Central Coalfields Limited vs M/S Annapurna Coal Carriers Private ... on 8 January, 2024

[Cites 18, Cited by 0]

Jharkhand High Court

Central Coalfields Limited vs M/S Annapurna Coal Carriers Private ... on 8 January, 2024

Author: Anubha Rawat Choudhary

Bench: Anubha Rawat Choudhary

         IN THE HIGH COURT OF JHARKHAND AT RANCHI

                    Arbitration Appeal No. 02 of 2019

       Central Coalfields Limited, a subsidiary of Coal India Limited and a
       Government of India Undertaking having Head Office at Darbhanga
       House, Ranchi P.S. Kotwali, P.O. G.P.O. Ranchi District Ranchi
       through Mr. Rajeev Singh, aged about 51 years, General Manager
       (C.M.C.), Central Coalfields Limited, Darbhanga House, Ranchi, P.S.
       Kotwali, P.O. G.P.O. Ranchi District Ranchi-834001
                          ...     ...       Respondent/Petitioner/Appellant
                                Versus
       M/s Annapurna Coal Carriers Private Limited, an Ex-Servicemen
       Company, registered under the Companies Act, 1956 at New Area,
       Morabadi, P.S. Lalpur, P.O. Ranchi University District Ranchi-834008
                          ...     ... Claimant/Opposite Party/Respondent

                               With
                    Arbitration Appeal No. 03 of 2019

       Central Coalfields Limited, a subsidiary of Coal India Limited and a
       Government of India Undertaking having Head Office at Darbhanga
       House, Ranchi, P.S.- Kotwali, P.O.- G.P.O. Ranchi, District- Ranchi
       through Mr. Rajeev Singh, aged about 51 years, General Manager
       (C.M.C.), Central Coalfields Limited, Darbhanga House, Ranchi, P.S.-
       Kotwali, P.O.- G.P.O. Ranchi, District Ranchi-834001
                          ...     ...       Respondent/Petitioner/Appellant
                                Versus
       M/s Annapurna Coal Carriers Private Limited, an Ex-Servicemen
       company, registered under the Companies Act, 1956 at New Area,
       Morabadi, P.S.- Lalpur, P.O.- Ranchi University, District Ranchi-
       834008             ...     ... Claimant/Opposite Party/Respondent

                             ---
CORAM :HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
                             ---
     For the Appellant(s)    : Mr. Arun Kumar Srivastawa, Advocate
                             : Mr. Badal Vishal, Advocate
     For the Respondent(s) : Mr. Pandey Neeraj Rai, Advocate
                             : Mr. Rohit Ranjan Sinha, Advocate
                             : Mr. Akchansh Kishore, Advocate
                             : Mr. Saurabh Sagar, Advocate
                             : Mr. Mohit Mukul, Advocate
                             ---
                          JUDGMENT

C.A.V. On 21st July 2023 Pronounced on 8th January 2024

1. Heard the learned counsels for the parties.

2. Arbitration Appeal No. 2 of 2019 has been filed against the judgment dated 21.12.2018 passed by the learned Civil Judge (Senior 2 Division) I, Ranchi in Misc. (Arb.) Case No. 55 of 2010 whereby petition filed under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) against the award dated 10.08.2010 passed in Arbitration Application No. 32 of 2002 by the Arbitral Tribunal of Shri R. D. Roy, Chairman-cum-Managing Director (Retired), Western Coalfields Limited, Anandgram has been dismissed.

3. Arbitration Appeal No.03 of 2019 has been filed against the judgment dated 21.12.2018 passed by the learned Civil Judge (Senior Division) I, Ranchi in Misc. (Arb.) Case No. 54 of 2010 whereby petition filed under section 34 of the Act of 1996 against the award dated 10.08.2010 passed in Arbitration Application No. 07 of 2003 by the Arbitral Tribunal of Shri R. D. Roy, Chairman-cum-Managing Director (Retired), Western Coalfields Limited, Anandgram has been dismissed.

4. The summary of the award on claim and counter-claim with respect to Arbitration Application No. 32 of 2002 is as under:

"CASE NO. AA 32/2002

Claim No. 1: Respondent shall pay to the claimant the withheld amount of Rs. 78,91,366.47 Claim No. 2: The respondent shall pay to the claimant interest on the withheld amount of Rs. 78,91,366.47 @ 12% from 13.08.2001 till the date of publication of this award.

Claim No. 3: The respondent shall pay to the claimant Rs. 50,000.00 as compensation towards legal expenses and arbitration. Counter Claim: counter claim of Rs. 2,26,65,925.95 is not justified and is, therefore, rejected in totality."

5. The summary of the award on claim and counter-claim with respect to Arbitration Application No. 07 of 2003 is as under:

"CASE NO. AA 07/2003

Claim No. 1: The respondent shall refund to the claimant the security money of Rs. 5,85,000/-.

Claim No. 2: The respondent shall pay to the claimant interest on the security money of Rs. 5,85,000/- @ 12% from 10.07.2002 till the date of publication of this award.

Claim No. 3: The respondent shall pay to the claimant Rs. 30,000/- towards legal expenses and arbitration.

Counter Claim: The counter claim of the respondent is not justified and therefore it is rejected in totality."

6. A common award was passed by the learned Arbitrator in Arbitration Application No. 32 of 2002 and Arbitration Application No. 7 of 2003. The learned Court below dismissed Misc. (Arb.) Case No. 55 of 2010 arising out of Arbitration Application No. 32 of 2002 3 and Misc. (Arb.) Case No. 54 of 2010 arising out of Arbitration Application No. 7 of 2003 by two separate orders both dated 21.12.2018.

7. The order passed in Misc. (Arb.) Case No. 55 of 2010 is under challenge in Arbitration Appeal No. 02 of 2019 and the order passed in Misc. (Arb.) Case No. 54 of 2010 is under challenge in Arbitration Appeal No. 03 of 2019.

Arguments on behalf of the appellant

8. Learned counsel for the appellant while arguing the matter arising out of Arbitration Application No.7 of 2003 whose corresponding appeal is Arbitration Appeal No.3 of 2019 has submitted that the respondent had raised the plea for a refund of security money as well as payment of keep back amount of 10% in the application filed under section 11 (6) of the Act of 1996 being Arbitration Application No.32 of 2002, but suppressing these aspects of the matter, they filed another application being Arbitration Application No.7 of 2003 only for the refund of security money. He submits that although the Arbitration Application No.32 of 2002 covered both security money as well as 10% keep back amount, but in the claim filed in connection with the Arbitration Application No.32 of 2002 only the 10% keep back amount was mentioned and the refund of security amount was not mentioned and, therefore, the subsequent proceeding arising out of Arbitration Application No.7 of 2003 is barred by Order II Rule 2 of CPC. He has submitted that this plea was specifically raised before the learned Court below in ground no. J & M quoted in the impugned order itself, but has not been considered. He has also submitted that the learned Arbitrator has omitted to record this plea in the award and has also referred to the rejoinder filed by the appellant before the learned Arbitrator concerning the statement of claim arising out of Arbitration Application No.7 of 2003. He has referred to paragraphs 8 and 9 of the said reply, which is quoted as under:

"8. That with regard to the same contract and arbitration proceeding is going before this learned Arbitrator for release of withheld amount of Rs.77,53,163.83 as also for the interest on the same amount being A.A. No.32 of 2002.

