Delhi High Court
J.K. Anand vs Union Of India (Uoi) And Anr. on 25 August, 2005
Author: Anil Kumar
Bench: Anil Kumar
JUDGMENT
Anil Kumar, J.
1. Aggrieved by the award dated 17th October,1996 made at Banglore by Shri Y.N.R. Rao, a retired Chief Engineer, respondent has filed the present objections under section 30 and 33 of Arbitration Act, 1940.
2. The facts in brief to appreciate the objections are enumerated hereinafter. A contract was arrived at between the parties for provision of Central Sewage Disposal Scheme (Phase-II) at Delhi Cantonment. Written contract which was executed between the parties bore No. CEDZ-7/1982-83.
3. The work which was awarded to the petitioner, Central Sewage Disposal Scheme (Phase – II), was held up on account of delay in supply of drawings, on account of frequent changes in them and for cutting of roads leading to disputes between the parties. Since the respondent failed to make the payment and other disputes arose, petitioner invoked the arbitration clause and after the disputes were referred to the arbitration, an award dated 20th March, 1993 was given by the learned Arbitrator which was fled in the Court. The award given by the arbitrator was remitted back by order dated 18th July, 1996 with a direction to give opportunity to both the parties for arguing the matter afresh and record the reasons for awarding amount of each claim as wells counter claims and to pass the award according to law within three months.
4. After the award was remitted back, the parties were heard and thereafter the learned Arbitrator gave the award dated 17.10.1996 which is objected to by the respondent. In the award Arbitrator observed that as per department practice, the condition 70of the contract agreement 2249 contemplated speaking award/ reasoned award for contracts concluded after 1986 and non speaking award could be given for contracts concluded prior to 7th July,1982 and as such non speaking award could be given, however, on count of amendment 42 issued contemplating reasoned award to be given if the claims exceeded Rupees One Lakh, the reasoned award was given. Learned Arbitrator considered the claims and counter claims and awarded amounts as under:-
S. Claims Amount claimed Amount awarded in Rs.
NO
1. For compensation on account of
prolongation of work beyond the
stipulated date of completion of
the work 11,75,925.00 9,67,499.17
(3,20,560.32 + 6,46,939.85)
2. For payment of compensation for
the extra expenditure incurred
on bank guarantee and the loss
suffered due to blockage ofthese
funds due to prolongation of
contract period 94,132.31 4,420.00
(holding that the Department
is responsible for the delay)
3. For payment of extra amount due
to excavation of rock under water 34,226.09 34,226.09
4. Payment of charges for pumping out
water from the trenches, water
collected from outside 1,37,795.34 34,448.84
(25% of the claim was held to
be a reasonable amount)
5. On account of less measurements
due to incorporation of the
multiplying factor in respect of
items 45 to 49 of the list of
item of work 42581.89 NIL
(No amount was awarded)
6. For the provision of extra amount
on account of provision of 1:3:6
concrete instead of D.2 concrete
(1:4:8) for bedding of pipes in
respect of the items 72 to 77 of
the list of items of work 52,846.00 NIL
(Claim was rejected.)
7. For payment of the losses for
cutting and repairing of pipes at
their junction with man-holes 37,455.00 NIL
(Claim was rejected)
8. For payment of extra expenditure
in supporting the exposed services 20000.00 7,375/-
(25% of the cost was
treated as loss)
9. For refund of the amount of minus
D.O. No.14(E) 8383/CE-7/1943/E8
dated 30.9.1985 5,077.00 NIL
(the claim was rejected)
10. For payment of the cost of man-
hole covers and frames which has
been replaced after they are
stolen. 62292.00 NIL
(the Claim was rejected)
11. For refund of deduction on
account of minus D.O. 2036 dated
17.03.1986 on account of testing
of the lines 25,839.59 25,839.59
(the claim was upheld)
12. Compensation on account of loss
of profit at 15% due to reduction
in the gross amount of the contract
as actually executed, i.e., from
Rs.1,28,224.05 to Rs.98,86,800.64 4,40,790.60 NIL
(claim was rejected)
13. For the payment of expenditure
involved in surveying the alignment
which was changed. 10,000.00 NIL
(Claim was rejected)
14. For the payment of interest at 20%
per annum on the amount claimed in
the above disputes with effect from
16.2.1986
20% from 16.2.1986
15% simple interest from 16.2.86
to 30.7.86
15. Costs for both the parties. 25,000.00 NIL
(Claim was rejected)
5. On filing the award, the notice of filing of the award was given to the respondent no.1 which was received by him on 20.09.1998. The objections were filed by respondent No.1 under Sections 30 and 33 of the Arbitration Act, 1940 read with Section 151 of CPC contending that the Arbitrator mis-conducted himself and the proceedings as he acted contrary to the express terms of the contract between the parties. The respondent No. 1 filed objections regarding claim Nos. 1, 2, 3, 4, 8, 11 and 14. However, the objections were not filed within time. An affidavit was filed on behalf of respondent no.1 giving detailed reason for condensation of delay in filing the objections within time.
6. On the basis of the pleadings of the parties, the Court framed the following issues:
i. Whether there is sufficient cause of condoning the delay in filing the objections?
ii. If the issues No.1 is proved in the affirmative, whether the award is liable to be set aside for the reasons stated in the objection?
iii. Relief.
7. I will first deal with the issue no.1.
“Whether there is sufficient cause for condoning the delay in filing the objection?”. An affidavit has been filed of Major M.K.S. Yadav, Garrisson Engineer, the GE (P) No. I, Delhi Cant, who has deposed that the notice of filing of the award was received on 20.09.1998 and the respondent No.1 immediately contacted the concerned Government counsel and handed over the relevant files for preparation of objections. It has been deposed that there was a change in panel of counsels for the Union of India, consequently, the objections could not be filed within the period of 30 days and were filed only when the files were returned by the old panel counsel to the respondent No.1 and it was assigned to the new counsel on 24.03.1999. It was categorically deposed that the delay in filing the objections was neither intentional nor deliberate. No evidence in reply was produced by the petitioner.
8. Consequently, the facts deposed regarding condensation of delay deposed by the respondent/objector remained unrebutted and considering the facts and circumstances and after hearing the counsels, I am of the opinion that there is sufficient reason for not filing the objections within the time. Therefore, I condone the delay in filing the objections and consider the same.
9. The respondent No.1 filed objections regarding claim Nos.1, 2, 3, 4, 8, 11 and 14. However, Mr. Rajinder Nischal, Learned counsel for respondents, has argued the objections in respect of claim No.1 and claim no 14 only and did not press his objections for claim no.2,3,4,8 and 11 in view of the fact that the amounts awarded were not contrary to any alleged term of the contract and counsel for respondent no.1 accepted the legal proposition that court will not consider the reasonableness of the reasons given by the arbitrator as the arbitrator is the sole judge of the quality as well as quantity of evidence and it will not be for this court to take upon itself the task of being a judge on the evidence before the arbitrator.
10. Regarding Claim no.1 the counsel for objector/respondent No.1 contended that in view of clause 11 C of the Agreement, the learned Arbitrator has mis-conducted in awarding Rs. 9,67,499.17 to the petitioner on account of prolongation of work. The clause 11 C of the Agreement is extracted for reference:-
“11 (C) No claim in respect of compensation or otherwise; howsoever arising, as a result of extensions under Conditions (A) and (B) above shall be admitted.”
11. Mr. Rajinder Nischal learned counsel for the objector contended that since the extension must have been granted under clause 11 (A) and (B), therefore, in view of specific bar under clause 11C, the Arbitrator has clearly exceeded his jurisdiction. The counsel for objector also contended that the petitioner had signed the extension DOs with financial effect `Nil’ and delays were not only on the part of the respondent no.1 but there were delays on the part of petitioner also. According to the respondent no.1 Arbitrator was only authorized to decide rights and liabilities of the parties in terms of the written contract between the parties. As clause 11 C specifically prohibited grant of any compensation, no compensation could be granted to the petitioner.
