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Eastern and North East Frontier Railway Co-operative Bank Ltd. Vs. B. Guha and Co. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward Case No. 156 of 1983
Judge
Reported inAIR1986Cal146,89CWN804
ActsArbitration Act, 1940 - Sections 30 and 33;
AppellantEastern and North East Frontier Railway Co-operative Bank Ltd.
RespondentB. Guha and Co.
Appellant AdvocateJayanta Mitra, Adv.
Respondent AdvocateBhaskar Gupta, Adv.
DispositionPetition dismissed
Cases ReferredIn Firm Madanlal Roshanlal v. Hukam
Excerpt:
- .....of work order. 13. i have set out above the award impugned in this application. the arbitrator has awarded the claim amount without indicating on what basis he had awarded the said sum of rs. 49,199.00 and there was no proposition of law enunciated either. it has not been proved to the satisfaction of the court that there was no evidence at all before the arbitrator in support of the said claim. therefore, it is not possible for this court to hold that there is no evidence before the arbitrator to make the award. it is again well settled proposition of law that the court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record to find out whether or not the arbitrator had committed any error of law. (see n. chellappan.....
Judgment:
ORDER

P.K. Majumdar, J.

1. This is an application under Sections 30 and 33 of the Arbitration Act, 1940 for setting aside an Award dt. 11th July, 1983 made by a sole arbitrator in respect of disputes and claims arising out of Agreement No. PRE-34-A/V-1 dt. 27th March, 1971.

2. The respondent entered into an agreement being Contract No. PRE-34-1/V-1 dt. 27th March, 1971 with the petitioner for construction, addition and alteration of the building at Nos. 34A and 34B Sashi Bhusan Dey Street, Calcutta. By a subsequent agreement dt. 30th June, 1972 the rates of work mentioned in the agreement dt. 27th March, 1971 were revised and the date of the completion of the work was extended till 15th September, 1972.

3. The works under the said contract were completed on or about 31st March, 1973. By a letter dt. 23rd Aug., 1973 addressed to the petitioner the respondent claimed from the petitioner the final bill amount of Rs. 40,950.49 p. and refund of security deposit. By another letter dt. 8th Jan., 1974 addressed to the petitioner the respondent made a further claim of Rs. 58,500/- under the head 'Other claims and dues'. This figure was later on revised upon giving full particulars by the letter dt. 1st March, 1974 to a sum of Rs. 57,563.01 p. By a letter dt. 3rd September, 1974 the petitioner informed the respondent that the said claim of Rs. 57,563.01 p. was placed before the Board of Directors of the-petitioner Bank for consideration and the Board was unable to consider as there was no work order for the work for which the said bill was presented. In a meeting held thereafter on 5th April, 1975 between the parties it was stated by the respondent that there were some addition and alteration work which had to be attended on the instruction for which said Bill for Rs. 59,563,01 p. was submitted and there was no work order for the said work. The petitioner, however, denied and disputed the validity and legality of the said claim of the respondent, and as such refused to make any payment in respect thereof. The petitioner paid the other sums claimed by the respondent.

4. The disputes and differences arose between the parties which were referable to the arbitration under an Arbitration Agreement contained in the said contract between the parties. The respondent made an application in this Court under Section 20 of the Arbitration Act for filing of the said arbitration agreement and for reference of said disputes and differences. The said application was marked as Special Suit No. 24 of 1976. By an order dt. 24th Jan., 1976 this Court directed filing of the said arbitration agreement and further ordered that all matters and differences in the special suit be referred to the arbitration of an arbitrator to be appointed in terms of the said arbitration agreement. An appeal preferred by the petitioner from the said order was dismissed by the Court of Appeal.

5. Thereafter, another application was made by the respondent to this Court for revoking the authority of the General Manager of the petitioner Bank to appoint an arbitrator, and for an appointment of an arbitrator by this Court for adjudication of the said disputes between the parties. By an order dt. 9th February, 1982 this Court allowing the application appointed one Brigadier Mihir Kumar Basu (Retd.) as sole arbitrator to adjudicate the disputes between the parties.

