IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 04/08/2004 Coram The Hon'ble Mr.Justice K.GOVINDARAJAN and The Hon'ble Mr. Justice N.KANNADASAN O.S.A.No.201 of 1998 and O.S.A.Nos.107, 108 of 1999 and OSA.No.201 of 1998 M/s.Hindustan Construction Co. Limited, Construction House, Lalchand Hirachand Marg, Ballard Estate, Bombay-400 038. .. Appellant -Vs- 1.Tamil Nadu Electricity Board, rep., by its Secretary, 800, Anna Salai, Chennai-2. 2.Mr.P.K.Vedanayagam, B.E., Joint Arbitrator, Pallavi Apartments, Flat No.3, F/47, Anna Nagar, Chennai-102. 3.Mr.A.Mohanakrishnan, B.E., Joint Arbitrator, No.48, AK Block, Anna Nagar, Chennai-40. .. Respondents This Appeal is preferred against the decree and judgment of this Court dated 30.4.1998 in O.P.No.368 of 1994. !For Appellant : Mr.V.Ramachandran, Senior Counsel for Mrs.Anita Sumanth ^For Respondent-1 : Mr.N.C.Ramesh For Respondent-2 : No Appearance For Respondent-3 : No Appearance O.S.A.Nos.107 and 108 of 1999 Tamil Nadu Electricity Board rep., by its Secretary, Tamil Nadu Electricity Board, No.800, Anna Salai, Chennai-600 002. .. Appellant in both the appeals Vs. 1)Sri A.Mohanakrishnan,B.E., Joint Arbitrator, 48th Street, Anna Nagar, Chennai-600 040. 2)M/s.Hindustan Construction Company Ltd., Construction House, Walchand Hirachand Marg, Bellard Estate, Mumbai-400 038. .. Respondents in both the appeals These Appeals are preferred against the decree and judgment of this Court dated 30.4.1998 in O.P.Nos.715 of 1993 and 368 of 1994. For Appellant in both the appeals: Mr.N.C.Ramesh For Respondent-1 in both the appeals: No Appearance For Respondent-2 : Mr.K.Ramachandran, in both the appeals Senior Counsel for Mrs.Anita Sumanth :J U D G M E N T N. KANNADASAN, J. The appellant in OSA No.201 of 1998 was awarded a contract by the first respondent and the contract agreement provides a period of 36 months to complete the work from the date of handing over the site. The ranks of the parties are given as set out in OSA No.201 of 1998 for convenience. Even though the site was handed over to the appellant/ contractor on 1.6.1979, the work was not completed within the stipulated period. It is contended by the appellant that they could not complete the work due to the default on the part of the first respondent and due to the delay on the part of the first respondent on several counts, the appellant suffered a huge loss. In view of the delay on the part of the first respondent, the appellant was constrained to seek extension of time to complete the contract and the period was extended from time to time. Under the said circumstances, the appellant has invoked the arbitration clause. The Arbitrators, after considering the various records and documents made available before them and after giving opportunity to examine the witnesses and after hearing the arguments and submissions of both the parties, have passed an award accepting the claim of the appellant with the respect to the claim Nos.(a),(b),(c),(d) and (e) and quantified the amount therein payable by the first respondent at Rs.2,01,13,914.00 with interest at 11% from 2 2.11.1989 till the date of payment or decree whichever is earlier. Even though a counter-claim was made as against the appellant herein by the first respondent, the same was rejected by the Arbitrators. The first respondent has filed a petition in O.P.No.368 of 1994 to set aside the award under Section 30 of the Arbitration Act and the Arbitrators have filed a petition in O.P.No.715 of 1993 under Section 14(2) of the Arbitration Act, 1940, seeking permission to file the award dated 29.3.1993 before the Court. The learned Judge by a common order dated 30.4.1998 has set aside the award in respect of four claims viz., claim Nos.(a),(b),(c) and (e) but upheld the award in respect of claim No.(d), but however, restricted the period for which the interest is payable as from the date of the award till the date of payment. Aggrieved against the said order of the learned Judge, the appellant filed OSA No.201 of 1998 as against O.P.No.368 of 1994 and the first respondent filed two appeals in OSA Nos.107 and 108 of 1999 against O.P.Nos.715 of 1993 and 368 of 1994 respectively. 