Mr. V.V. Raghavan vs M/s. Madras Refineries Ltd., Madras and M/s. Sri Prasad Constructions

Lakshmanan, J.—This petition was filed by Mr. Justice V.V. Raghavan who was appointed as the sole Arbitrator in regard to the disputes

between the first respondent, M/s. Madras Refineries Ltd., Madras and the second respondent M/s. Sri Prasad Constructions. The first

respondent M/s. Madras Refineries Ltd. is a limited Company having its office at Manali, Madras-68. The second respondent is M/s. Sri Prasad

Constructions represented by its sole Proprietor Ch. Baba Prasad, having its office at No. 11, Nawab Habibullah Avenue, Nungambakkam,

Madras-34.

The first respondent with a view to expand its activities at Manali, called for tenders for site grading work at Manali as a first step in their

expansion Scheme. The second respondent was one of the eight tenderers and after negotiations the second respondent''s tender was accepted on

22.4.1981 and the work was to be completed within one year, i.e., within 12 months. As per the contract the work was to be done at seven

places in Manali and time was made the essence of the contract, the outer limit of one year in any event was to be kept up, although for various

items of work at the seven places any delay may be excused and time extended, and if not so extended under the terms of the contract, the second

respondent agreed to pay compensation up to a maximum of 10% of the contract value.

It is stated in the petition that the second respondent committed default in execution of the contract, with a result that they had to pay

compensation sought to be recovered at the maximum rate. The second respondent did not complete the work within the one year period resulting

in the appointment of a substitute contractor for completing the balance of the work. Thus M/s. Madras Refineries, the first respondent, claimed

Rs. 3,46,678 as compensation for delay during the period of the contract and a sum of Rs. 25,13,205/- as excess payment by reason of the

appointment of the substituted contractor, which was increased to Rs. 32,50,446/- by an amendment of the claim.

The second respondent, Sri Prasad Constructions disputed the claim of the first respondent and made a counter claim under various heads like

value of materials at site, compensation for wrongful termination of contract, etc., with the result that the Arbitration clause had to be invoked.

Under the Arbitration clause, the Chairman of the first respondent, M/s. Madras Refineries Ltd. or his nominee has to decide the dispute between

the parties. The first respondent in deciding the disputes between the parties, named Mr. Justice V.V. Raghavan, (Retired), who is the petitioner

herein, as the Sole Arbitrator. Accordingly the petitioner also consented to act as an Arbitrator and convened the first meeting and settled the

procedure and proceeded with the enquiry.

The first respondent filed 58 documents in support of their case and the second respondent filed 97 documents. There was no oral evidence.

After elaborate enquiry, the Arbitrator made an award on 15.4.1984 directing the first respondent M/s. Madras Refineries Ltd., to pay the second

respondent a sum of Rs. 4,32,260/- and gave a month''s time for payment and further directed payment of interest at 11% per annum, the interest

to run on the expiry of the one month period from the date of the award namely, by 15.5.1984. Along with the original award the petitioner had

also enclosed the documents filed by the first respondent (Annexure I), documents filed by the second respondent (Annexure II), the minutes of the

51 meetings (Annexure III), and extension of time for making the award made from time to time on consent of the parties (Annexure IV). The

petitioner therefore Prayed this Court to receive the Award dated 5.4.1984 and to issue notices to the respondents of filing of the above award.

It is seen from the receiving seal of the Original Side of our Court, the Original Petition was presented on 29.9.1984. The matter was returned

by the High Court office on 1.10.1984 and the papers were again represented on 17.11.1984. On 19.11.1984 again it was returned by the office

directing the petitioner''s counsel Mr. K. Lakshmi Narayanan, to file a petition to condone the delay in re-presenting the petition. Though the

petition was returned by the office as early as on 19.11.1984, the direction made earlier by the office of the Original Side of this Court, was

complied with only on 28.6.1990.