9. That it is submitted that there cannot be two parallel proceeding one shall be for release of amount alleged to be withheld by the respondent and the other is refund of security money. Unless arbitration proceeding is pending before the learned Arbitrator in 4 A.A. No.32 of 2002 is decided as to whether the claimant is entitled to the amount claimed in the said arbitration proceeding the question of refund of security money does not arise because the present proceeding is dependent upon the decision of A.A. No.32 of 2002."

9. Learned counsel for the appellant has relied upon the judgment passed by the Hon'ble Supreme Court in the case of "K.V. George Vs. Secretary to Government, Water and Power Department, Trivandrum and Another" reported in AIR 1990 SC 53 (paragraph 16).

10. The learned counsel for the appellant has submitted that Clause 32 and 33 of the general conditions of the contract have not been properly considered by the learned Arbitrator. He submits that as per Clause 32, the certificate was to be issued, but no completion certificate was issued and therefore, the respondent was not entitled to refund of the security deposit. However, during the course of the argument learned counsel for the appellant is not in a position to show any such ground raised by the appellant before the learned Court below in the petition filed under section 34 of the Act of 1996.

11. So far as Clause 33 of the general terms and conditions is concerned, the learned counsel has submitted that no interest was payable on the refund of the security deposit if there is any reasonable ground for not refunding the security deposit. He has submitted that the matter was referred to Price Water House for consideration of the rate which can be taken to be sufficient reasonable ground for not refunding the security deposit and therefore, the learned Arbitrator has ignored Clause 33 and has refunded the security amount with interest. The learned counsel submits that the clauses of the agreement are binding on the parties and the learned Arbitrator could not have gone beyond the terms of the agreement and ordered payment of any amount which was not permissible under the contract.

12. The learned counsel for the appellant has relied upon the judgment passed by the Hon'ble Supreme Court in the case of "Associate Builders Vs. Delhi Development Authority" reported in (2015) 3 SCC 49. He has referred to paragraph 42 of the said judgment which has been dealt with under the heading "patent illegality". He has submitted that the award is in contravention to the substantive law of India; it is in contravention of the Arbitration and Conciliation Act itself and it is in contravention of the terms and conditions of the agreement.

Arguments of the Respondent(s)

13. The learned counsel for the respondent while responding to the arguments advanced on behalf of the appellant regarding the plea of Order II Rule 2 of CPC, has submitted that the only objection which was raised before the learned Arbitrator was that there cannot be two parallel proceedings arising out of the same contract. He submits that the plea regarding Order II Rule 2 is a different plea altogether. Such a plea was never raised before the learned Arbitrator.

14. He has also submitted that otherwise also, the point regarding Order II Rule 2 of CPC will have its applicability when the claim arises out of the same cause of action. He submits that in the present case, the claim is arising out of a distinct cause of action since the keep-back money (10%) was related to the balance amount of the money payable to the claimant arising out of the work done by the claimant which is different from the cause of action to refund security money.

15. He submits that so far as 10 % keep back money is concerned, the same was related to delay/dispute with regard to price fixation as the same could not be done for a considerable time, and refund of security deposit had nothing to do with price fixation. The learned counsel has further referred to the arguments regarding Clause 32 of the agreement and has submitted that such a plea having not been taken under section 34 of the Act of 1996 cannot be permitted to be taken for the first time under section 37 of the Act of 1996. He has also submitted that otherwise also the learned Arbitrator has dealt with the said plea which was referrable to the satisfactory completion of the entire work and due certification. The learned counsel has referred to the judgment passed by this Court in Arbitration Appeal No.12 of 2012 and has submitted that this issue has already been decided by this Court. He has referred to paragraphs 34 to 45 of the said judgment which are quoted as under:

"2nd Point -regarding clause 32 of the agreement

34. Clause 32 of the Agreement is quoted as under:

"On satisfactory completion of the entire work and after it is duly certify by the companies GM of the concerned area the security deposit will be refunded to the contractor."

35. The ground raised by the appellant before the learned court below with regards to clause 32 of the agreement is as under: -

"The learned Arbitral Tribunal has failed to take into consideration that Clause 32 of the GTC prohibits payment of security deposit unless satisfactory completion of entire work and a certificate to this effect duly certified is given by the representative of the company and General manager of the concern area. Only on the satisfactory completion of work and after it is duly certified by the representative of the company and the General manager of the concern area the security deposit will be refunded to the contractor."

36. In the judgment passed by Hon'ble Supreme Court in the case of M/s Rashtriya Chemicals & Fertilizers Ltd. Vs. M/s Chowgule Brothers & Ors. in Civil Appeal No.5286 of 2006, it has been, inter alia, held that while it is true that the Courts show deference to the findings of fact recorded by the Arbitrators and even opinions, if any, expressed on questions of law referred to them for determination, yet it is equally true that the Arbitrators have no jurisdiction to make an award against the specific terms of the contract executed between the parties.

37. It is well settled that the arbitrator derives authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one; that this deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action.

38. It is also well settled that interpretation of a particular condition in the agreement would be within the jurisdiction of the arbitrator. However, in cases where there is no question of interpretation of any term of the contract, but of solely reading the same as it is and still the arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award would be arbitrary, capricious and without jurisdiction. Whether the arbitrator has acted beyond the terms of the contract or has travelled beyond his jurisdiction would depend upon facts, which however would be jurisdictional facts, and are required to be gone into by the court. The arbitrator may have jurisdiction to entertain claim and yet he may not have jurisdiction to pass award for particular items in view of the prohibition contained in the contract and, in such cases, it would be a jurisdictional error.

39. In the case of Bharat Coking Coal Ltd. v. Annapurna Construction reported in (2003) 8 SCC 154, the Hon'ble Supreme Court reiterated the legal position in the following words:

"There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameters of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record."

40. The plea of the appellant has to be looked into keeping in mind the aforesaid principles of law.

41. The learned Arbitrator referred to various correspondences and also conduct of the parties and interpreted clause 32 of the 7 agreement regarding release of security deposit and recorded his finding at para 7 of the award:

"7. I agree that under clause 32 of the agreement for release of the security deposit a certificate from the GM of the area concerned or his representative is required, but it has not been specifically mentioned that the contractor is required to enclose such certificate. Such certificate could have been given even on the claimant's application/request for release of security deposit. If it was essential for the claimant to produce the certificate, they could have been asked to do so, rather than denying them the payment. In fact the respondent should have issued a notice under clause 20 (b) of MOU dated 16.04.1999 before forfeiting the security deposit. On going through the submissions of both the parties carefully I am satisfied that the performance of the claimant had been satisfactory and the security money should have been released after completion of the work. There was no reasonable ground to withhold the payment of security deposit. If there was any reason other than the absence of certificate regarding the performance that matter should have been sorted out immediately after the completion of the work and the security money released."

42. This court finds that the interpretation has been made by the learned arbitrator with regards to refund of security deposit with particular reference to clause 32 of the agreement. The view taken by the learned arbitrator is certainly a view based on appreciation of evidences and interpretation of agreement (clause 32) which to the mind of this court is certainly a possible/plausible view which does not call for any interference in the limited jurisdiction under section 34 of the aforesaid Act of 1996.

