IN THE HIGH COURT OF KERALA AT ERNAKULAM
Arb.A.No. 8 of 2005()
1. UNION OF INDIA, REPRESENTED BY
... Petitioner
2. CHIEF ENGINEER (CONSTRUCTION),
Vs
1. P.P.XAVIER,
... Respondent
For Petitioner :SRI.M.C.CHERIAN,SR.SC.,RAILWAYS
For Respondent :SRI.S.RAMESH BABU
The Hon'ble MR. Justice PIUS C.KURIAKOSE
The Hon'ble MR. Justice P.Q.BARKATH ALI
Dated :14/07/2009
O R D E R
PIUS C. KURIAKOSE & P.Q. BARKATH ALI, JJ.
-------------------------------------------------------
Arb. Appeal Nos. 8 & 13 OF 2005 & Cross
Objection No. 72/05 in Arb. Appeal No. 8 of 2005
--------------------------------------------------------
Dated this the 14th day of July, 2009
J U D G M E N T
Pius C.Kuriakose, J.
The Union of India represented by General Manager,
Southern Railway and the Chief Engineer, Southern Railway
are the appellants in Arbitration Appeal No. 8 of 2005. They
are referred to hereinafter collectively as the railway. The
respondent in the appeal is the railway contractor. He is
referred hereinafter as the claimant. There was an
arbitration in respect of a contract work executed by the
claimant for the railway. The joint arbitrators passed
annexure-I award granting an amount of Rs.7,35,000/- to
the claimant. Annexure -I award is a non-speaking award
which was not challenged by the railway. Under annexure-I
claim No. 7 which was a claim for interest has been
declined. However, there is a direction in annexure – I that
if the award amount is not paid within one month railway
Arb. Nos. 8 & 13 of 2005
-2-
would pay interest at the rate of 14% per annum to the
claimant on the award amount. The appellant submits that
the entire amount due under the award was paid to the
claimant who has issued a no claim certificate to the
railway. The appellant submits that thereafter the railway
issued notice of annexure – II petition filed by the claimant
(O.P. No. 22 of 1994) before the Sub Court, Ernakulam. To
annexure – II, the railway filed annexure -III objections
before the Sub Court. By Annexure – III the territorial
jurisdiction, maintainability etc. of the petition was seriously
challenged. On merits also the claims in the petition were
disputed. The joint arbitrators who were impleaded as R3
and R4 in annexure – II remained ex parte. The Sub Court
passed an order directing the arbitrators to file the award in
court. Along with annexure – II which was Arb. O.P. No. 22
of 1994 the claimants filed Arb. O.P. No. 21 of 1994 in
respect of another work and arbitration award passed by the
Arb. Nos. 8 & 13 of 2005
-3-
same arbitrators in relation to that work. Appellant submits
that the position and stage of O.P. No. 21 of 1994 is the
same as that of Arbitration O.P. No. 22 of 1994. While
matters stood so, the claimant filed a common petition in
the two arbitration O.Ps. which was numbered as IA.
719/03. Annexure -IV is copy of that IA. The prayer in
annexure – IV was that the Sub Court may act on the basis
of the signed copy of the award available in court and pass
orders invoking sections 13, 15, 16, 30 and 33 of the
Arbitration Act. Thus, though the scope of Arb. O.P. No.
22/94 was under section 14 of Arbitration Act, 1940, the
prayer in the interlocutory application annexure- IV was to
take a decision invoking sections 13, 15, 16, 30 and 33 also.
By a common order dated 11-8-2004 annexure – IV IA was
allowed by the Sub Court modifying the portion of the award
relating to interest prior to passage of the award.
Appellants submit that by the said order the Sub Court has
Arb. Nos. 8 & 13 of 2005
-4-
granted interest at the rate of 14% per annum to the
claimant during the period 30-9-90 to 13-4-1994 which will
amount to Rs.3,64,684/-. According to the appellants, the
above order amounts to modification of the award passed by
the joint arbitrators to the extent the same pertains to claim
No. 7 which was specifically declined by the joint arbitrators.
It is challenging the legality and propriety of the above
order that the appellants have preferred Arb. Appeal No.
8/05.
2. Arb. Appeal No. 13/05 is also directed against the
very same order in so far as it pertains to Arb. O.P. No.
