The State of Punjab vs Shri Ram Chand Contractor and others

D.V. Sehgal, J.—This revision petition arises out-of the judgment dated 3rd March, 1978 of the Additional District Judge, Patiala, in appeal whereby he set aside an award dated 12th March, 1962 of the Arbitration Committee, as also the order dated 31 st July 1976 of the trial Court making the said award a rule of the Court.

The facts in brief are that Ram Chand, contractor, respondent in this petition (hereinafter referred to as ''the Contractor'') entered into an agreement with the State of Punjab (hereinafter referred to as ''the State'') for excavation of Bhakra Main Line 432-434 vide Work order No. 54/2 A dated 25 th April, 1951. There was a term in the Work order to the effect that in the matter of the dispute between the contractor and the State, the same shall be referred to the Settlement Committee consisting of Superintending Engineer, an Officer of the Finance Department not below the rank of the Deputy Secretary and an Accounts Officer, all to be nominated by the Government for arbitration whose decision would be final. The contractor raised a dispute and made a claim for Rs. 4,000/- before the Settlement Committee and requested for arbitration through an application dated 28th April 1959 on a prescribed proforma which was registered with the Settlement Committee at No. 3404 dated 14th December, 1951. It is further alleged that the State made a counter claim for Rs. 560/- against the contractor.

The record shows that lateron the Contractor and the Executive Engineer on behalf of the State agreed in writing on 14th December, 1961 that the said arbitration be heard by to arbitrators and that the decision by them would be binding on the parties. This agreement in writing between the parties is at page 12 of the arbitration proceedings. The arbitrators made their award dated 12th March, 1962 wherein they considered the claim for Rs. 4,000/- submitted by the contractor in respect of the aforesaid work Order. To appreciate the contention of the parties, it would be proper to reproduce text of the award :

The contractor has submitted a claim for a sum of Rs. 4,000/- in respect of the work order mentioned above.

We have perused the record, heard the parties gone through the evidence led by them. We find that the contractors have already been paid Rs. 3700/- in excess and as such we reject the claim of the contractors. Department is however left free to realise the amount paid in excess from the contractor in as best a manner as they consider proper.

Parties are left to bear their own costs and they should be informed of the award in writing.

It is worthwhile mentioning here that there is another writing on the record which figures at page 11 whereby a contractor and the Executive Engineer on behalf of the State requested the Chairman of the Settlement Committee to proceed with the arbitration because even-though the time for making the award had expired, it was submitted that the parties mutually had agreed to the period for making the award being extended for another four months for their convenience. This writing is dated 15th February, 1962.

The Learned Additional District Judge, Patiala, has set aside the award on two grounds Firstly, he has held that the award was not made within a period of four months from the date of the reference and for reaching at this conclusion he had referred to paragraph 3 of the 1st Schedule of Arbitration Act, 1940. Secondly, it has been held that in the award it is mentioned that an amount of Rs. 3700/- was in this respect had been made in favour of the State and the State had been left free to realise the amount paid in excess from the contractor in as best a manner as the State considered proper. According to the learned Additional District Judge, the award is, therefore, vague and does not determine the matter in controversy between the parties.

The first ground on which the award has been set aside is in my view without substance. No doubt reference to the arbitration was made long before the date of the award, it was received by the Settlement Committee on 1st January, 1960, but the arbitrators did not enter upon the reference. Later, when the reference was still pending, writing dated 15th February, 1962 duly signed by the contractor and the Executive Engineer on behalf of the State was submitted to the arbitrators whereby both the parties agreed that the period for making the award be extended by another four months. It has been held by the Supreme Court in Hari Krishna Wattal v. Vaikunth Nath Pandya (Dead) by L. Rs.1, that the arbitrators can enlarge time for making award if after entering on the arbitration the parties mutually agree to such enlargement. It is not the requirement of law that the power to enlarge time by a subsequent agreement must be stipulated in the arbitration agreement itself. Therefore, their Lordships have observed that such a consent must a post reference consent is clear from Section 28(2) of the Arbitration Act, which renders null and void a provision in the original agreement to that effect. In view of the law laid down by their Lordships of the Supreme Court, the consent dated 15th February, 1952 being a post reference consent was sufficient to enlarge time within the meaning of section 28 of the Arbitration Act. The award was made by the arbitrators on 12th March, 1962, i. e. within 4 months from the date of the post reference consent. The award therefore cannot be said to be violative of paragraph 3 of the 1st Schedule of Arbitration Act, 1940.

The second ground on which the award has been set aside it being vague, is also not tenable. As the text of the award, reproduced above, would show the arbitrators have considered only the claim of the contractor and have made the award. No counter claim of the State has been considered by the arbitrators while making the award in question. The arbitrators were therefore, right in not allowing any sum in favour of the State on the basis of the counter claim. No infirmity has crept in the award by the observation to the effect that the department was left free to realise the amount of Rs. 3700/- paid in excess from the contractor in as best a manner as they considered proper. This part of the award cannot be termed to be an award for Rs. 3700/- in favour of the State and a decree for Rs. 3700/- in favour of the State cannot be passed. The award itself was to be made a rule of the Court. Award simply spells out that the claim made by the contractor for Rs 4000/- stands rejected.

This revision is, therefore, allowed, the award is up-held and the judgment dated 3rd March, 1978 of the learned Additional District Judge, Patiala, is set aside. The judgment of the trial Court dated 31st July. 1976 making the award a rule of the Court is restored. However, the finding of the trial Court that the arbitrators had found Rs. 3700/- due from the contractor to the State and on that basis a decree for Rs. 3700/- be passed in favour of the State and against the contractor is not in accordance with the award is therefore, set aside. There shall be no order as to costs.