43. So far as the plea that the required certificate was to be given after deposit of the amount of provident fund dues is concerned, the same has no basis at all as the award itself reflects that the claim in connection with dues against provident fund amount could not be substantiated by the appellant before the learned arbitrator and the counter claim under this head was also rejected by a well speaking award. In fact, all the counter claims were rejected by the learned arbitrator.

44. The learned court below has rightly rejected the objection to the award which does not call for any interference under section 37 of the aforesaid Act of 1996. Neither the learned arbitrator acted in manifest disregard of the contract nor the award given by him can be said to be an arbitrary one nor there is any deliberate departure from the contract while directing refund of security amount after interpreting clause 32 of the agreement.

45. The point no.2 is accordingly decided against the appellant and in favour of the claimant."

16. So far as the plea regarding Clause 33 of the contract is concerned, he has submitted that the same was the subject matter of interpretation by the learned Arbitrator and he has dealt with Clause 33 and has stated that as per Clause 33, no interest is payable on security deposit if the payment is delayed on any reasonable ground. The learned Arbitrator has dealt with such a plea on page 40 paragraph 10 of the award by holding that there was no reasonable ground to withhold the 8 payment of the security amount which became the reason for the grant of interest for security. He has submitted that this plea has been dealt with in Arbitration Appeal No.12 of 2012 from paragraphs 46 to 53 which is under similar circumstances. The aforesaid paragraph nos. 46 to 53 are quoted as under:

"46. Third Point -regarding clause 33 of the agreement -

47. Clause 33 of the Agreement is quoted as under:

"No interest shall be paid on the security money deposited or deducted for the work and/or on the amount due and payable if payment is delayed on any reasonable grounds."

48. The ground raised by the appellant before the learned court below with regards to clause 32 of the agreement is as under: -

"The learned Arbitrator has erred in awarding the interest and the same is against the terms of the Clause - 33 of the agreement which speaks that no interest shall be payable on the security money deposited or deducted for work is/are on amount due and payable if payment is delayed on any reasonable grounds and whatever the interest is awarded by Arbitral Tribunal is too high, unjust and not to be logically accepted."

49. Paragraphs 9,10 and 11 of the judgement passed in Union of India v. Bright Power Projects (India) (P) Ltd., (2015) 9 SCC 695 are quoted as under:

9. Clause 13(3) of the contract entered into between the parties reads as under:

"13. (3) No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but government securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereon."

10. Thus, it had been specifically understood between the parties that no interest was to be paid on the earnest money, security deposit and the amount payable to the contractor under the contract. So far as payment of interest on government securities, which had been deposited by the respondent contractor with the appellant is concerned, it was specifically stated that the said amount was to be returned to the contractor along with interest accrued thereon, but so far as payment of interest on the amount payable to the contractor under the contract was concerned, there was a specific term that no interest was to be paid thereon.

11. When parties to the contract had agreed to the fact that interest would not be awarded on the amount payable to the contractor under the contract, in our opinion, they were bound by their understanding. Having once agreed that the contractor would not claim any interest on the amount to be paid under the contract, he could not have claimed interest either before a civil court or before an Arbitral Tribunal."

50. The clause regarding payment of interest in the judgement passed by Hon'ble Supreme Court Union of India v. Bright Power Projects (India) (P) Ltd., (2015) 9 SCC 695 clearly mentioned that no interest was at all payable against the earnest money and the security deposit 9 or amounts payable to the contractor under the contract, but interest was payable only on government securities.

51. In the present case, the clause 33 of the agreement is different. The claim of interest under claim no.2 in the light of clause 33 has been considered by the learned arbitrator by interpreting the same and applying it to the facts of the case. So far as the claim no.2 relating to interest on the security amount is concerned, the learned Arbitrator considered and interpreted the clause 33 of the contract by stating that as per terms and conditions of the contract, no interest was payable on security deposit provided the security deposit withheld on reasonable ground and rejected the plea of the appellant by holding that it was already recorded by the learned Arbitrator that there was no justification or any reasonable ground to withhold the refund of security deposit and therefore the interest was found to be payable on the withheld amount of Rs.2,93,910.00.

52. The view taken by the learned Arbitrator is certainly a view based on appreciation of evidences and interpretation of agreement clause 33 which to the mind of this court is certainly a possible/plausible view which does not call for any interference in the limited jurisdiction under section 34 of the aforesaid Act of 1996. The learned court below has rightly rejected the objection to the award which does not call for any interference under section 37 of the aforesaid Act of 1996. Neither the learned arbitrator acted in manifest disregard of the contract nor the award given by him can be said to be an arbitrary one nor there is any deliberate departure from the contract while directing payment of interest on refundable security amount after interpreting clause 33 of the agreement and applying it to the facts of the case.

53. The point no.3 is accordingly decided against the appellant and in favour of the claimant."

17. Learned counsel has also relied upon the judgment passed by Hon'ble Supreme Court reported in (2015) 3 SCC 49 (supra) and has submitted that the ratio of the judgment is in his favour and not in favour of the appellant.

Arbitration Appeal No. 02 of 2019

18. The claimant was awarded contract of transportation and loading of coal in various areas of the appellant and he received full payment for the financial year 1995-96. In terms of the agreement/MoU, the Rate Fixation Committee worked out the rates according to accepted norms for the financial year 1996-97, and the rates were communicated to the concerned areas of the appellant vide letter dated 06.02.1997. The rate was fixed as per the recommendation of the Rate Fixation Committee and was duly approved by the competent authorities. The Chief General Managers/General Managers of the appellant were advised to release 80% of the balance amount over and above the payment already made. Subsequently, the General Manager (Transport), CCL communicated to 10 the Chief General Manager/General Managers of the concerned areas the approval of FDs to release provisional payment to ex-servicemen company at 90% of the difference between the recommended rate of 1996-97 and the rate of 1995-96 adjusting 80% payment already made. Accordingly, 90% of the increase over the rates of 1995-96 was paid to the claimant retaining/withholding 10% of the increase to be paid later. This system of payment of retaining 10% of the increase over the rate of 1995-96 continued till 12.08.2001. The claimant made several requests for the release of the balance 10% payment, but no payment was released. The claimant made representation vide letter dated 14.05.2002 and ultimately, invoked the arbitration clause vide letter dated 10.06.2002 and when no action was taken, a petition under section 11(6) of the Act of 1996 was filed and the learned Arbitrator was appointed to adjudicate the disputes under the order passed by the High Court. The 10% retained amount/withheld amount was Rs.77,53,163.83 and the claimant asserted that he was entitled to payment of the said amount with interest @18% per annum and the cost of litigation. Vide another petition dated 07.11.2003 filed before the learned Arbitrator, the claim was revised to an amount of Rs. 78,91,366.47.

19. The appellant objected to the claim and stated that the period of sponsorship was initially for five years which was extended for another five years as per Memorandum of Understanding (MoU). Based on the policy of the Rate Fixation Committee of CCL, the appellant used to assess the transportation rate for ex-servicemen companies and its approval was obtained from time to time by the Board of appellant for implementation of the rate. This methodology of rate fixation was followed by the appellants till 1995-96.

