STATE OF ANDHRA PRADESH Vs. Y SHIVA SHANKAR

JUDGEMENT

(1.) This appeal is preferred by the State of Andhra Pradesh against the judgment of the V. Additional Judge, City Civil Court, Hyderabad in O.P.No.296 of 1987 filed under Sections 30 and 33 of the Indian Arbitration Act, 1940 ('the Act' for brevity) requesting to set aside the arbitration award dated 14-8-1986.

(2.) The first respondent is a contractor and the second respondent is the sole arbitrator in this appeal. The contractor entered into an agreement with the State of Andhra Pradesh on 11-8-1980 for forming a road from Naidupet, Durgarajapatnam road to Sriharikota with a link road to Armagoan Light House at Wadapalem covering a distance of 6 km. for a sum of Rs.17,42,759.00. As per the terms and conditions of the agreement, the matter is referable to arbitration. The contractor contended that he suffered various losses in execution of the work due to various delays and defaults on the part of the department. The arbitrators identified by both parties failed to give the award, therefore, the contractor filed O.P.No.366 of 1983 on the file of the II Addl. Judge, City Civil Court, Hyderabad to appoint a sole arbitrator. Accordingly, Sri Justice M. Krishna Rao, a retired Judge of the A.P. High Court was appointed as the sole arbitrator. The arbitrator after entering into reference and concluding the hearing, passed an award on 14-8-1986 and filed O.S.No.1076 of 1986 on the file of the V Additional Judge, City Civil Court, Hyderabad under Sections 14(2} and 17 of the Act to make the award as the rule of the Court. The department while contending that the suit is not maintainable on various grounds also filed O.P.No.296 of 1997 under Sections 30 and 33 of the Act to set aside the award dated 14-8-1986. The arbitrator mentioned in the plaint that he considered all the documents filed by both parties and rightly passed the award in favour of the contractor for a sum of Rs.1,81,184.00 together with interest at 15% per annum till the date of decree or payment, whichever is earlier from 9-11-1985.

(3.) The department contended that the award passed by the arbitrator is illegal, unjust, arbitrary and contrary to the facts and circumstances of the case. The department further alleged that the Arbitrator misconducted the proceedings by not considering the entire material placed before him and by coming to an erroneous conclusion allowed the claim referred by the contractor wrongfully. There is no justification on the part of the arbitrator to award Rs.725.00 towards compensation for seizure of lorry of the contractor, There is no material to award Rs.30,456.00 towards the cost of the work done in respect of claim No,6. The arbitrator is not entitled to collect half of the fees payable by the petitioner behind the back of the department and it amounts to misconduct and the award is liable to be set aside on that ground. The arbitrator has no power to direct the State to pay interest at 15% from the date of default till the date of payment or decree. There is no justification for the arbitrator to direct refund of deposits to a tune of Rs.20,000.00 as Earnest Money Deposit (EMD) and Rs.35,723/- regarding claim No.6. The State therefore requested to dismiss the suit filed by the arbitrator and to allow the petition by setting aside the award dated 14-8-1986. C.R.P.No.2754 of 1997: