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State of Orissa Vs. B.N. Agarwala - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 254 of 1980
Judge
Reported inAIR1981Ori124; 52(1981)CLT37
ActsArbitration Act, 1940 - Sections 13 and 29
AppellantState of Orissa
RespondentB.N. Agarwala
Appellant AdvocateR.K. Patra, Addl. Govt. Adv.
Respondent AdvocateR. Mohanty and ;Sanjit Mohanty, Advs.
DispositionAppeal dismissed
Cases Referred(State of Orissa v. Rama Chandra Sahu).
Excerpt:
.....and decided by the arbitrator. it is well settled by the decisions of this court that the arbitrator has jurisdiction to award interest from the due date of payment......of random rubble masonry workrs. 5353.00rs. 34,366.25 (6) interest @ 6% per annum from due date of payment (1-5-72 till 22-2-80)rs. 16,898.93rs. 50,465.183. the state government filed objections to the award which were overruled by learned subordinate judge and the award was made rule of the court. it is urged in this appeal that the claims as per items 4 and 5 being in respect of additional items of work done by the contractor were not available to be adjudicated upon in the arbitration proceeding as they are outside the scope of the agreement and the arbitration clause. it is also contended that the award of interest is without jurisdiction and the arbitrator was not competent to direct payment of interest from due date of payment in absence of any reference of such specific.....
Judgment:

P.K. Mohanti, J.

1. This is an appeal under Section 39(vi) of the Indian Arbitration Act against the order of the learned Subordinate Judge of Bhubaneswar refusing to set aside an award.

2. The respondent was entrustedwith the work (Construction of Chhatrang M. I. P. Head Works) by the Executive Engineer, R. E. Division, Phulbani after acceptance of the tender submitted by him. An agreement was entered into between the parties and interms thereof the respondent took upexecution of the work. Disputes havingarisen between the parties in respect ofthe work, the Chief Engineer, R. E. O.appointed Shri B. N. Das, Superintending Engineer as Arbitrator. The Arbitrator submitted his award on 25-2-1980awarding a sum of Rs. 50,465.12 infavour of the respondent. The detailsof the award are as follows :

(1) Payment for drilling of holes for blasting workRs. 1383.94(2) Refund of depart mental recovery as costs for blasted stonesRs. 4435.00(3) Payment for sorting out and breaking of blasted stonesRs. 2216.00(4) Extra payment for dewatering and shutter-ing in foundation workRs. 20978.31(5) Extra payment for dewatering of sleapage water and scaffolding etc., during execution of random rubble masonry workRs. 5353.00Rs. 34,366.25 (6) Interest @ 6% per annum from due date of payment (1-5-72 till 22-2-80)Rs. 16,898.93Rs. 50,465.18

3. The State Government filed objections to the award which were overruled by learned Subordinate Judge and the award was made rule of the Court. It is urged in this appeal that the claims as per items 4 and 5 being in respect of additional items of work done by the contractor were not available to be adjudicated upon in the arbitration proceeding as they are outside the scope of the agreement and the arbitration clause. It is also contended that the award of interest is without jurisdiction and the Arbitrator was not competent to direct payment of interest from due date of payment in absence of any reference of such specific dispute to him.

4. Regarding the first objection, it is now well settled by the decisions of this Court that the Arbitrator has jurisdiction to decide matters regarding the additional work, as in deciding those matters, disputes and questions arising out of the contract, may have to be considered and decided by the Arbitrator. Similar objections raised on behalf of the State were overruled by a Division Bench of this Court in the case of A. C. Parija v. Secretary in charge of the General P. W. D. of Union of India: (1970) 36 Cut LT 1089 and by another Division Bench of this Court in the case of Hindustan Steel Ltd. v. P. Boner : ILR (1973) Cut 1218. These decisions were followed in a single Judge decision reported in (1979) 48 Cut LT 505 : (AIR 1980 Orissa 157): State of Orissa v. G. C. Kanungo. In a very recent decision in the case of State of Orissa v. Rama Chandra Sahu: (1981) 51 Cut LT 263 Hon'ble Mr. Justice R. N. Misra (as he then was) relied on the Division Bench decision in ILR (1973) Cut 1218, for the proposition that additional work can be taken to be a part of the principal work and the same arbitration clause would be applicable for disputes arising out of the additional work. In view of the settled position of law, the learned Subordinate Judge was justified in repelling the contention raised on behalf of the appellant.

5. The contention that an Arbitrator has no power to award interest from due date of payment is untenable. It is well settled by the decisions of this Court that the Arbitrator has jurisdiction to award interest from the due date of payment. His power to award interest, however, comes to an end upon the passing of the decree. The period thereafter is covered by Section 29 of the Act. In this connection reference may be made to (1971) 37 Cut LT 937 (State of Orissa v. Govinda Choudhury), AIR 1978 Orissa 121 (Executive Engineer, Ganjam v. Sankar Maharana) and (1981) 51 Cut LT 263 (State of Orissa v. Rama Chandra Sahu).

6. In the present case, the Arbitrator allowed interest @ 6% from the due date of payment till 24-5-1980 and directed that in case the payment was not made by that date, interest would run @ 9% per annum from 26-6-80 (sic) (D/ 25-5-1980?) towards until payment or until the decree whichever was earlier. The learned Subordinate Judge while making the award rule of the Court directed that interest would run @ 6% per annum from the date of award and also at the same rate from the date of decree until payment. Apparently he overlooked the provision in the award for payment of interest @ 9% per annum from 25-5-1980 until payment or until the decree whichever was earlier. He could in exercise of his power under Section 29 of the Arbitration Act, award interest from the date of the decree until payment. No payment having been made before 25-5-1980, the respondent was entitled to interest @ 9% per annum from that date till the date of the decree, as per the award.

7. The result is that the appeal is dismissed and the cross-objection filed by the respondent is allowed in part. The provision as to interest will be that the amount of Rs. 50,465,18 paise payable by the appellant to the respondent will carry interest at the rate of 6 per cent per annum from 1-5-72 to 24-5-1980 and at the rate of 9 per cent per annum from 25-5-1980 till 18/7/1980 and at the rate of 6 per cent per annum from 19-7-1980 until realisation. The decree passed by the learned Subordinate Judge is modified accordingly. Parties are left to bear their own costs in this appeal.


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