12. The finding of the Arbitrator under Claim No. 1 is as under:-
“The learned counsel of the contractor gone thro’ the preliminary details given by them in the statement of claims and explained the consequences. He referred me to exhibit 68 and contended that they would rely on section 53, 54 and 73 of Indian Contract Act and example B in particular. The High Court judgment on Selwan Construction Co. of CPWD about exemption clause. Section 29 of Indian Contract Act and Photo copies were filed. Condition 51 of 2249 was read out and powers of arbitrator was also described as per the judgment given by Supreme Court. He also explained the circumstances under which the contractor had signed as required by the department. It was without a free consent. The final bill was shown to them on 15th Oct. 1985.
He also contended that the claims were raised within limitation period as per limitation act. He also referred me to exhibit 100. He pleaded for awarding them sum as claimed.
The reps. of department contended that the final bill was submitted in Sept 85 and the contractor had singed under protest. In Dec 86, when it was pre-audited, the payment was received after giving a clear certificate.
The Rep. States that delays were there and the bound to be there and extensions were granted. There were delays on the part of contractor also. It was also stated that the contractor has signed the extension DOs with financial effect “NIL”.
The Rep of contractor then explained the delays caused by the department in road cutting exhibits C-7, C-17, C-19, C-21, C-39, C-41, C-50, C-53, C-55, and C-18 were gone through highlighting the point.
The Rep. of department brought to my notice exhibits P-3, P-5, P-6, P-7, P-8, P-10, site order 5, site order 6 and stated that contractor did not employ the required number of laborers and about the slow progress of the work.
The contractor then referred to exhibit C-99 and replied to various points and stressed that C-99 was not contradicted by the department. He also took me to exhibit C-98.
The Rep. of the department intimated that the cases referred by the contractor do not pertain to the case under consideration but did not explain how and why.
The Rep. of department stated that the contractor should prove that there were losses and produce the income tax statement. The contractor intimated that it was not for the contractor to prove with income tax statement, contractor contended that these were his entitlement.
The details of payments made were recorded by me to assess the work done during the various period after the date of completion.
As admitted by the department I find that there were delays in finalising the drawings and there were some changes made as also considerable delays were there for clearing the road cuttings etc., some of the delays tantamount to fundamental breaches. The contractor’s plea that he had employed sufficient labourers and since they were without work he has to decrease the tempo of work is considered reasonable.
In the absence of any escalation clause in the tender, the contractor should normally anticipate some time over run in completion of work of this nature as also provide for some unforeseen problems in a work of this nature and must have accounted for the same. However there is certainly considerable market rise and as department was responsible, the contractor should be compensated.
After finding out from the department about details of amounts of Phase I, II and III and quantum of work carried out after the original date of completion, I do not accept the plea of the contractor for claiming compensation on formula basis, nor the arguments of the department that such delays are common. The condition of contract for price rise should be within the contract period. Since there is a clear breach by the department the contractor should be compensated.
Now, coming into the quantum, the contractor has worked out in such a way that it is more favorable to him. If the formula is applicable according to terms of contract, his working is correct. The department has not made any specific comments except stating that it is hypothetical. Hence I will have to look into details to arrive at the figures.
There are two main aspects firstly establishment charges and overheads and secondly the price rise.
The PDC was 10.2.84 and the contractor must have taken into account for some time over run at the time of quoting. Hence I consider it is reasonable to expect the work to be completed by 10.11.84 and I do not propose to give any relief up to this date.
The normal establishment and overhead charges are taken from 7 to 8% and I allow 7-+ %. Hence I allow Rs.3,20,560.32 as against the claim of Rs.4,25,879.10.