3. The learned Senior Counsel Mr.K.Ramachandran appearing for the appellant contended that inasmuch as the award passed by the Arbitrators is a non-speaking award and there are no errors apparent on the face of the award or documents accompanying it, the same should not have been set aside either in part or in full. In this connection, the learned Senior Counsel cited various decisions of the Supreme Court to the effect that the Courts have no powers to interfere with a nonspeaking award. The learned Senior Counsel further contended that the learned Judge has erroneously proceeded with the matter that the Arbitrators have exceeded their jurisdiction even though they have acted within the terms of Arbitration Clause. The learned Senior Counsel further contended that inasmuch as the learned Judge has overlooked the fact that the Arbitrators have chosen one out of the two possible views and as such, their decision ought not to have been set aside as erroneous. The learned Senior Counsel further contended that inasmuch as the Supreme Court has remitted the matter for fresh consideration and discretion is left to the Arbitrators to decide the arbitrability of the issues involved and accordingly when the Arbitrators have decided that the issues involved therein are arbitrable and passed an award, the same ought to have been accepted, unless contrary is proved. He further argued with regard to the nature of the claim made and the loss suffered by the contractor/appellant and contended that the appellant is entitled to maintain the claim as per the various terms of the agreement. According to him, the r estriction in respect of the period for payment of interest from the date of award instead of from the date of reference is without any valid reasons and contrary to law. 4. Per contra, Mr.N.C.Ramesh, learned counsel for the first respondent contended that the appeal itself is not maintainable in view of the fact that the appellant has chosen to file only one appeal as against O.P.No.368 of 1994, but failed to challenge the order in O.P.No.7 15 of 1993. On merits, the learned counsel for the first respondent contended that inasmuch as the tender specification requires the contractor to inspect the proposed work site with regard to the location and satisfy about the quality and availability of materials, adequacy and nature of access to sites and other facilities, the first respondent cannot be found fault after completion of the work. After the execution of the agreement, the appellant is not entitled to claim further amount as if there was a change in location of tailrace gate shaft, extra expenses on account of non-availability of approach roads and idling charges for the non-use of the machineries/equipments for the excavation of adit 3 head race tunnel (HRT). On the basis of the specific prohibition contained in the agreement, the learned counsel contended that the appellant cannot make any claim for the extra payment. It is further contended that the award in respect of claim No.(d) viz., expenses incurred due to the delay in the execution of work is not justified and the order of the learned Judge in confirming the award on this claim is not sustainable in law on the ground that the contract is a lumpsum contract and for the extended period the escalation charges were paid to the contractor. The learned counsel further contended that the issues raised by the contractor before the Arbitrators are not arbitrable under the terms of the contract and as such, the appellant is not entitled for any relief as claimed. 5. We have considered the rival contentions of either parties. 6. The points for determination that arise in this appeal are:- a) Whether the appeal filed by the appellant against O.P.No.368 of 1994 alone sustainable in law without filing appeal against the order in O.P.No.715 of 1993? b) Whether the learned Judge is correct in setting aside the award in respect of four claims except claim No.(d)? c) Whether the learned Judge is correct in restricting the period for which the interest is payable viz., from the date of the award till the date of payment instead of from the date of reference? d) Whether the learned Judge is correct in rejecting the counter claim of the first respondent? 7. Before we proceed with the matter with regard to various contentions on either side, we propose to deal with the preliminary objection raised by the learned counsel for the first respondent regarding maintainability. 8. The learned counsel for the first respondent contended that the present appeal is filed as against the judgment and decree in O.P.No.368 of 1994 dated 30.4.1998 only, without filing an appeal as against the judgment and decree in O.P.No.715 of 1993 and as such, the appeal is liable to be dismissed on the ground of res judicata. In support of the above contention, the learned counsel relied upon the various decisions which are dealt with in the succeeding paragraphs. 