C.R.No.3507 of 2002 (O&M) 1 IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH Civil Revision No.3507 of 2002 (O&M) Date of Decision: September 04, 2009 State of Punjab ...........Petitioner Versus M/s Aar Kay Construction Co.Pull Bazar Ropar etc..........Respondents Coram: Hon'ble Mrs.Justice Sabina Present: Mr.J.S.Sandhu, Assistant Advocate General Punjab for the petitioner. Mr.Ashwani Talwar,Advocate for respondent No.1 -- Sabina, J. (oral) This revision petition is filed for setting aside the judgment and decree passed by the Courts below whereby objection petition filed under Sections 30 and 33 of the Indian Arbitration Act, 1940 was dismissed and award passed by the Arbitrator was ordered to be made the Rule of Court. The case of the parties as noticed by the learned District Judge, as noticed in paras 2 to 20 of its order, reads as under:- “2.The brief facts of the case are that petitioner/respondent no. 1 filed application directing respondent no. 2 to produce the award and proceedings and also filed application for making the same as rule of the Court submitting that respondent no. 2 was appointed as arbitrator by the Court and after entering into the reference and after adjudicating the matter has given award on 5.5.1999 and arbitrator has given reasoned award which does not suffer form C.R.No.3507 of 2002 (O&M) 2 any illegality as arbitrator is a master of fact and law and his inter- pretation is final and Civil Court cannot sit in appeal and scope of interference is limited. That the arbitrator has given ample opportunity to both the parties to produce their evidence and thereafter made award. 3.The State-Objector/appellant has filed objections, taking preliminary objections that arbitrator has announced the award without taking into consideration all the facts of the case and without giving proper hearing to the arguments of the objector and award is apparent as product of non-application of mind. That claimant submitted different claims than the claims originally submitted before the Executive Engineer. Claimant submitted a claim of Rs. 1,75,536/- before the Executive Engineer but at the time of presentation before the arbitrator he put forth claim of Rs. 5,71,113/- and during the course of proceedings gave escalated details of these claims for adjudication to the arbitrator but the arbitrator has not appreciated these facts and award is based on no evidence and clear cut case of non-application of mind and also has decided time barred claims for which he was not competent and has also awarded double interest for which he was not entitled. Claim-wise objections are as under:- CLAIM NO. 1: CLAIM FOR ESCALATION THOUGH SANCTINED BUT NOT PAID AND ALSO ESCALATION OF THE AWARDED AMOUNT. 4.That the arbitrator has not applied his mind judiciously and has not given due to weightage to the clauses of agreement because as C.R.No.3507 of 2002 (O&M) 3 per clause 40 of the agreement price adjustment will be made only for the work done within the stipulated period or extension thereoff as are not attributable to the contractor. Since extension was at the instance of the contractor, department granted the extension with the condition that no escalation will be given, but arbitrator awarded Rs. 65,644/- against initially demand of Rs. 35,000/- without any evidence. CLAIM NO. 2: CLAIM ON ACCOUNT OF LESSOR RATES PAID FINAL BILL/SECURITY DEPOSIT. 5.Rs.83,499/- was lying in the final bill of the agency but arbitrator has awarded Rs. 91,189/- by allowing for additional quantity of cement concrete sleeper which was never admitted by the department, rather has advocated that agency have been paid as per the work done and contractor could not produce any evidence, rather arbitrator ignored the evidence produced by the department. CLAIM NO. 3: INTEREST ON THE AMOUNT WITHHELD BY NOT RELEASING THE GENUINE RATE AS LESSOR RATES FROM THE DATE OF LAST RUNNING PAYMENT THE REALISATION. 6.There is no clause in the agreement to pay interest but arbitrator awarded 15% compound interest which is clear cut grave mis- conduct. CLAIM NO. 4: CLAIM FOR IDLE PERIOD 7.That the arbitrator wrongly awarded Rs. 75,000/- on account of idle labour although, infact there was no idle labour and no idle C.R.No.3507 of 2002 (O&M) 4 labour during the execution of work and it was the contractor who was to use his resources to the best of his utility and if work could not be executed in one reach he should have used the labour on the other reach and award is against clause No. 59 and award of Rs. 75,000/- clearly shows non-application of mind. INTEREST: 8.It is submitted that there was no clause in the contract agreement about the interest to be paid but arbitrator has gone beyond the terms of the agreement. COUNTER CLAIM NO. 1 : BY OBJECTOR/APPELLANT : RECOVERY OF 6943 NO.E.C.BAGS. 9.All the record pertaining to this claim was shown to the arbitrator and on the other hand agency has not shown any documentary proof of return of empty cement bags and department is entitled for Rs.10,415/- which is to be recovered from the contractor. COUNTER CLAIM NO. 3:20 NO. R.C.C. PIPE 225 MM. 10.It is submitted that 20 No.R.C.C. Pipe 225 mm dia was issued to the contractor vide Indent No. 14/1697 dated 4.4.1988 and contractor had acknowledged its receipt but pipes were never used on the construction site due to change in technical data but agency did not return the same but arbitrator has not awarded amount of Rs.2800/- which deserves to be awarded. COUNTER CLAIM NO. 4. RECOVERY OF WATER CHARGES 11.It is submitted that arbitrator wrongly rejected the claim of the C.R.No.3507 of 2002 (O&M) 5 department without any documentary proof which show non- application of mind and prayed for a sum of Rs.11,798/-. COUNTER CLAIM NO. 5 : EARTH WORK LIP CUTTING. 12.That balance work of M/S V.K.construction Company was allotted to M/S AAR Kay Construction Company. Before allotment of work to the agency lip cutting was done by the department and after allotment of work to the agency measurement book was shown to the arbitrator, so counter claim be awarded in favour of the department. COUNTER CLAIM NO. 6. MATERIAL EXCESS ISSUED. 13.All the indents duly acknowledged by the agency and MAS account was shown to the arbitrator during the course of proceedings in which 388 cement bags were shown issued in excess and agency failed to counter the claim of the department but arbitrator has decided otherwise, so a sum of Rs. 27975/- be awarded in favour of the department. COUNTER CLAIM NO. 7: LIQUIDATED CHARGES. 