STATE OF RAJASTHAN Vs. NAV BHARAT CONSTRUCTION COMPANY

JUDGEMENT

(1.) The appellant, State of Rajasthan, invited tenders for construction of Bhimsagar Dam in which one of the tenderer was the respondent. The tender of the respondent was accepted. Accordingly, a contract was awarded to the respondent and under the contract the work was to be started on 16th of November, 1978 and the date of completion was fixed on 15th of May, 1981. One of the terms of the contract was that if any difference or dispute arises between the parties, such dispute or difference shall be referred to arbitration. However, the work was not completed within the time allotted and time was thereafter extended. Inspite of extension of time, the work was not completed. For that reason, the State of Rajasthan terminated the contract and got the remaining work done from some other contractor.

(2.) The respondent raised various claims which were rejected by the State of Rajasthan. The respondent, therefore, moved an application under Section 20 of the Arbitration Act, 1940 (in short the 'Act') for referring the claims mentioned therein to arbitration. The District Judge, Jhalawar by an order dated 11th of November, 1982 held that only one claim was referable to arbitration and refused to refer the other three claims to arbitration. The respondent filed an appeal before the High Court of Rajasthan at Jaipur and the High Court by its order dated 7th of June, 1984 held that it was for the Arbitrator to decide whether the claims were to be awarded or not and accordingly directed that all the four claims be referred to arbitration. The disputes were referred to two Arbitrators. The respondent, however, filed 39 claims amounting to Rs. 42,59,155.56 before the Arbitrators. The parties led oral and documentary evidence. There was a difference of opinion between the two Arbitrators. Therefore, the Arbitrators referred the dispute to an Umpire. The State of Rajasthan, the appellant herein, thereafter filed an application under Section 11 of the Act for removal of the Umpire on the ground of bias. This application was dismissed on 16th of November, 1993. The appellants filed a revision case which also came to be dismissed by the High Court in January, 1995. The Umpire entered into the reference and passed an award on 29th of May, 1995.

(3.) The State of Rajasthan, the appellant herein, filed objections under Sections 30 and 33 of the Act which were dismissed by the trial court and in appeal the respondent filed a cross appeal claiming compound interest. The High Court by a judgment dismissed both the appeals. Feeling aggrieved, both the parties approached this Court and two Civil Appeals were registered. C.A. No. 2500 of 2001 was by the State of Rajasthan which was aggrieved by the dismissal of their objection filed under Sections 30 and 33 of the Act and C.A. No. 2501 of 2001 was by the respondent against the dismissal of their claim for compound interest. By a judgment and order dated 4th of October, 2005 passed in the aforesaid two appeals, this Court had set aside the award of the Umpire and the judgment of the High Court by the following directions: