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Union of India (Uoi) Vs. Builders Union - Court Judgment

LegalCrystal Citation
SubjectArbitration;Limitation
CourtOrissa High Court
Decided On
Case NumberMisc. Appeal No. 36 of 1981
Judge
Reported inAIR1981Ori188; 52(1981)CLT369
ActsLimitation Act, 1963 - Sections 5 - Schedule - Article 119; Arbitration Act, 1940 - Sections 3, 29, 30 and 39; Code of Civil Procedure (CPC) , 1908 - Order 41, Rule 22
AppellantUnion of India (Uoi)
RespondentBuilders Union
Appellant AdvocateStanding Counsel (Central Govt.)
Respondent AdvocateP. Palit and ;J. Patnaik, Advs.
Cases ReferredState of Orissa v. Rama Chandra Sahu
Excerpt:
.....the objection within the period of limitation. 5. the legal position is well settled that the award of an arbitrator cannot be set aside unless there is an error of law apparent on the face of the record. 1695): the umpire has awarded interest to the respondent on the footing that for the purpose of carrying out his contract with the government of india, the respondent was required to make arrangement by borrowing monies from his bankers and he had to pay interest in the behalf, and when the contract was abandoned after it was partially performed, the government of india became liable to make good the loss of interest which the respondent suffered. it is now well settled by series of supreme court decisions that unless there is a specific clause in the agreement, prohibiting award..........copy of the award from the court and on 22-8-80 filed an application for amendment of his original objection dated 10-7-80 by furnishing details of his objections to the award. on 2-9-80, the appellant made an application under section 5 of the limitation act to condone the delay in filing the objection. section 5 of the limitation act provides for extension of the prescribed period of limitation if the petitioner satisfied the court that he had sufficient cause for not preferring the objection within the period of limitation. the delay, in my opinion, was due to the fact that the appellant was misled by the notice issued by the court in which the date of filing of objection was fixed to 9-7-80. it is contended on behalf of the appellant that the executive engineer, central division. c......
Judgment:

P.K. Mohanti, J.

1. This is an appeal under Section 39 of the Arbitration Act against a decision of the learned First Additional Subordinate Judge. Cuttack rejecting the appellant's objections to the award of the Arbitrator on the ground of limitation.

2. The respondent was entrusted by the Union of India with the work of 'Strengthening and Extension of Main Runway and Apron, and Construction of Parallel Taxi-tracks at Charbatia, S. H.: Runway. Taxi Tracks and culverts'. Dispute between the parties arising out of the agreement was referred to Shri B. M. Das, Superintending Engineer, N. H. Circle, Bhubaneswar, He made the award on 17-3-80 and sent it to the court with a forwarding letter. The award was received by the court on 18-3-80. In his forwarding letter the Arbitrator had requested the court to fix his remuneration and indicated that the copies of the award would be made over to the parties only after they deposited his remuneration as fixed by the court. The copies of the said forwarding letter were sent to the parties by the Arbitrator. On 27-5-80 the appellant received a notice from the court below to the effect that the arbitrator had filed the award on 18-3-80 and any objection to the said award might be field by 9-7-80 failing which action would be taken according to law. In pursuance of the said notice the appellant appeared in court on 9-7-80 and prayed for time to file objection against the award. The court below did not pass any order on that application, but adjourned the case to the next day for consideration. On the next day, that is, 10-7-80 the appellant filed an objection on general grounds since he had not received a copy of the award. On 18-8-80 a copy of the award was supplied to the counsel for the appellant. On 22-8-80 the appellant applied for leave to amend his objection petition dated 10-7-80. The prayer for amendment was resisted by the respondent on the ground that the objection petition dated 10-7-80 was itself barred by limitation. On 2-9-80 the appellant made an application under Section 5 of the Limitation Act to condone the delay in filing the objection. The court below after hearing the parties held that the objection filed on 10-7-80 was barred by limitation and there was no sufficient ground for condonation of delay. Accordingly, the objections filed on 10-7-80 and 22-8-80 were dismissed as barred by limitation, and a decree in accordance with the award was passed. Aggrieved by his order the appellant has come up in appeal.

