Dismissed

Tesoro Indo Construction Co. Pvt. v. Bajwa Agro Industries Ltd.

Punjab & Haryana HC13 Feb 2012CR/6987/2009

Case brief

AI extract

What is this about?

The High Court dismissed two revision petitions. It held cross-objections under Section 39 of the Arbitration Act, 1940 were not maintainable and objections under Sections 30 and 33 failed. The suit amounts were affirmed, but interest for the trial court pendency period was set at 12% p.a. instead of 18% p.a.

What did the court decide?

The civil revision petitions filed by both the contractor and the employer were dismissed. The contractor is entitled to interest at 18% p.a. until filing of the application and 12% p.a. thereafter.

Tesoro Indo Construction Co. Pvt. Vs Bajwa Agro… — Arbitration | Punjab & Haryana HC (2012)

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CR NO.6987 OF 2009

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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CIVIL REVISION NO.6987 OF 2009 DATE OF DECISION: FABRUARY 13, 2012

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Tesoro Indo Construction Co. Pvt. Ltd.

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.... Petitioner

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Versus

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Bajwa Agro Industries Ltd. & another

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.... Respondents

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CORAM :- HON'BLE MR. JUSTICE L. N. MITTAL.

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PRESENT: Mr. P. S. Rana, Advocate for the petitioner.

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Mr. Harminderjit Singh, Advocate for respondent No.1.

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L.N. MITTAL, J. (ORAL)

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By this common order, I am disposing of two revision petitions i.e. Civil Revision No.6987 of 2009 titled Tesoro Indo Construction Co. Pvt. Ltd. versus Bajwa Agro Industries Ltd. & another and Civil Revision No.589 of 2010 titled Bajwa Agro Industries Ltd. versus Tesoro Indo Construction Co. Pvt. Ltd. & another as both these revision petitions have arisen out of the same case.

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Proforma respondent No.2 (former Judge of this Court) as Arbitrator regarding disputes between petitioner and respondent No.1, gave award dated 19.11.2004 (Annexure P-2 in Civil Revision No.589 of 2010) thereby awarding total amount of Rs.34,73,914 (Rupees thirty four lacs seventy three thousand nine hundred fourteen) in favour of contractor Tesoro Indo Construction Co. Pvt. Ltd. along with interest on the awarded amounts @ 18% per annum w.e.f. the date when each amount fell due till date of decree or actual payment whichever is earlier. Petitioner-contractor filed application under

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CR NO.6987 OF 2009

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Section 14 read with Section 17 of the Arbitration Act, 1940 (in short, the Act) for filing of the original award by the Arbitrator and for making the same rule of the Court and passing decree in terms of the award along with further interest @ 18% per annum from the date of decree till actual payment.

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Respondent No.1-employer-Bajwa Agro Industries Ltd. filed objections under Sections 30 and 33 of the Act for setting aside the award, alleging that the award is based on conjectures and surmises and the Arbitrator misconducted himself and the proceedings and ignored the terms and conditions of the contract and pleadings, evidence and arguments of the objector. The award was passed without application of mind. Appointment of the Arbitrator was also pleaded to be illegal. Various other pleas were also raised.

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Averments regarding award of amounts by the Arbitrator under various claims made by the contractor were also made to challenge the said award. Rejection of counter-claim made by respondent No.1-employer before the Arbitrator was also challenged in the objections.

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Petitioner-contractor controverted the averments of the objectorrespondent No.1 and pleaded that the award is legal and valid and be made rule of the Court.

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Learned Civil Judge (Senior Division), Chandigarh vide order and decree dated 26.02.2007 dismissed the objections preferred by respondent No.1 including its counter-claim and allowed the application of the petitionercontractor and made the award rule of the Court, holding the claimantcontractor entitled to recover Rs.34,73,914 (Rupees thirty four lacs seventy three thousand nine hundred fourteen) along with interest @ 12% per annum on the awarded amount from the date of filing of the application till recovery of total amount.

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CR NO.6987 OF 2009

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Against aforesaid order and decree of the trial Court, contractor preferred first appeal claiming interest @ 18% per annum till the date of decree of the trial Court and contended that interest @ 12% per annum as awarded by the trial Court should be made applicable from the date of decree of trial Court and not from the date of filing of the application.

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Respondent No.1 preferred cross-objections in the said appeal although respondent No.1 did not file any independent appeal. Prayer made in the cross-objections is reproduced hereunder:

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“ It is, therefore, respectfully prayed that the appeal may kindly be dismissed and the present cross objections may kindly be allowed and the counter claim set out by the answering respondent before Learned Arbitrator and before Hon'ble Court below may kindly be awarded in favour of the answering respondent and against the appellant in the interest of justice.

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And for any other relief as this Hon'ble Court may deem fit in the facts and circumstances of the case.”

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Learned Additional District Judge, Chandigarh vide impugned judgment and decree dated 12.06.2009 dismissed the appeal as well as the cross-objections preferred by petitioner and respondent No.1 respectively. Feeling aggrieved, petitioner-contractor has filed Civil Revision No.6987 of 2009 whereas respondent No.1-employer has preferred CR No.589 of 2010.

