Punjab-Haryana High Court
Punjab Mandi Board vs Gurbax Singh And Ors. on 24 March, 2003
Equivalent citations: 2003(3)ARBLR630(P&H), (2003)135PLR381
JUDGMENT N.K. Sodhi, J.
1.This first appeal is directed against the order 6.6.1992 whereby the Additional Senior Sub Judge, Sultanpur Lodhi dismissed the objections filed by the Punjab Mandi Board-the appellant herein and made the award of the Arbitrator a Rule of the Court.
2. Facts necessary for the disposal of this appeal which lie in a narrow compass may first be noticed.
M/s Gurbax Singh and others (hereinafter referred to as the contractor) entered into a contract with the Punjab Mandi Board (for short the Board) on 16.4.1988 for the work of 'Providing and Laying 3/4" (2cms.) Thick Open Graded Premix Carpet in a Single Layer Using Hot Mix Plant and Paver Finisher' on village link roads in the Districts of Jalandhar and Kapurthala in Punjab State. The contract was to be completed in 6 months and 21 days and it is common case of the parties that the work could not be completed within the stipulated period and the time for completing the work was extended upto 7.2.1989 and thereafter another extension was granted up to 30.6.1989. The total estimated value of the work was Rs.1.75 crores. Amongst others, Clauses 9, 10 and 15 of the conditions contained in the contract are relevant for our purpose and these read as under:-
"1 to 8 xxx xxx xxx
9. The Hot Mix Plant will be installed at a suitable point at the discretion of contractor.
10. The Board will intimate the points in the Mandies where land will be available for installation of Hot Mix Plants to the contractor and in case any of it suits to contractor, the same will be provided free of cost.
11 to 14. xxx xxx xxx
15. In case of rains, storms and floods etc., the losses incurred because of damages to materials will be the liability of contractor and work damaged will have to be removed and relaid by the contractor for which no extra payment will be allowed.
16 to 64. xxx xxx xxx"
3. The contract contained an arbitration clause according to which all disputes arising out of or in any way connected with the rights and liabilities of either party were to be referred for arbitration to the Superintending Engineer of the National Highway Circle, Jalandhar acting as such at the time of the reference. It is not in dispute that the work stopped with effect from 1.3.1989 and it appears that both were blaming each other. The contractor made a claim to the tune of Rs.1,12,81,839/- from the Board whereas the Board while denying its liability to pay any amount to the contractor made a counter claim of Rs.8,65,676/- from it. The court referred these disputes to Shri M.S. Sikand Arbitrator who entered upon the reference and allowed the parties to produce documents and evidence and after hearing their arguments in regard to the claims and counter claims made the following award on 26.10.1991:
"I award a sum of Rs.58,74,691.12 (Rupees fifty eight lac, Seventy four thousand, six hundred ninety one and paise twelve only) to the claimant M/s Gurbax Singh and others against their claim of Rs,l,12,81,839/- against the Punjab Mandi Board. I also award a sum of Rs.8,82,923.60 (Rupees eight lac, eighty two thousand nine hundred twenty three and paise sixty only) in favour of Punjab Mandi Board against their counter claim of Rs.32,58,653/- (Rupees thirty two lacs, fifty eight thousand, six hundred and fifty three only) against M/s Gurbax Singh and others.
I direct Punjab Mandi Board through Executive Engineer, Punjab Mandi Division. Jalandhar to pay a sum of Rs.49,91,767.52 (Rupees forty nine lakh nienty one thousand, seven hundred sixty seven and paise fifty two only) to the claimant M/s Gurbax Singh and others within a period of 30 days from the date of this Award and on the failure to make the payment within the above said time, the respondent Punjab Mandi Board will be liable to pay interest at the rate of 12% (twelve percent) per annum from the date of the Award till the award is made rule of the court or the amount is paid to the claimant, whichever is earlier. The parties to the dispute shall bear their own costs to these arbitration proceedings. However, the cost of non-judicial stamp paper worth Rs.135/- will be borne by the claimant."
On the same day i.e. 26.10.1991 the Arbitrator sent a signed copy of the award to both parties namely to the contractor and also to the Board and authorised them to file the same before the competent court on his behalf. In pursuance to the authority given by the Arbitrator, the contractor filed an application dated 29.10.1991 under Sections 14 and 17 of the Arbitration Act, 1940 (hereinafter called the Act) in the court of Additional Senior SubJudge, 1st Class, Sultanpur Lodhi wherein the following two prayers were made:
"1. It is, therefore, prayed that respondent No.2 be directed to file the original award in the court along with all the documents and depositions produced and adduced before him and the Hon'ble Court is prayed that a notice of filing the signed copy of the award be issued to respondent No. 1. The award be made Rule of the Court on receipt of the original award.
