Calcutta High Court
Steel Authority Of India Limited vs Tapas Kumar Roy on 15 October, 2007
Equivalent citations: 2008(1)CHN697
Author: Girish Chandra Gupta
Bench: Girish Chandra Gupta, Prasenjit Mandal
JUDGMENT Girish Chandra Gupta, J.
1. This appeal is directed against a judgment and order dated 31Bt March, 2005 passed by the learned Civil Judge, Senior Division, Burdwan, in Misc. Case No. 82 of 1992 refusing to set aside an award passed by Mr. K. Ramaiya.
2. The facts and circumstances of the case briefly stated are as follows:
By an intent dated 25/28th July, 1983 the work of construction of 40 units of 600 sq.ft. double storied house, in the C & B Zone at Durgapur Steel Township at an estimated contract value of Rs. 24,93,718.10 paisa, was awarded to the respondent by the appellant. The time granted for completion of the work was one year. According to the respondent the appellant failed to perform its reciprocal obligations. As a result the respondent was compelled to rescind the contract by a notice dated 30th September, 1985. The respondent thereafter preferred claim on various grounds including payment for the work done, refund of security deposit and damages. The appellant failed and neglected to meet the demands raised by the respondents. In the circumstances the respondent invoked the arbitration Clause and requested the appellant to concur in the appointment of Shri B. Mukherjee as a sole arbitrator. The appellant refused to concur in the appointment of Shri B. Mukherjee. The respondent in the circumstances filed Misc. Case No. 1 of 1986 in the Court of Assistant District Judge, Burdwan for appointment of Shri B. Mukherjee as the sole arbitrator. By an order dated 20th June, 1987 the prayer of the respondent was allowed. The appellant carne up in revision challenging the order dated 20th June, 1987 before this Court and the application was registered as CO. No. 334 of 1988 which was ultimately disposed of by a judgment and order dated 28th March, 1991 by which the order dated 20th June, 1987 was set aside and Shri K. Ramaiya was appointed sole arbitrator.
3. Mr. Ramaiya, learned Arbitrator, appointed by this Court, entered on the reference on 10th May, 1991 and directed the parties to file their pleadings and to adduce evidence. He held 23 sittings and ultimately passed his award on 8th April, 1992. Out of the claim of the respondent for a sum of Rs. 23,39,343/-a sum of Rs. 8,50,000/- was awarded. It is this award which was challenged before the learned Trial Court.
4. Mr. Ghosh, learned Counsel, appearing for the appellant, submitted that a sum of Rs. 1,25,000/- awarded by the learned Arbitrator on account of escalation of prices due to delay, in discharge of obligations, on the part of the appellant is bad because the aforesaid claim was barred by limitation. He accordingly invited this Court to delete that portion of the award.
5. He further submitted that the sum of Rs. 2,00,00/- awarded on account of loss of profit is also contrary to law and therefore that part of the award should also be deleted. In support of his submission he relied on a judgment in the case of State of Andhra Pradesh v. Associated Engineering Enterprises Hyderabad reported in 1990 (2) ALR 375. He drew our attention to paragraphs 14 and 21 wherein the Division Bench took the following view:
The Government disputed the respondent's claim. It relied upon the letters of the respondent dated 23.1.1970 and 13.3.1970, and the letter of the Chief Engineer dated 8.3.1970 in this behalf. Under these letters the time for delivering the several sites piers was postponed. It was also stated that because of the said delay, the period of contract will be extended by six months. The Government's contention, therefore is that there is no basis for claiming any compensation on account of the delays in handing over the sites. It submitted that there were several delays on the part of the contractor in carrying out the work, and that he did not keep up to the schedule of work. Since no compensation was contemplated either by the agreement or by the letters aforesaid, it submitted, the contractor cannot claim any compensation. Reliance was placed upon Section 55 of the Contract Act, and the several terms and conditions of the agreement, including Clauses 58 and 59 of the Andhra Pradesh Detailed Standard Specifications (APDSS). It denied that the contractor paid any moneys to the owners of the structures, as claimed by him, and submitted that he is not, therefore, entitled to any compensation on that account also.
According to this section, it was open to the respondent to avoid the contract on account of the Government's breach of promise to deliver the sites at a particular time; but, he did not choose to do so, and accepted the delivery of sites at a time other than what was agreed upon between them earlier. If so, he is precluded from claiming compensation for any loss occasioned by such delay, unless, of course, at the time of such delayed acceptance of the sites, he had given notice to the Government of his intention to claim compensation on that account. It must be remembered that this provision of law was specifically referred to, and relied upon in the counter filed by the Government to the respondent's claim before the arbitrator. But, it is not brought to our notice that the contractor had given such a notice (contemplated by the last sentence in Section 55). We must make it clear that we are not entering into merits of the decision of the arbitrator. What we are saying is that such a claim for compensation is barred by law, except in a particular specified situation and inasmuch as such a particular specified situation is not present in this case, the claim for compensation is barred. It is well settled that an arbitrator while making his award, has to act in accordance with law of the land, except in a case where a specific question of law is referred for his decision.
6. Mr. Sinha, learned Advocate, appearing for the respondent submitted that the reference was under the 1940 Act which did not oblige the learned Arbitrator to assign reasons for his award. The award in question does not disclose any reasons and therefore it is not open to the Court to speculate the mental process of the learned Arbitrator as to what had, in fact, weighed with him in awarding the sums which he awarded. He relied on a judgment of the Apex Court in the case of Engineers Syndicate v. State of Bihar and Ors. .