3. An application for setting aside an award for getting an award remitted for re-consideration must be made within thirty days from the date of service of the notice of the filing of the award as prescribed under Article 119 (b) of the Limitation Act. In the present case notice of the filing of the award was received by the appellant on 2G-5-80. Thus, the limitation for filing the application expired on 26-6-80. It appears, however, that in the notice issued by the Court the appellant was required to file his objection to the award on 9-7-80. The appellant appeared in court on 9-7-80 and applied for time to file objection. No order was passed on that application and the case was adjourned to 10-7-80 when the appellant filed his objection on general grounds since he had not received the copy of the award. On 18-8-80 the appellant received the copy of the award from the court and on 22-8-80 filed an application for amendment of his original objection dated 10-7-80 by furnishing details of his objections to the award. On 2-9-80, the appellant made an application under Section 5 of the Limitation Act to condone the delay in filing the objection. Section 5 of the Limitation Act provides for extension of the prescribed period of limitation if the petitioner satisfied the court that he had sufficient cause for not preferring the objection within the period of limitation. The delay, in my opinion, was due to the fact that the appellant was misled by the notice issued by the court in which the date of filing of objection was fixed to 9-7-80. It is contended on behalf of the appellant that the Executive Engineer, Central Division. C. P. W. D. had no occasion to ascertain the period of limitation inasmuch as a date was already fixed in the notice. It is difficult to hold that the delay was due to want of bona fides of the appellant. The appellant cannot be held guilty of negligence so as to disentitle him to plead sufficient cause under Section 5 of the Limitation Act. It is urged on behalf of the respondent that a mistake or ignorance of law is not a sufficient cause for condonation of delay under Section 5 of the Limitation Act. In my opinion, if the mistake is bona fide it would be considered as sufficient cause within the meaning of Section 5. It is clear that the appellant committed the mistake being misled by the notice issued from the Court. A party should not suffer for the mistake of the Court. In the particular facts and circumstances. I feel sufficient grounds are made out for condonation of delay in filing the objections. The decision of the court below cannot therefore be sustained.

4. Although the Court below had not dealt with the merits of the case, both parties desired that the case be heard on merits by this Court (vide Order No. 6 dated 10-4-81). Accordingly, the case was heard on merits.

5. The legal position is well settled that the award of an Arbitrator cannot be set aside unless there is an error of law apparent on the face of the record. The award is ordinarily final and conclusive, unless a contrary intention is disclosed by the agreement. The agreement is the decision of a domestic tribunal chosen by the parties, and the civil courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. Wrong or right, the decision is binding, if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement. (See AIR 1963 SC 1685, Union of India v. Rallia Ram). Keeping these principles in mind, I proceed to consider the contentions raised in this appeal.

6. The learned counsel for the appellant contended that interest could not be awarded as the items of claim which have been allowed by the Arbitrator could not have been paid unless there was an adjudication either by the Arbitrator or by a competed court of law. Reliance is placed on the decisions of the Supreme Court in Thawardas Pherumal v. Union of India, AIR 1955 SC 468 and Union of India v. A. L. Rallia Ram, AIR 1963 SC 1685.

7. In Thawardas's case (AIR 1955 SC 468) their Lordships observed that the following among other conditions must be fulfilled before interest can be awarded:

(i) There must be a debt or a sum certain:

(ii) It must be payable at a certain time or otherwise:

(iii) These debts or sums must be payable by virtue of some written contract at a certain time;

(iv) There must have been a demand In writing stating that interest will be demanded from the date of the demand.

The correctness of the above observations was doubted by the Supreme Court in the case of Nachiappa Chettiar v. Subramaniam Chettiar, AIR 1960 SC 307 and also in the case of Satinder Singh v. Umrao Singh. AIR 1961 SC 908. The ratio of the decision in Thawardas's case was explained by their Lordships in Firm Madanlal Roshanlal Mahaian v. Hukumchand Mills Ltd, Indore, AIR 1967 SC 1030 and Union of India v. Bungo Steel Furniture Private Ltd AIR 1967 SC 1032. In Firm Madanlal s case the Arbitrator having awarded interest, the award was challenged on the ground of want of authority in the arbitrator to award interest pendente lite. Reliance was placed on Thawardas's case. Their Lordships repelled the contention on the following observations fat p. 1032):

