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Union of India (Uoi) and ors. Vs. Sharma and Company and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration;Contract
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil Miscellaneous Appeal No. 63
Judge
Reported in1979WLN806
AppellantUnion of India (Uoi) and ors.
RespondentSharma and Company and anr.
Excerpt:
.....is pet verse and cannot be sustained.;we are also at a loss to understand as to from where the learned district judge has taken this date. it is not known that where the contents of the notice dated february 18, 1967, alleged to have been issued by the arbitrator. there is not a word in the application by the applicant as to on which date the arbitrator will be deemed to have entered on the reference or as to when the arbitrator was called upon to act by a notice in writing from any party to the arbitration agreement.;the allegation made in the application in this respect is vague and incomplete and to make the matters worse the reply on the point is conspicuous by its complete silence. in such a state of pleadings and absence of material on the re cord, it is well high impossible..........the replication was opposed on behalf of the union of india which also filed a written reply. the learned district judge, bikaner, framed five issues on the pleadings of the parties. none of the parties produced any evidence. however, the applicant put in an affidavit of one shiv lal no other document was tike by any of the parties except a copy of the award. even the record of arbitration was not summoned by the court. by his judgment dated may 15, 1969, the learned district judge held that the weather during the period the comment was to be completed was abnormally bad on account of dust-storm, and, therefore, the applicant had to suspend the work for 23 days. in this view the matter, the learned district judge came to the conclusion that the penalty was wrongly imposed upon the.....
Judgment:

C.M. Lodha, C.J.

1. These are two connected appeals arising out of proceedings under the Arbitration Act, 1947 (which will hereinafter be referred to as theAct).

2. The facts brought on the record are inadequate, and, therefore, it may not be possible to narrate all the relevant facts giving rise to these appeals. Suffice it to say, that the respondent M/s Sharma and Company entered into a contract with the Union of India far constructing concrete pavements and brick enclosures etc. at Nil, Bikaner. An agreement was duly executed by the parties. It is the common case of the parties that the work was to be commenced on July 10, 1963, and was to be completed on May 9, 1964. There is also no dispute on the point that the work was not completed before the stipulated date The respondent made an application on May 2, 1964, for extension of time to finish the work and extension was granted upto June 9, 1964, but the work was not completed within the extended time. The parties are further agreed that it was actually completed on June 28, 1964, that is, after 19 days of the extended time. This gave rise to certain differences between the parties and, consequently, in accordance with the tetras of the agreement, a request was mule to the Arbitrator Mr. G.R. Mirchandani, Section 1, (Works) Engineer in Chief's Branch, Kashmir House, New Delhi, to decide the points of dispute between them The arbitrator gave his award on September 6, 1967. The relevant portion of the award reads as under:

1. Claimant's Claim.

(a) Claim No. 1 for Rs. 48394.54 - The amount recovered as compensation by the respondent. Claim is rejected.

(b) Claim No. 2 for Rs. 1610 20 - The amount recovered by respondent from the final bill on account of repair charges of 2 Nos. Road Rollers - E/M9541 and E/M 9423.

Respondent shall refund the amount of Rs. 161020 (Rupees one thousand six hundred and ten and paise twenty only) to the claimant.

(c) Claim No. 3 for Rs. 2982 78 The amount recovered by respondent from the final bill towards the cost of coal dust consumed in excess.

Respondent shall refund the amount of Rs. 2982.70 (Rupees two thousand nine hundred & eighty two and paise twenty only to the claimant.

2. Cost of Reference:

Each party shall bear their own cost of reference.3. Cost of Stamp - paper.

Cost of stamp paper shall be borne by the respondent.

3. On October 5, 1667, the respondent M/s. Sharma and Company made an application under Section 30 and 33 of the Act praying that the award may be set aside to the extent penalty has been imposed upon the applicant. Act and the award may be remitted and referred to arbitration to the said arbitrator Shri Mirchandeni or to any other arbitrator whom the court may be pleased to appoint for reconsideration and for giving a fresh award. The replication was opposed on behalf of the Union of India which also filed a written reply. The learned District Judge, Bikaner, framed five issues on the pleadings of the parties. None of the parties produced any evidence. However, the applicant put in an affidavit of one Shiv Lal No other document was tike by any of the parties except a copy of the award. Even the record of arbitration was not summoned by the Court. By his judgment dated May 15, 1969, the learned District Judge held that the weather during the period the comment was to be completed was abnormally bad on account of dust-storm, and, therefore, the applicant had to suspend the work for 23 days. In this view the matter, the learned District Judge came to the conclusion that the penalty was wrongly imposed upon the applicants the learned District Judge also found that the arbitrator shall be deemed to have entered on the reference on the date he issued notice to both the parties fixing the date of hearing and that notice was issued on February 10, 1967. He further found that under Rule 3 of the first Schedule to the Act read with Clause 70 of the agreement the period for giving the sward was four months but the award had actually been given after the expiry of the period without obtaining the orders for the sis on from the court. In this view of the matter he found that the award was ineffective. In the result the learned District Judge allowed the applicant's claim on May 15, 1969, and observed as follows:

In view of the findings given above, I allow the claim of the petitioners in respect of Rs. 40,39454 as well besides the claims allowed by the arbitrator. The award is modified in terms of the order given above under Section 15 of the Act. No parties will get costs.

Appeals No. 63 of 1969 is directed against the Judgment dated May 15, 1969.

4. Thereafter on May 21, 1969 M/s. Sharma & Company made another application under Sections 14 and 17 of the Act praying that the modified award may be made the rule of the court, and, in accordance with the modified award a decree for Rs. 52,817.44 be passed against the Union of India. It appears that even though Shri Dwarka Prasad Joshi appeared on behalf of the Union of India, yet no reply was filed to the application. In fact, nothing was done on behalf of the Union of India. By his order dated 18-9-69 the learned Distt. Judge ordered that the modified award dated 15-5-1969, be made the rule of the court & a decree be framed accordingly. It was also observed in the order that no arguments whatsoever had been advanced on behalf of the Union of India by its lawyer. Accordingly, a decree for Rs. 52,987.44 was passed against the appellant. Miscellaneous Appeal No. 1 of 1970 is against the judgment and decree dated September 18/26, 1969.

5. Learned Counsel for the appellant Union of India has urged that the District Judge erred in holding that the award is ineffective on account of having been made after the expiry of the period of four months after entering on the reference. In this connection, he has submitted that there is nothing on the record to show that the arbitrator enterred on the reference 10.2.1967. We are also at a loss to understand as to from where the learned District Judge has taken this date It is not known what were the contents of the notice dated February 10, 1967, alleged to have been issued by the arbitrator. There is not a word in the application by the applicant as to on which date the arbitrator will be deemed to have entered on the reference or as to when the arbitrator was called upon to act by a notice in writing from any party to the arbitration agreement. Our attention has been invited by the earned Counsel for the respondent to para 3 of the application, wherein it is stated that the arbitration committed an illegality in imposing a penalty of Rs. 48,394.54 after the time fixed This is neither here nor there It has been submitted on behalf of the Union of India that the notice was issued on May 20, 1967 fixing the date of hearing to July 24, 1967 and, consequently, the period of four mouths expired on September 20, 1967 whereas the award had been given on September 6,1967 (Refer to Ground No. 1(ii) of the Grounds of Appeal, dated July 22, 1960, filed in this Court), It is further submitted on behalf of the appellant that the applicant took part in the arbitration proceedings right upto the time the award was made, and, therefore, he with be deemed to have consented to the award being given after the expiry of four months, and, therefore, he is now estopped from questioning the validity of the award.

6. We are constrained to observe that no foundation has been laid by any of the parties for these arguments. In the first place, as stated above, the allegation made in the application in this respect is vague and incomplete and to make the matters worse the reply on the point is conspicuous by us complete silence. In such a state of pleadings and absence of material on the record, it is well nigh impossible for us to given any finding either way.

7. Then again, surprisingly enough, the learned Judge has proceeded to examine the merits of the question whether time should have been granted or not it is too late in the day to point out that it is not open the court to scrutinse the correctness of findings of fact arrived at by the arbitrator. The only grounds on which an award can be set aside are mentioned in Section 30 of the Act, which reads as under-

30. An award shall rot be set aside except on one or more of the grounds, namely J

(a) that an arbitrator or umpire has misconducted himself or the proceeding;

(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35,-

(c) that award has been improperly procured or is otherwise invalid.

8. Time is not a word in the judgment by the learned District Judge that the arbitrator has misconducted himself or the practicing's or that the award has been improperly procured or is otherwise invalid. Consequently, the finding arrived at by the learned District Judge that the arbitrator had no sight to impose penalty is perverse and cannot he sustained.

9. Now, as to the question of modifying the award, reference may be made to Section 15 of the Act, which reads as under:

power of the Court to modify award:

10. The Court may by order modify or correct an award-

(a) where it appears that a part of the award is upon a matter not referred in arbitration and such part can he separated from the other and does not affect the decision on the matter referred, or

(b) where the award is imperfect in form, or contains an obvious error which can be amended without affecting such decision, or

(c) where the award contains clerical mistake or an error arising from an accidental slip or omission.

10. It is writ large in the pleadings, of the parties as well as in the judgment of the lower court that none of the grounds for modifying the award Was been either pleaded or made out, yet, curiously enough, without there being any application under Section 15 of the Act, by his judgment dated May 15, 1969, the learned District Judge modified the award. Taking advantage of this situation the applicant subsequently made an application under Section 17, which, as already be stated above, was allowed and a decree for Rs. 52,982,44 was passed in favour of the applicant against the Union of India.

11. In our opinion, the where proceedings on both the applications under Section 30 as well as under Section 17, are misdirected. We do realise that the parties are to come in a large measure for this hopeless state of pleadings in disregard of the elegant provisions of law, but it was at the same time the duty of the court to have got the pleadings clarified and then to have proceeded in accordance with law after looking into the relevant provisions of the Act. It is sufficient to point out that under Section 41 of the Act the provisions of Code of Civil Procedure apply to all proceedings before the Court under the Act. Thus the court could have called for better further particulars in order to get the pleadings clarified and in order to frame proper issues, but nothing seems to have been done in this respect. With the result that no proper trial of the case has taken place. The only proper course in these circumstances is to set aside the judgment dated May 15, 1959, in appeal No. 53 of 1969, and the judgment and decree dated September 18/26, 1959, in Appeal No. 1 of 1970 and remand the case for proper trial.

12. Accordingly, we allow both the appeals in part, set aside the judgment dated May, 15, 1969 as well as the Judgment and decree dated September 18/26, 1969, and send the case back to Court of District Judge, Bikaner to try and decide the matter afresh in accordance with the provisions of the Act. He will proceed on the lines indicated above. It is needless to observe that the court may call for further and better particulars from the parties and then frame proper issues. It would also give an opportunity to both the parties to lead evidence. The record before the arbitrator may also be summoned for which an application seems to have been made by the applicant but thereafter everybody forgot about it. The parties are left to bear their own costs of these appeals.


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