9. Per contra, the learned senior counsel for the appellant contended that though there are two decrees, the learned Judge has dealt with both the original petitions by a common judgment and contended that one appeal as against the judgment and decree in O.P.No.368 of 1994 is maintainable. The various decisions cited by both the learned counsel are dealt with as hereunder:- The learned counsel for the first respondent relied upon the decision of the Supreme Court in K.V.George vs. Secretary to Government, Water and Power Department, Trivandrum (AIR 1990 SC 53) to the effect that Section 11 of the Civil Procedure Code is applicable to the cases arising under the Arbitration Act and as such contended that the appeal is not maintainable. In the above decision, it is held that the principles of constructive res judicata is applicable to arbitration proceedings. But factually the said case is to be distinguishable. It is to be seen that the above said decision arose out of the claim made by a contractor, raising certain disputes in the first claim petition in pursuance of termination of the contract, chosen to file a second claim petition subsequently. In the said circumstances, the Supreme Court has held that the principles of res judicata is applicable and the second claim petition is not maintainable. So the said decision is not applicable to the present case. 10. The decision of the Apex Court in Ram Prakash vs. Charan Kaur (1997 (9) SCC 543) relied on by the learned counsel for the first respondent has no application for the case on hand in view of the fact that the above Special Leave Petition arose out of two separate suits filed by the petitioner as well as the respondent claiming damages against each other and the petitioner's suit having been dismissed and the order having become final, the respondent has chosen to file one appeal only against the judgment and decree, dismissing the suit filed by him and the said second appeal is barred by res judicata. 11. Similarly, the decision relied upon by the learned counsel for the first respondent in Premier Tyres Limited vs. The Kerala State Road Transport Corporation (AIR 1993 SC 1202) has no application for the present case, since two suits were filed by the plaintiff as well as the defendant and one appeal alone was filed as against the decree passed in respect of one suit. 12. Likewise, the decision cited by the learned counsel for the first respondent in Banarsi vs. Ram Phal (2003 (9) SCC 606) has no application in the instant case for the reasons stated above. 13. The learned counsel for the first respondent placed reliance upon the decision of the Supreme Court in Venkateswara Prabhu vs. Krishna Prabhu (AIR 1977 SC 1268) and contended that the appeal is liable to be dismissed on the ground of res judicata. The abovesaid decision was rendered in the circumstances wherein a decree was passed in a money suit and a separate decree was passed with regard to a partition suit and one appeal alone was filed before the Apex Court as against the decree granted in the partition suit and the same was dismissed as res judicata. Even though the common judgment was rendered by the High Court therein even in form, the judgment in the appeal relating to the money suit was separate from the rest of the judgment. It was further observed therein that there were two separate decrees. The Apex Court has also taken note of the fact that if the doctrine of res judicata is not applied to a particular case and if two inconsistent decrees will come into existence, it is not correct to allow such a situation to exist. In the very same decision, the Apex Court has approved the ratio decidenti of the principle laid down in the earlier case in Narhari vs. Shankar ((1950) 1 SCR 754)) to the effect that wherein if two decrees in substance are one, one appeal is sufficient. The relevant passage of the judgment in Venkateswara Prabhu's case is extracted here-under:- "10. Narhari vs. Shankar ((1950) 1 SCR 754)) is no doubt the judgment of the Supreme Court of India, although it was, if one may so put it, "the Hyderabad Wing" of it in a transitional period when a learned Judge of this Court, Mr.Justice Mehr Chand Mahajan, presided over a bench of which the other two Members were formerly Members of His Exalted Highness the Nizam's Judicial Committee. Technically, however, it was this Court's judgment. In that case, Naik, J. had followed a decision of the Judicial Committee of the Hyderabad State and held that when there was only one suit and the appeals had been disposed of by the same judgment, it was not necessary