Application No. 2932 of 1990 in O.P. Diray No. 14448 of 1984 was filed on 28.6.1990. Mr. K. Lakshmi Narayanan, counsel appearing for

the Arbitrator filed an affidavit stating that though the papers had been returned by the office in November, 1984 the papers were misplaced and

he lost the track of the same. Subsequently when the counsel appearing for the second respondent contacted him in February, 1990 and enquired

about the matter he made a fresh search for the papers and traced the same during March, 1990 and wanted to re-present the papers.

Unfortunately at that time the petitioner was seriously ill. So he wanted him to recover from the illness for the purpose of signing the papers.

However the petitioner did not recover from the illness but he died on 9.4.1990. Under these circumstances, the counsel appearing for the

petitioner Mr. Lakshmi Narayanan, himself filed an application to condone the delay of 2034 days in re-presentation of the O.P. papers. The

matter was posted before the learned Master on 3.7.1990. On 12.7.1990 the Master ordered notice to the respondents returnable by 19.7.1990.

On 19.7.1990 the learned Master passed the following order:-

Counsel for Applicant and R.1 & R.2 present. R.2''s counsel has no objection for the delay being condoned. Call on 24.7.1990 with counsel''s

name.

On 24.7.1990, again the learned Master passed the following order:-

Counsel for both the Applicant and respondents present.

The counsel has filed an affidavit undertaking the responsibility for the delay.

In view of the averments the application is allowed and delay condoned.

Thus the Master has condoned the delay of 2034 days in re-presentation of the O.P. papers in the presence of the counsel appearing for both the

respondents. Thereafter the office has again returned the papers on 13.8.1990 directing the counsel appearing for the Arbitrator to comply with the

following three returns:-

The Original Award along with all the documents should be filed.

It should be clearly stated in the petition under which provision the Court Fee is paid.

Notice to respondents should be filed.

The matter was represented on 16.8.1990 (counsel signed on 15.8.1990) with the following endorsement:-

The Original award has been filed along with the documents on 29.9.1984. I now understand that the Original award and documents have been

misplaced. I am filing herewith another Original of the award duly signed by the Arbitrator.

Hence the petition may be numbered.

Paragraph 7-A of the petition states the provisions under which the court fee has been paid.

4 copies of the notice to the respondents are filed.

Complied with and returned.

(Sd.) K. Lakshmi Narayanan

Counsel for the petitioner.

On 23.8.1990 again, the office returned the papers with the following, query .

Since the petitioner is no more it may be stated how this petition is maintainable?

On 27.8.1990 the O.P. papers were re-presented by the counsel appearing for the petitioner with the following endorsement.

It is submitted that the petition is maintainable. The original award and documents were caused to be filed by the petitioners through his duly

authorised advocate in 1984. The petitioner was very much alive then, and died only in June, 1990. S.14(2) of the Arbitration Act is satisfied if the

petitioner had either filed the award or had authorised any one to file the award before his death. Both the conditions are satisfied here. (Please

Panchanan Dey Vs. Union of India (UOI), . Hence the petition is maintainable.

Even assuming the S.14(2) is not satisfied this Honourable Court has inherent powers under S.40) of the Arbitration Act, read with S.151,

C.P.C. Hence the O.P. is maintainable. (Please see Panchanan Dey Vs. Union of India (UOI), .

If the office is not satisfied the matter may be posted before Court.

(Sd.) K. Lakshmi Narayanan,

27.8.1990

Counsel for the petitioner.

Thereafter the office placed the matter before me for directions regarding numbering of the present petition on 28.9.1990. I directed the office to

post the matter for orders before court. After hearing the respective counsel I passed the following order on 4.9.1990:-

Heard the learned counsel for the petitioner. On the date when the original petition was filed, the Arbitrator was very much alive. He died only

on 9.4.1990.

In my view, S.14(2) of Arbitration Act is fully satisfied. It is represented by the learned counsel for the petitioner that the original award and alt

other documents which have been filed by the Arbitrator are either not traceable or misplaced.

The office is directed to trace the original award and all the documents filed along with the original petition and place the same before this Court.

The office is directed to comply with this direction and report such compliance. The office is directed to number the original petition and post it for

orders.

The duly signed copy of award already filed by the counsel for the petitioner will be received by the office and the same will be treated as

original award till the original award is traced out.

Thereafter the office was able to trace the entire original documents and placed the entire records before me after numbering the O.P. It appears

when the matter was returned by the office on 19.11.1984 the office has not returned all the original papers and the documents filed by the

Arbitrator along with the original petition. It appears from the return by the office dated 13.8.1990, the office has directed the learned counsel

appearing for the Arbitrator to file the Original Award alone with all the documents etc. In fact all the documents including the Original Award had

been retained by the Original Side of our Court, the O.P. petition alone was returned on 19.11.1984. In fact, while re-presenting the papers on

16.8.1990 the learned counsel appearing for the petitioner states that the Original Award has been filed along with the documents on 29.9.1984

and that documents and the original award have been misplaced. As a matter of fact, the original award and all the documents have been traced by

the office which were retained by them from the year 1984. Only now pursuant to my direction dated 4.9.1990, the office has traced all the

original papers. While so, the second respondent himself has filed an Application No. 2152 of 1990 to direct the third respondent Mr. K. Lakshmi

Narayanan, counsel appearing for the Arbitrator to prosecute the Original Petition relating to the award of the second respondent dated 14.4.1984

and bring it up for hearing before the court. It appears from the records that the said petition had been taken out as early as April, 1990. In the

affidavit the second respondent has stated that he sent a registered letter dated 3.6.1987 to the Sole Arbitrator requesting him to file the award into

court, and that arbitrator replied by his letter dated 11.6.1987 storing that he had handed over the award to Mr. K. Lakshmi Narayanan,

Advocate, who in turn filed the award into court. The Sole Arbitrator has also directed the contractor to contact the counsel for the sole arbitrator

for further details. It is further stated that the contractor contacted the counsel several times, but he did not give the number of the Original Petition

for receiving the award or the date of the presentation of the original petition in this court.

It is useful to refer paragraphs 6 to 9 of the said affidavit filed in support of the Application No. 2152 of 1990:

I state that the second Respondent''s letter dated 11.6.1987 clearly shows that the third Respondent has been duly authorised by the second

respondent to file the award into court and prosecute the same. The aforesaid letter also shows that the award has been filed into this Hon''ble

court and has been numbered even in June, 1987. Although years have passed since the award has been filed into court, the Applicant herein is yet

to receive summons in the Original Petition or even know the number of the Original petition.

I state that the Award has been passed in favour of the Applicant and the Applicant is anxious to have the award made into a rule of court.

The cause of action arose within jurisdiction of this Hon''ble Court where the 1st Respondent is residing and carrying on business and where the

second respondent is residing. The cause of action arose on 14.7.1981 when the contract was entered into between the Applicant and the first

Respondent, on 14.4.1984 when the second Respondent made an award, on 3.6.1987 when the Applicant requested the second respondent to

file a petition under S.14(2), on 11.6.1987 when the second respondent replied stating that the award has already been filed into court and

numbered.

I am advised to state that this Hon''ble Court is the ''Court'' within the meaning of S.2(c) of the Arbitration Act, 1940 to entertain and dispose of

this application.

It is seen from the above averments that the contractor (second respondent in O.P.) is not at all at fault and that the delay is solely attributable only

to the counsel for the arbitrator. As stated above the matter was returned by the office as early as on 19.11.1984 and the same was re-presented

only on 28.6.1990. The Original Side office of this Court is also to some extent responsible for the delay, since according to the office, all the

documents have been returned already to the counsel appearing for the petitioner and hence they directed the counsel appearing for the petitioner

to file the Original Award along with all the documents under its return dated 13.8.1990.

The fact also remains that the entire documents were available only with the office and were traced only pursuant to my directions dated 4.9.1990.

The Original Petition was also numbered pursuant to my direction dated 4.9.1990.

When the matter was listed before me on 18.9.1990. I passed the following order:-

Receive the award. Issue notice to respondents. At this stage Mr. Utham Reddy, Advocate, takes notice for 1st respondent. Mr. K.C. Rajappa,

Advocate takes notice on behalf of 2nd respondent. Call on 22.10.1990.

