Delhi High Court
Kuldip Kumar Suri vs Delhi Development Authority on 7 July, 1994
Equivalent citations: AIR1995DELHI82, 1994(2)ARBLR235(DELHI), 55(1994)DLT258, 1994(30)DRJ343, 1994RLR518, AIR 1995 DELHI 82, (1994) 2 ARBILR 235, (1994) 30 DRJ 343, (1994) 55 DLT 258, (1995) 1 CIVLJ 650
JUDGMENT Mr. J. K. Mehra, J.
1. By this order, I am disposing of the objections of the plaintiff as well as the defendant to the award dated 17.6.1988 and supplementary award dated 22.7.1988 made and published by Mr. M. C. Bahl, Sole Arbitrator, being I.As. No. 3665/89 and 3666/89 respectively in respect of the work of construction of 152 Three-bed, 76 Two-bed, 64 Servant Quarters and 32 garages at Siddhartha Enclave (Sunlight Colony), near Asharm (SFS) Building work including general water supply, sanitary installation and external development.
2. The defendant has raised objection only to claim No. 20 relating to the award of pendente lite interest @ 12% p.a. The defendant has relied upon the cases of Food Corporation of India v. M/s. Surendra, Devendra and Mohendra Transport Co. , Executive Engineer, Irrigation, Galimala and others v. Abhaduta Jena , & State of Orissa and others v. Construction India . I am not in agreement with the Counsel for the defendant in as much as the law on the authority of the Arbitrator to award pendente lite interest has been restated by the Hon'ble Supreme Court and has since undergone a sea change. A reference in this connection may be made to the case of Secretary, Irrigation Department, Government of Orissa and others v. G. C. Roy , wherein the Hon'ble Supreme Court after an elaborate discussion was pleased to lay down that absence of reason for awarding interest will not render an award liable to set aside. It was laid down following the decision in the case of Raipur Development Authority v. Chokhamal Contractor , and furthermore, the court held as follows :
"On a conspectus of aforementioned decisions, the following principles emerge :
(i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the Arbitrator as it is for the period prior to the Arbitrator entering upon the reference. This is the principle of Section 43, C.P.C., and there is no reason or principle to hold otherwise in the case of Arbitrator.
(ii) an Arbitrator is an alternative Forum for resolution of disputes arising between the parties. If so, he must have the power to decide all the disputes or differences arising between the parties. If the Arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the court for that purpose, even though he may have obtained satisfaction in respect of other claims from the Arbitrator. This would lead to multiplicity of proceedings ...
(v) Interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). For doing complete justice between the parties, such power has always been inferred."
The question regarding grant of interest and powers of the Arbitrator to do so again came up for consideration by the Hon'ble Supreme Court in the case of Hindustan Construction Co. Ltd. v. State of Jammu & Kashmir , in which the Hon'ble Supreme Court, while referring to the case of G. C. Roy held as follows :
"The principle of the decision makes it clear that the Arbitrator is competent to award interest for the period commencing with the date of award to the dt. of decree or dt. of realisation, whichever is earlier. This is also quite logical for, while award of interest for the period prior to an Arbitrator entering upon the reference is a matter of substantive law, the grant of interest for the post-award period is a matter of procedure. Section 34 of Code of Civil Procedure provides both for awarding of interest pendente lite as well as for the post decree period and the principle of Section 34 has been held applicable to proceedings before the Arbitrator, though the section as such may not apply."
Again in another decision in the case of Jugal Kishore v. Vijender Prabhati Lal (Rep. as JT 1992 (Supl) SC 112), the court after considering all the decisions on the point held that the Arbitrator was within his rights to grant interest pendente lite, i.e., from the date of reference till the date of decree in terms of the award and as such, grant of interest was upheld by the Court. The Court further observed that the Arbitrator has all the powers of the court in the matter of awarding interest. In the light of this position, which has come to exist, I find no merit in the objections of the defendant. The same are rejected with the consequence that I.A. No. 3666/89 is dismissed.
