of contractor referred in para no.9 of the award
have been dealt with by the arbitrator whereas in para
no.10 of the award, the learned Arbitrator dealt with
the claim of appellant Union of India. The award is not
a reasoned award. However, the learned Arbitrator has
not accepted the total claims of any of the parties but
gave different amounts to the parties from the amounts
claimed by them. Some of the claims of both the parties
have been rejected. For ready reference, the table of
claim and amount awarded by the Arbitrator are quoted
here under :-
“Claims and award for the contractor :-
S.No. Brief description of claimed award
claims amount amount
1. Balance price of work done 1,76,766.40 48,560.00
collective amount of
Deviation Orders sanctioned
from time to time during
execution of work.
(Claim partly sustained).
2. Cost of material lying at 1,88,289.27 19,410.58
site at the time of
termination of the contract.
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
(Claim partly sustained).
3. Difference of cost of 15,379.65 NIL
overweight steel 6mm and
8mm as finalised by the
Board.
(Claim not sustained).
4. Cumulative amount of 5 Nos 3,82,086.76 1,71,770.43
claims respecting the
instant contract.
(Claim partly sustained).
5. Unconsumed materials vide 4,810.51 NIL
CRV No.57/EV/79/BRD dt.
23.3.88.
(Claim not sustained).
6. Unconsumed stores and tools 72,782.60 16,896.60
and plants which remained
at site at the time of
termination of contract.
(Claim partly sustained).
7. Release of security 60,000.00 To be rel-
deposit furnished in the eased
shape of bank guarantee. within one
(Claim sustained). month of
the award.
8. Retention money furnished 1,50,000.00 To be rel-
in the shape of bank eased
guarantee. within one
(Claim sustained). month of
the award.
9. Loss of profit on the 62,879.38 NIL
unexecuted portion of
work @ 10%.
(Claim not sustained).
10. Past interest on the 5,48,047.35 12% PASI
Principal sum of from
Rs.8,69,916.43 @ 18% 28.5.88 to
per annum from 01.3.87 31.8.90 on
to 31.8.90. awarded
(Claim partly sustained). amount of
claim 1 to
6.
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
11. Interest pendentelite 18% 12% PASI
from 23.9.91. from
(Claim partly sustained). 23.9.91 to
the date of
award on
awarded
amount of
claims 1
to 6.
12. Cost of arbitration 20,000.00 NIL
(Claim not sustained).
Claims and award for the Union of India :-
S.No. Brief description of claimed award
claims amount amount
1. Addl expenditure incurred 7,12,809.68 5,40,057.47
by the claimant for
completion of incomplete
works through risk & cost
of respondent.
(Claim partly sustained).
2. Technical Examination of 25,407.41 23,687.29
work.
(Claim partly sustained).
3. Claim on account of 7,14,665.22 NIL
compensation.
(Claim not sustained).
4. Claim on account of over 15,65,837.56 Not adju-
issued stores. dicated.
(Claim not referred by
Appointing Authority).
5. Cost of reference. 10,000.00 NIL
(Claim not sustained)."
In this appeal, the appellant has challenged the
order dated 8.4.2004 by which their objections against
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
the award were rejected. The learned court below
considered each of the ground raised by the appellant
in detail and thereafter, rejected the contention of
the appellant.
According to learned counsel for the appellant, in
view of the condition in clauses no.11 and 54, the
issue which could have been decided only by Chief
Engineer could not have been referred to the Arbitrator
and in the present case, the Arbitrator has adjusted
that amount which has referred in Col.1 of the claim of
the contractor. It will be worthwhile to mention here
that the contractor claimed Rs.1,76,766.40 on account
of balance price of work done which is collective
amount of deviation orders sanctioned from time to time
during execution of work. Against this claim of
Rs.1,76,766.40, the Arbitrator awarded only
Rs.48,560.00. The said plea of the appellant was
rejected by the trial court on the ground that no such
objection was raised by the appellant before the
arbitrator and, therefore, once they have submitted to
the jurisdiction of the arbitrator and got adjudication
of claim, they cannot claim objection under Section 30
of the Act of 1940.
