Andhra HC (Pre-Telangana)
Superintending Engineer, Somasila ... vs R. Ramana Reddy, Adv. on 16 February, 1990
Equivalent citations: AIR1990AP283, AIR 1990 ANDHRA PRADESH 283
ORDER
1. In C. R. P. No. 1056 of 1986, bv an order dated 14-7-1987 (reported in 1987-2 APU (HC) 447), 1 have appointed Shri Justice Challa Kondaiah, retired Chief Justice of High Court of Andhra Pradesh as the sole arbitrator to adjudicate upon the disputes between the petitioner and the first respondent in respect of the words "Special Repairs to the existing W. B. M. Road and providing B.T. Surface to Atmakur-Somasila Road Kms. 15/0 to 21/0". In pursuance of that order, the arbitrator has entered upon reference and after considering the oral and documentary evidence adduced before him, passed an award dated 12-11-1988 allowing the claim of the petitioner in C.R.P. No. 1056 of 1986 (hereinafter referred to as 'the Contractor') for a total sum of Rs. 91,606/-with simple interest at 12% per annum from 4-8-1981.
2. The Government filed C. M. P. No. 4428 of 1989 under Section 30 of the Arbitration Act (hereinafter referred to as 'the Act') to set aside the award on the ground of misconduct. The contractor on the other hand filed CM. P. No. 1134 of 1989 under Ss. 14 and 17 of the Act to make the award, a rule of the court. As common questions of fact and law arise in both the petitions, they were heard and are being disposed of together.
3. The learned Government Pleader attacked the award on three grounds viz., (1) the finding regarding the delay in execution of work is not based upon any evidence and as such the enhanced rate awarded by the arbitrator is not warranted. (2) the arbitrator has not passed the award within four months as provided in Schedule I of the Act and hence the award passed beyond the period of four months is a nullity. (3) the awarding of interest from 4-8-1981 is not permissible as the contractor is not entitled to interest during the period covered by the arbitration proceedings.
4. I shall deal with these objections seriatim.
5. The arbitrator in the award nas allowed some of the claims and disallowed some of the claims put forth by the contractor. The arbitrator relying upon the statement given by the contractor on oath before him that he mentioned in the applications seeking extension of time that he would not make any claim for the increase in the price at the instance of the officers as they threatened him that otherwise he would not be given extension of time (which fact was not contradicted by any positive evidence), upheld the claim of the contractor to claim the increase in the value of the cost of the work. The arbitrator however held that the amount of Rs. 1,10,000/- claimed by the contractor is excessive and exorbitant and fixed the same at Rs. 25,000/ - on that account.
6. The learned Government Pleader submitted that the site was handed over to the contractor on 16-6-1977; that he has not completed the work within the stipulated period of four months; that the time was extended from time to time till 30-4- 1 979; that the contractor made an endorsement that he has no further claims; that all the claims made by the contractor pertain to the extended period; that as per the agreement, the contractor has to work out at the agreed rates and that the delay in execution of the work is due to the laches of the contractor and hence he is not entitled to claim any amount towards the increase in the value of the cost of the work.