20. In the meantime, the Chairman of Coal India Limited constituted a committee on 28.05.1993 to evolve a standard format for fixation and revision of rates. The revision of rates for 1996-97 was delayed due to a delay in the finalization of the coal transportation rate by the CCL Board. Regarding running bills, provisional payment of 80% of the balance amount was allowed by the appellant pending approval of the final rate by the Board of the appellant and necessary instructions were issued vide letter dated 06.02.1997 and again, in the meeting held on 22.10.1997, payment was released on a provisional basis to the extent 11 of 90% of the difference of the proposed rate of 1996-97 over and above the approved rate of 1995-96 adjusting payment already released on 80% basis.

21. It was the further case of the appellant before the learned Arbitrator that the proposed rates as recommended by the CCL committee were not approved by the CCL Board on the ground that new parameters to be made applicable to ex-servicemen companies were still under finalization at Coal India level and Coal India Limited was requested for new parameters vide letters dated 25.08.1997 and 01.09.1997.

22. Subsequently, Coal India Limited appointed M/s Price Water House as a consultant for the formulation of normative cost and it was clarified to ex-servicemen companies vide letter dated 01.06.2000 that the rates applicable to ex-servicemen transport companies need to be revised and formulated based on report submitted by M/s Price Water House. It was their further case that M/s Price Water House made detailed studies and the normative rate recommended by M/s Price Water House was approved by Coal India Limited Board in a meeting held on 05.08.2001 and therefore, normative rates were made effective in CCL. It was their case that the rates so evolved were duly approved, hence the normative rates of Price Water House may be the only accepted rate applicable in terms of Memorandum of Understandings during the period from 01.04.1996 to 12.08.2001.

23. It was their further case that payments to ex-servicemen companies were released at provisional rates during the period from 01.04.1996 to 12.08.2001. The payments made on a provisional basis could not be treated as payments made on approved rates and there was no approval of the rate for the period from 01.04.1996 to 12.08.2001 and therefore, the payment was to be revised based on approved rates. Provisional payments made earlier were subject to adjustment on actual payment of bills as communicated to the ex-servicemen company vide letter dated 18.08.2001. The appellant reserved their right to file a counter-claim after the process of calculating the recoverable amount was over.

24. It was their further case that the claimant had submitted the agreement only for one year commencing from 14.08.1996 and ending 12 on 13.08.1997 and there was no explanation for not submitting the agreements for the subsequent years. It was their further case that the provisional payment was made with a deduction which was adjustable on approval of the final rate but in the present case, the rate was not approved as per the Memorandum of Understanding. The rates were to be approved later and therefore, the claimant was not entitled to any claim far less than the amount claimed.

25. The appellant raised a counter-claim for different areas amounting to a total of Rs. 2,46,65,925.95 the break-up of which has been provided in internal page 15 paragraph no. IV of the award.

26. The learned Arbitrator considered the arguments of the parties and the materials placed on record and recorded the following findings in paragraph VII of the award:

"ANALYSIS OF THE SUBMISSIONS AND ARGUMENTS OF BOTH THE PARTIES & FINDINGS:

1. I have very carefully gone through the submissions of both the parties and also meticulously examined the documents produced by them. There is no difference of opinion or dispute regarding the methodology adopted for the award of the contract. Both the parties agree that initially the contract was for five years which was extended for a further term of five years with mutual consent and that for execution of contract an agreement was entered into in each year. Regarding the fixation of rates by Rate Fixation Committee and the revision of the rates also both the parties hold similar views. Both the parties further agree that right from the beginning up to the year 1995-96 the claimant was paid at provisional rates with the approval of CMD/FDs and that final payments at the firm and final rates were made after approval of the recommended rates of Rate Fixation Committee by the Board of the Directors of the respondent company. The learned counsel for the respondent has very correctly summed up his submission stating that on the basis of the pleadings of both the parties the only point for consideration before the arbitral tribunal is whether the actual rate fixed by the Board on 13.08.2001 be paid to the contractor for the period 01.04.1996 to 12.08.2001 or the rate approved for the period 1996-97. According to him the payment made during the period 01.04.1996 to 12.08.2001 was provisional payment subject to adjustment based on the rates to be approved by the competent authority. He has asserted that the only rate which was approved by the competent authority i.e. the Board of Directors of respondent company is the rate as recommended by Price Water House based on the approved norms. The counter claim of the respondent is based on the difference between the provisional rates at which the payment had already been made to the claimant and the rate of Price Water House which was approved by the Board of Directors of the respondent company and therefore the respondent is entitled to the recovery of the excess payment made to the claimant. He has however overlooked the second part of the decision of the Board taken in the 300th Board Meeting held on 05.08.2001 according to which the rate of the Price Water House could be made applicable only with effect from 13.08.2001. The Board's directive reads as under: -

"The Board further directed that the modalities / norms for fixation of rates payable to ex-servicemen transport companies be made 13 effective from the date of finalisation of the minutes to be communicated with the approval of CMD, CCL."

2. This decision of the Board is not found to have been altered or modified by the Board at any point of time. The minutes of the Board's meeting held on 05.08.2001 were circulated by the Company Secretary on 13.08.2001 (C/Sup/19). Obviously, the rates as recommended by the PWC became effective from 13.08.2001. The claimant has rightly contended that the rates as recommended by PWC and approved by the Board can be made effective only from 13.08.2001 and not from a date prior to 13.08.2001.

3. According to the claimant for years 1992-93, 1993-94, 1994-95 and 1995-96 the payments were made initially on the provisional basis with the approval of CMD /FDs of CCL and final payments after approval of the rates by CCL Board which is a fact. Considering the practice of finalisation of rates and making the payments prior to the year 1996-97 and the language "approval by the Board will take some time" of the respondent the claimant has rightly equated this case with the two cases cited by them which were decided by the Hon'ble Supreme Court on the basis of the doctrine of Promissory Estoppel and the benefits were given to the parties to which the promise was made.

4. I fully agree with the submission of the claimant on the issue of application of the rates of Price Water House and hold that the Price Water House rates are not applicable from a date prior to 13.08.2001.

5. The next point to consider is at what rates the payment should be made to the claimant from the year 1996-97 onwards.

6. As contended by the claimant it was not necessary to get approval of the rates recommended Rate Fixation Committee from CCL Board because as provided in clause-4 of the individual article of agreement which reads as "the contractor shall be paid on the calculated rates as per accepted norms subject to the approval by the Functional Directors of the Company/ Company Board of Directors", the approval of the rate was to be given either by the Functional Directors or by the Board of Directors.

7. I am not going into the issue whether the approval of the Board of Directors of the respondent was necessary or not. However it is true that in the years prior to 1996-97 the rates as recommended by the Rate Fixation Committee were invariably approved by the Board of Directors of the respondent company before the final payment. The claimant continued with the contract from 1996-97 onwards with legitimate expectation that as usual the approval of the Board would be coming in due course after which they would get the balance payment. It is a fact that at no point of time it was indicated by the respondent that the rates recommended by the Rate Fixation Committee would be reconsidered or re-examined by the said Board and thereafter the approval would be given. As a matter of fact The GT(T), CCL by his letter dated 06.02.1997 (Annexure C/Sup-9) issued to the General Managers of the areas concerned intimated that the rates recommended by the Rate Fixation Committee have been approved by the CMD, CCL on recommendation of Director Technical and concurrence of Director Finance. It was mentioned in the said letter that the "approval of the rate by the Board will take some time". Again by letter dated 05.11.1997 (Annexure C/Sup-

10) GM(T), CCL intimated all the areas in continuation of the previous letter dated 06.02.1997 that the rate has been approved by the Functional Directors in 97.13 meeting and it has been recommended that instead of 80%, 90% of the enhanced rate in case of old routes and 90% of the full rate in case of new routes should be paid.