2. It is further prayed that interest @ 18% p.a. be awarded and allowed from the date of decree till realization of the decretal amount".
Respondent No.1 before the trial court was the Board and respondent No.2 was the Arbitrator. This application came up for hearing for the first time before the court on 30.10.1991. Notice was ordered to be issued to the respondents in that application for 24.12.1991. On 24.12.1991 the court passed the following order which reads as under:
"24.12.91 Present: Counsel for the petitioner.
Respondent No,2 Shri M.S. Sikand has been served. But none is present on his behalf. He is proceeded against ex parte. Respondent No.l has refused process. He be served through substituted service by way of publication in the news paper Nawan Jamana Jullunder. To come up on 30.1.92.
Sd/-
ASSJ"
It appears that after the passing of the aforesaid order the Arbitrator appeared in court in person on the same day and moved an application for setting aside the exparte proceedings against him. That application was accepted and the court recorded another order on the same day which reads thus:
"24.12.91 Present: (At this stage) counsel for petitioner.
Respondent No.2 appeared in person. S.G.S. Sachdeva Adv. filed PA for respondent No.1. Application for set aside order of respondent No,2 accepted. Exparte order set aside. Arbitration file (Award and proceedings) produced. Be placed on file. Now to come up for filing objections if any on or before 30.1.92 date already fixed.
Sd/-
ASSJ"
In the meantime, the Board filed its objection to the award on 18.1.1992 and a copy of the same was supplied to the counsel for the contractor who was required to file his reply on or before 12.2.1992 to which date the case was adjourned. This is clear from the order of the court recorded on 30.1.1992. Thereafter, the trial court framed the issues on 26.2.1992 and after recording some evidence of the parties made the award a Rule of the Court and dismissed the objections filed by the Board as time barred. It was held that the award was not liable to be set aside. Hence this appeal.
4. I have heard the learned counsel for the parties and perused the record. At the outset, Shri H.L. Sibal, learned senior counsel appearing for the contractor contended that since the objections filed by the Board before the trial court were barred by time, the trial court was justified in dismissing the same and, therefore, this court should first decide the question of limitation and if the objections filed by the Board are found to be beyond the time prescribed by law, then it would not be necessary for this court to examine the other contentions raised by the Board. In view of this contention, I proceed to decide the question of limitation first.
5. According to Section 14 of the Act when an Arbitrator has made his award he is required to sign it and is required to give notice in writing to the parties of the making and signing thereof. Sub-section (2) of Section 14 of the Act which is relevant for our purpose reads as under: -
"(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the arbitration and award and of the costs and charges of filing the award, cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon give notice to the parties of the filing of the award."
Article 119 of the Limitation Act, 1963 prescribes the time for filing applications under the Act for the filing in court of an award and also for setting aside an award or getting an award remitted for reconsideration. This Article reads as under:
"119. Under the Arbitration Act, 1940 Description of suit Period of limitation Time from which period begins to run
(a) for the filing in court of an award Thirty days The date of service of the notice of the making of the award.
(b) for setting aside award or getting an award remitted for reconsideration an -do- The date of service of the notice of the filing of the award."