6. The said sole arbitrator duly entered into reference and issued necessary directions regarding submissions of the statements and counter-statements of the case by the respective parties. After setting out the reference and reciting the fact that the parties were given equal opportunities to present their respective cases in detail with all supporting documents and arguments in several sittings and the arbitrator had examined and considered the pleadings, documents produced by the parties the said sole arbitrator made the following Award :

'1. I award and direct that E & N.F. Rly. C.B. Ltd., 34A and B, Sashi Bhusan Dey Street, Calcutta 12, do pay to M/s. B. Guha & Co. 9, Clive Row, Calcutta 1, the undermentioned amounts as shown against items so stated in full and final settlements of all the claims and disputes' referred to the Arbitration before me.

a. Claim amount Rs. 49, 199/-(Rupees Fortynine thousandone hundred ninetynineonly)b. Interest Rs. 45,920/-(Rupees Fortyfive thousandnine hundred and twentyonly)c. Cost Rs. 3,500/-(Rupees three thousandfive hundred only). 2. That the above award sums be paid to M/s. B. Guha & Co. 9, Clive Row, Calcutta 1, within fortyfive days from the date of this award failing which the award will carry an interest of rate 9 per cent per annum from date of expiry of the aforesaid fortyfive days.

3. That the claimant will bear the costs of stamp duty for publication of the Award.

I, Brigadier Mihir Kumar Basu, (Retd.), the Sole Arbitrator, signed and declared this award on this date the eleventh day of July, 1983. Dated, 11-7-83. Sd/- IllegibleBrigadier Mihir Kumar Basu (Retd.)Sole Arbitrator.'

7. The said award is now being challenged in this application on several grounds. Regarding the claim for Rs. 57,563,01 p. the contentions of the petitioner are, first, that the said claim of Rs. 57,563.01 p. was not claimed at all before the Final Account bill or immediately after the completion of the work. It was claimed after nine months after the completion of work and was an afterthought. Secondly, at the hearing before the said arbitrator the respondent failed to produce any evidence to show that any work order in respect of the said work was issued by the petitioner nor there was any evidence before the said arbitrator that the said work was at all undertaken or performed by the respondent. Thirdly, that there was no evidence before the arbitrator as to the rate or value of the said work. It is, therefore, contended that the said Award has been made on the basis of no evidence and is perverse.

8. The said award has also been challenged on the ground that the award for interest is unsupported by either any agreement between the parties or any statutory provision of law. Further, claimant has not given any notice under Interest Act claiming interest and the arbitrator has not indicated on which basis such interest has been awarded. Therefore, the arbitrator had no jurisdiction to award interest. Similarly, the contention of the petitioner is that the arbitrator had no jurisdiction to award cost as no evidence was adduced as to the cost alleged to have been incurred by the respondent.

9. It is well settled proposition of law that only error of law apparent on the face of the award entitles a party to have the award remitted or set aside.

10. In the case of Union of India v. Kalinga Construction Company, reported in : [1971]2SCR184 , the Supreme Court observed that in a proceeding to set aside an award the Court could not sit in appeal over the conclusion of the arbitrator by re-examining and reappraising the evidence considered by the arbitrator and hold that the conclusion arrived at by the arbitrator was wrong. If the findings of the arbitrator are not perverse then the Court even though differs from such finding cannot set aside the award as it cannot be said that there is any error apparent on the face of the award.

11. In the case of Alien Berry and Co. v. Union of India, reported in : [1971]3SCR282 the Supreme Court, referring to the well known decision of the Privy Council on this point in the case of Champsey Bhara and Co. v. Jivraj Baloo Spinning & Weaving Co. reported in AIR 1923 PC 66, observed that as the parties chose their own arbitrator they could not, when the award was good on the face of it. object to the decision either upon the law or the facts. Therefore even when an arbitrator committed a mistake either in law or in fact in determining the matters referred to him but such mistake did not appear on the face of the award or in a document appended to or incorporated in it so as to form part of the award would neither be remitted nor set aside notwithstanding the mistake.

12. In the instant case, it has been stated by the respondent in its affidavit-in-opposition that particulars and the basis of such claim for Rs. 57,563.01 p. have been fully indicated in the letter dt. 8th January, 1974 and the letter dt. 1st March, 1974 and it is also stated that factum of such extra work in respect whereof such bill was submitted was not denied. It is further stated by the respondent that the arbitrator was satisfied on evidence that the work was executed and the payment for the said work was denied by the petitioner on the ground of non-issue of work order.

13. I have set out above the award impugned in this application. The arbitrator has awarded the claim amount without indicating on what basis he had awarded the said sum of Rs. 49,199.00 and there was no proposition of law enunciated either. It has not been proved to the satisfaction of the Court that there was no evidence at all before the Arbitrator in support of the said claim. Therefore, it is not possible for this Court to hold that there is no evidence before the arbitrator to make the award. It is again well settled proposition of law that the Court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record to find out whether or not the arbitrator had committed any error of law. (See N. Chellappan v. Kerala S. E. Board : [1975]2SCR811 ). It is not for this Court, however, to say that in its opinion the evidence was not sufficient to establish the conclusion at which the arbitrator arrived or that the arbitrator has not given proper weight to such evidence. He is the judge of the questions of both fact and of law referred to him, and some finality is attached to his decision.

