Full Judgment Text
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CASE NO.:
Appeal (civil) 5281 of 1996
PETITIONER:
T.P. GEORGE
Vs.
RESPONDENT:
STATE OF KERALA & ANR.
DATE OF JUDGMENT: 06/02/2001
BENCH:
S. Rajendra Babu & S.N. Variava.
JUDGMENT:
S. N. VARIAVA, J.
L...I...T.......T.......T.......T.......T.......T.......T..J
This Appeal is against a Judgment dated 15th February,
1989 wherein the appeal filed by the Respondent was partly
allowed.
Briefly stated the facts are as follows: The Appellant
was awarded a contract for construction of a Main Canal
Driving Tunnel of the Kallada Irrigation Project. The work
was to be completed by 4th March, 1983. A Supplemental
Agreement dated 20th October, 1983 extending the period of
completion was entered into. As disputes arose between the
parties the same were referred to a sole Arbitrator, who
gave a reasoned Award dated 12th August, 1985.
The Respondent filed objections to the Award, which were
rejected by a judgment dated 31st March, 1986 and the Award
was made a rule of Court.
In the Appeal, before the High Court, challenge was
restricted to Award of claims under Items 12(i), 12(j),
12(k) and award of interest from date of Award. The Appeal
filed by the Respondent was partly allowed by the impugned
Judgment dated 15th February, 1989. By this Judgment the
Award of claims under items 12(i) and 12(k) were set aside.
Award of claim under item 12(j) was upheld. Further the
award of interest was also set aside. The only ground on
which the claims under Item 12(i) and 12(k) have been set
aside are that the Arbitrator could not overlook the terms
of the contract or agreement. It is held that the
Arbitrator could not have awarded these claims as they were
contrary to the Supplemental Agreement dated 20th October,
1983.
Mr. Tripurary Ray, pointed out that claim 12 (i) was
for loss in connection with the price escalation and that it
was under clause 32 of the original agreement. He pointed
out that claim 12(k) was for revision of rates. He
submitted that under the original contract the time for
completion was fixed as 4th March, 1983. He submitted that
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due to fault of the Respondents the work could not be
completed by that time. He submitted that the Appellant was
forced to execute the Supplemental Agreement in a form as
dictated by the Respondent as otherwise the Respondents were
not clearing the pending bills of the Appellant. He drew
attention of this Court to a letter dated 6th October, 1983,
addressed by the Appellant to the Superintending Engineer
wherein the Appellant, before execution of the Supplemental
Agreement, has recorded that he was protesting execution of
the Supplemental Agreement and that he would be executing
the Supplemental Agreement without prejudice to his claims.
He submitted that even before writing of this letter the
Appellant had already, by a letter dated 5th October 1983,
made his claims. He pointed out that after the Supplemental
Agreement dated 20th October, 1983 was executed the
Appellant addressed another letter dated 24th November, 1983
to the Chief Engineer, stating that the Supplemental
Agreement was got executed under coercion and undue
influence and that the same was executed without prejudice
to his claims.
Mr. Tripurary Ray submitted that one of the questions
before the Arbitrator was whether this Supplemental
Agreement was binding on the Appellant and/or whether he had
been forced to sign the Agreement and/or whether the
Appellant was entitled to maintain his claims in view of the
Supplemental Agreement. He pointed out that after hearing
parties and considering the submissions of the Respondents
the Arbitrator had by a reasoned Award sanctioned the
claims. He pointed out that in the Award the Arbitrator had
held that the delay was not due to the fault of the
Appellant and that the Supplemental Agreement was got
executed from the Appellant. He pointed out that the
Arbitrator had held that the Supplemental Agreement was
without prejudice to the claims which had already been made.
The Arbitrator held that the Supplemental Agreement did not
debar the Appellant from making or maintaining his claims.
Mr. Tripurary Ray submitted that this was a possible view
of the matter. He submitted that the Court should be slow
to interfere merely because another view was possible.
Mr. G. Prakash supported the impugned judgment on the
ground that once the Appellant executed the Supplemental
Agreement he could not make any claims. He submitted that
the Supplemental Agreement provided that such claims could
not be made. He submitted that the Supplemental Agreement
was binding on the Appellant. He submitted that the High
Court was right in holding that the Arbitrator had
misconducted himself by awarding contrary to the
Supplemental Agreement.
We have considered the rival submissions. It is to be
seen that the question, whether the Supplemental Agreement
dated 20th October, 1983 debarred the Appellant from
pursuing his claims, was before the Arbitrator. Such a
question having been referred to the Arbitrator the view of
the Arbitrator would be binding if it is one which is
possible. The Arbitrator has taken note of the Appellant
letters dated 6th October, 1983 and 24th November, 1983 and
come to a conclusion that the Supplemental Agreement had
been got executed and that the same was executed without
prejudice to the claims which had already been made. This
is a possible view.
We have seen the impugned judgment delivered by the High
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Court. The High Court has not at all considered the letter
dated 6th October, 1983 and 24th November, 1983 nor dealt
with the question as to whether or not the Supplemental
Agreement was got executed. The High Court has not even
considered the effect of the Supplemental Agreement having
been executed without prejudice to the claims which had
already been made. Even if the High Court had considered
these aspects it could not have substituted its views for
those of the Arbitrator as it could not be said that the
view taken by the Arbitrator is unreasonable or one which
cannot be arrived at by a reasonable person. In this view
of the matter the impugned Judgment cannot be sustained and
is set aside in respect of claims under items 12(i) and (k).
The next question is whether the High Court was right in
setting aside the award of the interest from the date of the
Award. This Court has held in the case of Jagdish Rao and
Brothers vs. Union of India reported in 1999 (1) Arb. LR
696, that the award of interest ought to be granted in all
cases when there is a decree of money unless there are
strong reasons to decline the same. In the case of M/s.
Jagdish Rai & Brothers vs. Union of India, reported in JT
1999 (2) S.C. 268, this Court has held that there are four
stages of grant of interest, viz. (1) from the stage of
accrual of cause of action till filling of the arbitration
proceedings, (2) during pendency of the proceedings before
arbitrator, (3) future interest arising between date of
award and date of the decree and (4) interest arising from
date of decree till realisation of award. The power of
Court to grant interest from date of decree is not in doubt.
In the case of Hindustan Construction Co. Ltd. v. State
of Jammu and Kashmir reported in AIR 1992 S.C. 2192 this
Court has held that the Arbitrator is competent to award
interest from the date of the Award. This Court has held in
the case of Secretary Irrigation Department, Government of
Orissa and ors. vs. G.C. Roy reported in 1992 (1) S.C.C.
508, that the Arbitrator has power to grant interest
pendente lite. Recently in the case of Executive Engineer,
Dhenkanal Minor Irrigation Division, Orissa, etc. etc. v.
N.C. Budharaj (Dead) by LRs. etc. etc. reported in JT
2001 (1) S.C. 486, this Court has held that Arbitrator can
award interest for the pre-reference period. Thus as per
law laid down by this Court interest can be awarded at all
four stages. The reasoning given by the High Court that
interest cannot be awarded by the Arbitrator is thus
fallacious and cannot be sustained. In our view the
direction to pay interest from date of Award cannot be
faulted. The impugned judgment to the extent that it
disallows the interest from the date of the Award is set
aside.
However, the impugned judgment to the extent that it
upholds the Award under item 12(j) is upheld. The Appeal
stands disposed of accordingly. There shall be no order as
to costs.