It is seen from my above order that respondents 1 and 2 had personal knowledge of the filing of the award as early as on 18.9.1990. On

24.10.1990 when the matter was listed for final hearing, Mr. Utham Reddy, counsel appearing for the first respondent, M/s. Madras Refineries

Ltd., represented that his client is not filing any application under S.30 of the Arbitration Act, to set aside the award. However, Mr. Utham Reddy

argued that though the Arbitrator has directed payment of interest at 11% per annum from 15.5.1984 his client is not liable to pay the interest for

all these years because of the delay and laches on the part of the counsel for the Arbitrator and on the part of the second respondent herein

(contractor).

The only point which now arises for consideration is whether the second respondent herein is entitled for payment of Rs. 4,32,260/- together

with interest at 11% per annum from 15.6.1984 (the interest to run on the expiry of the one month period from the date of the award namely

15.5.1984.)

It is well settled principle of law that an award made by an arbitrator is final as a judgment between the parties and is not liable to be set aside

on the ground that it is erroneous in fact or in law. It cannot be set aside on any ground other than those mentioned S.30 of the Arbitration Act. In

the instant case, the award passed by the Arbitrator has not been challenged by both the respondents. The present petition has been filed only by

the Arbitrator under S.14(2) of the Arbitration Act. In the instant case the Award passed by the Sole Arbitrator is a reasoned and elaborate one.

Under the law, as stated above, the Arbitrator is made as the final arbiter of the dispute between the parties. When the award in question is not

challenged by any one, this Court has no jurisdiction to deal with the merits of the case determined by the arbitrator. It is not the function of this

Court to scrutinise the award on merits as if it is sitting in appeal on the verdict of the arbitrator. Unless the court sees the cause to remit the award

or any of the matters referred to the Arbitrator for reconsideration or to set aside the award, a definite and positive result must follow and that is

set out by the statute under S.17 of the Arbitration Act. Under these circumstances this Court has no option except to pronounce the judgment

according to the terms of the award which shall be followed by a decree. In this background I shall now deal with the arguments advanced by Mr.

Uttam Reddy, learned counsel, on behalf of the Madras Refineries Ltd. and the arguments advanced by Mr. Ramakrishnan, learned counsel

appearing for the second respondent, M/s. Prasad Constructions. Learned counsel appearing for the second respondent has submitted that the

delay is not at all attributable to his client, and that his client has been diligently in pursuing the matter all along and that the delay if any, is

attributable only to the counsel appearing for the Arbitrator. The learned counsel appearing for the second respondent has also submitted that the

inordinate delay in representing the O.P. papers has been condoned by the learned Master by his Order dated 24.7.1990 after hearing the counsel

for the applicant and the counsel for respondents 1 and 2 in Application No. 2932 of 1990. Learned counsel further submitted that in the absence

of any Application under S.30 of the Arbitration Act, to set aside the award, this Court has no other option except to pass a judgment and decree

in terms of the award.

In my opinion, there is much force in the contention of the learned counsel appearing for the second respondent. In support of his contention,

Mr. V. Ramakrishnan, learned counsel appearing for the second respondent, has invited my attention to the following three decisions:

While referring to a decision reported in P.K. Chinnasamy Vs. The Superintending Engineer, Execution Circle, TWAD Board (now

redesignated as Superintending Engineer, TWAD Board and Another, Mr. Ramakrishnan, learned counsel appearing for the second respondent

would submit that when there is no ground to set aside the award it is by the very force of S.17 of the Arbitration Act, this Court is left with no

other alternative but to proceed to pronounce the judgment according to the awards and upon the judgment being pronounced, decree shall follow.

It is useful to refer the decision of the learned judges of the Division Bench, of our High Court in this context:

The arbitrator is not bound to give a reasoned award while passing an award; if he makes a mistake of law or of fact not apparent on the face of

records, it is not open for challenge. The award is bad only on the ground of error of law on the face of records. An error of law apparent on the

face of records means that the erroneous legal proposition which is the basis of the award, is found expressed in the award itself or in a document

actually incorporated or appended thereto, as part and parcel of the award. The court has no jurisdiction to deal judicially with the merits of a case

determined by the arbitrator. It is not the function of the court to scrutinise the award on merits as if it is sitting in appeal on the verdict of the

arbitrator. There is no scope for the court to invoke the aid of S.30 of the Act for setting aside the award. Unless the court sees cause to remit the

award or any of the matters referred to arbitration for reconsideration, or to set aside the award, a definite and a positive result must follow, and

that is set out by the statute in S.17. The court has no opinion except to pronounce judgment according to the award which shall be followed by a

decree.