21/94. It is submitted that the order amounts to
modification of the award of the joint arbitrators, copy of
which is produced as annexure – I in Arb. Appeal No. 13/05.
By virtue of the modification an additional amount of
Rs.6,44,199/- has become payable by the railway and in
both Arb. Appeal Nos. 8/05 and 13/05 the appellants have
Arb. Nos. 8 & 13 of 2005
-5-
raised various grounds challenging the order of the Sub
Court in the above IA.
3. Cross Objection No. 72 of 2005 is filed by the
claimant in Arb. Appeal No. 8/05 and the ground urged
therein is that claim No.7 raised by the claimant before the
arbitrators in both the arbitrations should have been upheld.
It is contended therein that the trial court having rightly
held that claim No. 7 is liable to be allowed, interest should
have been awarded during the period of one month from the
date of the award till date of actual payment, i.e., from 18-
3-1994 till date of payment. To the memorandum of cross
objection, objection is filed by the railway contending that
the cross objection is not maintainable since the same does
not fit in under any of the provisions of Section 39 of the
Arbitration Act or rule 22 of Order 41 C.P.C.
4. Sri.M.C.Cherian, learned counsel for the railways
and Mr. Sukumar, representing learned counsel for the
Arb. Nos. 8 & 13 of 2005
-6-
claimant addressed us very extensively on the grounds
raised in the memorandum of appeal and memorandum of
cross objections respectively. Our attention was drawn by
the learned counsel to the relevant statutory provisions, viz.
Sections 13, 14, 15, 16, 30 and 33 of Arbitration Act, 1940.
Our attention was drawn also to various judicial precedents
including the judgment of the Supreme Court in T.P. George
v. State of Kerala, AIR 2001 SC 816 and the judgment in
G.C.Roy’s case.
5. Having anxiously considered the rival submissions
addressed at the Bar in the light of the relevant statutory
provisions and judicial precedents to which our attention
was drawn by the learned counsel we are of the view that
the impugned order passed by the learned Subordinate
Judge can be sustained. Section 15(c) of Arbitration Act
1940 enables the court to modify and correct any award
“where the award contains a clerical mistake or an error
Arb. Nos. 8 & 13 of 2005
-7-
arising from an accidental slip or omission.” In the instant
case the amount which has been awarded under the
impugned order is only pendente lite interest and the
interest during the period from the date of accrual of cause
of action till the date of initiation of the proceedings for
arbitration. The court below noticed the four stages during
which the claimant is entitled for interest in terms of
judgment of Supreme Court and has awarded interest
during the period from the date of accrual of cause of action
till the date of the award. It is seen from the impugned
order that there was no serious opposition raised before the
Sub Court in awarding interest for the above period from
30-9-1990 till 13-4-1994. According to us, by awarding
interest for the said period also the court below has only
exercised its powers under section 15(c) of the Arbitration
Act, 1940. Though it would appear as if there is some
impropriety in rectifying the award on the basis of an
Arb. Nos. 8 & 13 of 2005
-8-
interlocutory application filed in an original petition wherein
only provision of Section 14 had been invoked, we feel that
the action of the learned Sub Judge can be approved since
the result of the same is to render substantial justice to the
claimant who would have otherwise lost these amounts
which he was obliged to pay to his bankers towards interest
on the loans advanced by them. Moreover, we notice that
the railway did not have serious opposition to this before the
Sub Court.
5. At the same time, we are not inclined to uphold the
memorandum of cross objections. If the claimant was
genuinely aggrieved in that claim No.7 raised by him was
not adjudicated his remedy was to invoke section 14 of
Arbitration Act, 1940, the only provision which was invoked
by him in the main petitions filed by him. We would have
thought in terms of relegating the issue for adjudicating
claim No. 7 to the same arbitrators. We are informed by
Arb. Nos. 8 & 13 of 2005
-9-
both sides that at this distance of time it will become
necessary to constitute a fresh arbitration trial. Under the
above circumstance we are of the view that the appeals as
well as the memorandum of cross objections can be
dismissed. Accordingly the appeals as well as the
memorandum of cross objections are dismissed, but in the
circumstances parties are directed to suffer their respective
costs.
(PIUS C.KURIAKOSE, JUDGE)
(P.Q.BARKATH ALI, JUDGE)
ksv/-