7. It is necessary at this stage to consider the scope of the application filed under S. 30 of the Act. A Division Bench of this court of which I happened to be a party, held in State of Andhra Pradesh v. R. V. Rajaram, (1988) 1 APLJ (HC) 536, thai an award passed by the arbitrator can be interfered with by the Civil Court only if the award is vitiated by an error apparent on the face of the record. It is further held that the error must be one of law and not one of fact and that the civil court has no jurisdiction to re-appreciate me evidence and interfere with the award on the ground that its conclusions are erroneous. The learned counsel for me contractor submitted that the decision of me Division Bench referred to above in case, (1988-1 APLJ (HC) 536) (supra) has been confirmed by the Supreme Court by not granting tne special leave. To support that, he filed Judgments Today, , wherein the Supreme Court held that from the reading of the award it is clear that the arbitrator has considered the claim made on ihe basis of "escalation and damages" but he has awarded a total sum of Rs. [9.39 lakhs in so far as he finds admissible in respect of the claims which the arbitrator nas adjudged and in such a situation it is not possible to contend thai there was any exercise of jurisdiction by the arbitrator beyond his competence. Their Lordships observed that the award of the arbitrator can be challenged only on two distinct and different grounds viz., that there is an error apparent on the face of the record or that the arbitrator has exceeded his jurisdiction. In this case, the arbitrator after considering the entire evidence adduced before him and taking into consideration the human conduct, observed that no reasonable and prudent contractor would, of his own free will and volition would mention in the application seeking extension of time that he will not make any claim for the extra cost incurred by him during the extended period of the contract, if he is granted extension of time. Under those circumstances, the arbitrator was inclined to agree with the version of the claimant that he was asked by the Officers before whom he wrote the petitions to make a specific mention of the same and that otherwise, he would not be given extension of time. The arbitrator has given a reasoned award and it cannot be said that the arbitrator has exceeded his jurisdiction.
8. The Supreme Court held in U. P. Hotels v. U..P. Stale Electricity Board, , that where a question of law regarding statutory inter-pretation in the light of a decision of Supreme Court involved or arose during course of the arbitration proceedings and arbitrator/ umpire in compliance with principles of natural justice arrives at a possible view, the award is not open to court's interference on ground of the view being wrong. The scope of S. 30 of the Act is considered -in another decision of the Supreme Court in Puri Construction Pvt. Ltd. v. Union of India, , Wherein it is observed that the court deciding objections against the award cannot examine the correctness of the award on merits by re-appreciating evidence: Their Lordships held on facts that the award was fair, supported by evidence and also correct on merit and hence the award is not open to challenge. It is observed that the court cannot sit in appeal over the views of the arbitrator by re-examining and re-assessing the materials and that none of the grounds for setting aside the award as provided in the Act was available in that case. In another decision in Food Corporation of India v. Joginderpal Mohinderpal, , the Supreme Court held that an award of the arbitratorcan only be interfered with or set aside or modified within the four Corners of the procedure provided by the Act; that it is necessary to find whether the Arbitrator, has misconducted himself or the proceedings are legal in the sense whether the arbitrator has gone contrary to the terms of reference between the parties or whether the arbitrator has committed any error of law apparent on the face of the award and that these are the separate and distinct grounds for setting aside the award. The Supreme Court further clarified that 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 of fact are supported by evidence. The Supreme Court further held that if the award is a speaking award, then unless it is demonstrated to the court that such reasons are erroneous as propositions of law or that the arbitrator has taken a view which could not possibly be sustained on any view of the matter, the challenge to the award of the arbitrator cannot be sustained.
9. Following the above catena of deci sions of the Supreme Court, I hold that, even assuming that the conclusion arrived at by the arbitrator on the question of fact is erroneous, it does not amount to an error apparent on the face of the record so as to result in misconduct on the part of the arbitrator or misconduct of the proceedings. I, therefore, hold that the decision of the arbitrator on the question of awarding compensation during the extended period of the contract even assuming to be erroneous, cannot be interfered with by this court under S. 30 of the Act.
10. The next ground urged by the learned Government Pleader is that the arbitrator not having passed the award within four.months, the award is a nullity. Relying upon clause (3) of Schedule I of the Act, the learned Government Pleader argued that the arbitrator shall pass the award within four months after entering on the reference or within such extended time as the court may allow and inasmuch as the court has not extended the period, in this case, the award passed by the arbitrator is a nullity and cannot be looked into. In support of, his contention he relied upon a decision in State of Punjab v. Hardyal, .