8. I am satisfied that the approval of the rates recommended by the Rate Fixation Committee by the Board of Directors of the respondent has been 14 a mere formality. I am further satisfied that the claimant continued with the contract from 1996-97 onwards with legitimate expectation that the approval of the Board would be coming in due course. I also feel that as submitted by the claimant the use of the language "approval by the Board will take some time" is a firm promise on the part of the respondent to pay full rate to the claimant.

9. The rates recommended by the Rate Fixation Committee for the year 1996-97 were approved by CMD, CCL and later by the Functional Directors of CCL, on the basis of which provisional payments up to 90% of the enhanced rate in case of old routes and the same percentage of full rates in case of new routes were released for the year 1996-97, 1997-98, 1998-99, 1999-2000, 2000-2001, and 2001-2002 (up to 12.08.2001). Although there is a provision for yearly revision of rates in MoU and the GTC, the claimant is demanding the payment of the balance 10% on the basis of the rates recommended by the Rate Fixation Committee for the year 1996-97 for the period 1996-97 to 2001-02 (up to 12.08.2001). In all fairness and to meet the ends of justice, in the light of discussions made above, in my opinion the claimant should be paid for the years 1996-97 to 2001-2002 (up to 12.08.2001) at the rates recommended by the Rate Fixation Committee for the year 1996-97. Regarding rates, therefore, I hold and give my award that the claimant be paid for the year 1996-97 to 2001-2002 (up to 12.08.2001) at the rates as recommended by Rate Fixation Committee for the year 1996-97 which were approved by CMD, CCL and later by the Functional Directors of CCL.

10. Regarding the point raised by the respondent that the agreement only for one year has been submitted by the claimant whereas the claim covers several years, this point has been adequately and satisfactorily covered by the submissions made by the claimant. It is a fact that there was an agreement between the claimant and the respondent for each year and each agreement contained an arbitration clause. No evidence has been adduced by the respondent to prove it otherwise. This point has been dealt with in more details in case no. AA 7/2003 for refund of security money related to this case."

27. Upon perusal of the aforesaid findings of the learned Arbitrator, the learned Arbitrator recorded that the only point for consideration before the Arbitral Tribunal was whether the actual rate fixed by the Board on 13.08.2001 was to be paid to the contractor for the period 01.04.1996 to 12.08.2001 or the rate which was approved for the period 1996-97 was to be paid.

28. The learned Arbitrator, after considering the materials and evidence on record, has recorded a finding of fact that the rates of Price Water House were not applicable from a date before 13.08.2001 and thereafter, considered the point as to at what rate the payment should be made to the claimant from the year 1996-97 onwards. Thereafter, the learned Arbitrator considered the materials and recorded that the claimant continued with the contract from 1996-97 onwards with legitimate expectation that the approval of the Board would be coming in due course and there was a firm promise on the part of the appellant to pay full rate to the claimant. The learned Arbitrator also recorded that 15 the rates recommended by the Rate Fixation Committee for the year 1996-97 were approved by CMD, CCL and later by the Functional Directors of CCL, based on which provisional payment of up to 90% of the enhanced rate in case of old routes and the same percentage of full rate in case of new routes were released for the year 1996-97 till 12.08.2001.

29. The learned Arbitrator also recorded that although there was a provision for yearly revision of rates in MoU and GTC, the claimant was demanding the payment of balance of 10% based on the rates recommended by the Rate Fixation Committee for the period from 1996-97 upto 12.08.2001 and the learned Arbitrator ultimately held that the claimant should be paid for the year 1996-97 to 12.08.2001 at the rate recommended by the Rate Fixation Committee for the year 1996-

97.

30. The learned Arbitrator also rejected the argument of the appellant that the agreement was only for one year. The learned Arbitrator recorded that it was a fact that there was an agreement between the claimant and the appellant for each year and each agreement contained an arbitration clause and no evidence was adduced by the appellant to prove it otherwise, even though the agreement for only one year was submitted by the claimant but this point was adequately and satisfactorily covered by the submissions made on behalf of the claimant.

31. The learned Arbitrator accordingly awarded an amount of Rs. 78,91,366.47 for the period 1996-97 to 12.08.2001 being the withheld 10% amount at the rate approved for the year 1996-97. Interest was awarded at the rate of 12% per annum which according to the learned Arbitrator was quite reasonable to meet the ends of justice. The interest was directed to be paid from 13.08.2001 to the date of publication of the award. The learned Arbitrator awarded a cost of Rs. 50,000/-.

32. So far as the counter-claim is concerned, the same was rejected as because the learned Arbitrator held that the Price Water House rates were applicable only from 13.08.2001 and not from any date before 13.08.2001.

33. So far as the grounds for challenge to the Arbitral Award are concerned, it was asserted that the claim was barred by limitation; the Arbitral Tribunal erred in holding that the rate recommended by the Price Water House did not have any retrospective application for the period from 01.04.1996 to 12.08.2001; the learned Arbitrator erred in holding that the claims were not beyond the terms of arbitration and beyond the terms of reference; the learned Arbitrator should have confined the claim relating to only one agreement i.e. agreement dated 05.03.1999 for the period of one year which was attached with the arbitration agreement filed before the High Court; the learned Arbitrator has ignored Clause 4 of the agreement wherein it was specifically provided that the contractor shall be paid on the calculated rate as per accepted norms subject to approval by the Functional Directors and the learned Arbitrator also ignored Clause 39 of the GTC wherein it was mentioned that the dispute arising out of or in any way relating to the contract, other than those the decision of which has been specifically provided in the contract, shall be referred to the Arbitrator and in the present case the rate decided by the Functional Directors/Board of Directors was applicable.

34. This Court finds that the learned Arbitrator has considered the materials on record and has given a finding that the rates recommended by M/s Price Water House were applicable only for the period after 12.08.2001 and not from any date before 13.08.2001. Such findings have been recorded after scrutinizing the materials on record and appreciation of pleadings and points raised before the learned Arbitrator. The learned Arbitrator had also rejected the argument concerning Clause 4 of the Article of the agreement by recording a finding that the claimant continued with the contract from 1996 onwards with a legitimate expectation that the approval of the Board would come in due course and they would be given the balance payment and there were correspondences to show that the approval of rate would take some time.

35. This Court finds that every aspect of the matter has been duly considered by the learned Arbitrator. So far as the point of limitation is concerned, upon perusal of the entire award it is apparent that no point of limitation was taken and otherwise also, the narration of the facts as 17 mentioned in the award indicates that there was confusion in connection with the rate and the claimant was paid amount in anticipation of finalization of rates. The appellant had taken a plea that the rate finalized by Price Water House was to be made applicable, but the learned Arbitrator based on materials on record, held that the rate finalized by Price Water House was effective only from 13.08.2001 and not from any date before 13.08.2001. It was in the year 2002 itself the claimant invoked the arbitration clause vide notice dated 28.11.2002. In such circumstances, it cannot be said that the claim was barred by limitation calling for any interference under the limited jurisdiction of section 34 of the Act of 1996.

