Ltd Vs. The State of Himachal
Pradesh & Ors
 INSC 256 (6
ANAND, K. VENKATASWAMI
close and careful scrutiny of the facts we find that the dispute in these
matters lies in a very by referring to matters which have no real relevance to
the actual disputes in these matters.
facts leading to the filing of these two matters are the following :
work of construction of Sitla Bridge over river Ravi at Champa
was awarded after negotiation to the applicant/petitioner (M/s Steeman Ltd) on
31.2.1969. We are not giving details as they are not necessary. As there was
some dispute between the parties regarding the progress of the works and
payments for the same. The petitioner Company submitted disputes/differences
for adjudication by and arbitrator as per clause 29 of the agreement. While so,
the Executive Engineer, Champa division imposed penalty of Rs.
in addition to rescinding the contract on imposing penalty, the petitioner Company
successfully appealed to the Government of Himachal Pradesh. Consequently, the
Company was allowed to proceed with the work and the disputed were referred to
Arbitrator orginally appointed was not acceptable to the petitioner Company one,
Mr. R.K. Sarkar was appointed as arbitrator by mutual consent of parties. The
said arbitrator entered upon the reference.
the arbitration proceedings were going on the respondents again rescinded the
contract finally on 7.6.1972.
7.10.1972. The petitioner Company submitted additional claims before the
arbitrator consequent upon the rescinding of the contract finally. The
petitioner Company also raised a question of law before the arbitrator. namely,
whether the respondent was competent to rescind the contract on the ground of
slow progress when the matter in dispute was subjudice before the arbitrator
during the pendency of the case. The arbitrator referred that question for
opinion of the Himachal Pradesh High Court under Section 13(b) of the Indian
Arbitration Act. While that was pending, it appears that in the place of Mr.
R.K. Sarkar one Mr. O.B. Sablok was appointed as arbitrator. The petitioner
challenged the substitution of the arbitrator before the High Court. The High
Court while setting aside the removal of Mr. R.K. Sarkar and the appointment of
Mr. O.B. Sablok as arbitrator. Since no orders were passed by the High Court
for proceeding further with the arbitration matter the petitioner company moved
this court by filing Transfer Petition No, 233 of 1980 for transfer of the
cases to some other High Court. This court disposed of the Transfer Petition on
12.3.1984 by appointing on Mr. G.N. Ramaswamiah.
Engineer (IPH) H.P. P.W.D with the mutual consent of the parties with a
direction to the said arbitrator to enter upon the reference and directing both
the parties to appear before him on 3.9.1984.
said arbitrator duly entered upon the office. held as many as 10
sitting/hearings and drew minutes of every meeting in detail. Based that an
award has been passed 14.6.1985.
High Court (before which the question of law above mentioned, was referred to
by Mr. R.K. Sarkar, the previous Arbitrator) disposed of the matter on 3.7.1986
stating that since the successor Arbitrator had made the award, there was no
need to answer the question. On that view. The High Court dismissed the
reference matter. Aggrieved by that the above special leave petition has been
we asked the learned Senior Counsel appearing for the petitioner whether anything
survives in the special leaves petition not only in view of the issues raised
before the Arbitrator for adjudication but also having regard to the arbitrator
appointed by this Court passing the award, the learned counsel frankly
submitted that the special leave petition has become infructuous. Accordingly,
we dismiss the same as having become infructuous. Accordingly, we dismiss the
same as having become infructuous.
has been filed in this Court. Petitioner has filed objections to the award.
the award as such, the learned counsel raised four points.
first point raised is that the arbitrator should have answered the question of
law raised before the predecessor arbitrator and the failure to do so vitiates
the arbitrator has made a non-speaking award and, therefore, it is not possible
to find out whether he has applied his mind to that part of the claim amounting
to rupees two lakhs eighteen thousand which represented the good sized after
rescinding the contract.
the arbitrator has no given reasonable opportunity of meeting the case of the
respondents and also in establishing the petitioner's case. In support of this
contention he placed reliance on Suresh Ragho Desai and Another vs. Smt. Vijaya
Vinayak Ghag (1988) 4 SCC 591) and Rajpur Development Authority & Others
vs. M/s Chokhamal Contractors & Others (1989) 2 SCC 721).
the last point is that the interest awarded was at too low a rate as the claim
was for 18% and the award was at 6%.
as the first point is concerned. we do not think that the said question arises
out of the present arbitration proceedings inasmuch as this Court appointed the
present arbitrator to go into the disputes between the parties and the parties
were directed to place before the arbitrator their respective disputes. As a
matter of fact by consent of both the parties, the arbitrator framed issues for
adjudication and it does not appear from the issues that the question of law
not being raised was one of the issues, further the so called question of law
loses its relevance, after the appointment of the new arbitrator by this Court,
as indeed no act of rescinding the contract took place after this court
appointed the Arbitrator. Therefore, there is no substance in the first point.
the second point, the facts are like this.
petitioner company's demand in the original claim under clauses I & II read
as follows :- (in round figure of 1000 rupees)
work done by the company upto 16.9.1972 when it was forcibly dispossessed, approximately
..... 12,00,000/- Less value received from H.P. PWD, in the shape of cash or
material .... 3,00,000/- ------------------ 9,00,000/- Plus for property of the
company illegally & forcibly taken over on 16.9.72 by the Department (+)
4,18,000/- Less value of material handed over to the company (-) 2,00/000/-
--------------------- 11,18,000/- Total mount on account of work done and
property forcibly taken over plus interest @ 18% p.a. from 16-9- 72 to 15-9-84,
i.e. for 12 years (+) 24,15,000/- The total sum to which the company is
entitled as on 15-9-84 under this head 32,33,000/- II. Damages on account
criminal breach of Trust, fabricating false evidence, mischief, forgery,
cheating, with intent to cause in just loss and injury to the petitioner. The
company claims a illegally deprived of 11,18,000/- The above claims were
modified before the present Arbitrator which read as follows:- Claims preferred
by the Petitioner:- I (a) Claim on works done by the Company upto Rs.