The date of commencement was 11.8.82 and date of completion for phase III was 10.2.84. the period comes to 18 months. Actual date of completion was 16.5.85. Hence the work id delay by 15 months. So far as phase I is concerned the actual date of completion is 31.12.84 and delay is 19 months. For phase II it is 17 months. For phase III delay is 15 months.
I consider it reasonable to allow 100%, 50% and 50% of time given for phase I, II and III respectively and no compensation is considered admissible. The actual work for which compensation works out to Rs. 6,46,939.85 by averaging out to price rise.
Therefore the total reasonable compensation would be Rs.3,20,560.32 + Rs. 6,46,939.85 = Rs.9,67,499.17.
I award Rs. 9,67,499.17. for this claim”.
13. According to him the Learned arbitrator has completely disregarded the specific term of the contract and as such has mis-conducted in awarding this claim to the petitioner. The counsel relied on Steel Authority of India Limited v J.C. Budharaja, Government and Mining Contractor, and Associated Engineering Company Vs Government of A.P, (1991) 2 Arbitration L R 180. It was contended that the arbitrator derived his authority from the Contract and if the arbitrator commits an error inonetruction of the contract then it is an error within his jurisdiction. A deliberate departure from contract amounts to not only manifest disregard of his authority or a mis-conduct on his part, but it may tantamount to a mala fide action. According them the award is vitiated as there is conscious disregard of the provision of the agreement.
14. Per contra, the contention of the petitioner is that the submission of the objector is based on mis-construction of clause 11 (C) The clause 11 does not cover all the delays. Under clause 11 (C) no claim in respect of compensation or otherwise can be granted for delays which are enumerated under clause 11 (A) and (B). The delays for prolongation had been caused by the respondent/objector on account of finalizing of drawings by making changes in them from time to time and delays were also caused by not clearing road cutting etc. which do not fall either in clause 11 (A) or clause 11 (B) and such delays will not be covered under Clause 11 (C). Clause 11 of the contract is extracted for reference:-
11. Time delay and Extension (A) Time is of essence of the contract and is specified in the contract documents or in each individual works order.
As soon as possible after the contract is let or any substantial works order is placed and before work under it is begun and, the G.E and the contract and shall agree upon a Time and Progress Chart. The Chart shall be prepared in direct relation to the time stated in the contract documents or the works order for completion of the individual items thereof and/or the Contract or works order as a whole. It shall indicate the forecasts of the dates for commencement and completion of various trade processor sections of the work, and shall be amended as may be required by agreement between the G.E. and the contractor within the limitation of time posed in the contract documents or works order. If the work is delayed: –
(i) by Force majure, or
(ii) by reason of abnormally bad weather,
(iii) by reason of serious loss or damage by fire, or
(iv) by reason of civil commotion, local combination of workmen, strike lockout, affecting any of the trades employed on the work, or
(v) by reason of delay on the part of nominated sub-contractors, or nominated suppliers which the Contractor has, in the opinion of G.E., taken all practicable steps to avoid, or reduce, or
(vi) by reason of delay on the part of Contractors or tradesmen engaged by Government in executing works not forming part of the contract, or
(vii) by reason of any other cause which in the absolute discretion of the Accepting Officer is beyond the Contractors control;
then, in any such case the Office hereinafter mentioned may make fair and reasonable extension in the completion dates of individual items or groups of items of works for which separate periods of completion are mentioned in the contract documents or works Order, as applicable.
Upon the happening of any such event causing delay, the contractor shall immediately, but not later than 30 days of the happening of the event, give notice thereof in writing to the G.E but shall nevertheless use constantly his best endeavor to prevent or make good the delay and shall do all that may reasonably be required to the satisfaction of the G.E to proceed with the works. Extension of time shall be granted as under:-
a) by G.E for all Term Contracts;
b) by Accepting Officer of contract for all other contracts.
In case the contractor fails to notify the G.E of happening of an event(s) causing delay within the period of 30 days stipulated in sub-para 3 above, he shall forfeit his right to claim extension of time for the delay caused due to such event(s).