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
Learned counsel for the appellant submitted that
it is a challenge to the jurisdiction of arbitrator,
therefore, the objection could have been raised under
Section 30. Learned counsel for the appellant relied
upon the judgment of the Hon’ble Supreme Court
delivered in the case of Prabartak Commercial
Corporation Ltd. vs. The Chief Administrator,
Dandakaranya Project & Anr. reported in AIR 1991 SC 957
wherein it has been held that where the matter is to be
decided by the Chief Engineer under the terms of the
contract, that matter cannot be referred to the
Arbitrator. The matter which can be referred to the
Arbitrator and can be decided by the arbitrator and the
claim can be decided by other mode, there may be
separate provisions in the contract. If any of the
party had any objection regarding the jurisdiction of
the Arbitrator in deciding the matter then that should
have been raised on earliest occasion or at least with
the reply before the arbitrator. It is a matter
relating to the contract of 1983-84 and where the
dispute arose on 17.11.1987 and the award was passed in
the year 1996 and, therefore, the arguments about the
jurisdiction of the arbitrator has been raised after a
long delay of 5 years from the time of appointment of
arbitrator. Therefore, if the civil court has not
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
accepted that objection, this Court is not inclined to
accept the objection against the jurisdiction of the
arbitrator. It is not a case of inherent lack of
jurisdiction of the arbitrator.
Learned counsel for the appellant submitted that
the contractor claimed Rs.1,88,289.87 as cost of
material lying at the site at the termination of the
contractor against which Rs.19,410.58 has been awarded
to the contractor by the Arbitrator but while doing so,
the arbitrator has not given bifurcation and has not
shown the head under which the amount has been awarded.
The said argument is legally not sustainable in view of
the fact that by this, the appellant is seeking reason
for the award and it is settled law that the arbitrator
can pass the award without assigning any reasons. From
the claim of the contractor and the award given by the
arbitrator and looking to the difference in amount, it
appears that the arbitrator has applied its mind and
against the claim of Rs.1,88,289.27, the contractor has
been awarded Rs.19,410.58 only. The same is position
for the claim no.6 and for this reason also, whether it
could have been referred to the arbitrator, there was
no objection before the arbitrator by the appellant.
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
Another objection of the appellant is about
release of security amount. It is submitted that the
security amount could be released only when no dues
certificate is issued by the petitioner. This plea is
available only when it is an amicable settlement. Once
the issue is resolved by the arbitrator, then the
question of no dues certificate from the appellant
could not be a hurdle in way of the appellant for
releasing the security. No dues certificate is
settlement between the parties and end of claims so far
as the award is concerned. With the passing of the
award, nothing remains which can be disputed and
objected by either of the parties. Therefore, the no
dues certificate looses its significance. Otherwise
also, the Union of India can issue such certificate and
make payment of security but as held above, there is no
necessity for obtaining the no dues certificate by the
respondent from the appellant in the situation as
referred above.
Learned counsel for the appellant submitted that
the arbitrator has awarded past interest though at the
rate of 12% instead of 18% as claimed by the contractor
which could not have been granted. For that, I do not
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
find any force in said submission of learned counsel
for the appellant looking to the facts of the case.
Learned counsel for the appellant also submitted that
the rate of interest is required to be reduced in view
of the judgment of Hon’ble Supreme Court in the case of
Rajasthan State Road Transport Corpn. vs. Indag Rubber
Ltd. reported in AIR 2006 SCW 4564.
I considered the submissions of learned counsel
for the parties and perused the facts of the cases
referred to above particularly the case of Indag Rubber
Ltd. (supra).
The dispute was of the year 1987 and the award of
interest was at the rate of 12% per annum which was
reduced to 6% on the ground that the rate of interest
is excessive. In a commercial transaction, the rate of
interest can be granted as per the commercial rate of
interest. Before the Civil Court, there was no material
that in the year 1987, the rate of interest in
commercial transaction in the year 1988 and onwards was
much less than 12%. Therefore, this Court is not
inclined to interfere in the said award of interest by
the arbitrator to the contractor.
In view of the above reasons, I do not find any
reason to interfere in the impugned order while
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S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
exercising the appellate jurisdiction.
Consequently, this appeal, having no merits, is
hereby dismissed.
(PRAKASH TATIA), J.
S.Phophaliya