Partly allowed

State of Kerala v. N.E.Abraham

Kerala HC11 Mar 2024MFA/1133/1999

Case brief

AI extract

What is this about?

Appeal by State of Kerala against a decree confirming an arbitration award to a contractor under the Arbitration Act, 1940. The court upheld the award-decree as no Section 30 grounds were pleaded or proved, but modified it by excluding interest for 04.11.1997 to 04.05.2022, when the Kerala Revocation of Arbitration Clauses Act nullified awards until ruled unconstitutional.

What did the court decide?

Decree of Subordinate Judge confirmed except that no interest is payable for the period 04.11.1997 to 04.05.2022.

State of Kerala Vs N.E.Abraham — Arbitration | Kerala HC (2024)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE GOPINATH P.

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MONDAY, THE 11^TH DAY OF MARCH 2024 / 21ST PHALGUNA, 1945

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MFA NO. 1133 OF 1999

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AGAINST THE JUDGMENT IN OP ARB NO.125 OF 1994 OF ON THE FILES OF THE

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PRINCIPAL SUB COURT, THIRUVANANTHAPURAM

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APPELLANTS:

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1 STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT (IRRIGATION), IRRIGATION DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM

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2 THE SUPERINTENDING ENGINEER, K.I.P (LB CIRCLE), KOTTARAKKARA

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BY ADV. SUJITH MATHEW JOSE,GOVERNMENT PLEADER

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RESPONDENT:

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N.E.ABRAHAM, GOVERNMENT CONTRACTOR, NJATTUM KALAYIL HOUSE, KADYIRIPPU, KOLENCHERRY

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BY ADV.M.C.JOHN

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THIS MISC. FIRST APPEAL HAVING COME UP FOR ADMISSION ON 11.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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M.F.A. NO.1133 OF 1999

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JUDGMENT

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Dated this the 11^th day of March, 2024

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This M.F.A. has been filed challenging the

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judgment in O.P.(Arbitration) No.125/1994 on the file of the Principal Sub Court, Thiruvananthapuram.

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The respondent was awarded certain work in connection with the Kallada Irrigation Project. Certain disputes arose between the respondent and the State, leading to initiation of arbitration proceedings under the provisions of the Arbitration Act, 1940. The Arbitrator passed an award on 22.09.1994, which was

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carried to the Court of the Principal Subordinate Judge, Thiruvananthapuram, along with a challenge to the award at the instance of the State of Kerala, where it was numbered as O.P.(Arb.) No.125/1994. That Original Petition was disposed of on 25.10.1997, rejecting the challenge made to the award of the Arbitrator at the instance of the State of Kerala and

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M.F.A. NO.1133 OF 1999

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granting a decree, awarding a sum of Rs.27,35,672.59 (Rupees twenty seven lakh thirty five thousand six hundred seventy two and paisa fifty nine only) together with 6% interest from the date of

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decree (25.10.1997), till the date of realisation.

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The learned Special Government Pleader (Irrigation) would vehemently contend that the order of the Subordinate Judge’s Court, Thiruvananthapuram in O.P.(Arb.) No.125/1994 is not sustainable either in law or on facts. It is submitted that the learned Subordinate Judge’s Court has proceeded to make the award a Rule of the Court and passed a decree in terms of the award except in the matter of pendente lite interest which was reduced from 18% to 6%. It is submitted that the Arbitrator and the learned Subordinate Judge’s Court failed to appreciate the fact that there were no materials or evidence before them to conclude that the petitioner was entitled to any payment from the Government. It is submitted that the Subordinate Judge’s Court had

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M.F.A. NO.1133 OF 1999

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not considered the matter in its proper perspective and had mechanically followed the award of the Arbitrator in coming to the conclusion that the respondent was entitled to the amounts in the manner indicated above. It is submitted that, it is in such circumstances, the order of the Subordinate Judge’s Court in O.P.(Arb.) No.125/1994 is liable to be set aside. It is also submitted that, almost immediately after the passing of the order in O.P. (Arb.) No.125/1994, the Kerala State legislature had promulgated the Kerala Revocation of Arbitration

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Clauses and Reopening of Awards Act, 1998

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(hereinafter referred to as ‘the 1998 Act’), which came into force from 14.11.1997, nullifying all awards passed in respect of contracts made for the Kallada Irrigation Project. It is submitted that the 1998 Act was preceded by an Ordinance containing the very same terms and thus the provisions regarding nullity of Awards were in force from 04.11.1997 till 09.07.2013, when this Court found that the 1998 Act

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M.F.A. NO.1133 OF 1999

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was unconstitutional. It is submitted that the State challenged the judgment of this Court, finding the 1998 Act to be unconstitutional before the Supreme Court. It is submitted that by judgment dated 04.05.2022, in Secretary to Government of Kerala, Irrigation Department and others v. James Varghese and others [(2022) 9 SCC 593] , the Supreme Court modified certain findings of this Court, but however held the 1998 Act to be unconstitutional, as the Act constituted an encroachment into the Judicial functions of the State. It is submitted that for the period from 04.11.1997 to 04.05.2022, since the matter regarding the validity of the 1998 Act was at large, either before this Court or before the Supreme Court, the appellants must at least be absolved from the requirement to pay interest for the aforesaid period.

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Sri. M.C. John, the learned Counsel appearing for the respondent would vehemently oppose the grant of any relief. It is submitted that the Award of

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M.F.A. NO.1133 OF 1999

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the Arbitrator and the order of the Subordinate Judge's Court in O.P.(Arb.) No.125/1994, are completely legal and there is no ground made out for interference with it. It is submitted that the Arbitrator

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has clearly analyzed the terms of the contract between the parties and he came to the conclusion that the respondent was entitled to the amounts as indicated above. It is submitted that the Subordinate Judge's Court, while making the Award of the Arbitrator a decree of the Court, had correctly analyzed the evidence before the Arbitrator and had come to the conclusion that the objection against the Award cannot be sustained. It is submitted that the interference at the hands of this Court in an appeal filed under Section 39 of the Arbitration Act, 1940, is extremely limited. It is also pointed out that, the grounds for setting aside an Award under Section 30 of the Arbitration Act were also limited and could be done, only if the Arbitrator has misconducted himself or the proceedings or on the ground that the

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M.F.A. NO.1133 OF 1999

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Arbitrator had passed an Award, after the issuance of an order by the Court, superseding the Arbitration or after the arbitral proceedings have become invalid under Section 35, or when an Award has been improperly procured or is otherwise invalid. It is submitted that none of these grounds of invalidity under Section 30 of the Act are attracted in the facts and circumstances of this case. It is submitted that, the fact that the State legislature had promulgated the 1998 Act, and the fact that the challenge of the same resulted in the judgment of this Court only on 09.07.2013 and finally the judgment of the Supreme Court on 04.05.2022, is no ground to hold that the period during which the 1998 Act was operational and during the time when the matter was pending before the Supreme Court, must be excluded for the purposes of interest awarded to the respondent.

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Having heard the learned Special Government Pleader (Irrigation) appearing for the appellants and the learned Counsel appearing for the respondent,

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I am of the view that, no ground has been made out for interference with the orders in O.P.(Arb)

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No.125/1994, through which the Award of the Arbitrator, in favour of the respondent has been made

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a decree of that Court. The contention taken on behalf of the appellants that the Award of the Arbitrator and the order of the Subordinate Judge's Court, making the said award, a decree of the Court are unsustainable in law does not appeal to this Court. It is clear from the provisions of Section 30 of the Arbitration Act, 1940, that it is only on limited grounds that an Award of the Arbitrator can be set aside by the Court. None of those grounds appear to have been pleaded or proved before the Subordinate

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Judge's Court, warranting that Court reaching a conclusion that the Award of the Arbitrator was not sustainable in law. The Subordinate Judge's Court, Thiruvananthapuram has properly considered the contentions raised before it to come to the conclusion that none of the grounds set out in Section

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30 of the Arbitration Act, 1940 are attracted in the facts and circumstances of this case. However, considering the history of the 1998 Act and considering the fact that the provisions of the 1998 Act/Ordinance operated from 04.11.1997 to 09.07.2013 (till this Court declared the provisions to be unconstitutional) and since the appeal filed by the State before the Supreme Court was pending till 04.05.2022, I am of the opinion that, the period from 04.11.1997 to 04.05.2022 can be excluded from the purposes of calculating interest payable to the respondent in terms of the Award, as confirmed by the decree of the Subordinate Judge's Court, Thiruvananthapuram. Therefore, while repelling the challenge to the decree passed by the Subordinate Judge's Court, Thiruvananthapuram in O.P.(Arb) No.125/1994, the said decree is modified by directing that, no interest shall be payable in terms of the Award/decree for the period from 04.11.1997 to 04.05.2022. In all other respects, the decree of the

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Subordinate Judge's Court, Thiruvananthapuram in

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O.P.(Arb) No.125/1994 is sustained.

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This appeal is disposed of accordingly.

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Sd/-

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