JUDGMENT
Vijender Jain, J.
1. This appeal has been filed impugning the order passed by the learned Single Judge upholding the award of the arbitrator who was the Executive Director, Civil Engineering (General) Railway Board. The Arbitrator in terms of the agreement between the parties was appointed by the appellant and was its employee.
2. Ms. Geetanjali Mohan, learned counsel appearing for the appellant has restricted her argument only on the plea of grant of interest by the Arbitrator. The learned counsel has contended that in view of the Standard Conditions of Contract, particularly, conditions No. 2401 and 2403, the arbitrator did not have the jurisdiction to award any interest. As the basic dispute involves interpretation of Clauses 2401 and 2403 of the Standard Conditions of the Contract, the same are reproduced below:
2401. “Whenever any claim or claims for payment of a sum of money arises out of or under the contract against the contractor, the purchaser shall be entitled to withhold and also have a lien to retain such sum or sums in whole or in part from the security, if any, deposited by the Contractor and for the purpose aforesaid, the purchaser shall be entitled to withhold the said cash security deposit or the security, if any, furnished as the case may be and also have a lien over the same pending finalization or adjudication of any such claim. In the event of the security being insufficient to cover the claimed amount or amounts or if no security has been taken from the contractor, the purchaser shall be entitled to withhold and have lien to retain to the extent of such claimed amount or amounts referred to supra, from any sum or sums found payable or which at any time thereafter thereafter may become payable to the contractor under the same contract or any other contract with the purchaser or the Government pending finalization or adjudication of any such claim.
It is an agreed term of the contract that the sum of money or moneys so withheld or retained under the lien referred to above by the purchaser will be kept withheld or retained as such by the purchaser till the claim arising out of or under the contract is determined by the Arbitrator (if the contract is governed by the arbitration clause) or by the competent court, as prescribed under Clause 2703 hereinafter provided, as he case may be, and that the contractor will have no claim for interest or damages for whatsoever on any account in respect of such withholding or retention under the lien referred to supra and duly notified as such to the contractor.”
2403: Lien in respect of claims in other Contractor
Any sum of money due and payable to the contractor (including the security deposit returnable to him) under the Contract may withhold or retain by way of lien by the purchaser or government against any claim of the purchaser or government in respect of payment of a sum of money arising out of or under any other contract made by the contractor with the purchaser or the government.
It is an agreed term of the contract that the sum of money so withheld or retained under this Clause by the purchaser or government will be kept withheld or retained as such by the purchaser or government till his claim arising out of in the same contract or any other contract is either mutually settled or determined by the arbitrator, if the contract is governed by the arbitration clause or by the competent court under Clause 2703 hereinafter provided, as the case may be and that the contractor shall have no claim for interest for damages whatsoever on this account or on any other ground in respect of any sum of money withheld or retained under this Clause and duly notified as such to the Contractor.”
3. It has been contended before us by the learned counsel for the appellant that the impugned order suffers from the vice of non-application of mind. In paragraph V of the objections filed before the learned Single Judge specific objection was raised with regard to the grant of interest by the Arbitrator. Para V of the objections was to the following effect:
“That it is also evident on the face of award that the learned Arbitrator has wrongly held that clauses 2401 and 2403 of Indian Railway Standard conditions of contract are not applicable in the case when these clauses are well applicable to the contract in reference by virtue of the terms and conditions of the contract. It is clearly mentioned in clause 2401 of IRS conditions of contract that “it is agreed terms of the contract that the sum of money or moneys so withheld or retained under the lien referred to above by the purchaser will be kept/withhold and retained as such by the purchaser till the claim arising out of or under the contract is determined by the Arbitrator or by the Competent Court as prescribed under the clause 2703 hereinafter provided as the case may be and that the contractor will have no claim for interest or damages whatsoever on any amount in respect of such withholding and retention under the lien.”
4. On the basis of the aforesaid clauses of the Contract as well as the objection taken in the petition filed before the learned Single Judge, Ms. Geetanjali Mohan, learned counsel for the appellant has contended that the appellant is under no obligation to pay interest in terms of the award of the Arbitrator and that the impugned order of the learned Single Judge upholding the award is liable to be set aside. In support, reliance has been placed upon a judgment rendered by a Constitution Bench of the Apex Court, titled Secretary, Irrigation Department, Government of Orissa and Ors. v. G.C Roy.
5. On the other hand, learned counsel appearing for the respondent has contended that clauses 2401 and 2403 have no applicability to the case in hand. These clauses, it is submitted can be invoked by the appellant to its advantage in case it had raised any claim against the respondent by way of liquidated damages, or general damages and in anticipation of that claim had withheld the money of the claimant including security. It is argued that the case before the Arbitrator was in the reverse order. It was the respondent who had raised the claim before the Arbitrator in view of the existence of price variation clause in the contract. During the currency of the contract the prices of the goods increased but the escalated prices was not paid. The appellant despite reminders persisted in not making the payment leaving no other course open to the respondent except to represent before the appellant to refer the matter for arbitration. Accordingly, in terms of the Contract, the Arbitrator was appointed who was none other than an Ex Director (General) of the appellant and thus an expert in dealing with the Contract, its terms and conditions, scope and applicability. Learned counsel for the respondent in support of the award has relied upon the judgment titled Sudarsana Trading Co. v. The Govt. of Kerala and Anr., as well as a judgment of the Division Bench of this Court reported in DLT 2005 (116) titled Bharat Heavy Electricals Ltd. v. Globe Hi Fabs Ltd. at page No. 1 & judgment reported in 2004 (1) (54) Arbitration Law Reporter, at page 652 titled Bharat Coking Coal Ltd. v. L.K. Ahuja.