14. Now I will deal with the petitioner's contention that the award for interest being unsupported either by any agreement between the parties or any statutory provision of law, was clearly inadmissible. Further, claim for interest has not been referred to the arbitrator.

15. The learned Counsel appearing for the petitioner has contended that the claim in respect of, extra work was on the basis of fair and reasonable rates and not on the basis of any rate agreed to by the parties. Learned counsel's contention is that interest can be claimed on a sum certain and is agreed to by the parties. Alternatively, the learned counsel argues that if it is claimed on the basis of a notice under Interest Act then such interest can be claimed on a sum certain which is payable at a certain time. It is the contention that neither the claim on account of extra work was a sum certain nor was it payable at a certain time by virtue of a written instrument. In any event, the learned counsel contends that it was not indicated in the award the basis on which such interest has been calculated and from which period such interest would run. Further, he contends that the question of interest has not been specifically referred to the Arbitrator. The learned Counsel has cited the decision of the Privy Council in Bengal Nagpur Rly. Co. v. Ruttanji Ramji, reported in AIR 1938 PC 67, the decision of the Supreme Court in the case of Thawardas v. Union of India reported in : [1955]2SCR48 .

16. The learned counsel appearing for the respondent has contended that this Court not being a Court of Appeal, cannot investigate as to how the sum awarded as interest has been determined by the arbitrator since the Award is a non-speaking award. The learned counsel has drawn my attention to claimant's statement of claim to show that the claimant has specifically claimed interest at the rate of 12% per annum or at such rate as the arbitrator shall consider reasonable and fair from the date i.e. to say 1st March, 1974 till the date of Award before the arbitrator and due notice was given demanding such interest at the rate of 12 per cent per annum by the letter dated 1st March, 1974.

17. Regarding the arbitrator's jurisdiction the learned counsel for the respondent cited a decision of the Supreme Court in the case of State of Madhya Pradesh v. Saith and Skelton (P) Ltd. reported in : [1972]3SCR233 . In that case the Supreme Court hasobserved as follows :

'31. In Firm Madanlal Roshanlal v. Hukam-chand Mills Ltd., Indore, : [1967]1SCR105 , the power of the arbitrator, to whom the subject matter of a suit had been referred for arbitration, to award pendente lite interest was considered by this Court. It was held in the said decision that all the disputes in the suit were referred to the arbitrator for his decision. One of the disputes, so referred, was whether the respondent therein was entitled to pendente lite interest. It was held that though in terms Section 34 C.P.C. does not apply to the arbitration, it was an implied term of the reference in the suit that the arbitrator was to decide the dispute, according to law, to grant such relief with regard to pendente lite interest as the Court itself could give, if it decided the dispute. It was further held that such a power of the arbitrator was not fettered either by arbitration agreement or by the Act. The decision in : [1955]2SCR48 was distinguished on the ground that the said decision is silent on the question whether an arbitrator can award interest during the pendency of the arbitration proceedings, if all the disputes in the suit including the claim for interest were referred for arbitration.

32. From the decision in : [1967]1SCR105 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.'

18. From the above decision it can be said that the arbitrator has jurisdiction to award interest if such claim is before the arbitrator. The arbitrator has authority to grant interest also from the date of award to the date of the decree. In the present case the arbitrator has made an award for interest for Rs. 45,920/-. It is however, not indicated in the award at which rate such interest has been allowed and in respect of which period. But this Court not sitting in appeal over the conclusion of the Arbitrator cannot investigate as to how such interest has been determined. It also cannot be said that there is an error appearing on the face of the award. Assuming the arbitrator has committed an error in awarding interest, such error not appearing on the face of the award cannot be looked into by this Court exercising a limited jurisdiction.

19. Regarding the cost, it is well settled that under Rule 8, Schedule 1 of the Arbitration Act, arbitrator is empowered to award costs, it is a discretionary relief. The arbitrator has full discretion to pass orders about costs incurred by the parties in connection with the arbitration proceedings.

20. For the reasons aforesaid, the challenge to the Award must fail and the application is hereby dismissed. There will, however, be no order as to costs.


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