Punjab-Haryana High Court
Haryana Tourism Corporation Ltd. And ... vs Bodh Raj Gupta And Another on 2 November, 2000
Author: R.L. Anand
Bench: R.L. Anand
JUDGMENT R.L. Anand, J.
1. This is a Civil Revision and has been directed against the order dated 28.10.1999, passed by the learned counsel learned District Judge, Karnal, who dismissed the appeal of the Haryana Tourism Corporation (hereinafter called "the Corporation") by affirming the order dated 26.2.1997 passed by the Additional Civil Judge (Sr. Division), Karnal, who dismissed the objection under Section 30 of the Indian Arbitration Act, of the Corporation and made the award dated 30.11.1992 a rule of the Court.
2. Some facts can be noticed in the following manner. A dispute arose between the parties arid the matter was referred to the sole arbitration of Shri S.P. Grover. The arbitrator gave the award dated 30.11.1992 in favour of the contractor Shri Bodh Raj Gupta and against the Corporation.
3. An application was moved for making the award a rule of the Court. The award was filed in tht Court. Objections of the parlies were called. Resultantly, the Corporation filed the objections under Section 30/33 of the Indian Arbitration Act.
4. The preliminary objection was that the Civil Court at Karnal had no territorial jurisdiction to entertain the application under Section 14 of the Arbitration Act. According to the Corporation, the principal seat of the Corporation was allocated at Chandigarh. The work was executed at Ambala. The agreement was signed at Faridabad. Therefore, the Civil Court at Karnal had no jurisdiction to entertain the application under Section 14 read with Section 17 of the Indian Arbitration Act as no part of cause of action arose at Karnal.
5. On merits, the award was also challenged on the plea that it is a non- speaking award and the Arbitrator has misconducted himself and the proceedings. This aspect of the case was disputed by the contractor and the stand of the contractor was that earlier he made an application for the removal of the Arbitrator at Kamal on 12.9.1989 and this application was withdrawn on 11.6.1990. Since the steps had already been taken by the contractor at Kamal, therefore, all the subsequent applications are supposed to be filed at Karnal. Moreover, no prejudice has been caused to the Corporation which had already got the opportunity to contest the award. On merits, it was also the case of the contractor that the arbitrator had not misconducted himself or with the proceedings and, therefore, award has been rightly made the rule of the Court.
6. From the above pleadings of the parties, the following issues are framed :-
1. Whether the present Court has no jurisdiction to entertain and decide the application under Section 14 of the Arbitration Act ? OP Objector.
2. Whether the impugned award dated 30.11.1992 is liable to be set aside on the grounds alleged in the objection petition ? OP objector.
3. Whether the requisite Court fee stamp has not been affixed in the memo of objections and if so its effect ? OPR
4. Relief.
The parties led evidence in support of their case and on the conclusion of the proceedings it was held by the trial Court that the Civil Court at Karnal had the territorial jurisdiction to entertain the application and the award is not liable to be set aside. Issue No. 3 was also decided against the objector. Resultantly, vide judgment dated 26.2.1997, the learned trial Court made the award a rule of the Court and granted a decree for a sum of Rs. 10,39,155/- with interest at the rate of 15% with effect from 1.12.1992 till payment.
7. Aggrieved by the judgment and decree of the trial Court, the Haryana Tourism Corporation filed the appeal before the Court of learned District Judge, Karnal, who for the reasons given in paras No. 7, 8, 9 and 10 of the impugned judgment dated 20.10.1999, dismissed the appeal and aggrieved by he said judgment the present revision has been filed.
8. I have heard Shri K.K. Gupta, learned counsel appearing on behalf of the petitioner and Shri R.K. Vij, learned counsel appearing on behalf of the respondent and with their assistance have gone through the record of this case.
9. Before, I deal with the contention raised by the learned counsel for the parties, it will be appropriate for me if I reproduce paras No. 7 to 10 of the judgment of the first appellate Court, which are under :-
"7. At the appeal stage it has been argued that the learned trial Court has erred in dismissing the objections of the appellants against the award dated 30.11.1992 rendered by respondents No. 2 which was against facts and law on record and the judgment and the decree were liable to be set aside. It was argued that the learned trial Court has erred in holding that the civil Court at Karnal had the jurisdiction to entertain and try the application under Section 31(i) of the Arbitration Act, the award could only be filed in a Court having jurisdiction (over) the matter to which the reference relates and that the principal office of the appellant Corporation being located at Chandigarh, the agreement between the parties having been executed at Faridabad and the work having been executed at Ambala no part of cause of action had arisen within the jurisdiction of the Civil Courts at Kama! and as such the Civil Courts at Kamal had no jurisdiction in the matter and the learned Civil Judge has failed to appreciate that simply because the petitioner No. 1 moved an application for appointment of an arbitrator of Karnal itself did not confer the jurisdiction on the Civil Court at Karnal to entertain and try the petition under Section 14 of the Arbitration Act moved by the petitioner. It was alleged that no order on the application moved by the petitioner- respondent for appointment of the Local Commissioner was passed and the same was dismissed as withdrawn. It was then argued that the learned trial Court has further erred in holding that the objections were filed with a view to cause delay in the payment of the awarded amount to the petitioner. It was alleged that the objections filed by the appellants have been summarily rejected by the trial Court which course is not permissible under the law. It was prayed that the award rendered by Respondent No. 2 is liable to be set aside on the grounds mentioned in the objections filed by the appellants for setting aside of the award. It was prayed that the appeal be accepted and the judgment and the decree passed by the learned trial Court be reversed and the award dated 30.11.1992 passed by respondent No. 2 be set aside with costs throughout.
