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Manifold Machines (P) Ltd. Vs. Municipal Corporation of Delhi - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberSuit No. 759A of 1975
Judge
Reported in14(1978)DLT231
ActsArbitration Act - Sections 20
AppellantManifold Machines (P) Ltd.
RespondentMunicipal Corporation of Delhi
Advocates: Usha Mehra and; Sanjiv Aggarwal, Advs
Cases ReferredArbitrator. In Bungo Steel Furniture (P.) Ltd. v. Union of India.
Excerpt:
.....in respect of the question of interest claimed by the petitioner ? 2. whether the arbitrator has misconducted himself in awarding interest to the petitioner ? 3. whether the arbitrator has misconducted himself in awarding the balance amount of 10% of the price of the storage tank to the petitioner before it bad worked successfully for one year ? 4. relief......arbitrator entered upon reference on 1st may, 1975, and gave his award on 29th august, 1975. the arbitrator awarded and directed as under : 1.that the respondent municipal corporation of delhi shall pay to the claimant-contractor messrs manifold machines private limited a sum of rs. 3.809.00 plus interest as stated in para 2 below. 2. (i) simple interest at the rate of 6 per cent per annum is allowed on rs. 35,584.50 p. from 4th june, 1973 to 17th march, 1975 and on rs. 2,959.00 from 18th march, 1975 to 30th april, 1975. (h) simple interest at the rate of 6 per cent per annum is also allowed on amount of award from 1st may, 1975 to the date of decree or payment, which ever is earlier. 3. that expenses incurred in connection with the non-judicial stamp paper for this award shall be.....
Judgment:

Sultan Singh, J.

(1) The question in these proceedings is as regards the power of an Arbitrator to award interest from the date of claim till the date of decree. The respondent-corporation on 1st March, 1973, placed an order with the petitioner for the supply of Bitumen Storage Tank of 10 M.T. capacity. The petitioner supplied the Tank. But it appears that a complaint was lodged with the Vigilance Department of the Corporation about the sub-standard supply of the Tank. The concerned file regarding the claim of the petitioner was, thereforee, seized by the Vigilance Department, but the case was closed by the Vigilance Department and the file was returned to the Engineering Department on 7th March, 1975.

(2) In the mean time the petitioner filed an application under Section 20 of the Arbitration Act. On 23rd April, 1975, Mr. S.P. Kapil, Superintending Engineer (Arbitration) in Municipal Corporation of Delhi, was appointed by the Commissioner, Municipal Corporation of Delhi, to decide and make award regarding the disputes referred to him by the contractor. The Arbitrator entered upon reference on 1st May, 1975, and gave his award on 29th August, 1975. The Arbitrator awarded and directed as under :

1.That the respondent Municipal Corporation of Delhi shall pay to the claimant-contractor Messrs Manifold Machines Private Limited a sum of Rs. 3.809.00 plus interest as stated in para 2 below. 2. (i) Simple interest at the rate of 6 per cent per annum is allowed on Rs. 35,584.50 P. from 4th June, 1973 to 17th March, 1975 and on Rs. 2,959.00 from 18th March, 1975 to 30th April, 1975. (H) Simple interest at the rate of 6 per cent per annum is also allowed on amount of award from 1st May, 1975 to the date of decree or payment, which ever is earlier. 3. That expenses incurred in connection with the non-judicial stamp paper for this award shall be borne by the claiment.

(3) The Arbitrator filed the Award in court and notices of filing of the same were issued to the parties. The Corporation filed its objections, LA. No. 368 of 1976. The petitioner filed its reply and the following issues were framed on 15th April, 1977, by T.P.S. Chawla, J. :

1. Whether there was no reference to the arbitrator in respect of the question of interest claimed by the Petitioner 2. Whether the Arbitrator has misconducted himself in awarding interest to the petitioner 3. Whether the Arbitrator has misconducted himself in awarding the balance amount of 10% of the price of the storage tank to the petitioner before it bad worked successfully for one year 4. Relief.

(4) The petitioner in his statement of claim before the Arbitrator submitted four items of claim, i.e. Claim No. 1. Balance payment of Rs. 2,959.00 and refund of earnest money amounting to Rs. 600.00 . Claim No. 2. Damages suffered on account of failures and defaults of the respondent amounting to Rs. 50,000.00 . Claim No. 3. Interest amounting to Rs. 800.00 . Claim No. 4. Cost of proceeding amounting to Rs. 20001-.

(5) These are main claims made by the petitioner before Arbitrator. He also gave further details of the various claims in his statements of claim.

