The single judge dismissed an appeal against an order modifying an arbitral award that granted interest on security deposit from the date of the award and awarded arbitration costs, deeming the amount disputed.
The miscellaneous appeal and stay application were 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.
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
S.B. Civil Miscellaneous Appeal No. 3712/2013
----Appellants Versus
M/s Bansal Transport Company Pvt. Ltd., 240 Himmatnagar, Tonk Road, Jaipur
----Respondent
| For Appellant(s) | : Mr. Vimal Chaudhary and Mr. Yogesh Kumar Tailor |
|---|---|
| For Respondent(s) | : Mr. N.L. Agarwal |
HON'BLE MR. JUSTICE BANWARI LAL SHARMA
Order
08/10/2018
The present misc. appeal is preferred by the appellants assailing the impugned order dated 24.07.2013 passed by learned Additional District Judge No.3, Jaipur Metro in Civil Misc. Case Case (Arbitration) No. 690/2012 (Food Corporation of India & Ors. vs. M/S Bansal Transport Company Pvt. Ltd.) whereby learned Court below partly allowed the objections of appellants submitted under Section 34 of the Arbitration And Conciliation Act, 1996, and amended the sole arbitral award dated 01.07.2008 to the effect
that “DysesaV ¼izR;FkhZ&foi{kh½] vkifRrdrkZ Hkkjrh; [kk| fuxe ls /kjksgj jkf’k 218000@& :i;s ij vokMZ dh frfFk fnukad 1&7&2008 ls olwyh rd 12 izfr’kr C;kt lfgr izkIr djus
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dk vf/kdkjh gksxk o Mkd ?kj esa tek jkf’k C;kt lfgr DysaesaV izkIr djsxkA blds vykok fo}ku iap egksn; }kjk vf/kjksfir iap dk;Zokgh ls lacaf/kr [kpsZ vkfn ;Fkkor jgsaxsaA laiw.kZ jkf’k Hkkjrh; [kk| fuxe }kjk nks ekg ds Hkhrj DysesaV dks vnk dh tk;sxhA bl izdj.k dk [kpkZ nksuksa i{kdkj viuk viuk ogu djsaxsA^”
Mr. Vimal Chaudhary learned counsel appearing on behalf of appellants submits that the interest imposed on security deposit is not proper and the cost of arbitral proceedings was also wrongly imposed by the Arbitrator, which was not considered by the Court below, therefore this misc. appeal may be allowed to that extent.
Learned counsel relied on National Building Construction Corporation vs. Essel Properties & Industries, MANU/DE/2538/2012 decided by the Delhi High Court on 12.04.2012.
Per contra Mr. N.L. Agarwal learned counsel appearing on behalf of respondent-claimant supported the impugned order and submits that the security deposit amount i.e. Rs. 2,18,000/- was lying with the appellants and after issuance of no-dues and nodemand certificate, appellants were bound to return the aforesaid security deposit amount forthwith but they failed to do so, therefore they are liable for interest thereon.
He further submits that though respondent is entitled for interest on the security deposit amount from the date when the no-dues no-demand certificate was issued still learned Court below awarded interest from the date of award only.
He submits that the cost of arbitral proceedings is also reasonably imposed by the Arbitrator. He further submits that the
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[CMA-3712/2013]
scope of interference of the Court while exercising powers under Section 34 of the Act of 1996 is very limited and the objection under Section 34 of the Act of 1996 cannot be treated as Appeal. Since, sole Arbitrator has awarded the interest and cost of proceedings, therefore it doesn’t require any interference.
Lastly he submits that the misc. appeal may be dismissed.
I have considered the submissions made at Bar.
In the matter of National Building Construction Corporation vs. Essel Properties & Industries (supra) Division Bench of Delhi High Court observed that :-
“This brings us to the last limb of Mr. Singh's argument that this contention was not raised before the learned arbitrator. In our view, the facts noted against claim no. 9, clearly show that even though there was no specific reference to the clause in issue, i.e., clause 29(1), the justification by the appellant for withholding the security amount was: non-acceptance of the final bill and the failure to attend to incomplete/defective works by the respondent. The factum of withholding not being in dispute.
On the other hand, the respondent had alleged that the amounts were wrongfully withheld.
The arbitrator being a creature of the contract would have to be guided by the terms of
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[CMA-3712/2013]
the contract, which would include clause 29(1), while determining whether a particular claim would have to be allowed or disallowed. Even the Single Judge recognized this position, and thus, did not reject the contention of the appellant on this ground. The ground which persuaded the learned Single Judge to reject the appellant's contention was that no lien had been declared qua the amounts withheld. In our opinion, since the argument of the appellant emerges from facts available on record, it would be both unfair and inequitable and in a sense unlawful to allow a claim when a clause prohibiting payment of interest is staring us in the face. This is also the reason that, the lack of clear articulation in the appeal filed by the appellant, cannot be the ground for not modifying the award on this score. ”
which is not disputed.
The contract agreement of the parties regarding interest on security deposits, reads as under :-
“(D) The corporation shall not be liable for payment of any interest on the security deposit or any depreciation thereon for the time it is hold by the corporation.
(E) The Security deposit will be refunded to the contractors on due and satisfactory performance of the services and on completion of all obligation by the contractors under the terms of the contract and on
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[CMA-3712/2013]
completion of all obligations by the contractors under the terms of the contract and submission of a no demand certificate subject to such deductions from the security as may be necessary for making up of the corporation’s claims against the contractors. ”
From the perusal of aforesaid condition of agreement, it reveals that respondent is not entitled for interest on security deposit till completion of all obligations of the contractor, meaning thereby respondent is not entitled for interest on the security deposit till issuance of no-dues and no-demand certificate.
Since, learned Court below after considering the aforesaid condition awarded interest on security deposit only from the date of arbitral award i.e. after the period of issuance of no-dues and no-demand certificate, which doesn’t require any interference and the aforesaid case law cited by learned counsel for the appellants also supports this observation.
So far as, the expenditure of arbitral proceedings is concerned.
Since, sole Arbitrator has awarded it in favour of respondent, which also cannot be interfered while deciding the objection under Section 34 of the Act of 1996. Accordingly, the misc. appeal devoids merit which is hereby dismissed. Stay application also stands dismissed.
(BANWARI LAL SHARMA),J
S. Kumawat/39
2 issues framed by the court
Whether the High Court should interfere with the award granting interest on security deposit from the date of award only.
Whether arbitrary proceedings costs should be altered when the sole arbitrator has already awarded them.
Colour shows how this judgement treated each authority
National Building Construction Corporation vs. Essel Properties & IndustriesReferred¶27
National Building Construction Corporation vs. Essel Properties & Industries, MANU/DE/2538/2012
2 provisions across 2 enactments
Food Corporation Of India
M/s Bansal Transport Company Pvt. Ltd.
Banwari Lal Sharma
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