Extension of time, as granted above, shall be communicated to the Contractor by G.E in writing and shall be final and binding. Provided that in the case of contracts(other than Term Contracts) accepted by the G.E in the event of the Contractor not agreeing to the extension granted by the G.E the matter shall be referred to the C.W.E whose decision shall be final and binding.
(B) If the works be delayed:-
a) by reason of non-availability of Government stores mentioned in Schedule B or
b) by reason of non-availability or breakdown of Govt. Tools and Plant mentioned in Schedule C .
then, in any such event, notwithstanding the provisions hereinbefore contained, the G.E may in his discretion grant such extension of time as may appear reasonable to him and the Contractor shall be bound to complete the Works within such extended time.
In the event of the Contractor not agreeing to the extension granted by the Garrison Engineer, the matter shall be referred to the Accepting Officer (or C.W.E in case of contract Accepted by Garrison Engineer) whose decision shall be final and binding.
15. The counsel for the petitioner contended that though the Clause 11 (c) has not been specifically mentioned by the arbitrator but it was considered which is apparent from his findings on claim no.1. The exemption clause of `Selwan Construction’ case was considered in reference to exemption clause 11 (c) of the contract. The arbitrator has specifically referred to his power and considered the extension DOs which were signed by the petitioner with `Nil financial effect. The plea of the objector the circumstances that amount awarded under claim no. 1 is barred under clause 11 (c) is based on construction of contract and was considered and not acceded to by the Arbitrator.
16. According to Mr. Sandeep Sharma, Learned Counsel for the petitioner, it was apparent from perusal of clause 11 of the agreement that the delays on account of road cuttings and frequent changes of drawings were not covered under clause 11 A and B and therefore, awarding compensation on account of delays was not barred under clause 11 C. In any case it was contended that by purporting to construe the contract the court could not take upon itself the burden of saying that this was contrary to the contact and, as such, beyond jurisdiction. Petitioner submitted that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised. An arbitration award might be setside on the ground of an error on the face of it when the reasons given for the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. However, an award is not invalid merely because a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.
17. Learned counsel for the petitioner relied on and cited Sudershan Trading Co. v. The Government of Kerala and Anr, . Relevant para is extracted for reference:
31. An award may be remitted or set aside on the ground that the arbitrator in making it, had exceeded his jurisdiction and evidence of matters not appearing on the face of it, will be admitted in order to establish whether the jurisdiction had been exceeed or not, because the nature of the dispute is something which has to be determined outside the award whatever might be said about it in the award or by the arbitrator. See in this connection, the observations of Russell on The Law of Arbitration, 2th Edn., p. 427. Also see the observations of Christopher Brown Ld. v. Genossenschaft Oesterreichischer and Dalmia Dairy Industries Ltd. v. National Bank of Pakistan. It has to be reiterated that an arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award. In Halsbury s Laws of England II, 4th Edn., Vol. 2, para 622 one of the misconducts enumerated, is the decision by the arbitrator on a matter which is not included in the agreement or reference. But in such a case one has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. See the observations in Anisminic Ltd. v. Foreign Compensation Commission and Regina v. Noseda, Field, Kight and Fitzpatrick12. But, in the instant case the court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator hatched correctly or incorrectly. This, in our opinion, the court had no jurisdiction to do, namely, substitution of its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between he parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in this case. By purporting to construe the contract the court could not take upon itself the burden saying that this was contrary to the contract and, as such, beyond jurisdiction. It has to be determined that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised. There may be a conflict as to the power of the arbitrator to grant a particular remedy. See Commercial Arbitration by Sir N.J. Mustill and Stewart C. Boyd, p 84.