36. This Court finds that the learned Arbitrator has passed a well- reasoned order and there was no scope of interference under section 34 of the Act of 1996.

37. This Court has also gone through the order passed by the learned Court below and is of the considered view that the learned Court below has rightly not interfered with the award considering the limited scope of interference in the award under section 34 of the Act of 1996.

38. There is no merit in this appeal.

Arbitration Appeal No. 03 of 2019

39. This appeal, inter alia, relates to the refund of the security amount arising out of the contract involved in Arbitration Appeal no. 2 of 2019.

40. The learned Arbitrator has dealt with the claims of the claimant and counter-claim of the appellant in the following terms:

"6. Regarding the submission of certificate for satisfactory completion of work the respondent has quoted the relevant clause which reads as under:

"On satisfactory completion of the entire work and after it is duly certified by the representative of the company's General Manager of the concerned area the security deposit will be refunded to the contractor."

The claimant has contended that this clause nowhere says that the said certificate is to be obtained and produced by the claimant. Had it been so, the language would have been "on production of certificate by the ESM Company" and it would have been clearly stipulated that security deposit shall not be refunded "unless and until" the claimant produces certificate of satisfactory performance from the area concerned.

7. I agree with the contention of the claimant. Further, the certificate could have been given by representative of the General Manager concerned at any stage, when the request was for the refund of the security deposit was being processed. If the production of certificate was so essential, the claimant should have been asked to obtain it from the GM or his representative and submit it. In case the performance was not satisfactory the respondent would have turned down the request for the 18 refund of security money intimating the claimant accordingly, but it was not done in course of execution of the contract which continued for 10 years or thereafter. As a matter of fact on the recommendation of the General Manager (Transport) of the respondent stating that the performance of the claimant had been satisfactory for five years sponsorship of the claimant was extended for another term of 5 years by DGR.

8. The claimant has quoted several clauses of the MoU / GTC under which the penal action could have been taken by the respondent for unsatisfactory performance of the claimant, but no action is found to have been taken by the respondent in course of execution of the work or thereafter.

9. Immediately after the completion of the contract the claimant requested the respondent to release the security deposit vide their letters dated 05.08.2002, and 22.09.2002. The respondent neither acceded to the claimant's request nor did they give any reply conveying that certificate from concerned area was required. During currency of two contractual periods of five years each the respondent did not write a single letter regarding non-satisfactory performance of the claimant.

10. The question of submission of the certificate for satisfactory completion of the work has been raised only when the case is being heard by this tribunal which I regard as an after thought only to justify the unreasonable withholding of the security deposit. In view of the above I hold that there was no reasonable ground to withhold the refund of the security deposit.

11. Regarding the dues towards the Provident Fund the claimant has contended that the as per the agreement the liability of making the payment of the employees contribution, administration charges etc. under the CMPF scheme and DLI scheme rested with the contractor and they complied with all the provisions of the scheme. In case of failure of the claimant to abide by the provisions of CMPF Act and the rules made thereunder the statutory authorities would have initiated direct action against the claimant. The respondent has not come forward with a single document in support of any action initiated by CMPF authorities against the claimant on account of breach of CMPF provisions. Further respondent has not produced even a single document issued by the CMPF authorities whereby and whereunder the said authorities had directed the respondent to make payments towards any alleged CMPF dues as the principal employer. CMPF authorities have neither written any letter to the claimant directly nor to the respondent demanding any dues towards CMPF. The counter claim towards CMPF dues therefore has no leg to stand and needs to be rejected.

12. I agree with the aforesaid contention of the claimant. The respondent has not produced any notice or any letter from CMPF authorities directing the claimant or the respondent to make the payment of PF dues. On perusal of the statement submitted by the respondent making the counter claim of Rs.20,16,011.00, I find that this statement has been prepared clearly on hypothetical basis. In view of the above the counter claim of the respondent towards the CMPF dues deserves no consideration and is rejected.

13. Regarding the respondent's contention that there cannot be two proceedings in the same contract, one for release the withheld amount and other for refund of the security deposit the claimant has rightly contended that the objection of the respondent has already been resolved by the consent of the parties in the proceeding held on 22.09.2009 (sitting no. 54) in case no. AA 32/2002. On perusal of the proceeding held on 22.09.2009 (sitting no. 54), I find that both the parties have agreed that the dispute pertaining to refund of security deposit should also be adjudicated upon simultaneously with the dispute relating to 10% kept back amount. Therefore, raising the issue of two parallel proceedings in the same contract and between same parties is meaningless and the respondent is estopped from raising this issue."

41. The appellant challenged the award before the learned Court below, inter-alia, on the grounds that the claim was barred by limitation for the period 1996-97, 1997-98 and 1998-99 since the claimant gave notice for arbitration after the expiry of the period of limitation on 28.11.2002 in Arbitration Application No. 07 of 2003; the Award is illegal, misconceived, and against the weight of the material available on record; Arbitrator has traveled beyond the terms of the agreement; the learned Arbitrator has erred in awarding the interest and the same is against the terms of the Clause - 33 of the agreement which speaks that no interest shall be payable on the security money deposited or deducted for work is/are on amount due and payable if payment is delayed on any reasonable grounds and whatever is awarded by Arbitral Tribunal is too high, unjust and not to be logically accepted; the learned Arbitral Tribunal should have held that the claimant initially relinquished their claim concerning refund of the security amount before the Arbitral Tribunal, although in Arbitration Application No. 32 of 2002 before the Hon'ble High Court, they have raised the dispute about 10% keep back as also for refund of security but before the Arbitral Tribunal they did not raise the claim about the refund of security amount but later on filed another Arbitration Application No. 07 of 2003 raising the dispute for refund of security amount. Thus, the claimant who was entitled to more than one relief in respect of the same cause of action as raised in Arbitration Application No. 32 of 2002 had initially omitted the relief/claim for refund of the security amount nor any leave was obtained from the Arbitral Tribunal to raise a claim for refund of security amount afterward; the learned Arbitral Tribunal has failed to hold that in one proceeding all the reliefs are required to be made.

42. The learned Court below recorded its findings as under:

"6. On perusal of Award, dated - 10.08.2010, I find that by the order of the Hon'ble Jharkhand High Court in case no. AA 32/2002 and case no. AA 7/2003, Sri R.D. Roy was appointed as sole arbitrator to decide the disputes of the parties. Accordingly, in respect of both cases, arbitral proceeding were started, but after sometime the parties agreed for adjudication of the disputes raised in both cases together as they were related to the same contract and between the same parties. Therefore, a single award was prepared covering aforesaid both cases. The present case is related with the award given in case no. AA 7/2003.

