KURIAKOSE CHENNAKKADAN Vs. STATE OF KERALA REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVERNMENT W.R.(MP) DEPARTMENT GOVERNMENT SECRETARIAT THIRUVANANTHAPURAM

JUDGEMENT

(1.) THE petitioner is a PWD contractor. A work was entrusted with the petitioner for the construction of Kolenchery Branch Canal. He did not complete the work. THE contract was terminated and re-arranged at the risk and cost of the petitioner. THE petitioner raised a dispute in respect of the same. THE dispute was referred for arbitration. A sole arbitrator was nominated by the Subordinate Judge's Court in O.S (Arb.) No. 458 of 1982. THE arbitrator passed Ext.P1 award, wherein the termination of the contract with the forfeiture of security deposited was upheld. But it was held that the re-arrangement of the work shall not be at the risk and cost of the claimant. That award was under the erstwhile Arbitration Act, 1940. Ext.P1 award was not made into a decree by filing the same in court as prescribed in the Arbitration Act, 1940. THEreafter, by Ext.P2, the 2nd respondent informed the petitioner that on account of breach of contract by the petitioner, the respondents suffered damages to the tune of Rs. 5,37,099/- and the petitioner was called upon to pay the same. Exts. P4 and P5 Revenue recovery proceedings were also initiated for recovery of the same. THE petitioner is challenging the said proceedings.

(2.) THE petitioner raises two contentions. THE first is that after suffering Ext.P1 arbitration award, the respondents cannot, without challenging the same appropriately, demand damages from the petitioner contrary to the specific terms of the award. According to the petitioner, once the arbitrator makes the award by signing the same, that becomes final and binding on both parties to the arbitration proceedings and the fact that that the arbitration award has not been filed in court and made into a decree, does not in any way affect the binding nature of the award. THErefore, the respondents cannot, after suffering Ext.P1 arbitration award, take the stand that notwithstanding the finding in the award, insofar as the award has not been made into a decree by filing in court, still they are entitled to recover damages for alleged breach of contract. THE second contention of the petitioner is that the Government being a party to the contract, cannot, by themselves, decide the question of breach of contract and assess damages thereof without having the matter adjudicated upon by an independent authority like a court of law. THE petitioner seeks the following relief:

(3.) THE question as to whether an arbitration award binds the parties to the award notwithstanding the fact that it has not been filed in court and made into a decree is no more res integra, insofar as the Supreme Court has finally spoken on that issue as early as in 1970, in the decision of Sathish Kumar and others v. Surinder Kumar and others, reported in AIR 1970 SC 833. In that case, after considering the effect of Section 14 of the Arbitration Act, 1940 read with Section 3 and Rule 7 of the First Schedule to the Act, the Supreme Court held that the award is final and binding on the parties as soon as the same is signed by the arbitrator, notwithstanding the fact that it has not been made a rule of the court. THE same is a three bench decision. Two of the Hon'ble Judges wrote one judgment and the third Judge wrote a separate judgment, agreeing with the other two Judges, but adding a few words by his own in support of the judgment of the other two Judges which makes a legal position explicitly clear. It is held thus therein: