In this FAO, the State challenged an award dismissing objections to specific claims. The High Court held that claims were questions of fact and interest could be awarded under the Arbitration Act. The appeal was dismissed.
The appeal filed by the State of Punjab against the arbitration award was dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
F.A.O No.2142 of 2007
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
F.A.O No.2142 of 2007
Date of Decision: 09.09.2009
State of Punjab
....Appellants
Versus
M/s Gurmit Singh & Co.
...Respondents
CORAM : Hon'ble Ms. Justice Nirmaljit Kaur
Present:Mr. A.P.S. Mann, Sr. D.A.G., Punjab for the appellants-State. Mr. P.S. Rana, Advocate for respondent No.1.
NIRMALJIT KAUR, J.
This is an appeal against the Order dated 17-01-2007 passed by Additional District Judge, Rupnagar, vide which the objections of the appellants-State against the award dated 29-08-2003 has been dismissed.
While challenging the impugned order, learned State counsel submitted that the following questions, as mentioned in the grounds of appeal, are involved in the present case :-
“(a) Whether the Court was justified in allowing claim No.1 against appellant inspite of taking into consideration Ex. AW1 affidavit of Gurdip
F.A.O No.2142 of 2007
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Singh, wherein, letter No.2295-96/1-W.Gurmeet dated 10.05.1998 was issued to defendant for deployed sufficient men & machinery which was further remained vide letter No.5370-71/1-W Gurmeet dated 07.12.1998 in which it was made clear that there was no idle men & machinery at site of work. Suitable extension for completion of work was granted. In this way, huge amount of escalation charges has also been paid?
(b) Whether the Court was justified in allowing Claim No.3 against appellant when sufficient site was available for disposal of over burdened material within an average combined lead of 1 km. at no stage agency had to dispose off over burden beyond specified lead. The letter dated 30.1.1998 and 26.2.1998 were not received by the appellant on which basis learned arbitrator awarded this claim. Whether the Hon'ble Court was justified in not considering the request of appellant regarding non receipt of the said letter?
(c) Whether the Court was justified in allowing the claim No.4 of Rock Excavation increase in lead without taking into consideration written affidavit filed by Gurdeep Singh dated 9.2.2005, in which, it was stated that letter No.CC/97-98/1745 dated 30.1.98 submitted by Gurmeet Singh and company was not received by the appellant claim No.4 was based on the grounds of claim No.3 in which it was stated that sufficient site was available for the total quantity of rock Excavation?
(d) Whether the court was justified in allowing claim No.7 against appellant as per general condition No.5 of contract agreement, the award of interest cannot be allowed after the defect and liability period of contract agreement which was over on 31.5.2002 and interest upto 12/2002 at the prevailing bank rates on FDR during period were only 5% to 17%.
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(e) Whether the court is justified in allowing the claim No.1 of item increase in lead of previous material which was not brought to the knowledge of appellant as per terms & conditions of claim GC-36 of contract agreement?
(f) Whether the court is justified in allowing claim No.16 against the appellant when Mobilizations advance has been recovered as per clause GC-9 of contract agreement and agency had at no stage requested the appellant to adjust his balance Mobilization advance from his security amount lying with appellant?
(g) Whether the Court is justified in allowing claim No.18 (interest on awarded amount) against the appellant @ 10% P.A., on the awarded amount when the learned Arbitrator himself allowed interest on pending security amount @ 8% P.A., in Claim No.7. In Claim No.7 interest was allowed on security amount whether interest on interest claim in Claim No.7 can be allowed by the Court?
(h) Whether the Court was justified the imposing huge cost on appellant?”
The claimant, in the present case, based his claims on account of loss suffered by him due to the lapse on the part of the appellant-State, as the Department had failed to provide hindrance free site for execution of work on account of electric lines, as well as, the water supply pipe line, was not shifted till the end of March, 1998. The approved drawings were not supplied. Most important of all, the work was stopped by the department as the World Bank Aid was stopped after 31-07-1998 and the department had no funds for the project till September 2000.
The questions, raised by learned State Counsel, were taken one by one, but all the questions were found to be questions of fact, which were decided on merit by the Arbitrator except questions at d' and g', on the ground of interest. There is nothing to show that the award was against
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F.A.O No.2142 of 2007
the contract or the public policy. The scope under Sections 34 & 37 of the Arbitration and Conciliation Act, 1996, is limited. The Arbitrator was the Superintendent Engineer, a technical man of their own department. Nothing has been brought to the notice of the Court which may require interference. There is no error on the face of it or any violation of the statutory provisions. No illegality in the award has been pointed out.
Taking up the argument with respect to the questions d' & g' referred to above, General Clause 5 of the Agreement was read out. A perusal of the same shows that the same was silent qua the grant of interest. There was nothing expressed with respect to the grant of interest. No clause, which may prohibit Arbitrator from awarding the interest, has been pointed out. A perusal of Sub Section 7 of Section 31 of the Arbitration and Conciliation Act, 1996 shows that unless otherwise agreed by the parties, the Arbitrator may award interest at such rate as it deems reasonable, on the whole or any part of the money. The relevant provisions is reproduced below :-
“31. Form and contents of arbitral award.
7(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.”
There is nothing in the agreement which may show that there
was anything contrary to the grant of interest. Thus, there is no merit in the argument of the learned counsel for the appellants-State that the interest
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could not have been awarded by the Arbitrator. The Arbitrator, who was appointed, on the consent of parties, gave his award on 29-08-2003. No sufficient ground has been pointed out to set aside the Arbitration award. There is nothing to show that the Arbitrator had granted the award beyond the agreement and contract, in question.
The appeal is, accordingly, dismissed.
09.09.2009 gurpreet
(NIRMALJIT KAUR) JUDGE
2 issues framed by the court
Whether the District Judge was justified in not setting aside the arbitrator's award regarding interest and specific claims.
Whether the Arbitrator had the authority to award interest under Section 31 of the Arbitration and Conciliation Act, 1996.
2 provisions across 1 enactments
State of Punjab
M/s Gurmit Singh & Co.
Nirmaljit Kaur
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
