Rajasthan High Court - Jodhpur
State Of Raj vs M/S Shiv Shakti Contractors & Ors on 21 April, 2017
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Misc. Appeal No. 1119 / 2015
State Of Rajasthan through the Executive Engineer, 16th Division,
Indira Gandhi Nahar Pariyojana, Bikaner.
----Appellant
Versus
1. M/S Shiv Shakti Contractors, 7 Aadarsh Colony, Near
Ambedkar Circle, Bikaner.
2. Shri MC Mehta (Sole Arbitrator), 33 Amar Nagar, Pal Road,
Jodhpur
----Respondents
_____________________________________________________
For Appellant(s) : Mr. KD Singh, Dy.G.C.
For Respondent(s) : Ms. Rekha Borana
_____________________________________________________
HON'BLE MR. JUSTICE GOVERDHAN BARDHAR
Order 21/04/2017 The appellant-State of Rajasthan has preferred this appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, 'Act of 1996') being aggrieved by the impugned order dated 06.01.2015 passed by the learned District Judge, Bikaner. By the order aforesaid, the learned District Judge, Bikaner has rejected the application filed by the appellant-State under Section 34 of the Act of 1996 against the arbitral award dated 09.10.2008 passed by the sole Arbitrator.
The facts apposite for the purpose of this appeal are that on 26.10.1994 the appellant-State of Rajasthan invited tender for construction of New Administrative Office Building in I.G.N.P. Colony, Bikaner. The respondent No.1 participated in the tender proceedings besides other competitors and on winning the (2 of 6) [CMA-1119/2015] contract, tender was awarded in his favour for construction of New Administrative Office Building in I.G.N.P. Colony, Bikaner and in this context an agreement bearing No.191 for the year 1994-1995 was executed between the appellant-State and the respondent No.1. As per agreed terms and conditions of the agreement, the respondent-Contractor was obliged to complete the entrusted contractual work in the interregnum from 12.02.1995 to 11.08.1996. Later on certain dispute arose between the appellant- State and the respondent No.1, therefore, respondent No.2 was appointed as sole arbitrator and the matter was referred before the sole arbitrator. The respondent No.1-Contractor submitted a claim before the Sole Arbitrator and allegedly claimed the amount as mentioned in the statement of claim alongwith interest. The appellant-State filed counter claim and demanded a sum of Rs.50,000/- from the respondent No.1-Contractor and lastly prayed to dismiss the claim filed by the respondent No.1- Contractor. Thereafter, the respondent No.1-Contractor filed rejoinder to the reply. After filing rejoinder by the respondent No.1 Contractor, reply to the rejoinder came to be filed by the appellant-State. On the basis of pleadings, the learned Sole Arbitrator framed nine issues. Both the parties adduced and produced their respective evidence documentary as well as oral in support of their pleadings. The respondent No.2 sole Arbitrator, after considering the pleadings of the rival parties and the evidence and material available on record and affording opportunity of hearing to the parties allowed the claim of the respondent No.1-Contractor vide award dated 09.10.2008 in the (3 of 6) [CMA-1119/2015] following manner ;
"In the result, the claimant succeeds and the claimant would be entitled to get a sum of Rs.15,91,476/- and further the claimant is entitled to receive interest @ 12% from 11.12.2004 upto 30.06.2005 and further the appellant will make payment of interest @ 12% from 01.07.2005 till the date of realization on the amount of claims decided in favour of the claimant to the claimant and appellant's prayer for payment of exemplary cost of arbitration of Rs.50,000/- by the claimants has been rejected."
Feeling disdained by the arbitral award, the appellant laid an application under Section 34 of the Act of 1996 before the learned District Judge, Bikaner and the learned District Judge vide order dated 06.01.2015 has rejected the said application. Hence this appeal.
Counsel for the appellant-State argued that according to Clause 45 of the agreement, the respondent No.1-Contractor is not entitled to claim any amount towards cost of price escalation from the appellant-State and according to Clause No.7A, the claimant can raise any objection in respect of price escalation within 30 days from payment of final bill. The learned court below did not consider that the Sole Arbitrator has wrongly decided issue Nos.6 & 7 in favour of the respondent No.1 and the claim petition was not within limitation of three years as provided under Article 137 of the Limitation Act.
Counsel for the respondent No.1 argued that in appeal, factual issues cannot be examined and the learned Arbitrator has (4 of 6) [CMA-1119/2015] passed a just and reasoned order of award. The learned District Judge has rightly held that no case is made out to set aside the arbitral award under Section 34 of the Act of 1996 and has rightly rejected the application filed by the appellant-State.
Heard the counsel for the parties and perused the impugned order passed by the District Judge, Bikaner as well as the arbitral award passed by the sole arbitrator.
In appeal under Section 37 of the Act of 1996, factual questions cannot be examined. The Arbitrator has passed a reasoned award within the scope of the reference made to the Arbitration. In arbitral award dated 09.10.2008, the learned Arbitrator has given specific finding with regard to applicability of Clause 45 of the agreement which reads as under :
"Vexed question whether clause 45 of the Agreement is applicable in the present case where the tendered cost of work is more than Rs.10 lacs and period of completion more than 12 months. I have gone through the written statement of both the parties their arguments and the clause 45 itself as it exists in the contract agreement (Ex-C/4). Clause 45 of the agreement very clearly stipulates that this would be applicable in the case of contract work costing Rs.10 lacs or less and in case the value of work actually done exceeds Rs.10 lacs escalation would be payable in respect of work in excess over Rs.10 lacs and where originally stipulated period is 12 months or less but actual period of execution exceeds beyond 12 months on account of reasons not attributable to contractor escalation amount would be payable only in respect of extended period. This clearly states that the minimum monetary and time limits for application of this clause are Rs.10 lacs and 12 months respectively with a clear provision for such works which initially cost less than Rs.10 lacs and with time period of completion less than 12 months but in actual execution cost exceeds Rs.10 lacs and time period exceeds 12 months. In this case of claimants initial tendered value of work was Rs.80,16,803/- and stipulated time period of completion 18 months. Both these parameters very (5 of 6) [CMA-1119/2015] well qualifies for application of clause 45 for this contract."
A bare perusal of Section 34 of the Act, it is clear that award can be set aside only if any one of the five grounds as contained in Section 34(2)(a) or any one of two grounds as contained in Section 34(2)(b) of the Act exist. Learned Court below also noticed that the award is a reasoned one and based on due appreciation of evidence on record after affording sufficient opportunity to State Govt. In considered opinion of this Court, the appellant/State Government had failed to make out any ground under Section 34 of the Act of 1996 before the learned court below for setting aside the award, which is a well considered and reasoned order and liable to be upheld. Moreover, there is a catena of judgments of the Hon'ble Supreme Court on the limitation of the courts interfering with an arbitral award both in the exercise of power under Section 34 as also Section 37 of the Act of 1996. In J.G. Engineers Pvt. Ltd. Vs. Union of India & Anr. [(2011) 5 SCC 758], it was held by the Apex Court as under :-
"Interpreting the said provisions, this court in Oil & Natural Gas Corporation Ltd. vs. Saw Pipes Ltd. held that a court can set aside an award under section 34(2) (b)(ii) of the Act, as being in conflict with the public policy of India, if it is (a) contrary to the fundamental policy of Indian Law; or (b) contrary to the interests of India; or (c) contrary to justice or morality; or (d) patently illegal. This Court explained that to hold an award to be opposed to public policy, the patent illegality should go to the very root of the matter and not a trivial illegality. It is also observed that an (6 of 6) [CMA-1119/2015] award could be set aside if it is so unfair and unreasonable that it shocks the conscience of the court, as then it would be opposed to public policy." It is thus clear that the court hearing an application under Section 34 of the Act of 1996 does not act as an appellate court and where an award passed by an Arbitrator is a reasoned one not contrary to any substantive provisions of law or terms the contract or perverse to the evidence on record or not ex facie indicative of non-application of mind or is not in contravention of principles of natural justice or is not palpably illegal, it cannot be set aside. In the matter in hand, the appellants have failed to show that the finding recorded by the Arbitrator is contrary to the material on record. Upon examination of the impugned award as well as the judgment passed by the learned District Judge, it cannot be said that the award on the face of it suffers from any perversity. Accordingly, while upholding the judgment dated 06.01.2015 passed by the District Judge, Bikaner, the present appeal is hereby dismissed.
(GOVERDHAN BARDHAR) J.
ms/-43