14.That the department is entitled to liquidated charges from the agency. 15.The petitioner/respondent no. 1 has contested the objection petition taking preliminary objections that the arbitrator has given his award after giving full opportunity to both the parties and taking into consideration the whole case and evidence and even otherwise arbitrator being technical man of the department is fully conversant with the procedural technicalities and personally visited the site on 5.4.1999 before giving the award and C.R.No.3507 of 2002 (O&M) 6 opportunity was given to both the parties and it is settled law that arbitrator is master of fact and law and best judge of the quality and quantity of evidence and his interpretation is final and Civil Court cannot sit in appeal. It is submitted that award can be interfered only if the arbitrator has mis-conducted with himself or with the proceedings and Civil Court cannot re-appraise and re- appreciate the evidence. That reasonableness of the reasons given by the arbitrator cannot be gone into by the Civil Court and even if there are two possible interpretations of the same clauses, the interpretation given by the arbitrator is final. It is submitted that arbitrator has given the reasoned and detailed award and Civil Court cannot re-appraise as the award is reasoned award and allegations have been dealt with by the arbitrator and there is no change in the claim submitted by the claimant/petitioner. It is further submitted that the arbitrator has given the award on the basis of record given by both the parties and it is reasoned one and it is not necessary to give detailed history of the whole case and even brief note of reason is sufficient and it cannot be interfered by the Civil Court and the allegations are only for the sake of raising the objections otherwise there is no proof in the same and award has been given on the basis of evidence produced by the parties and respondents failed to substantiate their claim and now the decision is final. Claim-wise reply is submitted as under:- CLAIM NO. 1:- 16.It is submitted that interpretation of the agreement by the C.R.No.3507 of 2002 (O&M) 7 arbitrator is final and even if two views are possible, the court cannot interfere as scope of interference is very limited on the point of mis-conduct only and it is the job of the arbitrator for interpretation of the clauses and the contract and not of Civil Court. CLAIM NO. 2: 17.It is submitted that the arbitrator has awarded the claim on the basis of evidence led by both the parties and after giving proper opportunity for hearing and interpretation of the arbitrator is final and Civil Court cannot act as an Court of Appeal. Even it two interpretations are possible and objector wanted to reappraise the evidence which is not permissible as change in the amount is due to clerical mistake and award of the arbitrator is just and proper. CLAIM NO. 3. 18.It is submitted that the arbitrator has rightly awarded interest for which the arbitrator have power and there is no bar now for the arbitrator to grant interest and moreover the interpretation of the arbitrator has been final and cannot be interfered. CLAIM NO.4 19.It is submitted that arbitrator is technical man and known to the practice and procedure of the work and has awarded the amount being conversant with the system, so has rightly awarded the amount and clause 59 of the contract agreement has no effect on the claim of the contractor/claimant as arbitrator has considered all the aspects of the case. INTERST POINT. C.R.No.3507 of 2002 (O&M) 8 20.It is submitted that the arbitrator is well within his power to award interest and powers of the arbitrator can be limited regarding the grant of interest only by making a stipulation in the agreement and if agreement is silent then the arbitrator has the power. On the pleadings of the parties, the following issues were framed:- "1. Whether award is liable to be made rule of the Court?OPA 2. Whether award is illegal and is liable to be set aside?OPR/O 3. Relief." After hearing the learned counsel for the parties, I am of the opinion that no ground for interference by this Court is made out. Learned counsel for the State has submitted that the Arbitrator had misconducted by awarding amount beyond the scope of the agreement and hence, the award could not be sustained. Learned counsel for the State has further submitted that so far as claims No.1 and 4 are concerned, the Arbitrator had awarded the amount qua the said claim beyond the scope of the agreement. It is a settled proposition of law that the Civil Court cannot sit as a Court of appeal with regard to the award submitted by the Arbitrator. However, in case, the Arbitrator has misconducted then the Court can interfere and set aside the award. In the present case, work was allotted to the respondent. Payment of the execution of the work was not made to the respondent and consequently the matter came up before the Arbitrator. C.R.No.3507 of 2002 (O&M) 9 The Arbitrator, while dealing with claim No.1 has observed that the department had paid a lesser amount than the amount claimed by the respondent on account of escalation. The extensions which were sought by the respondent were not attributable to the respondets.After going through the record, the Arbitrator opined that the contractor was entitled to escalation price on the work done by him. Similarly, while dealing with claim No.4, the Arbitrator found that the labour had remained idle on account of stoppage of work and the work could only be started after the sanction of competent authority received. In these circumstances, the Contractor was liable to be compensated. However, there is nothing on record to suggest that the Arbitrator had misconducted. The Arbitrator, after appreciating the evidence led by the parties, has decided the matter. The award was made rule of the Court vide judgment and decree dated 16.8.2000 by the Civil Judge (Senior Division) Rupnagar and the appeal filed by the State against the said judgment and decree was dismissed vide judgment and decree dated 11.2.2002. Learned counsel for the respondent has submitted that the payment in terms of the award has since been made and,thus, the award stood satisfied. No ground for interference is made out. Dismissed. ( Sabina ) Judge September 04, 2009 arya