6. We have given our thoughtful consideration to the arguments advanced by the learned counsel for both the parties. It is no more res integra that when the parties have chosen a forum other than the normal dispute redressal through a Civil Court, then the interference of the Court has to be minimal. Unless and until a party approaching the Court can successfully canvass that the Arbitrator mis-conducted the proceedings or that the award suffers from lack of jurisdiction or it is against the expressed terms of the Contract, the Court will not interfere with the same.
7. In the case before us, the sole Arbitrator who was a nominee of the appellant and was a responsible officer, being an Ex-Director, Civil Engineering Department not only knew the Contract well, but also about its applicability in terms of the reference which was referred to him and which was subject matter of the award. We would be quoting as to how the Arbitrator held that the amount was payable by the appellant to the respondent. The Claim No. 3 as dealt by the Arbitrator is reproduced below:
Claim No. 3: Interest @ 18% per annum etc.
The sole arbitrator examined the claim of Rs. 7,55,502/- towards interest etc. The supplies were to be completed by 8.10.92 however actual supplies were completed by 9.3.93, the total payments, including those on account of PVC, were therefore due to the supplier after 9.3.93, say w.e.f. .4.93. As worked out against claim No. 1 above, the amount on account of PVC that is considered payable is Rs. 6,80,680/-. This is taken to be due on 1.4.93. It is therefore concluded that the claimant has a legitimate claim on this money which has been denied to him since 1.4.93.
8. It is the considered view of the sole arbitrator that clauses 2401 and 2403 of Indian Railway Standard conditions of contract, are not applicable in the instant case as the “due payments on account to PVC were not made. This is distinct from the condition en visaged by these two clauses i.e. payments being found due and payable but being withheld by a conscious decisions of competent authority.
9. After considering the pros and cons of the issue involved in this claim, the sole arbitrator considers that the claimant is eligible for the payment of simple interest at the rate of 15% per annum with effect from 1.4.93 till 30.10.2000, the date of published award. The calculations for the amount payable are as under:
Amount payable = Rs. 6,80,680 X (91 months/12) X 15/100)
= Rs. 7,74,273.50
Say Rs. 7,74,274/-
The sole arbitrator further records that this amount of interest shall remain frozen for a further period of three months i.e. up to 31.1.2001i.e. no interest for the period 1.11.2000 to 31.1.2001. However, if this amount (Rs.7,74,274/- is not paid by the respondents by 31.1.2001, the simple interest shall continue to accrue (on Rs. 6,80,680/-) at the rate of 15% per annum w.e.f.1.11.2000 till such time it is paid by the respondents.
From the reasoning of the Arbitrator, which is so apparent on record, can it be said that the Arbitrator has ignored the standard clauses Nos. 2401 and 2403 of the Indian Railways Standard Conditions of the Contract ?
10. Law of arbitration is well settled. If there are two probable views, this Court will not interfere with the award merely because it feels that the view of the Court is more plausible or better than the one taken by the Arbitrator. The Arbitrator in the present case has understood the contract in the commercial sense. He has taken into consideration the fact that the money was payable to the respondent in terms of the contract on account of escalation clause. Therefore, the Arbitrator was within its jurisdiction and competence to award interest on such delayed payment.
11. In Mannai Investment Co. Ltd. v. Eagle Star Life Asurance Co. Ltd. reported in 1997 (2) WLR 7, it has been observed as under:
“there has been a shift from strict construction of commercial instruments to what is sometimes called purposive construction of such documents. Lord Diplock deprecated the use of that phrase in regard to the construction of private contracts as opposed to the construction of statutes: Antaios Compania Naviera S.A. v. Salen Rederierna A.B. (1985) A C 190, 201D. That is understandable. There are obvious differences between the processes of interpretation in regard to private contracts and public statutes. For a perceptive exploration of the differences in the context of United States law, see Robert S Summers, “Statutes and Contracts as Founts of Formal Reasoning, ” in Essays for Patrick Atiyah, edited by Peter Cane and Jane Stapleton (1991),pp71 et. seq. It is better to speak of a shift towards commercial interpretation. About the fact of the change in approach to construction there is nodoubt. One illustration will be sufficient. In Antaios Compania Naviera S A v. Salen Rederierna B (1985) A C 191, 201, Lord Diplock in a speech concurred in by his fellow Law Lords observed:
“If detailed semantic and syntactical analysis of a word in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.:
In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favors a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.”
12. The learned Single Judge in the impugned order was conscious of the fact that the claim of the respondent was on the basis of a supply made after the rise in official prices. Therefore, to say that the learned Single Judge has not taken into consideration the objection of the appellant, is too far-fetched.
13. The learned Single Judge has discussed in detail the justification of the claim of the respondent in view of the rise in prices and non-payment of the same by the appellant to the respondent when it became due. If the payment is due and it is unreasonably and without any rhyme or reason withheld by the appellant, it cannot be allowed to say that it is not liable to pay interest thereon.
14. We find no merit in this appeal. The same is dismissed.