'......It will be noticed that the judgment of this Court in Thawardas's case, (1955) 2 SCR 48 : (AIR 1955 SC 468), is silent on the question whether the arbitrator can award interest during the pendency of arbitration proceedings if the claim regarding interest is referred to arbitration. In the present case, all the disputes in the suit were referred to the arbitrator for his decision. One of the disputes in the suit was whether the respondent was entitled to pendente lite interest. The arbitrator could decide the dispute and he could award pendente lite interest just as a court could do so under Section 34 of the Code of Civil Procedure. Though, in terms, Section 34 of the Code of Civil Procedure does not apply to arbitrations, it was an implied term of the reference in the suit that the arbitrator would decide the dispute according to law and would give such relief with regard to pendente lite interest as the Court could give if it decided the dispute. This power of the arbitrator was not fettered either by the arbitration agreement or by the Arbitration Act, 1940. .........'

The same question again came up for consideration in the case of Union of India v. Bungo Steel Furniture Private Ltd. : AIR 1967 SC 1032. After quoting the relevant paragraph from Thawardas's case their Lordships laid down (at p. 1035):

'This passage supports the argument of the appellant that interest cannot be awarded by the arbitrator after the date of the award but in later cases it has been pointed out by this Court that the observations of Bose, J. in (1955) 2 SCR 48: (AIR 1955 SC 468), (supra), were not intended to lay down such a broad and unqualified proposition. ...... it is an implied term of the reference that the arbitrator will decide the dispute according to existing law and give such relief with regard to interest as a Court could give if it decided the dispute. ...'

In the case of State of Madhya Pradesh v. Saith and Skalton (P) Ltd. : AIR 1972 SC 1507 it was pointed out (at p. 1514):

'...it is clear that if all the disputes are referred for arbitration, the arbitrator has power to award interest pendente lite, i.e. during the pendency of the arbitration proceedings.'

In the case of Ashok Construction Company v. Union of India, (1971) 3 SCC 66 their Lordships laid down that a claim for interest from the due date of the claim till the claim was laid was admissible.

8. In Rallia 'Ram's case (AIR 1963 SC 1685), relied upon by the appellant, interest was awarded against the Union of India by the arbitrator by giving reasoning in that behalf. Their Lordships dealt with the said reasoning for awarding the interest and observed as follows (at p. 1695):

''The umpire has awarded interest to the respondent on the footing that for the purpose of carrying out his contract with the Government of India, the respondent was required to make arrangement by borrowing monies from his bankers and he had to pay interest in the behalf, and when the contract was abandoned after it was partially performed, the Government of India became liable to make good the loss of interest which the respondent suffered. We know of no principle on which the Government of India could be rendered liable for payment of interest in the circumstances relied upon....'

I am unable to appreciate as to how the decision in this case helps the appellant.

9. In a Bench decision of this Court in the case of State of Orissa v. Govinda Choudhary, (1971) 37 Cut LT 937 their Lordships reliving on the previous decisions of the Supreme Court held as follows:

'It is now well settled by series of Supreme Court decisions that unless there is a specific Clause in the Agreement, prohibiting award of interest the Arbitrator has jurisdiction to award interest from the due date of payment till the date of the award......'

10. In a recent decision of this Court in the case of State of Orissa v. Consolidated Construction Company (Engineers and Contractors). (1981) 52 Cut LT 63 : (AIR 1981 SC 166) it was held that unless there be clear exclusion, the arbitrator would have jurisdiction to entertain a claim for interest. Reliance was placed on the decision in the case of Ashok Construction Company v. Union of India, 1970 SCC 530.

11. In another decision of this Court in the case of State of Orissa v. Rama Chandra Sahu, (1981) 51 Cut LT 263 it was also held that the arbitrator has jurisdiction to grant interest where the entire dispute has been referred to him and that grant of interest from due date till the date of the award is unquestionable.

