JACOB Vs. STATE OF KERALA

JUDGEMENT

(1.) FIRST respondent was the contractor for the work "p. I. P. R. B. Circle, formation of Kaviyoor Branch Canal, 3rd reach from Ch: 2. 300 M - 3576m - including C. D. works". The agreement was executed between the parties on 24-11-1976. Disputes arose during the progress of the work and those disputes were referred to Chief Engineer (Arbitration), Thiruvananthapuram. Chief Engineer (Arbitration) on 22-5-1978 passed a "nil" award. Respondent filed O. P. (Arb) No. 59/78 under S. 30 of the Arbitration Act, 1940, hereinafter referred to as 'the Act', to set aside the award. The Subordinate Judge's Court, Alappuzha, set aside the award by order dated 16-7-1980. Respondent then filed O. P. (Arb) No. 85/84 before the Subordinate Judge's Court, Alappuzha u/s. 20 of the Act for referring the disputes to a fresh Arbitrator appointed by court. This petition was transferred to the Subordinate Judge's Court, Pathanamthitta where it was re-numbered as O. P. (Arb.) 54/85. The court by judgment dated 25-9-1987 appointed Shri. Sankaragankan, retired District Judge as sole Arbitrator.-That order was challenged by the Government before this court in M. F. A. No. 94/88. A Bench of this court by judgment dated - 3-3-1989 appointed Shri. K. Ramakrishnan Nair, retired Chief Engineer (PWD) as the sole Arbitrator. The Arbitrator entered on reference on 22-3-1989. He passed an award on 15-7-1989 on disputes. (1) and (3) in the following terms: Dispute (1): " Extra rate for blasting hard strata is due and payable to the claimant. The respondents shall pay the claimant an amount of Rupees Two Lakhs Twenty eight thousand one hundred and thirty two (Rs. 2,28,132) only on this account. Dispute (3): The claimant is entitled to payment of interest on the amount payable to him as per dispute 1. The respondent shall pay the claimant for the amount of Rs. 2,28,132 interest at the rate of 9% from the date of passing the final bill for the work, ie. 15-5-1978 till the date on which I entered on the reference, ie. 22-3-1989. The amount to be paid on this account is Rupees Two Lakhs twenty two thousand four hundred and twenty eight (Rs. 2,22,428/-) only". All the other claims put forward by the claimant and the counter claims raised by the State were rejected.

(2.) THE Arbitrator then filed the Award before the Subordinate Judge's court, Pathanamthitta under S. 14 of the Act. THE prayer of the Government to set aside the award was rejected by that court. THEreupon it passed a judgment and decree in terms of the award on 30-11-1989. THE judgment and decree were challenged before this court in M. F. A. 355/90 on the ground that the court below had no jurisdiction to receive the award and entertain it under S. . 17 of the Act because the award ought to have been filed in the High Court in view of the fact that the Arbitrator was appointed by this Court. M. F. A. 355/90 was allowed and the judgment and decree passed by the Subordinate Judge's Court were set aside. That court was directed to return the award and the necessary records to the Arbitrator for filing the same before this court. In compliance with that judgment, the Arbitrator filed the award and connected records before this court and it is numbered as O. P. (Arb) No. 7282/1990. Notice under S. 14 (2) of the Act was served on the petitioner. THEreupon petitioner filed application under S. 16, 30 and 33 of the Act for setting aside the award on disputes (1) and (3) passed by the Arbitrator. Petitioner's application is O. P. No. 8642/90.

(3.) THE question whether on setting aside an award is it possible to refer the matter to an Arbitrator without a fresh/arbitration agreement came up for consideration before the Supreme Court in Juggilal v. General Fibre Dealers (AIR 1962 SC 1123 ). THEir Lordships took the view that where an award has been set aside the court may by order supersede the reference and shall thereupon order that the arbitration agreement shall cease to have effect with respect to the difference referred. S. 19 leaves it to the discretion of the court when it decides to set aside an award, whether to supersede the reference or not. THE court may not supersede the reference at all in which case though the award may be set aside the reference will continue. If the court orders supersession of the reference then the consequence of the arbitration agreement ceasing to have effect follows. Where the court decides not to supersede the reference and leaves arbitration agreement to subsist, 'a further arbitration can take place. THEir Lordships stated:- " Where it decides to supersede the reference it has to order that the arbitration agreement shall cease to have effect with respect to the difference referred; but where it decides not to supersede the reference the arbitration agreement subsist and if there is machinery provided in the arbitration agreement for making a further reference or for continuing the same reference, further arbitration can take place".