3. Coming to the objections of the plaintiff, I find that the plaintiff has challenged the findings of the Arbitrator on claim No. 1, additional claims No. 1, 2, 5, 6, 14, 17, and 19. I have perused the objections and the proceedings before the Arbitrator and I find that most of the objections that have been raised in respect of the said claims are of the nature that can be raised as grounds of appeal against judgment and cannot be sustained on account of limited scope of the jurisdiction of court to interfere with the award. In this connection, the following rulings of the Hon'ble Supreme Court be referred to :
"(i) Hindustan Tea Co. v. K. Shashikant & Co. . Award cannot be set aside on the ground that Arbitrator reached wrong conclusion or he failed to appreciate facts. Under the law, the Arbitrator is made final Arbitrator of the dispute between the parties. Where the award which was a reasoned one was challenged on the ground that the Arbitrator acted contrary to the provisions of Section 70 of the Contract Act, it was held that the same could not be set aside (Para-2).
(ii) Delhi Municipal Corporation v. Jagan Nath Ashok Kumar (Rep. as AIR SC 2316).
The Arbitrator is the sole Judge of the quality as well as quantity of evidence and it will not be for the Supreme Court to take upon itself the task of being a Judge of the evidence before the Arbitrator. It may be possible that on the same evidence, the court might have arrived at a different conclusion than the one arrived at by the Arbitrator but that by itself is no ground for setting aside the award of an Arbitrator."
4. I will first take up the objections to additional claim No. 1, wherein the Arbitrator has based his findings only on documents R-2 to R-45, he has failed to consider claimant's document C-22 wherein the details of the delays and the causes therefore had been set out and document R-46 whereby the delay in completion of the work was condoned. There is nothing either in the proceedings before the Arbitrator or in the award showing that the Arbitrator did consider the effect of these documents. These two documents are in my view very material. The Hon'ble Supreme Court while considering this question in the case of K. P. Poulose v. State of Kerala and another had held as under :
"Under Section 30(a) of the Arbitration Act an award can be set aside when an Arbitrator has misconducted himself or the proceedings. Misconduct under Section 30(a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision. It is in this sense that the Arbitrator has misconducted the proceedings in this case. We have, therefore, no hesitation in setting aside such an award."
It is for this reason, I feel that the award of the Arbitrator suffers from an error apparent on the face of the record. For that reason, this part of the award is remitted back to the Arbitrator for reconsideration. The Arbitrator will consider the effect of the aforesaid two documents and also any other material which is placed before him at the time of hearing by the parties before publishing his award, which should be done within two months from the date of receipt of this order.
5. Counsel has raised another objection in respect of the award on additional claim No. 17 also and has referred to page 12 sub-para 1 of the award where the Arbitrator has conceded that "in case any of the terms envisage that the particular authority's decision in certain matters has to be final, the Arbitrator would certainly be bound by those decisions and would not question them". The Arbitrator has rendered his decision after due consideration of the submissions of both parties.
(1) In Food Corporation of India v. Veshno Rice Millers , the Hon'ble Supreme Court held as under :
"It is not misconduct on the part of an Arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings on fact are supported by evidence.
Arbitrator on interpretation of Arbitration clause arriving at conclusion-construction by Arbitrator was conceivable and possible-court has no jurisdiction to modify award."
(2) In Hindustan Construction Co. v. State of Jammu & Kashmir (supra), the Hon'ble Supreme Court had laid down inter alia as under :
"But, in the instant case, the court had examined the different claims not to find out whether these claims were within the disputes referable to the Arbitrator, but to find out whether in arriving at the decision, the Arbitrator had acted correctly or incorrect. This in our opinion the court had no jurisdiction to do, namely, substitution of its our evaluation of the conclusion of law or fact to come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the Arbitrator in this case".
6. In the light of the statement of law appearing from various pronouncements of the Hon'ble Supreme Court referred to herein, I am satisfied that the award of the Arbitrator cannot be interfered with. The objections in respect thereof are dismissed.
7. Counsel for the objector-plaintiff has referred to various authorities while dealing with the various claims including the claim for compensation. I need not go into the same because I find that the Arbitrator was an experienced Engineer, who retired as Superintendent Engineer (Inquiries), D.D.A. and was stranger to such contracts. It find that his findings on all claims including that of compensation except additional claim No. 1 are based on due consideration of the material placed before him and is strictly a finding of fact on the basis of the material before the Arbitrator. The view taken by him cannot be said to be not a plausible view. As such, it cannot be interfered with. A reference in this connection be made to the following rulings :
"(i) M/s. A. T. Brij Paul Singh & Bros. State of Gujarat .
Where in a works contract, the party entrusting the work commits breach of the contract, the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract. What must be the measure of profit and what proof should be tendered to sustain the claim are different matters. But the claim under this head is certainly admissible.
(ii) Hind Builders v. Union of India .
Arbitrators were experienced Engineers and would not have passed, what is now said to be, an astounding claim without thought ... In a matter on which the contract is open to two equally plausible interpretations, and even if the court may think that the other view is preferable, the court will not and should not interfere (Pr. II).
(iii) Jagdish Chander v. Hindustan Vegetable Oil Corporation (Rep. as AIR 1990 SC 204).
B. N. Kirpal, J. Award made by an Arbitrator was an expert ... When an Arbitrator appointed under agreement was a serving officer of the Government of India holding a very high rank, namely, he was a Chief Engineer of P.W.D. and he was, presumably, an expert or well versed in Civil Engineering, an award made by such a person should not, therefore, be lightly interfered with (1987 SC 2316) followed.
Arbitrator related to a party, biased or has accepted briber evidence improperly shut out or raken at the back of a party - or sufficient opportunity not given - court can examine record to see if any misconduct of proceedings.
The court, however, is not entitled to examined the record and then hold that the decision of the Arbitrator, on merits, is incorrect."
8. The test is not what decision the court would have reached in the circumstances but to ascertain if the view taken by the Arbitrator is a possible view as is clear from the decisions referred to hereinafter.
9. It may be possible to reach a different conclusion on the basis of the material before the Arbitrator, but the view taken by the Arbitrator on this claim is one of the possible views and for that reason, this court cannot interefere with the findings of the Arbitrator.
10. The law on the powers of the court to interfere with the award of an Arbitrator has been laid down by the Hon'ble Supreme Court in various judgments. It will be appropriate to make a brief reference to the following cases decided by the Hon'ble Supreme Court and this court :
"(i) U.P. Hotels v. State Electricity Board .
Error apparent on the face of record - Interpretation of agreement for supply of energy and rates applicable. Possible view taken by Arbitrator relying upon earlier Supreme Court decision - Award not amenable to interference. Even on the assumption that such a view was not right, the award was not amenable to interference or correction by courts of law as there was proposition of law which could be said to be the basis of the award of the Umpire and which was erroneous (Para-28).
(ii) Puri Construction Pvt. Ltd. v. Union of India .
Jurisdiction of Courts is limited, as expressly indicated in the Act, and it has no jurisdiction to sit in appeal and examine the correctness of the award on merits (paras 7, 13 and 15).
(iii) Gujarat Water Supply and Severage Board v. Unique Erectors (Rep. as AIR 1987 SC 973).
Reasonableness as such of an award unless the award if per se preposterous or absurd is not a matter for the court to consider. Appraisement of evidence by the Arbitrator is ordinarily not a matter for the court. It is difficult to give an exact definition of the word "reasonable" reason varies in its conclusions according to the idiosyncrasy of the individual and the times and the circumstances in which he thinks. The word reasonable has in law prima facie meaning of reasonable in regard to those circumstances of which the actor called upon to act reasonably, knows or ought to know.
(iv) N. Chellapan v. Kerala S.E. Board .
Error of law is not a ground for setting aside the award, if in making the award, he makes a mistake of law.
...... It is only when an erroneous proposition of law is stated in the award and which is the basis of the award, can the award be set aside or remitted on the ground of law apparent on the face of the record."
11. Learned counsel for the plaintiff also tried to argue that the Arbitrator was biased against them from the time prior to the reference. I have perused the order sheets and the proceedings before the Arbitrator and I have not come across any indication of such a bias nor was any such objection ever raised by the plaintiff during the pendency of the proceedings before the Arbitrator. For that reason, this objection is also untenable and is rejected.
12. The net result of the above discussion is that the award and the supplementary award of the Arbitrator are upheld except in respect of additional claim No. 1 which is remanded back to the Arbitrator for decision afresh after hearing the parties and taking into account all relevant material that may be brought to his notice by the parties. The Arbitrator should make and publish such award within two months from the date a copy of this order is served on him. Let a decree in terms of the rest of the award be drawn up. The award shall form a part of the decree. The claimant-plaintiffs shall also be entitled to simple interest @ 12% p.a. on the amount awarded from the date of the decree till the date of payment. Suit and both the I.As. are disposed of in the above terms.
13. Result : Rule of the Court.