In the present case, the Arbitrator made his award on 26.10.1991 and after appending his signatures thereto gave notice to both parties on the same day i.e. on 26.10.1991 and informed them that he had made the award and he also sent a signed copy of the award to each of them further authorizing them to file it in the court of competent jurisdiction on his behalf. The contractor filed an application dated 29.10.1991 and made a prayer therein that the Arbitrator be directed to file the original award in court alongwith all documents filed and depositions made before him during the course of arbitration proceedings. The contractor also made a prayer that on receipt of the original award from the Arbitrator, the same be made a Rule of the Court. It is a clear from the order dated 24.1.2991 recorded by trial Court that the arbitration file together with the award and all the depositions and documents were produced in court on 24.12.1991. According to Clause (b) of Article 119 of the Limitation Act, an application for setting aside" an award can be filed within thirty days from the date of service of notice of the 'filing of the award'. The contractor had filed a signed copy of the award alongwith his application on 29.10.1991 but the arbitration file including the original award and depositions was produced in court on 24.12.1991. The question that arises for consideration is as to when can the award be said to have been filed in the Court for the purpose of Clause (b) of Article 119 of the Limitation Act. Can it be said to have been filed on 29.10.1991 when the contractor moved the application and appended a signed copy of the award with it or on 24.12.1991 when the arbitration file together with original award and deposition and documents was filed in court. When Section 14(2) of the Act is read alongwith Clause (b) of Article 119 of the Limitation Act, it would be clear that an award can be said to have been filed only when all depositions and documents are produced in court alongwith award and mere submission of a signed copy of the award by one of the parties in court would not be enough. There is good reason to hold that mere filing of a signed copy of the award in court cannot be said to be the date of the filing of the award in court. Sub-section (2) of Section 14 of the Act requires that the Arbitrator shall at the request of any party or if the court so directs has to file the award or a signed copy of it together with depositions and documents in the court and it is thereafter that the court will give notice to the parties of the filing of the award. The object of giving notice to the parties of the filing of the award is to inform them that the award has been filed so that they may file their objections, if any, to the award or make a request to the court to make the award a Rule of the Court. Parties will not be in a position to file the objections to the award if depositions and other documents produced during the course of the arbitration proceedings are withheld from them and not filed in court. It is for this reason that he Legislature provided in Sub-section (2) of Section 14 of the Act that notice of filing of the award shall be given to the parties only after depositions and documents along with original award have been filed in Court. In this view of the matter, the award will be deemed to have been filed in the court only on 24.12.1991 and the period of thirty days prescribed for setting aside that award will commence from that date because both parties were present in court and notice of the filing of the award' will be deemed to have been served on them. If the notice of the filing of the award was served on the parties on 24.12.1991 the objections filed by the Board on 18.1.1992 are clearly within time and cannot be said to have been filed beyond the time prescribed for the same and, therefore, the trial court was in error in holding that those were time barred.
6. I may now refer to a Division Bench judgment of Madhya Pradesh High Court in Shivalal Prasad v. Union of India, A.I.R. 1975 Madhya Pradesh 40 on which reliance was placed by the learned senior counsel for the contractor to contend that an arbitration award when filed in the court without depositions and documents and the minutes of the proceedings is valid and that the omission would not vitiate the award. There can be no quarrel with this proposition of law. If an award is filed in court without depositions the award could still be valid and would not be vitiated on the ground alone but the question before us is different i.e. whether an award can be said to have been filed for the purpose of limitation on the day when a signed copy thereof is filed by one of the parties without depositions and documents produced before the Arbitrator. In my opinion, the award can be said to have been filed in court only after depositions and documents are also produced as was done in the present case on 24.12.1991. The judgment in Shivalal Prasad's case (supra) is of no help to the contractor and it does not advance its case.
7. There is yet another, aspect of the matter. When the application of the contractor under Section 14 and 17 of the Act came up for consideration before the Court on 30.10.1991 notice was ordered to be issued to the respondents therein. It has already been observed that the prayer made in the application was for a direction to the arbitrator to produce the original award and then the same be made a Rule of the Court. The notice that was issued by the court to the Board reads as under:
"Notice is hereby given to you for filing the signed copy of the award in this Court in the above noted application filed by the petitioner for making the award rule of Court. Next date of hearing fixed in the said application is 24.12.1991."
The notice that was issued to the Arbitrator reads thus:
"You are hereby directed to file the original award dated 26.10.1991 made in the above case/reference alongwith all the documents filed before you by the parties during the proceedings of arbitration on or before 24.12.1991".
It is, thus, clear that notices issued to the parties on the application filed under Sections 14 and 17 of the Act by the contractor called upon the Board and the Arbitrator to produce awards in their possession. These weren't the notices of the filing of the award. Therefore, in terms of Clause (b) of Article 119 of the Limitation Act, the period of thirty days did not commence when notice was issued to the respondents in the application filed by the contractor. As already observed, the original award together with all depositions and documents was produced on 24.12.1991 when both parties were present and that was the date on which notice of the filing of the award could be said to have been served on the parties and it is the date from which the period of limitation will commence for the purpose of filing objections. The trial court was, therefore, in error in holding that the award stood filed in court on 29.10.1991 when a signed copy thereof had been filed by the contractor and that the objections filed on 18.1.1992 were time barred. The finding of trial court on this issue is, therefore, reversed,
8. I may now deal with the two contentions raised by Shri Mittal in regard to the merits of the award given by the Arbitrator. Firstly, it was contended that the Arbitrator could not go beyond the terms of the contract and award damages to the contractor for the alleged loss suffered by it due to floods. Secondly, it was urged that the award is also liable to be set aside because the claims made under different heads not only overlap each other but there is duplication of the claims and the Arbitrator has awarded a liunpsum amount overlooking the duplication.
