Rajasthan High Court - Jodhpur
Union Of India & Ors vs M/S Jagdish Prasad Ram Avtar P Ltd.& Anr on 19 September, 2008
Author: Prakash Tatia
Bench: Prakash Tatia
1
S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
S.B. Civil Misc. Appeal No.1431/2005
Union of India & Ors.
Vs.
M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
Date : 19.9.2008
HON'BLE MR. PRAKASH TATIA, J.
Mr.Arvind Samdariya, for the appellants. Ms.Rekha Borana, for the respondent.
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Heard learned counsel for the parties.
This appeal is against the order dated 8.4.2004 passed by the Court of District Judge, Sri Ganganagar in Civil Misc. Case No.122/1996 by which the court below rejected the objections of the appellants filed under Section 30 read with Section 33 of the Arbitration Act, 1940 (for short 'the Act of 1940').
The contract in question is No.CEBTZ-13/1983-84. It had arbitration clause and when dispute was raised after rescinding of the contract by the appellant Union of India on 17.11.1987, the appellant itself initially appointed Mr.AV Gopalakrishna, then Shri BM Gupta was 2 S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
appointed and lastly, he too was substituted by Arbitrator Shri Vidhya Bhushan by letter of reference dated 14.2.1995. The Arbitrator passed the award on 4.3.1996. The Arbitrator considered the claims of the contractor as well as of appellant Union of India. The claims of contractor referred in para no.9 of the award have been dealt with by the arbitrator whereas in para no.10 of the award, the learned Arbitrator dealt with the claim of appellant Union of India. The award is not a reasoned award. However, the learned Arbitrator has not accepted the total claims of any of the parties but gave different amounts to the parties from the amounts claimed by them. Some of the claims of both the parties have been rejected. For ready reference, the table of claim and amount awarded by the Arbitrator are quoted here under :-
"Claims and award for the contractor :-
S.No. Brief description of claimed award claims amount amount
1. Balance price of work done 1,76,766.40 48,560.00 collective amount of Deviation Orders sanctioned from time to time during execution of work.
(Claim partly sustained).
2. Cost of material lying at 1,88,289.27 19,410.58 site at the time of termination of the contract.3
S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
(Claim partly sustained).
3. Difference of cost of 15,379.65 NIL overweight steel 6mm and 8mm as finalised by the Board.
(Claim not sustained).
4. Cumulative amount of 5 Nos 3,82,086.76 1,71,770.43 claims respecting the instant contract.
(Claim partly sustained).
5. Unconsumed materials vide 4,810.51 NIL CRV No.57/EV/79/BRD dt.
23.3.88.
(Claim not sustained).
6. Unconsumed stores and tools 72,782.60 16,896.60 and plants which remained at site at the time of termination of contract.
(Claim partly sustained).
7. Release of security 60,000.00 To be rel-
deposit furnished in the eased
shape of bank guarantee. within one
(Claim sustained). month of
the award.
8. Retention money furnished 1,50,000.00 To be rel-
in the shape of bank eased
guarantee. within one
(Claim sustained). month of
the award.
9. Loss of profit on the 62,879.38 NIL
unexecuted portion of
work @ 10%.
(Claim not sustained).
10. Past interest on the 5,48,047.35 12% PASI
Principal sum of from
Rs.8,69,916.43 @ 18% 28.5.88 to
per annum from 01.3.87 31.8.90 on
to 31.8.90. awarded
(Claim partly sustained). amount of
claim 1 to
6.
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S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
11. Interest pendentelite 18% 12% PASI from 23.9.91. from (Claim partly sustained). 23.9.91 to the date of award on awarded amount of claims 1 to 6.
12. Cost of arbitration 20,000.00 NIL (Claim not sustained).
Claims and award for the Union of India :-
S.No. Brief description of claimed award claims amount amount
1. Addl expenditure incurred 7,12,809.68 5,40,057.47 by the claimant for completion of incomplete works through risk & cost of respondent.
(Claim partly sustained).
2. Technical Examination of 25,407.41 23,687.29 work.
(Claim partly sustained).
3. Claim on account of 7,14,665.22 NIL compensation.
(Claim not sustained).
4. Claim on account of over 15,65,837.56 Not adju-
issued stores. dicated.
(Claim not referred by Appointing Authority).
5. Cost of reference. 10,000.00 NIL (Claim not sustained)."
In this appeal, the appellant has challenged the order dated 8.4.2004 by which their objections against 5 S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
the award were rejected. The learned court below considered each of the ground raised by the appellant in detail and thereafter, rejected the contention of the appellant.