(6) The contention of the learned counsel for the corporation is that there was no reference to the Arbitrator in respect of the question of interest claimed by the petitioner. The order dated 23rd April, 1975 of the Commissioner, Municipal Corporation of Delhi, appointing Shri S.P. Kapil, as Arbitrator, requires him to decide and make his award regarding the disputes/ claims referred to him (Arbitrator) by the contractor. Thus, it would appear that the Arbitrator was specifically decide he claims referred to him by the contractor. As already stated, the petitioner claimed interest in his statement of claim and, thereforee, it cannot be said that there was no reference to the Arbitrator in respect of the question of interest. It is an established principle of law that there is no misconduct on the part of an Arbitrator if he awards interest.

(7) The petitioner has further claimed in claim No. 1 the balance payment of Rs. 2,959.00 and the refund of earnest money amounting to Rs. 600.00 , which, according to the learned counsel for the respondent. Corporation, is the balance amount of 10 per cent of the price of the storage tank. Thus, there was a claim by the petitioner before the Arbitrator with respect to the balance amount of 10 per cent of the price. The question raised by the learned counsel for the Corporation is that the Arbitrator has no power to grant 10 per cent of the price of the storage tank unless the tank: has worked successfully for one year. The tank was supplied in 1973 and the award was given on 29th August, 1975. The Corporation must have submitted its claim and defense to the claim of the petitioner contractor before the Arbitrator and it is not a matter for the Court to arbitrate whether the contractor was entitled to 10 per cent of the price of the storage tank or not. The Arbitrator in his award, as already stated, has awarded the amount i.e. 10 per cent of the balance of the claim, besides interest, as detailed above.

(8) The Supreme Court in the State of Madha Pradesh v M/s Saith and Skelton (P.) Ltd. and others, : [1972]3SCR233 , has held that the Arbitrator has power to award interest pendente-lite when the disputes are referred to him. In the Supreme Court case interest was awarded to the claiment from the date when the amount became payable as balance of price of goods supplied. It was further observed that there was no contract between the parties not to pay interest on the amount that may be found due. In the present case also there is no term that interest would not be payable to the petitioner.

(9) The Supreme Court in Firm Madan Lal Roshen Lal Mahajan v. Hukamchand Mills Ltd. Indore, : [1967]1SCR105 , has held that the Arbitrator has power to award pendente lite interest. Again, in Union of India v. Bungo Steel Furniture Private Ltd., : [1967]1SCR324 , it has been held that the Arbitrator has power to award interest subsequent to the passing of the award up to the date of the decree.

(10) The next contention of the learned counsel for the Corporation is that the award is unintelligible in as much as it is not possible to determine how the amount of Rs. 3.809.00 awarded to the petitioner was arrived at by the Arbitrator. It is not for the court to sit over the judgment of the Arbitrator has taken into consideration the claim put in by the petitioner and after hearing the parties, the Arbitrator has awarded a sum of Rs. 3,809.00 , besides interest to the petitioner. It is not for the court to find out how this figure of Rs. 3,809- was arrived at by the Arbitrator. In Bungo Steel Furniture (P.) Ltd. v. Union of India. : [1967]1SCR633 , it has been held that the award of certain amount as compensation without giving reasons as to how it was arrived at could not be held to be erroneous on face of record, by testing its validity on basis of laws applicable to breaches of contract.

(11) The learned counsel for the respondent Corporation has cited the judgment in re: M/s G.S. Atwal and Co V. Union of India, : AIR1976Delhi150 , where in Dalip K. Kapur, J. has held that the award could not be up held as it had apparently decided matters outside the scope of reference. This judgment, cited by the learned counsel for the Corporation, is not applicable at all to the facts of the present case.

(12) In view of the above discussions, my conclusions on the various issues are as follows:

ISSUENo. 1. There was reference to the Arbitrator in respect of the question of interest claimed by the petitioner. Issue No. 2. The Arbitrator has not misconducted himself in awarding interest to the petitioner. Issue No. 3. The Arbitrator has not misconducted himself in awarding the balance amount of 10 per cent of the price of the storage tank to the petitioner, before it had worked successfully for one year. Issue No. 4. The objections filed by the Municipal Carporation of Delhi are dismissed and the award dated 29th August, 1975, made by Mr. S.P. Kapil, Superintending Engineer (Arbitration), Municipal Corporation of Delhi, is made a rule of the court. A decree in terms of the award is passed accordingly and future interest at 6 per cent from the date of decree till the date of realisation is further awarded to be petitioner against the respondent. The petitioner shall also be entitled to costs of these proceedings which are assessed at Rs. 250.00 . The decree sheet be drawn accordingly. The award shall form part of the decree.


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