9. The first contention raised by Shri Chetan Mittal, learned counsel for the Board need not detain me for long. It was specifically agreed between the parties that in case of rains, storms and floods etc. the loss, if any, incurred because of damage to materials will be the liability of the contractor and the damaged work will have to be removed and re-laid by the contractor for which no extra payment shall be allowed. Clause 15 of the conditions of the contract between the parties has already been reproduced in the earlier part of the judgment. One of the heads under which the contractor made a claim was damage done to machinery at plant site and dumped material due to floods in September, 1988. A sum of Rs. 4 lacs had been claimed in this regard. Claim No. 4 made by the contractor reads as under: -
Sr. No. Particulars of Claims Amount
4.
Damage done to machinery at Plant Site and dumped material due to floods in 9/88 Rs. 4000000,00 In view of Clause 15 of the conditions contained in the contract, the contractor could not have made the aforesaid claim nor could the Arbitrator examine the same and award any damages due to the alleged loss suffered by the contractor due to floods. As observed by their Lordships of the Supreme Court in Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises and another, 1999(9) S.C.C. 283, it is a settled law that the Arbitrator being a creature of the contract between the parties cannot ignore the specific terms of the contract and if he were to do that, he would be committing a jurisdictional error which could be corrected by the court and that for this limited purpose the court can always examine the terms of the contract. Mr. Sibal learned senior counsel for the contract or fairly conceded that this claim for damage caused due to floods could not be made by the contractor. He, however, contended that out of the total amount awarded, a sum of Rs.4 lacs be deducted and the award be made a rule of the court in regard to the balance amount. The argument is that the total amount awarded is Rs.58,74,6901.12 which is far in excess of the amount claimed under the head of 'damage caused by floods' and, therefore, a sum of Rs.4 lacs can be deducted from the awarded amount without invalidating the remaining award. I might have considered this contention of the learned senior counsel for the contractor if the challenge to the award had been made only on this ground. Moreover, the award is a non speaking one and does not contain reasons. It cannot, therefore, be ascertained as to whether this amount was awarded by the Arbitrator or not. However, I am of the view that the award is liable to be set aside on the second contention raised by Shri Mittal.
10. Before I deal with the second contention, it is necessary to refer to the details of claims made by the contractor before the Arbitrator.
Sr.No Particulars of Claims Amount
1. Payment withheld arbitrarily by the Executive Engineer by adopting wrong factor.
389442.00
2. Payment for the premix carpet laid on Sultanpur Chaladha Link Road.
45397.00
3. Idling of plant due to stay granted by Hon'ble Court Lodhi from 11.11.88 to 2.1.89 prohibiting functioning of hot mix plant for 53 days.
1060000.00
4. Damages done to machinery at Plant Site and dumped material due to floods in 9/88.
400000.00
5. Idling of plant 13.4.89 to 13.2.90 i.e 306 days @ Rs.20,000/-
per day.
6120000.00
6. Payment of final bill for work done.
1520000.00
7. Refund of security (Approximate) 30000.00
8. To set aside action of Executive Engineer to levy 10% compensation under Clause 2 for which recovery was deferred during hearing on 22.8.89 by Superintending Engineer, Roads final decision to waive of the same not given so far.
9. Whereas stipulated period was 6 months and 21 days but the Deptt. dragged the contractor for about 2 years due to nonavailability of site, stay granted by the court, embargo laid by the Executive Engineer on payments for the work to be done. As per judgments of the Supreme Court (AIR 1977-SC-1481) defining loss of profit of the contractors and over head expenses etc. on the amount of contract. 1,75,00,000 x 15/100 2625000.00
10. Theft of Machinery parts from dump site 50000.00
11. Interest at the rate of 12% P.A. to be on the amount of final bill and calculated at security amount and other the time of amounts at claim No.1 and 2 payment of from 13.4.89 till payment of awarded awarded amount, amount.