to file two separate appeals. It elaborated the ratio of the decision as follows (at p.757-758): "It is now well settled that where there has been one trial, one finding and one decision, there need not be two appeals even though two decrees may have been drawn up. As has been observed by Tek Chand J. in his learned judgment in Mst. Lachhmi vs. Mst. Bhulli, AIR 1927 Lah 289 (FB) mentioned above the determining factor is not the decree but the matter in controversy. As he puts it later in his judgment, the estoppel is not created by the decree but it can only be created by the judgment. The question of res judicata arises only when there are two suits. Even when there are two suits, it has been held that a decision given simultaneously cannot be a decision in the former suit. When there is only one suit, the question of res judicata does not arise at all and in the present case, both the decrees are in the same case and based on the same judgment, and the matter decided concerns the entire suit. As such, there is no question of the application of the principle of res judicata. The same cannot remain effective just because it was appealed against with a different number or a copy of it was attached to a different appeal. The two decrees in substance are one". 14. In Pappammal vs. Meenammal (ILR (1943) Mad 235 = )1943) 1 Mad LJ 1 = AIR 1943 Mad 139 (FB) the Bench which made reference to the Full Bench, had to consider this question. They referred to the decision in (1906) 16 Mad LJ 63 = ILR 29 Mad 333, and pointed out that Full Bench had clearly indicated the principle to apply in the circumstances of the case that where the object of the appeal being in substance, if not in form, is to get rid of the very adjudication which is put forward as constituting res judicata that the adjudication should not be held to bar the appeal. The Bench also added the qualification that the decision must have been rendered at the same time and the suits must have been tried together but it was not material that they must be cross-suits. The Bench then referred to the decision in Ramaswami Chetti vs. Karuppan Chetti, 29 Mad LJ 551 = (AIR 1916 Mad 1133) which followed the Full Bench decision in (1906) 16 Mad LJ 63 = ILR 29 Mad 333, and held that that decision is not to be confined to cross suits only but that it is equally applicable to suits between the same parties in which a common question is raised and decided and an appeal is preferred in only one of the suits. 15. In the decision in Lakshi Ammal vs. Official Receiver, Tinnevelly, 67 Mad LJ 364 = (AIR 1935 Mad 214), Beasley, C.J., referred to the sentence in the Full Bench judgment to the following effect. "It would lead to startling results if we were to hold that an appellate tribunal is precluded from dealing with a question which comes before it on appeal because an inferior Court, upon the same facts but in a case other than the case under appeal, had given a decision which had not been appealed against, at the same time as the decision in the case under appeal". And held that the doctrine of res judicata had no application when the very object of the appeal was to get rid of the decision pleaded in bar. In Narayanaswami Iyer vs. Sevadappa Gounder, (1941) 2 Mad LJ 932 = (AIR 1942 Mad 226), the decisi d LJ 364 = (AIR 1935 Mad 214) was followed. 16. Admittedly, in the instant case, one Original Petition was filed by the first respondent herein to set aside the award passed by the Arbitrators whereas the other Original Petition was filed by the Arbitrators only seeking permission to file the award in the Court. Had the first respondent herein not filed O.P.No.368 of 1994 to set aside the award, the benefit of the award passed by the Arbitrators would be available to the appellant herein. It is only in the petition filed by the first respondent herein, the learned Judge has set aside the claims awarded by the Arbitrators in respect of four headings out of five headings. 17. A perusal of the decree arose out of the common judgment by the learned Judge in both the original petitions discloses that the decree proceeds as if it is a common decree. The relevant portion of the decree is extracted hereunder:- "In the High Court of Judicature at Madras (Ordinary Original Civil Jurisdiction) Thursday the 30th day of April 1998 The Hon'ble Mr. Justice R.JAYASIMHA BABU Orgl. Petn.No.715 of 1993 and Orgl. Petn.No.368 of 1994 In the matter of Indian Arbitration Act, 1940; and In the matter of Arbitration in the disputes/claims arising out of and relating to the work of construction of Access Tunnel, cable shafts, Water Conducter system and power House Cavern etc. of Specification No.C 1261 of Kadamparai pumped storage Hydro Electric project for Tamil Nadu Electricity Board; and In the matter of Arbitration Award dated 29.3.1993. A.Mohana Krishnan.. Petitioner/Arbitrator vs. 1.The Hindustan Construction Co.Ltd., Construction House, 5 Lalchand Hirachand Marg, Ballard Estates, Bombay-38. 