18. Learned Counsel for the petitioner submitted that in view of conflicting decision in Sudarshan Trading Co.(supra) and Associated Engineering Co (supra), the Supreme Court had referred the matter to a Bench of three judges. In the matter of K.R. Raveendranathan v. State of Kerala and anr , a three judge bench approved the law laid down in Sudarshan Trading Co. (supra). The counsel also relied on Arosan Enterprises Ltd. v. Union of India and Anr, 1999 (3) Arb.L.R 310 (SC) holding tat the Court can not substitute its own evaluation and come to conclusion that the arbitrator has acted contrary to bargain between the parties.
19. On careful consideration of the agreement, objections raised by the respondent, findings of the arbitrator in the award and the submissions made by the parties, it is apparent that the delays on account of not finalizing the drawings and delays in the road cuttings are not attributable to the petitioner. Clause 11 of the contract deals with eventualities which are not within the control of the contractor and for non availability of Government stores mentioned in Schedule B or by reason of non availability or breakdown of Govt. Tools and Plant mentioned in Schedule C . Clause 11 A (vii) also contemplates `any other reason which is in the absolute discretion of accepting officer, beyond the control of the contractor. Therefore, under this clause 11 A (vii) also reasons for delays should be such which are not attributable to contractor or are not within the control of the contractor and will not encompass all the reasons for delays. If some of the reasons for delays are not covered under clause 11 A or 11 B, awarding compensation for such delays will not run contrary to clause 11 C. Reasons for delay, not finalizing the drawings and delays on account of road cuttings, do not seem to be the reasons on account of and/or attributable to the petitioner or on account of non availability of Government Stores or on account of non availability or breakdown of Government Tools as contemplated under Clause 11 B. In any case it seems that the arbitrator though not specifically referred to clause 1C but he seems to have considered the same. The arbitrator has considered the exemption clause in reference to judgment of `Selwan Construction Co. and the effect of signing of extension Dos with `Nil’ financial liability. The arbitrator has considered the plea of the respondent no.1 that the petitioner ought to have proved the losses by producing income tax statement. Application of mind by the arbitrator is apparent from noticing of no escalation clause in the tender and consequently overrunning work for some unforeseen problems in work. He has not accepted the plea of the petitioner on formula basis nor the plea of the respondent that such delays are common. Consequently it can not be inferred that Learned Arbitrator was not conscious of clause 11 C or has not considered the same. A fortiori it can not be inferred that all types of delays are covered under clause 11 A and clause 11 B and the damages can not be granted for any type of delay under clause 11 C of the agreement. The arbitrator has dealt with the claim no.1 extensively which has been referred to above. The respondent/objector has also not disputed that it is not an excepted matter. The probable inference in the facts and circumstances is that the learned arbitrator has considered the provisions of the agreement, intention of the parties and the material on record and awarded the amount to the petitioner. Once the arbitrator had held that there were delay in execution of the contract attributable to the respondent and has warded amounts on account of establishment charges and overheads and for the price rise it cannot be said that it was without jurisdiction or not permissible under a particular clause of the agreement. In any case any error in awarding damages for delays will be within jurisdiction of the arbitrator and not in excess of his jurisdiction especially when clause 11 is not exhaustive and does not bar grant of compensation in every case of delay. Furthermore, in any event, reasonableness of the reasons given the arbitrator, and construction of agreement cannot be challenged. Appraisement of evidence by the arbitrator is never a matter which the court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded he power of appraisement of the evidence. The arbitrator is the sole Judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator or the construction of documents and inference drawn after due consideration. By no arguments, thus it can be said, that in the circumstances the amount for establishment charges and overheads and for the price rise was without jurisdiction and not sustainable in view of Clause 11 (c) of the agreement.