12. Depreciation charges of the machinery stood installed at site and remained under custody of Deptt.
400000.00
13. legal expenses and stamp duty etc. 10000.00 Total 1,12,81,839.00 (Rupees one crore twelve lacs eighty one thousands eight hundred and thirty nine only).
A perusal of Clause 9 of the claims would show that the contractor claimed a sum of Rs.26,25,000/- as loss suffered by it on account of the loss of profit due to breach of contract. It has claimed this amount at the rate of 15% of the total estimated value of the contract awarded by the Board which, as already observed, was Rs.1.75 crores. In other words, in it contractor's own case that if there had been on breach of contract it would have earned a profit equivalent to 15% of the total estimated cost of the project. In Clause 9, the contract has itself included the loss due to non-availability of site, stay granted by the court and various other reasons for which it could not earn for profit. Having made this claim, it has also claimed loss suffered due to stay order granted by the court of Sub Judge as a result of which the plaint remained idle for the period from 11.11.1988 to 2.1.1989. This is Clause 3 of the claims referred to above and a sum of Rs. 10,60,000/-has been claimed under this head. Similarly, it has again claimed damages for the loss suffered due to the plan having remained idle from 13.4.1989 to 13.2.1990 and another sum of Rs.61,20,000/- has been claimed under this head and this is Clause 5 of the claim. I am clearly of the view that these two items mentioned in Clauses 3 and 5 are duplication of the claim made in Clause 9 as those claims also pertain to the loss of profit which the contractor would have made out of the Contract had there been no breach thereof. At the cost of repetition, it may be mentioned that the total profit which, according to the contractor, it would have earned from he project was 15% of the total estimated cost of the project. How could it then claim in addition to hat a further amount in a sum of Rs.71,80,000/- (total of the amounts claimed in Clauses 3 and 5) on the pretext that the plaint remained idle. If the plaint remained idle and the Board was at fault, the loss, if any, suffered would be included in the loss of profit for breach of contract for which a sum of Rs.26,25,000/- has been separately claimed by the contractor. The Arbitration has awarded a lump sum figure of Rs. 58,693.12 to the Contractor out of which a sum of Rs.8,82,923.60 has to be set off as the amount awarded to the Board being its counter claim. The award is non-speaking one and contains no reasons as to how the amount has been worked out. The Board has not made a grievance as to why the Arbitrator has not given reasons. The grievance when analysed is that the claims in items 3 and 5 could not be made separately in addition to the claim made in Clause 9 because in substance they are for the same cause and it is for this limited purpose that I have referred to the details of the claims made by the contractor which is permissible in law. The award in the instant case is a non-speaking one and a lump sum amount has been awarded and it is, therefore, difficult to find out as to what went into the thinking process of the Arbitrator in fixing the same but certainly the huge claims made by the contractor in Clauses 3 to 5 being covered by the claim made in Clause 9, could not be claimed or awarded separately. Keeping in view the total amount claimed under these heads and the amount awarded by the Arbitrator, it is clear that the Arbitrator exceeded his jurisdiction and the award can be said to be perverse suffering from an error apparent on the face of it The trial court was, therefore, in error in making it a rule of the court.
11. In Bharat Coking Coal Ltd. v. M/s L.K. Ahuja and Co., A.I.R. 2001 S.C. 1179 the appellant therein had placed two work orders on the respondent therein on certain terms and conditions contained in the two agreements executed between the parties. The agreements contained an arbitration clause. Clause 17 of the agreements provided that the contractor shall supply together with carriage to and from the works at his own cost all materials, plants, tools, appliances, implements, ladders etc. except the essential materials such as cement, steel and other building material which was the obligation of the appellant therein to supply. The contractor therein was also to supply without charge the requisite number of persons with the means and materials necessary for the purpose of setting out the works and for counting, weighing and assisting in the measurement of examination at any time and from time to time of the works and materials. On his failure to do so the same was to be provided by the Engineer-in-chief at the expense of the contractor. Disputes having arisen between the parties, the matter was referred to sole Arbitrator. In the two claim petitions filed by the contractor before the Arbitrator, it made two claims under the head "claims for payment of material escalation", A sum of Rs. 40 lacs was claimed in one contract and another sum of Rs.25 lacs was claimed in regard to the other. These were the major chunks of the claims made by the contractor. The Arbitrator gave a non-speaking award in regard to these claims and awarded a lumpsum amount. The arbitration awards were made a Rule of the Court and decrees passed in terms thereof. The appeals filed in the High Court at Patna were dismissed. In appeal to the Supreme Court, their Lordships referred to the elaborate pleadings of the parties before the Arbitrator and also the detailed claims made by the contractor in regard to both the agreements and found that it was not clear whether the claim for escalation in the costs of materials was in regard to these which were to be supplied by the contractor or by the appellant therein. It was also and clear from the pleadings or from the award whether the escalation claim was in respect of escalation arising from delay in supply of materials which were to be supplied by the appellant therein. Since, the award was a non-speaking one, the learned judge came to the conclusion that the Arbitrator ha not applied his mind to this aspect of the matter and set aside the same observing that it suffered from an error apparent on the face of the award. Justice Rajender Babu speaking for the Bench observed as under:-
"It is not clear from the pleadings whether the claim made by the respondent is in respect of escalation in the costs of material such as plant, tools, appliances, implements, ladders, cordage, tackle, scaffolding and tempers, work, etc. inasmuch as the appellant has the obligation to supply the most essential building materials such as cement, steel and such other building material. It is also not clear either from the pleadings or from the award as to whether the escalation claim is in respect of the materials provided by the respondent or in respect of escalation arising from delay in non-supply of materials which was due to be supplied by the appellant. So far as the plant and other equipments are concerned, they had already been provided for the purpose of the execution of the work and how the delay in non-supply of building materials such as cement, steel, etc. caused escalation so far as the building materials provided by the appellant is concerned is not clear. The arbitrator has not applied his mind to this aspect of the matter at all. Having lost sight of the importance of Clause 17 and application of the same to the circumstance of the case will clearly disclose that there is an error apparent on the face of the award. The claim under this head is Rs.40 lacs with reference to the first agreement and Rs.25 lacs with reference to the second agreement which is the major chunk being nearly half the claim made by the respondent. In what manner this aspect has gone into in fixing the lumpsum by the arbitrator is into discernible. Therefore, we have no option but to set aside the entire award in respect of both the agreement made by the arbitrator and remit and matter." It is, thus, clear that the Court can refer to the pleadings of the parties and to the claims made by them before the Arbitrator to determine whether the award suffers from an error apparent on the record.
12. It was also urged by the learned counsel for the Board that the Arbitrator could not award any amount under Clause 3 of the claim because the stay order that was granted by the court was in a suit filed by the Gram Panchayat restraining the contractor from using its plant and that the Board was not a party in that suit. The argument is that if by reason of any wrong interim order passed by the court in proceedings initiated by a third party, the Board could not be made liable. There is merit in this contention as well, it is common case of the parties that the suit was filed by the Gram Panchayat of Villager Dadwindi, Tehsil Sultanpur Lodhi against the contractor seeking a permanent injunction to restrain the latter from placing the hard mixture material on the land in dispute and that an injunction was granted restraining the contractor from operating the hot mix plant. This injunction order remained in operation for 53 days till the suit was withdrawn on 2.1.1989. The Board was not a party to the suit. Assuming the injunction was wrongly granted, the Board was not at fault and, therefore, in disputes having arisen between the Board and the contractor, the Board could not be made liable for any wrongful act of any third party, namely, the Gram Panchayat or even the Court. This claim made by the contractor was on the face of it absurd and could not be gone into by the Arbitrator.
13. There is yet another of the matter to which I may advert. When the proceedings were pending before the trial Court the Arbitrator addressed a letter dated nil to the Additional Senior Sub Judge, Sultanpur Lodhi in whose court the proceedings were pending. This letter reads as under: -
"REGD To The Additional Sr. Sub Judge, Sultanpur Lodhi (Distt.Kapurthala).
Sub:-Arbitration- Providing and laying 2 cm Thick open graded premix carpet in a single layer using hot mix plant and paver finisher on village lind roads in Distt. Jalandhar and Kapurthala of Pb. State.
Sir, I have given the award in your court of the above work regarding the arbitration of M/s GURBAX SINGH AND ORS. V/s.
Executive Engineer (C) Punjab Mandi Board Division Jalandhar. The award was given in haste and under pressure. So the above award may be considered as Nul! and Void. This is for your information.
Sd/- M.S. Sikand Arbitrator S.E.(Retd.) I-GF, HIG Flats, Opp. Khalsa College for women Rani Jhansi Road, Ludhiana. Regd: CC: 1. Copy to Secretary Punjab Mandi Board, S..C.O.149-152 Sector 17-C, Chandigarh. 2. Executive Engineer (C) Punjab Mandi Board Division, New Sabzi Mandi Maksudan Road, Jalandhar."