8. Learned counsel for Bodh Raj argued that on the application under Sections 5, 8, 11 read with Section 12 of the Indian Arbitration Act was made by the applicant and Shri Subhash Goel, the then Additional senior Sub Judge, Karnal passed the order dated 11.9.1990 on the said application and the copy of the said order is Ex. Rl. He argued that since the first application having been made in the Court that Court shall have jurisdiction over the arbitration proceedings and all the subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and not in any other Court. He argued that in the initial application the petitioner prayed for the change of the already appointed arbitrator. He argued that Respondents No. 1 and 2 have not objected to the jurisdiction of that Court to entertain and try it and thus the respondents submitted to the jurisdiction of that Court although afterwards on their statement the petition was ordered to be dismissed as withdrawn vide order dated 11.6.1990. He argued that the Courts at Karnal have the jurisdiction over the matter in dispute and that the learned trial Court has rightly passed the order dismissing objection and making the award rule of the Court. He prayed that the appeal be dismissed.
9. Section 31(4) of the Indian Arbitration Act reads as under:
"31(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force where in any reference any application under this Act has been made in a Count competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and in no other Court."
The first application on which order dated 11.6.1990 Ex. R1 was made before the Court of Shri Sub-hash Goyal, the then Additional senior Sub Judge, Kamal. The letters Ex. A. 1 to Ex. A.5 addressed to respondent No. 2 at Kanial while he was having office at Kamal demanding payment of the outstanding amount form Respondents No. 1 and 2 clearly gave a cause of action to the application (applicant ?) to file the previous application under Section 5 of the Act at Karnal. From the statement of OW1 J.K. Bhalla it is clear that the office of Respondent No. 2 remained for sometime at Karnal. From a bare reading of Section 31(4) of the Indian Arbitration Act it becomes clear that the subsequent petitions/applications in the matter shall be made in the Court which passed the order Ex. R-1 and to no other Court. Thus, it is clear that there is no doubt to dispute the jurisdiction of the Court to entertain and try the petition and the learned trial Court was right in deciding issue No. 1 against the respondents.
10. The law is now well settled that an award can be set aside only on the ground misconduct or on an error of law apparent on the face of it and in that context me contention that the award being an unreasoned one is per se bad has no place on this aspect. It is well settled that when the parties choose their own arbitrator to be the judge in dispute between them they cannot, when the award is good on the face of it, object to the decision either upon law or on facts. Therefore, when arbitrator corn-mils a mistake either in law or in fact in determining the matter referred to him, where such mistake does not appear on the face of the award and the documents appended to or in corporated so as to form part of it, the award will neither be remitted nor set aside. In the present case no interference in the award can be made simply for the reason that the arbitrator has wrongly pronounced the award and also not pronounced a speaking award and also not extended reasonable opportunity of hearing to either before the arbitrator". No such objection was taken before the arbitrator. A perusal of arbitration proceedings reveal that no such formal application was filed by the objectors. The learned counsel for the petitioner Bodh Raj argued that though there is no explicit provision under the Arbitration Act to empower arbitrator to grant interest yet impliedly this power is inherent with the arbitrator and support has been sought from the observations of the Hon'ble Supreme Court in Secretary, Irrigation Department, Government of Orissa and other v. G.C. Roy, AIR 1992 Supreme Court 732 wherein it was held as under :-
"Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (alongwith the claim for principal amount of independently) is referred to the arbitrator, he shall have the power to award interest pendents lite. This is the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and, therefore, when the parties refer all their disputes as such to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all facts and circumstances of the case, keeping the ends of justice in view."
And Hindustan Construction Company Ltd. v. State of Jammu and Kashmir, AIR 1992 Supreme Court 2192 wherein it was held by the Apex Court that he arbitrator is competent to award interest for the period commencing with date of award to the date of decree or date of realisation whichever is earlier. In view of the above the learned trial Court was right in holding that the objections of respondents No. 1 and 2 are devoid of any merit and rightly answered the issue against the objectors."
The learned counsel appearing on behalf of !he petitioner vehemently submitted that no cause of action or part thereof had arisen at Kamal and, therefore, the application under Section 14 read with Section 17 ofthe Arbitration Act filed by the contractor was illegal and the order making the award a Rule of the Court is without any jurisdiction. He further submitted that only three Courts had the territorial jurisdiction to entertain such application. Firstly, at Chandigarh, where, the Head Office of the Corporation is situated, secondly at Faridabad where the agreement was executed and thirdly at Ambala where the work was executed by the contractor and as no part ofthe cause of action had arisen at Karnal, the application under Section 14 read with Section 17 ofthe Arbitration Act was a misconceived affair. This submission of Mr. K.K. Gupta, has vehemently been opposed by the learned counsel for the respondent Shri Vij, who stated that earlier the contractor in the year 1989 filed an application under Sections 5, 8, 11 and 12 of the Indian Arbitration Act at Karnat for the removal of the arbitrator. In those proceedings, the representative of the Corporation appeared. At no point of time, no (an ?) objection was raised with regard to the territorial jurisdiction. Once the Court at Karnal had entertained an application under the Act, all subsequent proceedings were supposed to be filed in that very Court. Moreover, it was also the principal argument of the learned counsel for the respondents that in the present proceedings the Corporation has taken keen interest. It has contested the award on merits. The Court has given full opportunities to both the parties to lead their evidence and no prejudice has been caused to the petitioner. The petitioner is a Corporation and such like objections are not open to the Corporation to defeat the right of the citizens. He further submitted that the Civil Court cannot sit as a Court of appeal. The Arbitrator has the power to award interest which has rightly been awarded at the rate of 15% and it cannot be said that the rate of interest is harsh or excessive in the given circumstances when a money decree has been passed in favour of the respondent.
Meeting the argument of the learned counsel Shri Vij, it was argued by Shri Gupta that in those proceedings also, the reply was filed on behalf of the Corporation and a preliminary objection was also raised regarding the territorial jurisdiction of the Court at Kamal and in these circumstances, it can reasonably be inferred that the Corporation never submitted to the jurisdiction of the Civil Courts. According to Mr. Gupta, a great prejudice has been caused to the Corporation. Otherwise also, this revision is liable to succeed as the Arbitrator has misconducted himself in the proceedings when he had awarded the future interest at the date of 15% right up to the date of the payment.
11. I have considered the rival contentions of the parties and in my opinion the contention of Shri Gupta so far as the territorial jurisdiction is concerned, is devoid of any merit. This Court is ofthe view that it does not in the mouth of the legal entities such as Union of India, State of Punjab or statutory bodies like the present petitioner, to raise technical pleas regarding jurisdiction when proper assistance can always be given on behalf of the statutory bodies/Corporations through their lawyers and Advocates. It is the admitted case ofthe petitioner that Haryana Tourism Corporation runs its business at Karnal. When the application for the removal of the Arbitrator under Sections 5, 8, 11 and 12 was moved by the Contractor at that time the Branch office of the Corporation was located at Kamal.
12. In these circumstances, it can be said that the part of the cause of action arose to the contractor at Kamal.
13. Section 31(4) of the Indian Arbitration Act lays down as follows:
"31(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference, any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference, and the arbitration proceedings shall be made in that Court and in no other Court."
Thus, the reading of the above would show that all subsequent proceedings have to be filed in the same Court in which the earlier application under this Act was filed. It is the admitted case of the parties that earlier the application under Sections 5, 8, 11 and 12 of the Act was filed at Kamal, therefore, alt the subsequent proceedings were supposed to be filed in that very Court.
14. Let us examine this case from reverse angled. Had the contractor filed the proceedings either at Chandigarh, Ambala or Faridabad, as desired by the learned counsel for the petitioner, then in that eventuality the Corporation would have come with a plea that since the proceedings have not been filed at Kamal, therefore, the application is liable to be dismissed. Otherwise also, no prejudice has been caused to the petitioner. ResuJtanlly, 1 over-rule the first objections of the corporation.
15. With regard to the second submission raised by the learned counsel for the petitioner with regard to the award of interest by the Arbitrator, I am of the opinion that this argument of the counsel for the petitioner deserves to be considered sympathetically as it has some merit. The Arbitrator could not award future interest from the date of the decree up to the date of the payment. His jurisdiction was to declare that the party is entitled to interest for the pre-reference period and also for the period during which the arbitration proceedings remained pending before him. By awarding interest at the rate of 15% from the date of decree till payment, the Arbitrator has definitely exceeded his jurisdiction. Therefore, to that xtent the award cannot be accepted.
16. Now the ancillary point which survives for determination is whether the award should be set aside as a whole or it can be modified so as to make enforceable to the extent it can be enforced.
The answer of this Court is that the award should be modified in part instead of remitting the same to the Arbitrator or setting aside it.
17. Resultantly, this revision is partly allowed by rejecting the objection of jurisdiction and it is hereby declared that the contractor-respondent shall get the amount awarded by the arbitrator along with interest at the rate of 15% from the date of the award up to the date when it became rule of the Court and he will further get interest at the rate of 9% from the date of the decree up to the date of the payment. There shall be no order as to costs.
18. Revision partly allowed.