UNION OF INDIA Vs. RAVI CONSTRUCTION COMPANY

JUDGEMENT

(1.) THIS appeal arises out of an order dated 8-11-1994 passed by the XIX additional City Civil Judge, Bangalore, whereby the objections filed by the appellant to an Arbitral Award have been rejected and the award made a rule of the Court. The facts leading to the making of the arbitral reference and the filing of the present appeal may be briefly stated as under: the respondent is a registered civil contractor. Certain civil works in connection with the Hassan-Mangalore Railway project were allotted to the respondent by the Southern Railways of the Union of India in terms of a contract executed by the parties on 7-5-1975. Upon completion of the work, the contractor in terms of a letter addressed by it, raised certain disputes and demanded a reference to the Arbitrator in terms of the provisions of the contract. Petition under Section 20 of the Arbitration act which was registered as O. S. No. 2685 of 1982 was in due course filed by the contractor before the Additional City Civil Judge, Bangalore, for making a reference as the Railway Authorities had not responded to the request for such a reference outside the Court. During the pendency of the said petition, the Railway Authorities nominated 2 of its officers as Arbitrators who were subsequently replaced by Sri R. Sundara raman and Smt. Vijaya Kanth, in terms of a communication dated 15-2-1984. The Arbitrators entered upon the reference and after examining the claims made by the contractor, made an award on 14-11-1984 whereunder the appellant was directed to pay to the contractor a sum of rs. 6,84,018. 12 for the extra work done by it. The said award was filed and registered as A. S. No. 3 of 1989 before the XIX Additional City Civil judge, Bangalore. While the contractor made an application under Section 17 of the Arbitration Act, 1940, for a decree in terms of the award, the appellant filed an application under Section 16 read with Section 30 of the Act for setting aside the same insofar as Items 1, 2, 3 and 11 of the award were concerned. The Court below has by the impugned judgment overruled the objections to the award and passed a decree in terms thereof with interest on the award amount at the rate of 18% p. a. from the date of the award till the date of payment. While doing so, the Court below has come to the conclusion that the award made by the Arbitrators did not suffer from any error apparent on the face of the record and that so long as the award was not unsupported by any evidence whatsoever, it could not be set aside on the ground that the Arbitrators had not properly appreciated the evidence adduced before them. The correctness of the said judgment and award has been assailed by the appellant as already indicated above.

(2.) APPEARING for the appellant, Mr. Ashok Haranahalli argued that the award made by the Arbitrators was vitiated by errors apparent on the face of the record inasmuch as the Arbitrators had accepted without any recording in the measurement books, the claim of the contractor for payment of wages for removal of slips. The measurement books maintained by the department argued Mr. Ashok Haranahalli did not record the existence of any slips or their removal by the contractor. It was submitted that in terms of para 44 of the agreement between the parties, the contractor could and ought to have insisted upon the measurement of the work executed by it. Since no such measurements had been recorded in the measurement books, the Arbitrators could not have allowed the contractor's claim regarding the removal of the slips. It was further contended that insofar as Item 2 of the award was concerned, the Arbitrators had conceded to the contractor rates for the bridge works higher than what was provided for in the agreement. The Arbitrators could not have, according to the learned Counsel determined a rate of their own or made an award on the basis thereof. To the same effect was the objection of the appellant insofar as Item 3 of the award was concerned. This item relating to the redoing of the collapsed protective works was not admissible in the absence of any measurement of the works allegedly done by the contractor in the measurement books. It was contended that the Arbitrators had committed an error in awarding the interest on the security deposit of the contractor, which was according to the learned Counsel contrary to the terms of the agreement executed between the parties. The award of interest by the Court under section 29 of the Arbitration Act was also assailed by Mr. Ashok Haranahalli relying upon the decisions of the Supreme Court in the cases of gujarat Water Supply and Sewerage Board v Unique Erectors (Gujarat) (Private) Limited and Another, Union of India v Jain Associates and another, State of Orissa v B. N. Agarwalla and Executive Engineer, dhenkanal Minor Irrigation Division, Orissa and Others v N. C. Budkaraj (deceased) by L. Rs and Others. It was lastly argued that the claim made by the contractor was barred by limitation and ought to have been dismissed on that ground alone.

(3.) ON behalf of the respondent-contractor, it was per contra argued that interference by the Court with an Arbitrators' award under Sections 30 and 33 of the Act was limited to errors that are apparent on the record. It was contended that so long as there was no allegation that the arbitrators had committed any moral or legal misconduct in connection with the proceedings concluded by them, a Court examining the validity of the award could not sit in appeal, reappraise evidence or substitute its own opinion for that of the Arbitrators. The question whether the contractor had cleared the slips or attended the collapsed protective works as also the question whether the contractor was entitled to claim compensation and if so, at what rates for the said works were all matters that fell within exclusive jurisdiction of the Arbitrators. The Arbitrators having appreciated the material placed before them and recorded their conclusions, this Court cannot interfere with the said conclusions merely because on a reappraisal of the entire matter, the Court may come to conclusions different from those of the Arbitrators. The question whether the claim was barred by limitation being a mixed question of law and fact, the finding of the Arbitrators was final and binding. Similarly, the question whether the security deposit could earn interest and if so, for what period were all matters to be determined on the basis of the provisions of the agreement on which the Arbitrators' opinion would be conclusive and final. The grant of interest by the Court below at 18% p. a. from the date of the award till the payment of the amount awarded was also supported by the learned Counsel on the decisions of the Supreme Court including the one in State of Jammu and Kashmir and another v Dev Dutt Pandit.