Learned judges while dealing with the above matter have also referred to the pronouncement of the Bench of this Court, to which one of them had

been a party in Ranga v. M/s. Asha Films Exchange 1981 2 M.L.J. 68, where it has been observed as follows:-

Even a bare reading of S.17 leaves no room for doubt that if the court sees no cause to remit the award on any of the matters referred to

arbitration for reconsideration under S.16 or to set aside the award, the court, after the time for making an application to set aside the award has

expired or such application having been made, after refusing it, has no other alternative but to proceed to pronounce judgment according to the

award and upon the judgment so pronounced a decree shall follow. It further lays down that no appeal shall lie from such decree except on the

ground that it is in excess of or not otherwise in accordance with the award.

Hence, I find much force in the submission of Mr. Ramakrishnan, learned counsel appearing for the contractor/second respondent herein.

Accordingly I hold that I have no other option except to pronounce the judgment according to the award since I find no cause to modify the award

under S.15 of the Arbitration Act or to remit the award under S.16 of the Arbitration Act or for setting aside the award as contemplated in S.17 of

the Arbitration Act. Mr. Ramakrishnan, learned counsel appearing for the second respondent then invited my attention to the decision reported in

A.R. Savkur Vs. Amritlal Kalidas and Others, . The Bombay High Court held as follows:-

The scheme of S.17, Arbitration Act, is that after an award has been filed an opportunity is given to the party challenging or disputing the award to

file an application to set aside the award and the application has got to be filed within the period of limitation prescribed by Art.158, Limitation

Act. If no application is filed, the party in whose favour the award is made is entitled to a decree upon the award, or if the application is filed and

has been dismissed on merits, then also the party in whose favour the award is made is entitled to a decree. It is only when an application to set

aside an award having been made in time and the application having succeeded that the party in whose favour the award is made is not entitled to a

decree in terms of the award under S.17.

Learned counsel appearing for the second respondent would further submit that the second respondent should be awarded interest on the

amount awarded by the arbitrator since according to him, this case is also governed by the Interest Act, 1978. In the instant case the arbitrator has

awarded interest at 11% per annum from 15.6.1984. In my opinion, the interest awarded by the arbitrator is just and reasonable and at any rate

cannot be treated as excessive or on the high side. But there can be no doubt about my power to grant interest in cases governed by the Interest

Act, 1978, as S.3(1)(A) of the Arbitration Act will enable me to award interest in this proceeding and also by invoking S.29 of the Arbitration Act.

Thus I award payment of interest at 15% per annum from this date which in my opinion, is just and reasonable to be paid on the principal sum as

adjudged by the award and confirmed by me in this order till date of realisation by the second respondent.

In the result, the amount awarded by the arbitrator for a sum of Rs. 4,36,260/- is confirmed and the said sum shall carry interest at 11% per

annum from 15.6.1984 till the date of this order and 15% per annum from the date of this order till realisation.

Mr. Utham Reddy, learned counsel appearing for the first respondent, would further submit that the second respondent is not entitled to any

interest during the pendency of this proceeding since according to him, the delay is attributable to the second respondent and hence for the laches

on the part of the second respondent and the counsel for the arbitrator, his client should not be made to suffer for payment of interest. Hence he

requested this Court to modify or correct the award by invoking the provisions of S.15 of the Arbitration Act. I am unable to countenance or

accept the said argument of the learned counsel appearing for the first respondent, for more than one reason. It is clear from S.15 of the

Arbitration Act that the powers of the Court to modify the award is discretionary. Under S.15 of the Arbitration Act the court can modify or

correct any clerical mistake or error arising out of accidental slip or omission. It is not the case of the first respondent that the award in question has

decided a matter not referred to the Arbitrator which can be separated from the other part of the award or award is imperfect in form, or contains

any obvious error which can be amended without affecting such decision. Learned counsel was not in a position to point out any infirmity in the

award which enabled this Court to modify the award by invoking S.15 of the Arbitration Act. Hence I reject the contention of the learned counsel

appearing for the first respondent.