7. He further submitted that the question of limitation is a mixed question of law and fact and it is not possible for this Court to spell out, with any amount of reasonable certainty, on the basis of the award itself that the claim for escalation awarded by the learned Arbitrator was barred by limitation. He further submitted that the question of limitation was not even urged as a ground for setting aside the award before the learned Court below. The appellant, according to him, is estopped from bringing any new ground for challenging the award.
8. With regard to second submission of Mr. Ghosh Mr. Sinha submitted that admittedly the work could not be completed due to latches on the part of the appellant and therefore loss of profit is a necessary consequence and this Court should refrain from interfering with the award. He submitted that the judgment relied upon by Mr. Ghosh has no manner of application to the facts and circumstances of this case.
9. We have considered the rival submissions made by the learned Advocates appearing for the parties. In the case of Engineers Syndicate v. State of Bihar and Ors. , Their Lordships relied upon the judgment in the case of Raipur Development Authority v. Chokhamal Contractors reported in 1989 (2) SCC 721. In the case of Raipur Development Authority Their Lordships cited an earlier judgment in the case of Jivarajbhai v. Chintamanrao Balaji wherein Their Lordship expressed the following view:
The Court while dealing with the application for setting aside an award has no power to consider whether the view of the arbitrator on the evidence was justified according to this Court. The arbitrator's justification was generally considered binding between the parties for it was a Tribunal selected by the parties and the power of the Court to set aside the award was restricted to cases set out in Section 30. The Court further observed that it was not open to it to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. The Court declined to recognise the power of the Court to attempt to probe the mental process by which the arbitrator had reached his conclusion where it was not disclosed by the terms of his award.
10. There can be no denial of fact that the learned Arbitrator has in this case not assigned reasons and therefore it is not permissible for the Court, trying an appreciation for setting aside an award, to speculate into the mental process of the learned Arbitrator as to on what basis did not learned Arbitrator allow the claim on account of loss of profit or on what basis did the learned Arbitrator allow a sum of Rs. 1,25,000/-on account of escalation of prices. Both the items of award are based on questions of facts. Without an in-depth enquiry into the evidence adduced by the parties it is not possible to arrive at a finding as to whether any of the two items of the award is improper.
11. It is also well-settled that a question of limitation is a mixed question of law and fact. If any authority is needed reference can be made to the judgment in the case of Shree Ram Mills v. Utility Premises (P) Ltd. reported in 2007 (4) SCC 599.
12. It is, therefore, not possible to find out whether the claim on account of escalation of prices allowed by the learned Arbitrator was barred by limitation without reappreciation of the evidence. The judgment relied upon by Mr. Ghosh in the case of State of A.P. v. Associated Engineering (supra) has no manner of application for in that case the contract between the parties barred any such claim which would be evident from paragraph 22 of the said judgment which reads as follows:
Even apart from Section 55, we are of the opinion that the arbitrator had no power to award compensation as claimed by the respondent. Clause 59 of the APDSS specifically bars such a claim. We have set out the Clause in full hereinbefore. The meaning of the said clause was considered by a Bench of this Court of which one of us (Jeevan Reddy, J.) was a member in A.A.O. No. 677/81 and C.R.P. No. 385 of 1982 disposed of on 19.4.1982. It was held:
'Coming to Clause 59 of the preliminary specifications of "APDSS", it provides that neither party to the contract shall claim compensation on account of delays or hindrances to work from any cause whatever'. That the delays and hindrances contemplated by Clause 59 include the stoppage, hindrances and delays on the part of the department as well is clear from the following sentence in the first part of the said clause, viz., 'the Executive Engineer shall assess the period of delay or hindrances caused by any written instructions issued by him, of 25% in excess of the actual work period so lost'. Indeed, the second para of the clause also contemplates delays and hindrances being caused on account of the failure of the Executive Engineer to issue necessary instructions. In such a case, the contractor has a right to claim the assessment of such delay by the Superintending Engineer of the Circle, whose decision is declared to the final and binding on the parties. But, any such claim has to be lodged in writing to the Executive Engineer within fourteen days of the commencement of such delay, or hindrance as the case may be. We find it difficult, therefore, to say that Clause 59 has no application to the present case. The words 'from any cause whatever' occurring in Clause 59, are wide enough to take in delays and hindrances of all types, caused by the department, or arising from other reasons, as the case may be. Thus, by virtue of Clause 59, the contractor is precluded from claiming any compensation on account of delays or hindrances arising from any cause whatever, including those arising on account of the acts or omissions of the departmental authorities....
13. In the present case an identical stipulation was not brought to our notice. In the absence of such a stipulation in the contract we are unable to examine applicability of Section 55 of the Contract Act without exercising appellate jurisdiction which the law has not bestowed upon us.
14. For the aforesaid reasons we are of the view that submissions urged by Mr. Ghosh, learned Counsel, for the appellant cannot be accepted. No interference with the award in this case in possible.
15. Mr. Sinha submitted that interest under Section 29 of the Arbitration Act, 1940 should have been awarded.
16. It appears from the decree appearing at page 167 of the Paper Book and particularly et page 169 that interest was, in fact, awarded by the learned Trial Court but no rate of interest appears to have been indicated. Under Section 29 of the Arbitration Act, 1940 Court is entitled to grant interest from the date of decree until the date of payment. In the circumstances we direct that interest at the rate of 9% P.A. from the date of decree passed by the Trial Court until payment shall be payable by the appellant to the respondents.
We do not, however, make any order as to costs.
This appeal is thus disposed of.
Urgent xerox certified copy of this judgment, if applied for, be delivered to the learned Advocates for the parties, upon compliance of all formalities.
Prasenjit Mandal, J.
I agree.