STATE OF BIHAR Vs. PRASAD CONSTRUCTIONS

JUDGEMENT

(1.) This is an appeal under Section 39 (1) (vi) of the Arbitration Act, 1940 (hereinafter referred to as 'the Act'). The plaintiff-respondent, a registered partnership firm engaged in carrying on various kinds of business including contract business, entered into a contract with appellant No. 1, namely, the State of Bihar in the Public Works Department (hereinafter referred to as 'the Department') on 6-5-1967 for construction of an R. C. C. high level bridge at village Gaurichak. One of the terms of the agreement was that all disputes and differences arising between the department and the contractor would be referred for decision to a sole arbitrator to be chosen with common consent of the parties. The work was taken up by the plaintiff. There was delay in the completion of the work and each party held the other responsible for the delay and ultimately the Department rescinded the contract and the claim of the plaintiff would not be settled. Thereupon the plaintiff filed an application under Section 20 of the Act in the court of the Second Subordinate Judge, Patna (vide Title Suit No. 70 of 1972) stating the circumstances and his claim against the appellants and prayed that notices be issued to the appellants requiring them to file the agreement in the court and in case they failed to do so the certified copy of the agreement produced by the plaintiff be deemed to have been filed and refer the dispute between the parties detailed in Schedule 1 read with Schedule II of the application to an arbitrator who should submit his award within the time which the court may fix. The total amount claimed on account of various items detailed in Schedule II of the application was laid at Rs. 2,74,30-1.73 after a set off of the amounts received by the plaintiff from the Department. To this he had added a sum of Rs. 6,585.48 on account of interest calculated at 12 per cent per annum from 31-1-1970 to 31-1-1972, The application under Section 20 of the Act was filed on 15-2-1972.

(2.) After hearing the parties the learned Subordinate Judge, by his order dated 20-11-1973, overruled the objections filed on behalf of the appellants and directed that the agreement be filed and in the absence of a consensus between the parties as to who should be appointed arbitrator, he appointed Shri Shiva Chandra Prasad, a retired High Court Judge, to be the arbitrator and, accordingly, a reference was made to him.

(3.) The arbitrator gave his award on 20-5-1975. He held that the rescission of the contract by the appellants was invalid and while he disallowed the claim for interest, he awarded a sum of Rs. 2 lacs only as a consolidated sum in respect of all the other items of the claim in Schedule II except item No. 5 thereof which he disallowed as not having been pressed. He also allowed interest pen-dente lite at 6 per cent per annum.