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The Board of Trustees, Paradeep Port Trust Vs. Badio Foundation Engineering Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 105 of 1976
Judge
Reported inAIR1978Ori60
ActsArbitration Act, 1940 - Sections 13 and 14(2)
AppellantThe Board of Trustees, Paradeep Port Trust
RespondentBadio Foundation Engineering Ltd. and ors.
Appellant AdvocateR. Mohanty, Adv.
Respondent AdvocateP.K. Mohanty, Adv.
DispositionAppeal allowed
Cases ReferredK. P. Poulose v. State of Kerala
Excerpt:
.....examining the terms of the contract it the court is satisfied that the contractor was only entitled to extension of time for not making departmental materials available in time, the award should be vacated and it would be......set aside an award.2. respondent no. 1 undertook to construct the general cargo berth no. 1 of the port and parties had entered into a contract for the said purpose. while the work was still in progress, respondent no. 1 raised disputes. keeping in view the arbitration clause in the contract, the several disputes were referred to a board of arbitrators consisting of respondents 2 and 3 and the arbitrators made interim awards in respect of the various items of disputes. we are con-cerned in this appeal with the interim award relating to item no. 28 which covered a claim for extra expenditure due to non-availability of constructional materials and a sum of rs. 2,51,995.00 is claimed on that score. the arbitrators gave hearing in regard to the claim on 14th and 16th of dec., 1974 and before.....
Judgment:

R.N. Misra, J.

1. This appeal by the Board of Trustees of the Paradeep Port Trust has been filed under Section 39(1)(vi) of the Arbitration Act of 1940 (hereinafter referred to as the Act) against the order of the learned Subordinate Judge of Cuttack refusing to set aside an award.

2. Respondent No. 1 undertook to construct the general cargo berth No. 1 of the Port and parties had entered into a contract for the said purpose. While the work was still in progress, respondent No. 1 raised disputes. Keeping in view the arbitration clause in the contract, the several disputes were referred to a Board of Arbitrators consisting of respondents 2 and 3 and the Arbitrators made interim awards in respect of the various items of disputes. We are con-cerned in this appeal with the interim award relating to item No. 28 which covered a claim for extra expenditure due to non-availability of constructional materials and a sum of Rs. 2,51,995.00 is claimed on that score. The Arbitrators gave hearing in regard to the claim on 14th and 16th of Dec., 1974 and before the award was made, on 17-1-1975 respondent No. 1 offered to withdraw the claim relating to item No. 28 if the Port Trust extended the time to complete the work. On 11-2-1975 the interim award was given. When the contractor applied to make the award a rule of the court in Title Suit No. 48 of 1975, objection was raised by the Port Trust on the ground that Arbitrators had committed legal misconduct by ignoring Clause 66 of the contract which provided that in the event of delay in supply of departmental stores, the contractor was entitled to extension of time for execution of the contract and not to compensation. By order dated 26-8-1975 the court remitted the matter in regard to item No. 28 to the Arbitrators and directed:--

'Item No. 28 in the third interim award D/- 11-2-75 is remitted to the Arbitrators for their reconsideration keeping in view the objections and counter objections filed in this connection by the respondent as well as claimant and resubmission of their award to the court within a month from the date of their receipt.'

The appellant has claimed that no notice of hearing was given to the parties after the matter was remitted to the Arbitrators and appellant came to know about re-submission of the award after notice was received from the court of the Subordinate Judge that a fresh award had been filed objection was raised in the court that no hearing was afforded to the parties and if such op-portunity had been given, the appellant would have been in a position to place the letter of the contractor that it was agreeable to withdraw its claim provided extension of time for completion of the contract was given and long before the award was submitted to the court, the Port Authorities had agreed to extend the time. In support of the objection, the appellant moved the court by an application that the contract and other documents produced before the Arbitrators may be called for consideration of the court. On 26th of February, 1976 the learned Subordinate Judge rejected theapplication for calling for documents and on the 29th of March made the award a rule of the court.

3. There is no dispute that after the award was remitted to the Arbitrators, no further hearing was afforded to the parties. The application made to the court under Section 14(2) of the Act to direct the Arbitrators to transmit to the court documents filed before them, it is contended, was rejected without any justification. Grievance, therefore, is made in appeal on these two counts. In this case, there were two parties, there was a lis between them and the matter had been placed before the Board of Arbitrators for adjudication. Though the strict procedure prescribed for a court may not be applicable, the Board of Arbitrators was required to conduct itself in a manner acceptable to principles of natural justice. The learned Subordinate Judge had remitted the matter with a direction that the respective stands of the two parties the contractor and the Port Trust should be considered and a conclusion was to be reached. The court nowhere indicated that no further hearing was necessary to be given. As was pointed out by the Supreme Court in the case of Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation. AIR 1959 SC 308, a personal hearing enables the authority concerned to clear the doubts during the course of arguments and the party appearing gets an opportunity to persuade the authority by reasoned argument to accept his point of view. If the Arbitrators had heard the parties after the dispute over item No. 28 had been remitted to them, the Port Trust could have substantiated its stand that failure to supply materials in time did not entitle the contractor to compensation but only to extension of time for execution of the work. If the court had allowed the application under Section 14(2) of the Act and brought up the contract containing the arbitration clause before it, it could have also found out the correctness of the stand of the Port Authorities.

4. The court proceeded on the basis that its jurisdiction in the matter was limited and it was not competent for the court to vacate the award by entering into the merits of the claim. It placed reliance on the ratio indicated in the case of M/s. Alien Berry and Co. Private Ltd. v. Union of India, AIR 1971 SC 696 and in the case of Batokristo Roy Co. (Pvt.) v. H. Polesy & Co. (Importers)Pvt Ltd., AIR 1975 Cal 467. There may not be any quarrel with the ratio in those cases though counsel for the appellant relying upon a recent decision of the Supreme Court in the case of K. P. Poulose v. State of Kerala, AIR 1975 SC 1259 maintained that if the Arbitrators ignored material documents to arrive at a just decision to resolve the controversy between the parties, it would amount to legal misconduct. Tf the arbitration agreement did provide as a fact that the contractor was entitled to extension only in the event of failure of the Port Authorities to supply materials In time, the question of claiming compensation would not arise. The Port authorities wanted to establish this aspect before the learned Subordinate Judge by calling for the document, but the court declined to do so.

5. I am of the view that the action of the learned Subordinate Judge in rejecting the application to call for the documents was not appropriate and the said application has to be allowed. I direct that the learned Subordinate Judge shall call for the documents including the contract between the parties and after examining the terms of the contract it the court is satisfied that the contractor was only entitled to extension of time for not making departmental materials available in time, the award should be vacated and it would be. open to the court either to remit the matter or to set aside the award. The appeal is accordingly allowed and the matter is remitted to the learned Subordinate Judge for a fresh disposal in accordance with law. Costs shall abide the event.


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