I further find that the question of jurisdiction was raised during the arbitration proceeding, and, after detail discussion, the learned 20 Arbitrator hold that this arbitration tribunal has full jurisdiction to adjudicate upon the disputes related to the refund of security deposit. The learned Arbitrator further discussed the question of submission of the certificate for satisfactory completion of the work, and discussing the facts, circumstances, and action taken by parties during the execution of work under running contract, the learned Arbitrator hold that there was no reasonable ground to withhold the refund of the security deposit. On the issue relating to the liability of making the payment of the employee contribution, administration charges etc. under the CMPF scheme and DLI scheme, the learned Arbitrator discussed all facts and circumstance and come to the conclusion that the counter claim towards CMPF dues has no leg to stand and needs to be rejected. In para 13 of the award, the learned Arbitrator observed that "regarding the respondent's contention that there cannot be two proceedings in the same contract, one for release of withheld amount and other for refund of the security deposit, the claimant has rightly contended that the objection of the respondent has already been resolved by the consent of the parties in the proceeding held on 22.09.2009 (sitting no. 54) in case no. AA 32/2002. On perusal of the proceeding held on 22.09.2009 (sitting no. 54), I find that both the parties have agreed that the dispute pertaining to refund of security deposit should also be adjudicated upon simultaneously with the dispute relating to 10% kept back amount. Therefore, raising the issue of two parallel proceedings in the same contract and between same parties is meaningless and respondent is estopped from raising this issue.

At last, the learned Arbitrator rejected the counter-claim of the respondent in totality, and, made award for the claim of claimant with reasonable interest considering all relevant dates.

Thus, I find that the learned Arbitrator decided all issues considering all materials placed by both parties during the arbitration proceeding."

"9. From the aforesaid discussion and settled principle of laws, I find and hold that the learned Arbitrator decided the dispute in view of agreement between the parties. The arbitrator has dealt with the point of limitation in the award and has hold that the claimant continued with the contract from 1996-97 onwards with legitimate expectation that as usual the approval of the Board would be coming in due course after which they would get the balance payment. It is a fact that at no point of time it was indicated by the respondent that the rates recommended by the Rate Fixation Committee would be reconsidered or re-examined by the said Board and thereafter the approval would be given. The petitioner/respondent has not pointed out any issue which has been decided by the learned Arbitrator beyond the terms of reference. The learned arbitrator has also discussed the issue raised by the respondent that the claimant filed arbitration agreement only for one year whereas the claim covers several years. The petitioner has been failed to show that the security money was withheld due to reasonable ground. The petitioner has not succeeded to show and establish that the findings of learned Arbitrator are against any law of this country. In other words, the petitioner/respondent has completely failed to show that there is an error apparent on the face of record in the finding and conclusion recorded by the Arbitrator and the same is, therefore, required to be set-aside. It has not been pointed out that there is misconduct on the part of the learned Arbitrator and the same can be held to be patently illegal. It is not established that the award has been obtained by fraud or corruption, and, it is against the public interest. Mere submission of the petitioner that the award is against the public policy, does not substantiate the case of the petitioner. Thus, I find that the award is not liable to be set aside in 21 view of provisions of section 34 of the Arbitration and Conciliation Act, 1996. In the result, it is hereby;

ORDERED that this miscellaneous case be and the same dismissed on contest with cost of Rs.5,000/- (Rs. Five thousand)."

43. The appellant has raised similar grounds as have been raised before the learned Court below while challenging the award and it is argued that the impugned order and the award calls for interference by this Court.

44. In the judgment passed by the Hon'ble Supreme Court in the case of "M/s Rashtriya Chemicals & Fertilizers Ltd. Vs. M/s Chowgule Brothers & Ors." in Civil Appeal No.5286 of 2006, it has been, inter alia, held that while it is true that the Courts show deference to the findings of fact recorded by the Arbitrators and even opinions, if any, expressed on questions of law referred to them for determination, yet it is equally true that the Arbitrators have no jurisdiction to make an award against the specific terms of the contract executed between the parties.

45. It is well settled that the Arbitrator derives authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be an arbitrary one; that this deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action.

46. It is also well-settled that the interpretation of a particular condition in the agreement would be within the jurisdiction of the Arbitrator. However, in cases where there is no question of interpretation of any term of the contract, but of solely reading the same as it is and still, the Arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award would be arbitrary, capricious and without jurisdiction. Whether the Arbitrator has acted beyond the terms of the contract or has traveled beyond his jurisdiction would depend upon facts, which however would be jurisdictional facts, and are required tobe gone into by the Court. The Arbitrator may have jurisdiction to entertain claim and yet he may not have jurisdiction to pass award for particular items in view of the prohibition contained in the contract and,in such cases, it would be a jurisdictional error.

47. In the case of "Bharat Coking Coal Ltd. Vs. Annapurna Construction" reported in (2003) 8 SCC 154, the Hon'ble Supreme Court reiterated the legal position in the following words:

"There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameters of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record."

48. The plea of the appellant has to be looked into keeping in mind the aforesaid principles of law.

Point regarding non-submission of completion certificate as per Clause 32 of the agreement

49. The learned Arbitrator interpreted Clause 32 of the agreement regarding the release of the security deposit and recorded his finding in para 6 to 10 of the award.

50. This Court finds that the learned Arbitrator considered the production of the completion certificate as per Clause 32 of the agreement in the Arbitral Award and found that the question of submission of the certificate for satisfactory completion of the work has been raised only when the case was being heard by the tribunal and the learned Arbitrator held that the same was an afterthought only to justify the unreasonable withholding of the security deposit. Accordingly, the learned Arbitrator held that there was no reasonable ground to withhold the refund of the security deposit. This Court is of the considered view that the learned Arbitrator has considered the contract and has taken a plausible view.

51. So far as the plea that the required certificate was to be given after the deposit of the amount of provident fund dues is concerned, the same has no basis at all as the award itself reflects that the claim in connection with dues against provident fund amount could not be substantiated by the appellant before the learned Arbitrator and the counter-claim under this head was also rejected by a well speaking award. In fact, all the counter-claims were rejected by the learned Arbitrator.

The issue regarding Clause 33 of the agreement (no interest shall be payable on security deposit)

52. The ground raised by the appellant before the learned Court below with regard to Clause 33 of the agreement is as under: -

"For that the learned Arbitrator has erred in awarding the interest and the same is against the terms of the Clause - 33 of the agreement which speaks that no interest shall be payable on the security money deposited or deducted for work is/are on amount due and payable if payment is delayed on any reasonable grounds and whatever the interest is awarded by Arbitral Tribunal is too high, unjust and not to be logically accepted."

53. Paragraphs 9, 10 and 11 of the judgement passed in the case of "Union of India v. Bright Power Projects (India) (P) Ltd." reported in (2015) 9 SCC 695 are quoted as under:

"9. Clause 13(3) of the contract entered into between the parties reads as under:

"13. (3) No interest will be payable upon the earnest money and the security deposit or amounts payable to the contractor under the contract, but government securities deposited in terms of sub-clause (1) of this clause will be repayable with interest accrued thereon."

54. The clause regarding payment of interest in the judgment passed by the Hon'ble Supreme Court in the case of Union of India Vs. Bright Power Projects (India) (P) Ltd. (Supra) mentioned that no interest was at all payable against the earnest money and the security deposit or amounts payable to the contractor under the contract, but interest was payable only on government securities.