2.The Tamil Nadu Electricity Board, Mount Road, Thro' Chief Engineer HEP, Madras-2. .. Respondents Original Petition praying that this Court be pleased to (a) permit the petitioner to file the Award dated 29.3.1993, in Court (b) issue notice to Respondents. . . . . . . 1. That the Tamil Nadu Electricity Board Mount Road the second respondent in O.P.No.715 of 1993 do pay to the Hindustan Constructions Company Limited the first respondent in O.P.No.715 of 1993 a sum of Rs.1 ,56,08,879.12/- (Rupees one crore fifty six lakhs eight thousand eight hundred and seventy nine and paise twelve only) with further interest at the rate of 11% p.a. on the sum of Rs.1,00,09,105/- (Rupees one crore nine thousand one hundred and five only) from this date till the date of realisation." 2. That the award made by the Arbitrators under the heads claimed ( a) (b) (c) and (e) of the claims made by the contractor the first respondent in both petitions be and are hereby set aside. 3. That the interest awarded by the Arbitrators for the period from the date of reference to the date of award be and is hereby set aside as being beyond their jurisdiction in view of clause 13 of section II of the contract; and 4. That the parties hereto shall bear their respective costs of these proceedings;" 18. The above decree is drafted considering the fact that the learned Judge dealt with the issues in common and a common judgment is passed. Even in the above appeal any order is passed as against the decree in O.P.No.368 of 1994, it cannot be construed that an another inconsistent decree would be available on record. 19. A Division Bench of the Patna High Court in Union of India vs. B.C.Basu (AIR 1983 Patna 25) held that the right of appeal conferred by the legislature cannot be lightly defeated. It is further observed therein that the mere drawing of a decree will not take away the right of appeal against the order. 20. Before 1940, the law relating to arbitration was mainly contained in the Second Schedule to the Code of Civil Procedure, which was repealed by the Arbitration Act of 1940, a self-contained code in the matter of arbitration. The scheme of the Act is to divide arbitration into three classes. The first consists of arbitration without intervention of a Court and is contained in Chap.II of the Act which has 1 7 sections from S.3 to S.19. The second consists of arbitration with intervention of a Court where there is no suit pending, which is in Chap.III of the Act, and there is only one section (S.20) therein, as sub-s.(5) thereof applies the other provisions contained in the Act to this type of arbitration also so far as they can be made applicable. The third type of arbitration is contained in Chap.IV, namely, arbitration in suits. This chapter contains five sections, and S.25 thereof applies the other provisions of the Act so far as they can be made applicable. 21. Chapter II makes various provisions with respect to arbitrations of the first type. Reference may be made to a few which are material for our purpose. Sec.6 lays down that the authority of an appointed Arbitrator shall not be revocable by death of any party, but it shall not affect the operation of any law by virtue of which any right of action is extinguished by the death of a person. Sec.8 gives power to Court to appoint an Arbitrator or umpire in certain circumstances. Sec.11 gives power to Court to remove an Arbitrator or umpire in certain circumstances and Sec.12 gives consequential power to Court to appoint persons to fill vacancies which may have arisen. Sec.13 provides for powers of the Arbitrators and Sec.14 provides for the award to be signed and filed. When the award is filed the Court has to give notice to the parties of the filing of the award under Sec.14(2). Under Sec.15, the Court is given power to modify or correct an award and under Sec.16 the Court can remit the award for reconsideration. Sec.17 provides for judgment in terms of the award and reads thus:- "Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award." Sec.19 gives power to the Court to supersede the arbitration agreement in certain circumstances. 22. This analysis of the relevant