EXECUTIVE ENGINEER SBC DIVISION Vs. K SUBBA REDDY

JUDGEMENT

(1.) WE have heard the learned Counsel who represents the appellants as also the learned Counsel who represents the respondents who are the l. Rs of the original contractor-claimant. The facts of this case are very similar to all other cases relating to Government contracts insofar as the contract dated 22-7-1985 for construction of Shahapur Branch Canal, upper Krishna Project was awarded to the contractor and this was a time bound contract worth Rs. 37. 27 lakhs. The duration of the contract was one year and the case of the department is that the Contractor neglected to perform his part of the contract, that he had commenced the work at a very late stage, that the amount of work undertaken was absolutely minimal and since this was a World Bank aided projected and the department would have suffered serious prejudice as the time factor was very short and the loan would have lapsed, and that the department had no option except to terminate the contract on 21-7-1986. Pursuant to this, the contractor contended that he is entitled to claim reimbursement for the expenditure incurred by him while executing the contract and secondly, that he is also entitled to claim damages and overhead expenses at the accepted and admitted rates of 15% and 10% respectively. The dispute was referred to the Arbitrator and the learned Arbitrator has after a rather protracted hearing, made an award aggregating to Rs. 21,72,140/- under different heads. He also awarded interest at the rate of 15% per annum on the amount in question until the date of realisation.

(2.) THIS award was the subject-matter of a challenge before the Civil court and the learned Civil Judge by his order dated 8-1-1993 virtually confirmed the award and made it a rule of Court but for some strange reason, which in our view appears to be an error, the learned Judge in the operative part of his order awarded interest at the rate of 15% per annum from the date of the decree until the date of payment. Though there is no cross-appeal against the order of the Civil Court the State has challenged the legality and validity of the Civil Court's order through the present appeal.

(3.) WE have heard the learned Counsels who represent the contesting parties and we have also done a review of the record to the extent that the law would permit. We have brought it to the notice of the learned counsel who represents the appellant, that the law is now very well crystallised and we drew his attention to the earlier decision of this court in M. F. A. No. 650 of 1984 as also to a series of decisions of the supreme Court followed by this Court culminating with the Division bench decision in Union of India v Ravi Construction Company, Bangalore, where again, this Court had occasion to refer to 19 decisions of the supreme Court in all of which the principles of law have been reiterated again and again along with following lines. Firstly, the Courts have consistently held that the scope of challenge in relation to an arbitration award is very very restricted and that barring situations in which there is established misconduct on the part of the Arbitrator or more importantly, where there is a very gross and serious error apparent from the record that the parties having referred the dispute to arbitration are bound by the decision and cannot question it. Secondly, the Courts have also repeatedly held that a review that may be undertaken by the Court in relation to an arbitration award is really restricted to points of law insofar as the Court would not under normal circumstances even permit reappreciation of evidence or factual references because that stage is over when the award has been made. Thirdly, though we have indirectly dealt with this concept earlier what we need to reiterate is that the inflexible rule that emerges in all these situations is that on a finding of fact, barring perversity being established to the extent that the record has been totally ignored or misread, a Court would not interfere with the findings that have been recorded by the Arbitrator. In this background, we brought it to the notice of the appellants' learned Counsel that though a host of submissions were canvassed on the ground that the Arbitrator has arrived at incorrect decisions, that we are now at stage 3 insofar as fortunately for the appellants the Civil Court did entertain the challenge, that they have gone through one lengthy round of litigation before the Civil Court and after hearing the parties and after a review of the record that the Civil Court has confirmed the award in totality. In this background, we brought it to his notice that the law would totally preclude the appellants from asking this Court to reappreciate the record or reopen any issue of fact and for that matter, that the scope of this appeal is very very restricted.