Superintending Engineer and Others vs Venkatreddy and Company

P.S. Narayana, J.—This Civil Revision Petition and the Civil Miscellaneous Appeal arise out of a common order made in O.S.No.201/90 and O.S.No.113/96 (O.P.No.307/92) on the file of Principal Subordinate Judge, Narsaraopet.

O.S.No.201/90 was filed by the plaintiff, the 1st respondent, under Sections 14 and 20 of the Arbitration Act, 1940 to make the award dated 21-7-1990 the rule of the Court and pass a decree in terms of the award. The defendants in O.S.No.201/90 who are the Revision Petitioners and 0the appellants filed O.S.No.113/96 (O.P.No.307/92) seeking the relief to set aside the aforesaid award and the learned Principal Subordinate Judge, Narsaraopet by an order dated 26-9-1996 had decreed O.S.No.201/90 in terms of the award with future interest at 6% from the date of decree till the date of realization and the suit O.S.No.113/96 was dismissed and aggrieved by the same, the present Civil Revision Petition and the Civil Miscellaneous Appeal were filed by the defendants in O.S.No.201/90 and the plaintiffs in O.S.No.113/96.

The parties will be referred to as arrayed in O.S.No.201/90 as plaintiff and defendants for the purpose of convenience.

The case of the plaintiff in brief is that in pursuance of an agreement with the 1st defendant, the plaintiff company had started the construction work of submergeable bridge and on account of certain disputes a reference was made to the arbitrators and an award was made on 24-8-1988 and the plaintiff filed O.P.No.361/88 for making the award the rule of the Court, but the award was remitted back to the arbitrator for giving reasons and subsequent thereto the arbitrator had recorded reasons and had made an award on 21-7-1990 and the same was filed into Court on 26-7-1990 and hence the suit O.S.No.201/90 was filed by the plaintiff to make the said award the rule of the Court. The defendants had questioned the award and also the claim of the plaintiff which were allowed by the arbitrator, by filing a written statement that the work 2270 cums. Was below low water level and the balance 3262.13 cums. Was above the low water level and the rates of payment had been made as per the agreement and the subsequent claims made by the plaintiff are totally untenable and unsustainable. The defendants also filed O.S.No.113/96 (O.P.No.307/92) to set aside the award on the ground that the arbitrator exceeded his authority in granting interest under claim No.7 and compensation and the arbitrator permitted the contractor to revise his claim as per his affidavit dated 3-2-1988, but failed to give an opportunity to the defendants and further admitting to claim No.2 by the arbitrator is illegal since the entire masonry work was admitted to have been completed during the same season and claim No.1 also was admitted by the arbitrator as the plaintiff is entitled at the rate of Rs.300/- per 10 cum only for a quantity of 1543.74 cums. And for the balance the plaintiff is entitled at the rate of 173 per 10 cum. As per the supplemental agreement between the parties. Claim No.3, as admitted by the arbitrator is illegal and against the agreement and claim No.4 is against claim No.7 of Schedule-A. The award of interest also is untenable. The point that was considered by the court below is whether the award is liable to be set aside as pleaded by the defendants or whether the award is to be made the rule of the court.

The learned Government Pleader for arbitrator had made elaborate submissions relating to the terms of the agreement and also the nature of the work and how the claims of the plaintiff had not been properly appreciated and how the arbitrator went wrong and the learned counsel also had submitted that the awarding of interest also is bad in law. The learned counsel had placed reliance on EXECUTIVE ENGINEER, D.M.I. DIVISION, ORISSA ETC., Vs. N.C. BUDHRAJ (DEAD) BY L.Rs.ETC.,1 GHAZIABAD DEVELOPMENT AUTHORITY Vs. UNION OF INDIA AND ANOTHER 2 and also STATE OF ANDHRA PRADESH Vs. P.L. RAJU & CO.,3

Sri D. Rama Krishna, counsel representing Sri Ratna Reddy appearing for the respondents had supported the order passed by the court below and the learned counsel had drawn my attention to M/s.R.S. AVTAR SINGH & CO. Vs. M/s. N.P.C.C. LTD. 4; UNION OF INDIA Vs. A.L. RALLIA RAM 5, CONTINENTAL CONSTRUCTION CO. LTD., Vs. STATE OF MADHYA PRADESH 6; PURI CONSTRUCTION PVT.LTD. Vs. UNION OF INDIA 7; GUJARAT WATER SUPPLY & SEWERAGE BOARD Vs. UNIQUE ERECTORS (GUJARAT) (P) LTD., AND ANOTHER 8; M/s. JAGADISH RAI & BROTHERS Vs. UNION OF INDIA 9; STATE OF A.P. AND OTHERS Vs. N.SIVA REDDY (DIED) AND OTHERS 10. The learned counsel had drawn my attention to the relevant paragraphs of the Judgment of the court below where certain aspects had been discussed in this regard. The learned counsel also pointed out that the arbitrator is a retired Chief Engineer in Irrigation Department, not only technically qualified, but also an experienced person relating to the matters in dispute.

The learned Government Pleader had stressed on claim No.1, the earth work and claim No.6, the compensation for withholding payment and had strenuously contended that since there is no contract itself relating to item No.1, it cannot be an item of reference at all and further for alleged breach of contract damages or compensation cannot be awarded. In fact, the arbitrator had recorded reasons who is a technically qualified person and the court below had recorded a finding that there are no grounds to set aside the award and the court below also felt that in the facts and circumstances the award has to be made the rule of the Court. In RAM NATH INTERNATIONAL CONSTRUCTION PVT.LTD. Vs. STATE OF UTTAR PRADESH 11 it was held that where a dispute was referred to an arbitrator and was argued before the arbitrator relating to awarding of interest who gave a speaking order, the High Court erred in holding the award to be beyond the scope of reference and the interest granted by the arbitrator from the date of reference till the date of award was granted by the arbitrator in his discretion to do complete justice between the parties and hence the appellant was entitled to interest from the date of reference. In the decision cited (3) supra, this court held that the error committed by the arbitrator is not a ground for interference by court if the conclusion arrived at is plausible on the facts and circumstances of the case. In M/s.SUDARSAN TRADING CO., Vs. THE GOVERNMENT OF KERALA AND ANOTHER 12 the Apex Court held that the Court cannot substitute its own decision where the amounts had been awarded by arbitrator by taking a particular view of the contract. In the decision cited (2) supra, while dealing with the breach of contract and damages it was held by the Apex Court that mental anguish cannot be a ground to award damages in ordinary commercial contract. In the decision cited (1) above it was held by the Apex Court that the arbitrator has jurisdiction to award interest on the sums found due and payable for pre-reference period in the absence of any specific stipulation or prohibition in contract to claim or grant any such interest. In SUPERINTENDING ENGINEER, N.S.C. CIRCLE, ONGOLE Vs. B.SUBBA REDDY AND ANOTHER 13, a Division Bench of this Court was pleased observe that the award can be set aside only when it is vitiated by error apparent on the face of record or where the arbitrator exceeded his jurisdiction and the arbitrator is competent to award interest pendente lite if the terms of the agreement did not exclude his jurisdiction and the compensation in the form of loss of profit also could be legitimately awarded if the other party is disabled from carrying out the work fully due to breach of contractual obligations.

Having gone through the order of the court below and also the material on record and the evidence recorded by the court below I am of the opinion that the arbitrator, a technically qualified person, after appreciating the facts and circumstances, had arrived at certain sums and the court below had recorded a finding that there are no grounds to set aside the award and opined to make the award the rule of the Court. In such circumstances, I do not think that this Court sitting as appellate Court or revisional Court can interfere with such findings unless they are totally unjustified or otherwise opposed to law. In the facts and circumstances, I do not find any reason to upset the findings of the court below in this regard.

In view of the above discussion, I do not find any merit in the present Civil Miscellaneous Appeal and the Civil Revision Petition and accordingly they are dismissed, but in the facts and circumstances of the case, without costs.