In the result, this petition is ordered as prayed for. There will be a decree in terms of the award passed by the arbitrator in favour of the second

respondent M/s. Sri Prasad Constructions together with interest as indicated above. However the parties will bear their costs.

Before parting with this case, it is my duty to advert to the submissions made by the learned counsel appearing for M/s. Madras Refineries on

the question of delay. As stated above the delay is not attributable only to the counsel appearing for the sole arbitrator and the counsel appearing

for the second respondent. But it is also due to the office of the Original Side of this Court.

It is a trait saying that there are law''s delays. It is proverbial luckily the saying speaks of delays in law and designedly not of court. Whether we

will or wish it not, it has to be conceded that there are delays impending speedy administration of justice in court. In a measure it constitutes a

vested interest in some. Judgment debtors have vested interest in delaying the proceedings. Recalcitrant tenants have vested interest to delay

eviction proceedings. The courts are therefore obliged to see through the proceedings to get rid of the impediments caused by the delay.

Howsoever desirous courts may be to avoid delay, the inherent infrastructure created by procedural and substantive laws cannot be circumvented

except at the risk of doing injustice to one or other of the parties. It is a complex problem to be solved not merely by Judges sitting in courts but by

a comprehensive overhauling of legal and procedural structure of enactments. Admittedly, it is not the province of the Judges alone. Instead of

voicing my dissertation on this subject let me deal with the delay in this proceeding. In the instant case there had been delay in the matter of filing of

the award, and when it was returned for compliance of certain directions it remained in cold storage for a pretty long time before it was re-

presented in court with an application for condonation of delay for an extra-ordinarily long period of time. Curiously enough, both the parties

ranged against agreed for condonation of the delay leaving practically no option to the Judge to probe into the reasons for such delay. Obviously

parties were interested in the said award becoming a decree of court, which they believe was to their advantage. In view of such conduct it is futile

for the party against whom a decree is to be passed to contend that interest should not be granted for the period subsequent to the award. This

obligation has been brought upon itself by its conduct in agreeing for condonation of the delay. Of course I must also mention in this context, the

delay caused when the proceeding was in court, which to a great extent was due to the laches of the office in not bringing up the matter in time

before the Judge, when the said court is subject to a succession of many a Judge the latter is helpless unless by timely appraisal the matter is

brought before him for quick disposal.

As a matter of fact once the matter has come before me I have endeavoured to give quickest disposal in the circumstances. It is time for all to

heave a sigh of relief for an effectual end of the proceedings to the satisfaction of all.

The highest court of the land in a decision reported in Jang Singh Vs. Brijlal and Others, has held as follows:-

It if no doubt true that a litigant must be vigilant and take care but where a litigant goes to court and asks for the assistance of the court so that his

obligations under a decree might be fulfilled by him strictly, it is incumbent on the court, if it does not leave the litigant to his own devices, to ensure

that the correct information is furnished. If the court in supplying the information makes a mistake the responsibility of the litigant, though it does not

altogether cease, is at least shared by the court. If the litigant acts on the faith of that information the courts cannot hold him responsible for a

mistake which it itself caused. There is no higher principle for the guidance of the Court than the one that no act of court should harm a litigant and

it is the bounden duty of courts to see that if a person is banned by a mistake of the court he should be restored to the position he would have

occupied but for that mistake. This is aptly summed up in the maxim: ""Actus curiae neminem gravabit.

Respectfully applying the said ratio laid down by the Supreme Court, I pass a decree in terms of the award in favour of the second respondent.

Before concluding I must record my deep appreciation that I have had the benefit of able argument from Mr. V. Ramakrishnan, the learned

counsel appearing for the second respondent which enabled me to grasp the question at issue between the parties in the proper perspective and

decide the said issue in accordance with law.