11,18,000/- (b) Interest on the amount under I(a) @ 18% per annum for a period
of 12 years.
II. Claim made by the company under reasons whatsoever as per clause of the
agreement Rs. 11,18,000/- [Other clauses omitted as not relevant] The
Arbitrator has passed the award on the basis of the amended claim as follows :-
------------------------------------------------------------ S.No. Claims
preferred by Amount Awarded amount the petitioner claimed (Rs.)
------------------------------------------------------------ I.(a) Claim on work done 11,18,000/- I award Rupees by
the company upto Forty Two 16.9.72. thousand Nine hundred Forty Nine and Sixty
three paisa only (Rs.42,949.63) (b) Interest on the 24,15,000/- I award simple
amount under I(a) interest of six per cent for 12 years upto this date
amounting to Rupees Thirty Thousand Nine Hundred Twenty Three and Seventy three
II. Claims made by the 11,18,000/- I award Rupees company on damages Twenty
Three this is amended Hundred twenty claim from the Five lying in earlier item
for deposit with reasons whatsoever Respondent.
clause of the Further I agreement), and award Rupees amount is the same Fifty
Thousand on inventory of stores etc.
Seventy Three Thousand Two hundred twenty Five only).
The Arbitrator was in out opinion quite justified in not awarding any amount
under a separate head for the property of the Company forcibly taken possession
in he light of the amended claims presented before him. There is thus no
substance in the argument that the claim as originally put forward regarding
company property allegedly taken possession of by respondent illegally and forcibly,
was not separately considered by the Arbitrator. Answer is obvious viz. no.
such separate claim was made by the petitioner in the amended claim. Hence we
have no hesitation to reject the second point also.
as the third point is concerned, namely that the petitioner was not given
reasonable opportunity to substantiate the case, we do not think that we can
accept that contention after perusing the detailed minutes of the Arbitrator
drawn at the sittings which extended to 10 in number. As a matter of fact, we
find that the Arbitrator had called upon the petitioner Company time and again
to furnish document to support the claims. But. The petitioner has only partly
complied with the directions of the Arbitrator. The Arbitrator had given full
and reasonable opportunity to both parties to put forward their respective
claims. At the last sitting dated 5.4.85. the Arbitrator observed as follows :-
"As far as oral hearing is concerned, it is closed but in case any
clarifications are needed by the court after receipt of final reply from both
the parties within the dates stipulated above. The parties may be summoned at
short notice to seek such clarifications needed by the court.
to the above, it appears the Arbitrator sent letters to both parties seeking
advantage of that, learned counsel for the petitioner argued that the
arbitrator has not given reasonable time to the petitioner to clarify the
doubts. The learned counsel also invited our attention to a post-script found
at the concluding part of the proceeding dated 30.5.85. The post- script reads
as follows :- "That during course of hearing, petitioner requested of and
interval to see the documents and give clarifications. Accordingly.
court adjourned for half an hour during the course of the proceedings.
to the learned counsel, the time given by Arbitrator was totally inadequate toe
clarify the doubt and therefore, there was no reasonable opportunity. As
pointed out earlier, after going through the minutes of the Arbitrator drawn
during in the argument. Further neither of the counsel was in a position to
explain as to who made the post-script and when was it entered in the
proceedings of the Arbitrator. The decisions cited by the learned counsel for
the petitioner in support of his argument that want or reasonable opportunity
would vitiate the award by not come to his aid as we are satisfied on the facts
of the case from the record including the minutes drawn meticulously, that the
Arbitrator had given full and reasonable opportunity to both parties.
Accordingly we find no force in this point as well.
regards the last point concerning the interest, we are informed that there is
no clause in the agreement regarding interest. Before the arbitrator both
parties appear to have agreed on the rate of interest at 18%.
the Arbitrator i the facts and circumstances of the case awarded interest at
6%. The agreement between the parties does not mean that the Arbitrator was
bogged down to that rate irrespective of other facts and circumstances of the
case on hand. We have no good reason to think that the Arbitrator has awarded
interest at 6% as against 18% claim without taking into account the relevant
facts and circumstances of the case. Further the jurisdiction of the Court to
interfere with the award is confined to matters enumerated in Section 30 of the
Arbitrator Act. We do not think that the last point resided before us would
fall within the ambit of Section 30 to interfere with the award.
result the Interlocutory Application 1/90 in Transfer Petition (Civil) No.
233/80 as well as Special leave petition (Civil) No. 15978/86 stand dismissed.
However there will be no order as to costs.