Punjab-Haryana High Court
State Of Haryana And Another vs Sudarshan Kumar And Another on 5 August, 2013
Author: Paramjeet Singh
Bench: Paramjeet Singh
C.R. No. 3235 of 2007 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CR No. 3235 of 2007
Date of Decision: August 05, 2013
State of Haryana and another
... Petitioners
Versus
Sudarshan Kumar and another
... Respondents
CORAM: HON'BLE MR. JUSTICE PARAMJEET SINGH
1) Whether Reporters of the local papers may be allowed to see the
judgment?
2) To be referred to the Reporters or not?
3) Whether the judgment should be reported in the Digest?
Present: Mr. K.C. Bhatia, Addl. Advocate General, Haryana,
for the petitioners.
Mr. Sanjeev Sharma, Sr. Advocate with
Mr. Vikram Vir Sharda, Advocate,
for respondent No. 1.
Paramjeet Singh, J.
Instant revision petition has been filed under Article 227 of the Constitution of India for setting aside the order dated 05.04.2006 passed by learned Additional Civil Judge (Senior Division), Rohtak and order dated 09.02.2007 passed by learned Additional District Judge, Rohtak in the arbitration proceedings.
Brief facts of the case are that respondent no.1 was awarded a contract for construction of "Radiotheraphy two storeyed Block (Cancer Kumar Virender 2013.08.16 11:04 I attest to the accuracy and integrity of this document C.R. No. 3235 of 2007 2 Institute)" in Medical College and Hospital, Rohak by the petitioner on 23.11.1985. Upon a dispute between the parties, an Arbitrator was appointed by the Civil Court on 14.11.1994. Subsequently, respondent no.2 was appointed an Arbitrator vide order dated 20.02.1999 by the learned Civil Judge (Senior Division), Rohtak. Thereafter, award dated 25.10.2000 was passed by respondent no.2 against the petitioners and directed them to pay Rs.8,22,100/- along with interest to respondent no.1. Thereafter, under Sections 14/17 of the Arbitration Act, 1940, respondent no.1 made a prayer that award dated 25.10.2000 be made rule of the Court. The petitioners filed reply contesting the award and alleged that Arbitrator had misconducted himself by going beyond the scope of reference, terms of agreement etc. It was further alleged that respondent no.1 in connivance with Arbitrator had procured the award. It was also pleaded that the petitioners have filed separate objection petition under Section 30 of the Arbitration Act and prayed for setting aside the award. Through separate objection petition under Section 30 of the Arbitration Act, petitioners pleaded that respondent no.1 did not complete the work within stipulated period and respondent no.1 continued to seek extension from time to time which was extended upto 31.03.1989, so the Arbitrator misconducted himself by going beyond the scope of reference, terms of agreement etc. The petitioners objected to amounts awarded under claim Nos. 1, 2(a) to 2(c), 3, 5 and 8 and alleged excessive payment of Rs.25,000/- by Arbitrator. Arbitrator was alleged to have given amounts of Rs.30,000/-, Rs.10,000/-, Rs. 1800/-, over and above the rates already paid, Kumar Virender 2013.08.16 11:04 I attest to the accuracy and integrity of this document C.R. No. 3235 of 2007 3 without any provision in respect of item Nos. 2 (a) to 2(c). Arbitrator was stated to have misconducted himself by allowing the refund of sales tax without any proof in respect of item No.3. In respect of item Nos. 4 and 5, Arbitrator was said to have misconducted himself by allowing Rs. 8 lacs on account of escalation. Besides this, another objection was raised that Arbitrator wrongly allowed 12% interest pendente-lite and 18% future interest to respondent no.1. The trial Court has wrongly consolidated objection petition of the petitioners and the petition of respondent no.1. Before the trial Court, both the parties have led their evidence. Respondent no.1 examined himself as witness. The petitioners examined Govind Lal as DW1 and B.S. Chhikara as DW2.
After hearing the learned counsel for the parties, the trial Court vide judgment dated 05.04.2006 dismissed the objection petition of the petitioners and allowed the petition of respondent no.1. Arbitrator award dated 25.10.2000 was made the rule of the court. Thereafter, petitioners preferred an appeal before the learned Additional District Judge, Rohtak, the same has also been dismissed vide impugned order dated 09.02.2007. Hence, this revision petition.
I have heard learned counsel for the parties and perused the record.
Learned State counsel vehemently contended that respondent no.1 had sought repeated extensions for completion of work in question. The delay in execution of work is on the part of respondent no.1. He is not entitled to compensation for escalation in prices of construction material Kumar Virender 2013.08.16 11:04 I attest to the accuracy and integrity of this document C.R. No. 3235 of 2007 4 during this period. It was also submitted that the Arbitrator has misconducted himself. Further submitted that the interest has been awarded at higher rate. Arbitrator awarded 12% pendente-lite interest and further awarded future interest @ 18% per annum to respondent no.1 which is not sustainable in the eyes of law. This also amounts to misconduct on behalf of the Arbitrator.
Learned counsel for respondent no.1 vehemently opposed the contentions raised by the learned counsel for the petitioners and submitted that there is no misconduct on the part of the Arbitrator, rather the Arbitrator was changed. Second time the award has been passed by the Arbitrator after appreciating the evidence on record. So far as the awarded interest is concerned, the same is in accordance with statutory provisions under the Act. It was further submitted that the Arbitrator appointed subsequently, has acted in a fair manner as per the terms of the agreement and the award is legal and valid. The jurisdiction of the Court is very limited in this regard. The Courts cannot sit in appeal and examine the correctness of the award.
I have heard rival contentions of the learned counsel for the parties.
The main argument of the learned State counsel is that the Arbitrator has committed a misconduct and the interest has been awarded on higher side. Firstly, I would like to deal with the alleged misconduct by the Arbitrator. As per the argument of the learned State counsel, the misconduct is to the effect that excess payment has been awarded despite Kumar Virender 2013.08.16 11:04 I attest to the accuracy and integrity of this document C.R. No. 3235 of 2007 5 the fact that the delay was on the part of respondent no.1 - contractor. Arbitrator could not compensate respondent no.1 for the alleged rise in the price of construction which has escalated during the extended period. This act of the Arbitrator clearly indicates that he has misconducted himself.
The contention of the learned State counsel on the face of it appears to be not sustainable. Admittedly, the extensions have been granted by the petitioners to the contractor from time to time. If the petitioners were aggrieved against the extensions, they should not have granted extensions to respondent no.1. It would be appropriate to mention that even if respondent no.1 had delayed the execution of work at his own level and sought extension of time from the petitioners through formal applications, it were the petitioners who themselves had granted extensions to respondent no.1 to complete the work. Now, they cannot raise the objection as thereafter, the extension was legal and valid. It was for the petitioners that they could have refused such extensions of time when he moved an application for this purpose. When the extensions have been granted by the petitioners themselves they are stopped by their act and conduct from pleading against the said extension of time. Learned State counsel has failed to show how the Arbitrator misconducted himself by compensating respondent no.1 for escalation of prices of construction material during such extended period. Both the Courts below i.e. trial Court as well as the Appellate Court did not find any misconduct on the part of the Arbitrator. The scope of Section 34 of the Act is limited to the Courts under the said Act. In fact, the delay was on account of the Kumar Virender 2013.08.16 11:04 I attest to the accuracy and integrity of this document C.R. No. 3235 of 2007 6 department when extensions have been granted. The Arbitrator was never involved in decision making process whereby extension was granted. Besides this, even no personal misconduct has been attributed to the Arbitrator. Hence, the argument of the petitioners is without any merit, and as such, deserves to be rejected.
The next argument raised by the learned State counsel is that rate of interest has wrongly been awarded by the Arbitrator @ 12% per annum as pendente-lite and further awarded future interest @ 18% per annum to respondent no.1 This is required to be reduced in view of judgment of Hon'ble Supreme Court in Krishna Bhagya Jala Nigam Ltd. vs. G. Harishchandra Reddy and another, (2007) 2 Supreme Court Cases, 720.
I have perused the said judgment. The said judgment was in the facts and circumstances of that case and is not applicable to the facts and circumstances of the present case.
Section 31(7) of the Arbitration and Conciliation Act, 1996 specifically provides about the award of interest. The relevant part of Section 31 reads as under:-
"31. Form and contents of arbitral award .....
.....
(7)(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral Tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the Kumar Virender 2013.08.16 11:04 I attest to the accuracy and integrity of this document C.R. No. 3235 of 2007 7 whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment."
Perusal of the aforesaid provisions shows that if no interest is specifically awarded, even then interest would be calculated at the rate of 18% per annum from the date of award till the date of payment.
In view of the above, I do not find any illegality or perversity in the impugned orders.
Dismissed.
August 05, 2013 [ Paramjeet Singh ]
vkd Judge
Kumar Virender
2013.08.16 11:04
I attest to the accuracy and
integrity of this document