UNION OF INDIA Vs. ANAND BUILDERS

JUDGEMENT

(1.) BY this petition, the petitioner Union of India seeks to have the Award dated 7th June, 1995 filed in this Court and numbered as Award No. 209 of 1995 set aside.

(2.) THE work of construction of sub-structure such as Abutments, Piles, Bed Block of proposed Road Over Bridge in lieu of level crossing No. 17 at Mahim (for short, the said work) was awarded to the respondent on the terms and conditions mentioned in Contract Agreement No. C and S/482 dated 11th February, 1981. Though the stipulated date for completion of the said work was 26th November, 1981, it was extended upto 15th September, 1982. The said work completed on 15th September, 1982. In respect of the said work executed by the respondent, the disputes and differences arose by and between the petitioner and the respondent and in view of existence of arbitration agreement by and between the parties, the respondent demanded reference thereof to arbitration. However, the Railway Administration declined to make reference to arbitration. The respondent, therefore, filed an Arbitration Suit in this Court under section 20 of The Arbitration Act, 1940 (for short, the Act) for filing the arbitration agreement in Court and for order of reference to arbitration in accordance therewith. By an order passed on 7th January, 1988, the said Arbitration Suit was disposed of and pursuant to the directions of this Court, the General Manager, Western Railway appointed one G. Rammohan, Chief Engineer (Survey), Western Railway and one Smt. Sunita Awasthi, Financial Adviser and Chief Accounts Officer (WST) as joint arbitrators vide reference letters dated 30th March, 1988 and 20th February, 1989. Since delay was caused in proceeding with the reference, the respondent filed Arbitration Petition No. 81 of 1991 in this Court for removal of the said arbitrators and appointment of another arbitrator in place thereof. By the order dated 30th November, 1984 passed by this Court in the said Arbitration Petition No. 81 of 1991, the said G. Rammohan and Smt. Sunita Awasthi were removed as arbitrators and one S. C. Pandian, Chief Engineer (TP), Central Railway was appointed as the Sole Arbitrator in their place. The Court directed the Arbitrator to make the Award within four months from the date of entering upon the reference. The Sole Arbitrator has made the Award on 7th June, 1995 which has been filed in this Court and numbered as Award No. 209 of 1995 (for short, the said Award ). By this petition, the petitioner has challenged the said Award only to the extent of award of interest by the Sole Arbitrator from 30th March, 1988 till the date of the decree of the Court or payment by the petitioner, which ever is earlier.

(3.) MS. Shah, the learned Counsel appearing for the petitioners, has submitted that the Sole Arbitrator failed to appreciate documentary evidence on record as well as terms and conditions of the said contract including the special conditions thereof and while awarding interest as awarded, travelled beyond such terms and conditions and as such, the said Award pertaining to the interest awarded with effect from 30th March, 1988 being bad in law is liable to be set aside. Ms. Shah further submitted that Clause 16 (3) of the terms and conditions of the said contract specifically provided that no interest would be payable by the petitioner upon the earnest money and the security deposit or amounts payable to the respondent under the Contract and in view of specific prohibition for grant of interest as contained in Clause 16 (3), the Sole-Arbitrator could not have awarded interest to the respondent and since the interest has been awarded in contravention and/or breach of the express term of the Contract, the said Award to that extent is bad in law. In support of her submission, Ms. Shah has put reliance on the judgment of the Supreme Court in the case of (Secretary, Irrigation Department, Government of Orissa and others v. G. C. Roy) reported in A. I. R. 1992 S. C. 732.