20. The judgments relied by the respondent are also clearly distinguishable. In the case of Associated Engineering Co Vs Government of Andhra Pradesh, relied on by the objector, the agreement contemplated a formula for giving escalation. The arbitrator disregarded that formula and awarded the amount on a different basis. In those circumstances the Supreme Court had held that the arbitrator had committed an error in construction of the contract and committed a jurisdiction and error. The another judgment relied on by the objector Steel Authority of India Ltd. v. J.C. Budharaja (supra) is also distinguishable as claims were not kept alive by the contractor and were not brought within three years from the date of cause of action. Therefore, I am of the opinion that the arbitrator has not mis-conducted in any manner nor the award suffers from any jurisdictional error as the arbitrator has not acted in excess of jurisdiction. The objection of the respondents in regard to claim no.1 is therefore, rejected.
21. In respect of claim No. 14, the arbitrator has granted 15% simple interest per annum on the sum of Rs. 10,73,808.56 from 16th February, 1986 to 30th June, 1996 though the petitioner had claimed interest at the rate of 20% per annum without disclosing the amount on which the interest was claimed with effect from 16th February, 1986.
22. The learned Arbitrator considered the documents reflecting that the Supreme Court has awarded interest at 18% per annum and also considered the judgments where pendente lite interest was awarded. It will be pertinent to note that both the parties left it to the Arbitrator to decide about the question of interest.
23. On the basis of the calculations before the Arbitrator, it was inferred by him that the petitioner has claimed 20% interest compounding quarterly. The learned Arbitrator after due consideration of the evidence concluded that the petitioner is entitled for interest from 16th November, 1985, however, since the petitioner had demanded interest from 16th February, 1986, consequently, the interest has been awarded from 16th February 1986 at the rate of 15% uptill 30th July, 1996. The objection which has been taken by the respondent/objector is that the amount upon which the interest is to be paid is fictitious and baseless and has been awarded in contravention of specific provision stipulated in the contract. The Arbitrator has considered all the clams and awarded the amounts in some of them and rejected other claims. The parties had left the question regarding award of interest on the learned Arbitrator. The relevant extract of the award is as under:-“The main contention of the contractor is that interest is due and the 20% claim is according to prevailing and accepted rated in the market. They took me to Exhibit CJ-2, CJ-1, CJ-3 to prove that Supreme Court has accepted payment on 18%. Also the judgment regarding allowing pendente lite interest. The Department stressed that contractor did not submit the final bill. The Department also contended that interest cannot be paid and the rule stated does not applicable and case cannot be reopened. However, both the parties left it to the Arbitrator to decide.’
24. In the circumstance, it cannot be inferred that the Arbitrator has awarded the interest on the amount of Rs.10,73,808.56 without any basis. From consideration of the entire award, it is apparent that there is due application of mind. The Arbitrator is a retired Engineer and the question of interest was categorically left by the parties on the Arbitrator. During the arguments, the counsel for the objector was unable to point out the specific provision stipulated in the contract which would disentitle the petitioner from interest. The proposition raised in the objection that the Arbitrator does not have power to award interest is also no more sustainable in view of the decision of the Supreme Court in Secy., Irrigation Deptt., Govt. of Orissa v. G.C. Roy and Sudhir Bros. v. Delhi Development Authority and anr . The objection of the respondent in regard of claim no.14, therefore, can not be sustained and is rejected.
25. Consequently the award dated 17.10.1996 cannot be said to be perverse and without jurisdiction. There are no grounds as contemplated under Section 30 and 30 of Indian Arbitration Act,1940 for setting aside the award. The objections are without any merit. It cannot be stated that the arbitrator has not taken the material before him into consideration before coming to a probable conclusion in allowing claims and has not considered the terms and conditions of the agreement between the parties. In any event of the matter it is apparent that the arbitrator has not committed an error in excess of his jurisdiction or has committed an error of jurisdiction in allowing claim 1 in view of Clause 11(C).
26. Consequently the objections of the respondents are dismissed. Award is made rule of the court. Petitioner shall also be entitled for simple interest at 6% per cent per annum pendent lite and future from the date of institution of above petition on claims allowed by the arbitrator except that of interest as the petitioner has not been awarded compound interest by the Arbitrator nor the petitioner is entitled for compound interest. A decree in terms of hereof and the award be drawn.