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I have heard learned counsel for the parties and perused the case files.

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First taking up Civil Revision No.589 of 2010 filed by respondent No.1-employer, counsel for the contractor contended that cross-objections in appeal preferred under Section 39 of the Act are not maintainable. Reliance in support of this Contention has been placed on judgment of Hon'ble Supreme

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CR NO.6987 OF 2009

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Court in case of Superintending Engineer and others versus B. Subba Reddy, 1999(2) Arbitration Law Reporter, 304 (SC). I have carefully considered the contention. It has been categorically laid down by Hon'ble Supreme Court in the judgment of B. Subba Reddy (supra) that cross-objection by respondent is not maintainable in appeal preferred under Section 39 of the Act. No judgment to the contrary has been cited by counsel for respondent No.1-employer. Consequently, it is held that cross-objections preferred by respondent No.1employer in the lower appellate Court were not maintainable and resultantly Civil Revision No.589 of 2010 filed by employer has to be dismissed.

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Even otherwise, on merits, respondent No.1-employer can not succeed in the objections. Respondent No.2 was appointed as Arbitrator by order of Civil Court and revision petition against that order was dismissed by this Court and thus the said order has attained finality. Consequently appointment of respondent No.2 as Arbitrator could not be challenged by filing objections under Sections 30 and 33 of the Act.

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Moreover, respondent No.1 cannot challenge the award on merits of claims and counter-claims as adjudicated by the Arbitrator. Civil Court does not sit as Court of appeal over the award of Arbitrator. On the contrary, under the Act, the award could be challenged only on grounds provided in Sections 30 and 33 of the Act i.e. the Arbitrator has misconducted himself or the proceedings, or the award has been made after super-session of the arbitration by Court order or after arbitration proceedings became invalid under Section 35 of the Act or that the award was improperly procured or is otherwise invalid. In the instant case, respondent No.1 has miserably failed to depict that Arbitrator misconducted himself or the proceedings or that the award has been improperly procured or is otherwise invalid or that the award was made after super-session

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CR NO.6987 OF 2009

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of the arbitration or the arbitration proceedings having become invalid under Section 35 of the Act. Consequently, the objections preferred by respondent No.1-employer have been rightly dismissed by the courts below.

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It may also be added that judgment and decree of the trial Court regarding claim of petitioner were not assailed by respondent No.1 in its crossobjections as is evident from the prayer made in the cross-objections as reproduced hereinbefore. The only prayer was to dismiss the appeal i.e. to affirm the judgment and decree of the trial Court and also to allow the counterclaim set up by respondent No.1-employer before the Arbitrator and the trial Court. However, claim of petitioner-contractor as awarded by the Arbitrator and affirmed by the trial Court, was not even challenged in the crossobjections.

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For all the aforesaid reasons, Civil Revision 589 of 2010 preferred by respondent No.1-employer has no merit and has to be dismissed accordingly.

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Now coming to Civil Revision No.6987 of 2009 preferred by the contractor, it was submitted by counsel for the petitioner that Arbitrator awarded interest @ 18%per annum from due dates till decree or payment whichever is earlier and, therefore, interest @ 18% per annum should have been affirmed till the decree of the trial Court and should not have been reduced to 12% per annum from the date of filing of application in the trial Court till decree of the trial Court, although future interest @ 12% per annum from the decree of the trial Court till recovery is not disputed. I have carefully considered the contention but the same cannot be accepted. It is correct that the Arbitrator awarded interest @ 18% per annum from due dates till date of decree or till payment whichever is earlier and therefore, in accordance with the award, the petitioner would have been entitled to interest @ 18% per annum from due

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CR NO.6987 OF 2009

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dates till date of decree of the trial Court. However, the trial Court thought it fit to reduce the rate of interest to 12% per annum from the date of filing of the application before the trial Court till decree passed by the trial Court and also thought it fit to award future interest also @ 12% per annum from the date of decree till recovery. Award of pendente lite and future interest @ 12% per annum as awarded by the trial Court cannot be faulted with. Arbitrator awarded interest at the higher rate of 18% per annum because in the year 1994-95 when the awarded amounts became due, interest rates were at peak. However, sometime after the year 2000 or so, interest rates started falling down. Application before the trial Court was moved by the Contractor under Section 14 read with Section 17 of the Act on 23.11.2004 and the same was decided vide judgment and decree dated 26.02.2007. During that period, the interest rates were very low. Consequently, pendente lite interest @ 12 % per annum as awarded by the trial Court is fully justified being reasonable rate of interest keeping in view the then prevailing rate of interest.

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Accordingly the petitioner-contractor shall be entitled to interest @ 18% per annum on the awarded amounts from due dates till filing of application before the trial Court and shall be entitled to interest @ 12 percent per annum from the date of filing of application before the trial Court till actual recovery.

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For the reasons aforesaid, I find no merit in both these revision petitions, which are accordingly dismissed.

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(L. N. MITTAL) JUDGE

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13.02.2012 'raj'

Tesoro Indo Construction Co. Pvt. v. Bajwa Agro Industries Ltd.

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Tesoro Indo Construction Co. Pvt. v. Bajwa Agro Industries Ltd.

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