State of Rajasthan and Others vs Prem Narain Saini

Bela M. Trivedi, J.—The present appeal has been filed by the appellants u/s 39 of the Arbitration Act, 1940 (hereinafter referred to as ''the said Act'') challenging the order dated 26.3.03 passed by the District & Sessions Judge, Alwar (hereinafter referred to as ''the court below''), in Civil Arbitration Case No. 6/2000, whereby the court below has dismissed the objections raised by the appellants against the award dated 30.12.99 made by the Arbitrator and has made the said award rule of the court. In the instant case, it appears that the Arbitrator was appointed by the court u/s 20 of the said Act for resolving the disputes between the appellants and the respondent in respect of the work of widening of Alwar Bhiwadi Road. The Arbitrator after considering the evidence on record partly allowed the claims of the respondent to the extent of Rs. 83,548/- for the claim item Nos. 1 to 7 and Rs. 28,020/- in respect of refund of security deposit and also Rs. 20,000/- towards the legal expenses, as per the award dated 30.12.99. The Arbitrator also awarded interest @ 18% per annum from the due date i.e. 1.7.90 upto the date of reference i.e. 29.1.99 and also from the date of reference to the date of award. Being aggrieved by the said award the appellants had filed the objections before the court below which have been rejected by the court below vide the impugned order.

It has been sought to be submitted by the learned Addl. Advocate General Mr. R.P. Singh for the appellants that the award made by the Arbitrator was bad in law inasmuch as the Arbitrator had travelled beyond the scope of reference. He also submitted that the Arbitrator had misappreciated the evidence on record and partly allowed the claims of the respondent without any evidence. Mr. Singh also submitted that the respondent had left the work incomplete which was required to be got completed by the appellants by incurring the additional expenditure and, therefore, the respondent had committed breach of contract for which he was not entitled to claim damages. Mr. Singh has relied upon the decision of the Apex Court in case of State of Rajasthan and Another Vs. Ferro Concrete Construction Pvt. Ltd., in support of his submission that if the award is based on "no evidence" it amounts to legal misconduct on the part of the Arbitrator.

However, the learned counsel Mr. S.R. Joshi for the respondent relying upon various decisions of the Apex Court submitted that the court cannot re-appreciate the evidence already appreciated by the Arbitrator nor can sit in appeal over the award made by the Arbitrator. According to him the Arbitrator has considered the claims of the respondent in detail based on the evidence and has given reasoned award which should not be interfered with by the court.

Having regard to the submissions made by the learned counsels for the parties and to the impugned award made by the Arbitrator as well as the impugned order passed by the court below, it appears that the Arbitrator has allowed some of the claims of the respondent in respect of the work done by him and disallowed some of the claims where either no evidence was produced by the respondent or where the claims had not been found justified. It is rightly submitted by the learned counsel for the respondent that as per the settled legal position prevailing at the relevant time under the old Arbitration Act, award being a reasoned award, the court could not re-appreciate the evidence and substitute its on findings on facts. There cannot be any disagreement to the ratio of the judgment of the Apex relied upon by the learned counsel for the appellants, however in the instant case the Arbitrator has partly awarded the claims of the respondent after giving reasons and considering the evidence on the record. The appellant had not raised any such contention before the court below that the award was based on "no evidence". The learned counsel for the appellants has also failed to point out from the appeal memo of having raised such a contention before this court. Under the circumstances, the court is not inclined to interfere with the impugned order passed by the court below and the award made by the Arbitrator so far as the amounts awarded under the different claims are concerned.

However, the court does find substance in the submission made by the learned counsel for the appellants that the award of interest @ 18% per annum was on a very higher side and the same was not the rate of interest prevailing at the relevant time. In this regard, the learned counsel for the respondent has fairly submitted that the rate of interest be reduced as may be found reasonable by the court. Under the circumstances without disturbing the award made by the Arbitrator in respect of the claims, the rate of interest is modified and reduced to the extent of 12% per annum, to be paid from the due date i.e. 1.7.90 to the date of realisation.

In that view of the matter, the order passed by the court below and the award made by the Arbitrator are modified to the extent that the appellants shall be liable to pay interest @ 12% per annum from the due date i.e. 1.7.90 till realisation on the principal amounts of claims, awarded by the Arbitrator i.e. on aggregate amount of Rs. 1,31,568/-. The award stands modified accordingly. The appeal stands partly allowed accordingly. The cross-objections filed by the respondent, have not been pressed for by the learned counsel for the respondent during the course of arguments, and hence they deserve to be dismissed and are accordingly dismissed.