55. In the present case, the Clause 33 of the agreement is different. The claim of interest in the light of Clause 33 has been considered by the learned Arbitrator by interpreting the same and applying it to the facts of the case. So far as the claim relating to interest on the security amount is concerned, the learned Arbitrator considered and interpreted Clause 33 of the contract by stating that as per terms and conditions of the 24 contract, no interest was payable on the security deposit provided the security deposit was withheld on reasonable ground and rejected the plea of the appellant by holding that it was already recorded by the learned Arbitrator that there was no justification or any reasonable ground to withhold the refund of security deposit and, therefore, the interest was found to be payable on the withheld amount of Rs.5,85,000/-.

56. The view taken by the learned Arbitrator is certainly a view based on appreciation of evidence and interpretation of agreement (Clause 33) which to the mind of this Court is certainly a possible/plausible view that does not call for any interference in the limited jurisdiction under section 34 of the aforesaid Act of 1996. The learned Court below has rightly rejected the objection to the award which does not call for any interference under section 37 of the aforesaid Act of 1996. Neither the learned Arbitrator acted in manifest disregard of the contract nor the award given by him can be said to be an arbitrary one nor there is any deliberate departure from the contract while directing payment of interest on refundable security amount after interpreting Clause 33 of the agreement and applying it to the facts of the case. Accordingly, this issue is decided against the appellant and in favour of the claimant.

Claim of the appellant regarding refund of the security money barred under Order II Rule 2 of C.P.C.

57. It was the case of the appellant that the claimant had filed another application for the appointment of Arbitrator in the High Court with regards to another claim arising out of the agreement and the High Court was pleased to refer the dispute to the Arbitral Tribunal-Sole Arbitrator and accordingly, the dispute with respect to refund of security deposit was barred by the principle of Order II Rule 2 of CPC.On the other hand, it was the case of the claimant before the learned Arbitrator that both the parties have agreed that the dispute pertaining to refund of security deposit should also be adjudicated upon simultaneously with the dispute relating to 10% keep back amount.

The learned Arbitrator, on perusal of the proceeding held on 22.09.2009 (sitting no. 54), further recorded that both the parties have agreed that the dispute pertaining to the refund of the security deposit 25 should also be adjudicated upon simultaneously with the dispute relating to 10% keep back amount. Therefore, raising the issue of two parallel proceedings in the same contract and between the same parties is meaningless, and held that the respondent (appellant here) was estopped from raising such issue.

58. In view of the aforesaid findings recorded by the learned Arbitrator based on the materials on record, this Court is of the considered view that the challenge made by the learned counsel for the appellant by referring to Order II Rule -2 of CPC cannot be entertained under the limited scope of interference under section 37 of the Arbitration and Conciliation Act, 1996. There is no scope for reappreciation of the evidence available before the learned Arbitrator and coming to a different finding. Neither the quantity nor the quality of the evidence can be reappreciated while considering a petition under section 34 of the aforesaid Act of 1996. This Court is of the considered view that the learned Court below has rightly rejected the aforesaid plea raised by the appellant. Further, the scope of interference is much narrower when it comes to an appeal under section 37 of the aforesaid Act of 1996. In view of the aforesaid findings, the issue raised regarding Order II Rule -2 of CPC is decided against the appellant and in favour of the claimant.

59. So far as the judgment passed in the case of "K.V. George Vs. Secretary to Government Water and Power Department Trivandrum and another" (Supra) is concerned, the same does not apply to the facts and circumstances of this case. In the said case, the Hon'ble Supreme Court referred to the provision of section 41 of the Arbitration Act, 1940 which specifically provided that the Code of Civil Procedure will apply to the Arbitration Act, 1940 and in this background under the Arbitration Act, 1940 Order II Rule 2 and section 11 of the CPC were considered to hold that if relief is not sought in the first claim application, the second claim application raising remaining issues were barred and also that principle of res judicata or constructive res judicata was applicable to arbitration proceedings. The said judgment relied upon by the appellant cannot be straight away applied in this case as the present proceedings are under the Arbitration and Conciliation Act, 1996 where there is no such similar provision as section 41 of the 26 Arbitration Act, 1940. Otherwise also, the learned Arbitrator has passed a reasoned order by referring to the conduct of the parties as recorded in order no.54 of the arbitral proceedings to hold that separate proceeding for the refund of security was maintainable. The learned Arbitrator has certainly taken a plausible view. In such circumstances, there is no need to decide in the instant case as to whether the Code of Civil Procedure is applicable to arbitral proceedings under the Act of 1996. Rather section 19 of the Act of 1996 declares that Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 though there is no express bar on the applicability of CPC of Indian Evidence Act, 1872. The Issue of Limitation

60. Upon perusal of the impugned award, it is apparent that the learned Arbitrator has recorded a finding that the claimant continued with the contract from 1996-97 onwards with the legitimate expectation that as usual, the approval of the Board would be coming in due course after which they would get the balance payment. Ultimately when the decision of the Board came on 13.08.2001 and the appellants insisted that the same would cover the period from 01.04.1996 to 12.08.2001 also but such plea was rejected by the learned Arbitrator by holding that the price fixed by M/s Price Water House was not applicable from a date before 13.08.2001. The rate was not finalized for the entire period. In such circumstances, the claim of refund of security amount for the entire period right from 1996-97 to 12.08.2001 cannot be said to be barred by limitation which was raised immediately after the decision of the Board dated 13.08.2001 by issuing notice dated 28.11.2002. This Court finds that the learned Court below has passed a well-reasoned order rejecting the point of limitation, which does not call for any interference by this Court.

The Issue regarding exorbitant interest

61. The learned Arbitrator has recorded following findings: -

"The claimant has demanded interest @ 18% per annum on Rs.5,85,000 from 10.07.2002, as the contract ended on 09.07.2002. since the PWC rates were made effective with effect from 13.08.2001 vide Secretary, CCL Board's letter dated 13.08.2001, the refund of the security money became due after this date. However, as the claimant is demanding the interest from 10.07.2002, I allow the payment of interest from 10.07.2002. the objection of the respondent 27 that the security money was withheld on reasonable grounds is ruled out for the reasons explained in the foregoing paras. The claimant has demanded interest @ 18% per annum which in my opinion is high. Interest @ 12% per annum is considered quite reasonable. I, therefore, award the interest on Rs.5,85,000/- @ 12% per annum from 10.07.2002 till the date of publication of this award."

62. This Court finds that the learned Arbitrator has cited reasons for the award of interest on refund of the security deposit and has passed a reasoned order even on the point of rate of interest on the security deposit. No interference was called for under section 34 of the aforesaid Act of 1996 and the learned Court below has rightly refused to interfere even on the point of interest.

63. The learned Court below has rightly rejected the objection to the award which does not call for any interference under section 37 of the aforesaid Act of 1996. Neither the learned Arbitrator acted in manifest disregard of the contract, nor the award given by him can be said to be an arbitrary one, nor there is any deliberate departure from the contract while directing refund of security amount after interpreting Clause 32 of the agreement.

64. As a cumulative effect of the aforesaid findings, there is no merits in these two appeals, which are accordingly dismissed.

65. Pending interlocutory application, if any, is closed.

(Anubha Rawat Choudhary, J.) Pankaj/Mukul AFR

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Jharkhand High Court