According to learned counsel for the appellant, in view of the condition in clauses no.11 and 54, the issue which could have been decided only by Chief Engineer could not have been referred to the Arbitrator and in the present case, the Arbitrator has adjusted that amount which has referred in Col.1 of the claim of the contractor. It will be worthwhile to mention here that the contractor claimed Rs.1,76,766.40 on account of balance price of work done which is collective amount of deviation orders sanctioned from time to time during execution of work. Against this claim of Rs.1,76,766.40, the Arbitrator awarded only Rs.48,560.00. The said plea of the appellant was rejected by the trial court on the ground that no such objection was raised by the appellant before the arbitrator and, therefore, once they have submitted to the jurisdiction of the arbitrator and got adjudication of claim, they cannot claim objection under Section 30 of the Act of 1940.
6S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
Learned counsel for the appellant submitted that it is a challenge to the jurisdiction of arbitrator, therefore, the objection could have been raised under Section 30. Learned counsel for the appellant relied upon the judgment of the Hon'ble Supreme Court delivered in the case of Prabartak Commercial Corporation Ltd. vs. The Chief Administrator, Dandakaranya Project & Anr. reported in AIR 1991 SC 957 wherein it has been held that where the matter is to be decided by the Chief Engineer under the terms of the contract, that matter cannot be referred to the Arbitrator. The matter which can be referred to the Arbitrator and can be decided by the arbitrator and the claim can be decided by other mode, there may be separate provisions in the contract. If any of the party had any objection regarding the jurisdiction of the Arbitrator in deciding the matter then that should have been raised on earliest occasion or at least with the reply before the arbitrator. It is a matter relating to the contract of 1983-84 and where the dispute arose on 17.11.1987 and the award was passed in the year 1996 and, therefore, the arguments about the jurisdiction of the arbitrator has been raised after a long delay of 5 years from the time of appointment of arbitrator. Therefore, if the civil court has not 7 S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
accepted that objection, this Court is not inclined to accept the objection against the jurisdiction of the arbitrator. It is not a case of inherent lack of jurisdiction of the arbitrator.
Learned counsel for the appellant submitted that the contractor claimed Rs.1,88,289.87 as cost of material lying at the site at the termination of the contractor against which Rs.19,410.58 has been awarded to the contractor by the Arbitrator but while doing so, the arbitrator has not given bifurcation and has not shown the head under which the amount has been awarded. The said argument is legally not sustainable in view of the fact that by this, the appellant is seeking reason for the award and it is settled law that the arbitrator can pass the award without assigning any reasons. From the claim of the contractor and the award given by the arbitrator and looking to the difference in amount, it appears that the arbitrator has applied its mind and against the claim of Rs.1,88,289.27, the contractor has been awarded Rs.19,410.58 only. The same is position for the claim no.6 and for this reason also, whether it could have been referred to the arbitrator, there was no objection before the arbitrator by the appellant.
8S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
Another objection of the appellant is about release of security amount. It is submitted that the security amount could be released only when no dues certificate is issued by the petitioner. This plea is available only when it is an amicable settlement. Once the issue is resolved by the arbitrator, then the question of no dues certificate from the appellant could not be a hurdle in way of the appellant for releasing the security. No dues certificate is settlement between the parties and end of claims so far as the award is concerned. With the passing of the award, nothing remains which can be disputed and objected by either of the parties. Therefore, the no dues certificate looses its significance. Otherwise also, the Union of India can issue such certificate and make payment of security but as held above, there is no necessity for obtaining the no dues certificate by the respondent from the appellant in the situation as referred above.
Learned counsel for the appellant submitted that the arbitrator has awarded past interest though at the rate of 12% instead of 18% as claimed by the contractor which could not have been granted. For that, I do not 9 S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
find any force in said submission of learned counsel for the appellant looking to the facts of the case. Learned counsel for the appellant also submitted that the rate of interest is required to be reduced in view of the judgment of Hon'ble Supreme Court in the case of Rajasthan State Road Transport Corpn. vs. Indag Rubber Ltd. reported in AIR 2006 SCW 4564.
I considered the submissions of learned counsel for the parties and perused the facts of the cases referred to above particularly the case of Indag Rubber Ltd. (supra).
The dispute was of the year 1987 and the award of interest was at the rate of 12% per annum which was reduced to 6% on the ground that the rate of interest is excessive. In a commercial transaction, the rate of interest can be granted as per the commercial rate of interest. Before the Civil Court, there was no material that in the year 1987, the rate of interest in commercial transaction in the year 1988 and onwards was much less than 12%. Therefore, this Court is not inclined to interfere in the said award of interest by the arbitrator to the contractor.
In view of the above reasons, I do not find any reason to interfere in the impugned order while 10 S.B. Civil Misc. Appeal No.1431/2005 Union of India & Ors. Vs. M/s. Jagdish Prasad Ram Avatar Pvt. Ltd. & Anr.
exercising the appellate jurisdiction.
Consequently, this appeal, having no merits, is hereby dismissed.
(PRAKASH TATIA), J.
S.Phophaliya