12. In the present case, a dispute regarding interest was in fact the subiect-matter of the arbitration before the arbitrator. In para 7 of the award the arbitrator has recorded that the claimants had claimed interest at the rate of 12 per cent per annum from 15-3-68 to 14-9-77 and future interest at the rate of 12 per cent per annum from 15-9-77 till the date of final payment on the claimed amount and that the respondents in their counter statement had disputed such claim. It appears from para 23 of the award that final bill of the contractor was accepted on 16-5-68. The arbitrator allowed past and pen-dente lite interest from 1-6-68 till 17-3-80 at the rate of 9 per cent per annum and at the rate of 6 per cent per annum from the date of the award till the date of the decree. I am, therefore, satisfied that the dispute as to the claim for interest was referred to the arbitrator. The award is not a speaking award. It gives no reason for awarding interest. In the circumstances, it is not open to the appellant to raise any contention relating to the award of interest.

13. The next contention of the appellant is that the award of the arbitrator does not disclose the disputes to he arbitrated upon and hence the award is bad in law. Admittedly this was a reference under Section 8 of the Arbitration Act. Under this section the Court does not make any reference to the dispute. It makes appointment of an arbitrator or an umpire as the case may be, After the appointment is made it is for the parties to file their claims before the arbitrator. The arbitrator is to see whether there is really any dispute between the parties. The existence of a dispute is an essential condition of the jurisdiction of an arbitrator. If there is no dispute there can be no arbitration at all. In the present case, the parties filed their claims and counter claims before the arbitrator. In para 8 of the award the arbitrator has stated:

'After having given my anxious consideration to all aspects of the claims and counters of the Claimants and Respondents, I proceed to give my award on the various claims submitted by the claimants as follows:'

In a schedule appended to para 8 he has given the particulars of the claim, the amounts claimed by the claimants and the amounts awarded by him on different items. He has also referred to the dispute between the parties regarding the claim of interest. Both the parties appeared before the arbitrator, filed their claim and counter claim, produced materials in support of their respective contentions and were heard. In such circumstances, it is difficult to accent the contention that the arbitrator did not examine the Question as to whether there was any dispute between the parties.

14. The next contention is that certain items of claim allowed by the arbitrator are beyond the purview of the agreement between the parties. It is argued that the claim for additional work is not covered by the agreement. It is now well settled by a series of decisions of this Court that, additional work can be taken to be a part of the principal work and the same arbitration Clause would apply to disputes relating to such extra work. Therefore, the contention that for extra work the arbitration Clause does not apply and the extra work is not arbitrable is devoid of any force.

15. The next contention is that the claim involves factual aspects and requires proof, but no evidence having been adduced the award is based on no evidence. In para 6 of the award the arbitrator has stated that he examined the claims and counter claims of the claimants and the respondents very carefully in the light of all the materials produced before him and he had given full opportunity to the parties of supporting their respective cases before him. He has, however, not made any reference to the evidence in support of his findings. The law, as it now stands, is that the arbitrator being a domestic tribunal is not required, while making award to refer to the evidence produced by the parties or to record reasons therein for allowing or disallowing the amounts claimed by them and it is not necessary for him to give specific finding on each of the separate claims. If an arbitrator has come to a wrong conclusion, it would not be a ground for setting aside the award. In view of the position of the law stated above, the mere fact that the arbitrator did not refer to any evidence produced by the parties does not render the award invalid.

16. The respondent has filed a cross-objection against the order of the court below disallowing interest from the date of decree. It is urged on behalf of the appellant that the cross-objection is not maintainable. Section 39 of the Act specifies the orders which are appealable. It does not provide for an appeal against an order declining to award interest from the date of decree under Section 29 of the Act In an appeal under Section 39 all that the appellate court can consider is whether the order of the court below refusing to set aside the award was proper or not. Neither any cross-objection regarding the order disallowing interest under Section 29 of the Act could be filed in such an appeal nor can this Court consider whether the respondent is entitled to interest or not. It is provided by Order 41, Rule 22, C. P. C. that a respondent:

'Though he may not have appealed from any part of the decree, may ....... take any cross-objection to the decree which he could have taken by way of appeal.........'

It is, therefore, obvious from the very language of the Statute that a cross-objection can be taken in respect of that matter only which can be agitated by means of an appeal. If a cross-objection is allowed to be filed in respect of an order which could not be agitated by means of an appeal the very purpose of law will be defeated. I, therefore, hold that the cross-objection filed by the respondent is not maintainable.

17. In view of my above findings, I would, while reversing the order of the court below on the question of limitation, dismiss the appeal on merits. The cross-objection is dismissed as not maintainable. The parties are directed to bear their own costs of this appeal.


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