A copy of this letter had been endorsed to the Board as well. The Board moved an application on 2.6.1992 for summoning the Arbitrator to prove the contents of the letter and in the alternative a prayer was made that the letter be exhibited on the record. The court issued notice of the application on 2.6.1992 to the contractor for the same day after lunch. The contractor filed its reply and the application was adjourned to the following day for arguments. On 3.6.1992 the application was rejected. It was observed by the trial court that the Arbitrator had no authority to write such letter once he had given the award. It was also held that he has no power to recall the award and, therefore, the trial court did not find it necessary to summon the Arbitrator to prove the letter. The learned counsel for the Board strenuously urged that since, as admittsd by the Arbitrator, he had given his award under pressure, the same should not have been made a rule of the court. I am unable to accept this contention. The trial court was right in not summoning the Arbitrator because he has not power to recall the award which he had given.
14. Before concluding, I may refer to CWP 11751 of 1989 filed by the contractor against the Board arising out of the same contract, which was ordered to be heard with the appeal. The Board had invited tenders for allotting the work and the tender of the contractor was accepted. A contract was entered into between the contractor and the Board which contains an arbitration clause. Disputes having arisen between the parties, the same were referred to the Arbitrator who gave the award dated 26.1.1991 which gave rise to FAO 1297 of 1992 dealt with hereinabove. In order to execute the work allotted by the Board, the contractor had to purchase the plant and machinery which, according to it, was worth Rs. 50 lacs, it requested the Board to sanction Rs. 10 lacs as mobilisation advance for the purchase of the plant an machinery. This amount was advanced and the contractor hypothecate the plant and machinery with the Board. When disputes arose between the parties and the matter was pending before the Arbitrator, the contractor filed this petition under Article 226 of the Constitution for a mandamus directing the Board to allow the petitioner to use the plant and machinery in accordance with law. It appears that the Board had taken possession of the plant an machinery because the same had been hypothecate with it. In the reply filed by the Board it is pleaded that the contract between the parties contained a clause that in case the contract was rescinded the Board was entitled to reallot the work to some other contractor and that it could recover the compensation by sale of the plant and machinery hypothecated by the contractor. It is further pleaded that the agreement contains an arbitration clause and in terms thereof the petitioner should have approached the Arbitrator instead of filing the writ petition. It is common case between the parties that the contract between them contains an arbitration clause and that in terms thereof the disputes raised by the contractor had been referred to the Arbitrator. The petitioner should have raised a dispute in regard to the plant and machinery as well. Had it been raised, the Arbitrator would have decided the same. In view of the arbitration clause contained in the agreement, I am not inclined to interfere in the exercise of jurisdiction under Article 226 of the Constitution.
15. For the reasons recorded above, FAO 1297 of 1992 is allowed, the impugned order of the trial Court dated 6.6.1992 set aside and the objection petition filed by the Board accepted. The award made by the Arbitrator is set aside and the case remitted to the Arbitrator. I am of the opinion that it will not be fair to either of the parties to remit the case beck to the same Arbitrator. In the circumstances of the case, a new Arbitrator will have to be appointed in place of the old Arbitrator because Sh. M.S. Sikand who was the Arbitrator in the instance case had addressed a communication to the Court that he had given the award under pressure. The Arbitrator on his own showing is amendable to pressure form either side and I am, therefore, satisfied that he is not a fit person to act as an Arbitrator. Ld. counsel for both the parties suggest that any former judge of this Court be appointed the Arbitrator. Accordingly, I appoint Mr. Justice A.L. Bahri, a former Judge of this Court, as the Arbitrator. He shall give his award within four months from the date when the parties appear before him. The Arbitrator shall not allow the parties to make new pleas or produce fresh evidence and the award will be given on the basis of the material already on the record. The Arbitrator will submit the award to this court within the aforesaid period. He will also send a signed copy of the award to each of the parties. His fee is fixed at Rs.1 lac to be shared equally by the contractor and the Board. Parties through their counsel have been directed to appear before the Arbitrator on April 21, 2003 for further proceedings.
CWP 11751 of 1989 is dismissed leaving the parties to bear their own costs in both the cases. A copy of this order be sent to Mr. Justice A.L. Bahri the Arbitrator for information and necessary action.