11. But Section 28(2) of the Act provides that any provision in an arbitration agreement whereby the arbitrators or umpire may, except with the consent of all the parties to the agreement, enlarge the time for making the award shall be void and of no effect. The learned counsel for the contractor argued that with the consent of both the parties and basing on the requests made in joint memoranda, filed by the contractor as well as the Government through their respective counsel, the arbitrator has extended the period from time to time; that the time was so extended till 31-12-1988 and that the award was passed by the arbitrator on 12-11-1988 well within the extended period. He therefore, argued that the award passed by the arbitrator is within the extended time. The submission made by the" learned counsel for the contractor that time was extended from time to time by the arbitrator with the consent of both the parties and on the joint memoranda filed by both the counsel is borne out by the proceedings of the arbitrator dated 11-6-1988 and 11-9-1988. That is obviously the reason why in the grounds mentioned in C.M.P. No. 4428 of 1989, no ground was taken that the award is rendered illegal by reason of the fact that it was filed beyond the time granted by the court. It is with the consent of both the learned counsel that the arbitrator has extended the time for filing the award till 31-12-1988 and as such the award filed by him on 12-11-1988 does not become illegal. I, therefore, hold that this objection also has no legs to stand.
12. The third objection raised by the learned Government Pleader is that the awarding of interest by the arbitrator from 4-8-1981 is not permissible and that the contractor is not entitled to interest during the period covered by the arbitration proceedings. In support of his contention, he relied upon a decision of the Supreme Court in Executive Engineer, Irrigation, Galimala v. Abhaduta Jena, .
13. To meet that contention of the learned Government pleader, the learned counsel for the contractor has placed reliance upon the provisions of the Interest Act (No. 14 of 1978) which came into force in our State on 19-8-1981. Section 2(a) of the said Act defines 'Court' as including a Tribunal and an arbitrator. Section 2(c) defines 'debt' as any liability for an ascertained sum of money and includes a debt payable in kind. Thus, the arbitrator is in the nature of a court under the Interest Act of 1978, and the debt includes any liability for an ascertained sum of money. The decision of the Supreme Court rendered in case, (supra) lays down that in cases which arose before the commencement of the Interest Act, 1978, the claimants are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration. In a subsequent decision in Gujarat Water Supply & Sewerage Board v. Unique Erectors (Gujarat) (P) Ltd., , the Supreme Court has laid down. that in a reference made after the commence ment of the Interest Act, 1978, interest for the period prior to the commencement of arbitration proceedings can be granted by the arbitrator and that interest from the date of the award to the date of the decree can also be granted. What all the arbitrator is prohibited from granting is the interest pendente lite. In paragraphs of the judgment, the date of commencement of the proceedings is mentioned as the date when the parties appeared before the arbitrator after filing the claims and counter-claims. The period pendente lite is mentioned as the period commencing from that date and till the date of the award/ Applying the decision of the Supreme Court in case, (supra) to the facts of this case, it is seen that after the arbitrator has entered on the reference, the claim-petition was filed on 18-11-1987, the Government filed the counter on 9-12-1987, the contractor filed the reply objections on 19-12-1987 and rejoinder was filed by the Government on 18-4-1988. So, it can be said that both the parties have appeared before the arbitrator after filing their claims and counter-claims only on 18-4-1988. Till that stage, the parties were in the process of putting forth their claims and counter-claims. Hence the direction of the arbitrator for payment of interest cannot cover the period from 19-4-1988 to 12-11-1988. The decision of the Supreme Court in case, (supra) clearly lays down that the contractor is entitled to interest for both the anterior and subsequent periods. I, therefore, hold that the objection of the learned Government pleader with regard to the awarding of interest is upheld only for the period from 19-4-1988 and 12-11-1988.
14. From the above discussion, it follows that C.M.P. No. 4428 of 19989 should be dismissed except to the extent of the award of the arbitrator awarding interest for the period from 19-4-1988 to 12-11-1988. C.M.P. No. 4428 of 1989 is accordingly dismissed. Consequently, C.M.P. No. 1134 of 1989 is allowed making the award of the arbitrator the rule of the court awarding Rs.91,606/-with simple interest at 12% per annum for the period from 4-8-1981 to 18-4-1988 and from 13-11-1988 till the date of payment. No costs. The Government shall pay their share of the arbitrator's fee. Advocate's fee Rs.500/- in each case.
15. Order accordingly.