National Insurance Company vs Chajju Ram

As agreed to by the learned counsel for the parties Sh. A.N. Saraf retired District and Sessions Judge, Jammu was appointed as an arbitrator

vide order passed in Arbitration Application No. 16 of 1984 on 2931985 for adjudication of disputes existing between the parties. Sh. Saraf

entered upon the reference and submitted his award in this court on 291986.

Notice of the filing of the award was served upon the petitioner Insurance company on 1771985 and they filed the present CMP under section

30/33 of the Arbitration Act for setting aside the award in this court on August 14, 1986.

The respondent Chajju Ram vide his objections filed to CMP No. 419 of 1986 on 1181987 submitted that he has no objection to the award

made a rule of the court. It was, however, submitted that the petition of the Insurance company was barred by time and liable to be dismissed. It

was further submitted that the award of the arbitrator could not be set aside on any ground what so ever.

On the basis of the pleadings of the parties, the following issues were framed in the case on 25th Aug. 1987.

Whether the application for setting aside the award filed by National Insurance Company the petitioner is within time. OPP

Whether the arbitrator has misconducted himself or the proceedings ? OPP

Whether the award is otherwise invalid ? OPP.

Relief. O.P.P.

As no list of witnesses was filed and no witness was produced the evidence of the petitioner was closed by this court vide order dated 26th

Aug. 1988. The learned counsel for the parties submitted that they do not want to lead any evidence and prayed that the case be listed for hearing

as is evident from the court order dated 29 June 1988.

I have heard the learned counsel for the parties and have perused the record.

Issue No. 1

The period of limitation for an application under the J&K Arbitration Act to set aside an award or to get an award remmited ""for reconsideration is

30 days from the date of the service of the notice of the filing of the award under Art. 158 of the Limitation Act. In the instant case the notice of the

filing of the award with direction to file objections if any, to the award within the statutory period appears to have been served upon the Insurance

company on 17.7.1986 and they filed the present CMP in this court on 14 August, 1986, well within time. The learned counsel for the respondent

has not been in a position to point out that the application for setting aside the award was not within time. Issue No. 1, is therefore, decided in

favour of the petition Insurance company.

Issue No. 2

The petitioner Insurance company has led no evidence to prove this issue. Even in the petition filed on behalf of the company no allegation has

been levelled which could be presumed and deemed to be a misconduct within the meaning of sec. 30 of the Arbitration Act. The allegation that

the petitioner company was not afforded au opportunity of bring heard in the matter is without any basis. The arbitrator could not be held to be

guilty of misconduct merely by charging allegedly heavy and injustifiable fee. The mere fact that the award was not allegedly correct or the reasons

given for the conclusion were incorrect, cannot be termed to be misconduct attributable to an arbitrator. In view of the fact that no evidence has

been led and there is no sufficient pleading in this regard, the issue is decided against the petitioner company and in favour of the respondent.

Issue No. 3

Mr. Thakur the learned counsel for the petitioner company has submitted that as the award directs the payment of interest pendentelite and future

interest as also for payment of Rs. 10, OOO/ as solvages expenses incurred by the petitioner the same is to be held otherwise invalid to that extent

within the meaning of sec. 30 (c) of the Arbitration Act. He has relied upon AIR 1988 SC 1520 to urge that the arbitrator was not entitled to the

award pendentelite or future interest. It was held by the Supreme court in that case,

In regard to pendentelite interest, that is interest from the date of reference to the date of the award the claiments would not be entitled to the

same for the simple reason that the arbitrator is not a court within the meaning of S. 34 of the C.P.C. nor were the references toarbitrator made in

the course of suits,.

""the learned counsel apearing for the respondent has submitted that by directing the payment of interest pendentelite, the award cannot be set

aside or modified under the provisions of sec. 30 of the Arbitration Act. The words, ""or is otherwise invalid"" are clear and unambiguous confering

the jurisdiction upon the court to set aside the award on the ground of invalidity from any cause whatsoever not covered by clauses (a) and (b) of

sec. 30 of the Arbitration Act. The concensus of the opinion of different High Courts is that the words, ""or is otherwise invalid"" were not to be

used as ejusdem generais, If the words were to be treated as ejusdem generis to clauses (a) and (b) of sec. 30, then no award could be set aside

even if the same was barred by time or was other wise a nullity. It was held in AIR 1960 SC 588 that the award of an arbitrator may be set aside

on the ground of an error on the face thereof only when the award or in any document incorporated there with there is found some legal

preposition which is the basis of the award and which is erroneous. Mr. J. Singh has conceded during arguments that the arbitrator was not

justified in granting the pendentelite or furture interest to his client.

So far as the award of Rs. 10.000/ to the petitioner as solvaeg expenses incrurred by him, is concerned the petitioner has referred to clause (2)

of the Insurance company and urged that the company was not liable to make any payment in respect of consequential lass, depreciation, wear and

tear, mechanical or electrical breakdown, failure or explosion of the boiler of the Moter Vehicle or theft unless such Moter vehicle is damaged at

the same time when the liability of the company is limited to 50% of the cost of the replacement. A perusal of clause (2) would show that the same

would not cover the actual expenses held to have been incurred by the petitioner for the extraction of the solvage to be delivered to the insurance

company. This court cannot sit over the judgement of the Arbitrator in, a Judge of the choice of the parties and hold otherwise. The awards of the

arbitrator therefore, cannot be either set aside or modified to the extent as pointed out by Mr. Thakur.

This court has the power to modify or correct the award where it appears that a part of it is upon a matter not refered to arbitration and the

same can be separated from the other part which does not effect the decision on the matter referred or where the award contains any obvious

error which can be amended without mistake or an error arising from an accidental slip or omission. The award of the arbitrator, therefore, in so

far as it directs the payment of pendentelite and future interest is liable to be set aside And is modified accordingly. This issue is therefore partly

decided in favour of the petitioner.

Issue No. no. 4

In view of the finding on issue No.3 the award of the arbitrator filed in this court on 2.7.1986 is modified to the extent that the petitioner company

will not be liable to pay any pendentilite or future interest but would be liable to pay a sum of Rs. 2,34,500/ to be paid to the Jammu and Kashmir

Bank in Chajju Ram respondents account and would be entitled to the receipt of solvage on payment of Rs. 10, 000/ The respondent is also held

entitled for the costs incurred. The petitionercompany shall pay the balance amount of arbitrator fee within one month, if not already paid. This

petition alongwith CMP No. 525, A/A No. 247/86 are disposed of! Let a decree be drawn accordingly.