STATE OF KERALA Vs. N. C. SOBHITHA PRASAD

JUDGEMENT

(1.) Work by name "NIP-forming a jeep road from Pattakulam to Mylottumoozhi in between 7th and 9th kilometres of RBC- 1st section" was awarded to the respondent by agreement dated 05.04.1980. The respondent undertook to execute the work by 20.06.1980, based on the schedule of rates prevailing in 1979-80. After executing the agreement he made a security deposit of Rs.1,850/- also. During the course of execution, disputes arose between the parties and the contractor could not complete the work. At the time when the parties were blaming each other for not completing the work, the respondent staked amounts from the appellants, the State of Kerala represented by the Chief Secretary and the Executive Engineer, Irrigation Division, Thiruvananthapuram. As his demands were not met, he moved the Principal Sub Court, Thiruvananthapuram with O.S.(Arb.) No.242/1986 under Sections 5, 8 and 20 of the Indian Arbitration Act, 1940, hereinafter referred to as the Act. The learned Sub Judge, by judgment dated 26.02.1991, decreed the suit and the Chief Engineer (Arbitration), Government of Kerala was appointed as Arbitrator for the purpose of the settlement of the disputes. However, by the time the matter was taken up, the post of Chief Engineer (Arbitration) stood abolished and thereafter Sri.S. Krishna Iyer was appointed as Arbitrator, who did not take up the proceedings. Ultimately, Sri.V. Ganesan, former Chief Engineer, PWD was appointed as Arbitrator, who passed the impugned award dated 05.12.2015 whereby the appellants were directed to pay an amount of Rs.38,48,773.71/-, including refund of security deposit of Rs.1,850/-, Rs.4,36,324.05/- towards hill tract allowance at the rate of 15% and Rs.5,01,772.656/- as loss of profit at 15%; the appellants were also directed to pay interest at the rate of 18% per annum with effect from 12.06.1986.

(2.) Aggrieved by the award, the appellants moved the Principal Sub Court, Thiruvananthapuram under Section 30 of the Act seeking to set aside the award; the respondent also filed an application under Section 17 of the Act for passing a decree in terms of the award. By a common order dated 29.07.2016 the learned Principal Sub Judge dismissed the application for setting aside the award, whereas the application moved by the respondent was allowed except in respect of the rate of interest. The court had granted interest only @ 9% per annum from 12.06.1986. Aggrieved by the same, the State and the Executive Engineer have preferred this appeal under Section 39 of the Act.

(3.) We heard Sri.K.V. Sohan, the learned State Attorney for the appellants and Sri. T. Krishnanunni, the learned senior counsel appearing for the respondent.