CIVIL REVISION NO.3304 OF 2008. ::-1-:: IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH. C.R. No. 3304 of 2008. [O&M] Date of Decision: 15th July, 2009. Union of India Petitioner through Mr. Jagdish Marwaha, Advocate Versus Parshotam Dutt Sharma & Anr. Respondents through Mr. Bhag Singh, Advocate. CORAM: HON'BLE MR. JUSTICE SURYA KANT. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? SURYA KANT, J. [ORAL) This Revision Petition is directed by the Union of India against the order dated 4.10.2006 passed by the Additional Civil Judge [Senior Division], Ambala whereby the award dated 31.7.2001 passed by the Sole Arbitrator, directing the refund of earnest money of Rs.25,000/- along with Rs.2000/- as costs and simple interest @12% per annum w.e.f. 19.7.1990 to 31.7.2001 [date of award] and 18% per annum w.e.f. 31.7.2001 till actual realization has been made the Rule of the Court. The petitioner also impugns the order dated 30.10.2007 passed by learned Additional District Judge, Ambala, dismissing its appeal against the aforementioned order of the trial Court. [2]. The undisputed facts are that the respondent – Contractor was awarded a contract and for execution thereof, he CIVIL REVISION NO.3304 OF 2008. ::-2-:: deposited an amount of Rs.25,000/- as earnest money. No actual work was, however, allocated to him despite repeated representations. The contract was later on rescinded but the earnest money was not refunded for a sufficiently long period which compelled the Contractor to raise a dispute which was referred to the sole arbitration of the Deputy Chief Engineer, CDG, Railways, who, vide his award dated 31.7.2001 upheld the claim of the Contractor for the refund of the earnest money of Rs.25,000/- along with litigation charges of Rs.2000/- and simple interest @12% per annum, though turned down the Contractor's claim for the award of another sum of Rs.70,123.92 and Rs.20,000/- towards the expenses incurred by him in arranging the material/labour and deployment of the labour at the Lalru Railway Station. [3]. The afore-stated award has been made the Rule of the Court by the Civil Court vide its impugned judgment at the instance of the Contractor. [4]. The solitary contention raised on behalf of the Union of India - petitioner is that in view of Clause 16[3] of the General Conditions of the Contract, no interest could be awarded by the Arbitrator on the earnest money. The aforesaid clause reads as follows:- “16[3] No interest will be payable upon Earnest Money and Security Deposit or amounts payable to the Contractor under the contract, but Government Securities deposited in terms of Sub-Clause [1] of this clause will be payable with interest accrued thereon”. [5]. The Union of India had raised this contention before the CIVIL REVISION NO.3304 OF 2008. ::-3-:: Civil Court also but the same has been repelled after observing as follows:- “12. Now coming to the next limb of arguments, advanced by learned counsel for respondent that there was no provision for awarding of interest in the general conditions of the contract between the parties and therefore, interest awarded by the Arbitrator, was against the terms and conditions of the contract, is also devoid of any force because Arbitrator, in his arbitral award has given cogent reason for awarding the interest while ordering refund of the security to the petitioner. Respondent No. 2 – Sole Arbitrator while mentioning reasons for his award, has observed in the Award dated 31.7.2001 Ex.O-17 that contractor had been representing the Railways for giving him work orders to start the work and work orders were not prepared timely by the Railways as per record. He has also observed that Railways' action of rescinding the contract on 6.7.1990 is thus not in order. While awarding the interest on the refund of earnest money of Rs.25,000/- he has ordered that 12% simple interest shall be paid w.e.f. date of encashment of guarantee bond by the Railways, i.e., 19.7.1990 till the date of Award. He has further ordered that respondent – Railways shall pay full and final payments mentioned above within 90 days from the date of Award, failing which, further interest at the rate of 18% per annum will be liable from the date of award to the date of payment. Once Arbitrator found the Railways at fault, award of interest and refund of security, could not be held to be illegal. More so, this court has no jurisdiction to sit in judgment on the award given by the Arbitrator particularly when there is no patent illegality in the arbitral award. The case of the petitioner in this regard finds support from Punjab Urban Planning and CIVIL REVISION NO.3304 OF 2008. ::-4-:: Development Authority, Patiala's case [supra] relied upon by his learned counsel”. [6]. The first Appellate Court has also turned down the aforesaid contention. [7]. I have heard learned counsel for the parties at some length and perused the impugned orders, the award and the terms and conditions of the contract. [8]. Learned counsel for the petitioner vehemently urges that in view of the express condition contained in the General Conditions of the Contract, no interest could be awarded by the Arbitrator. He relies upon a Division Bench judgment of the Guwahati High Court in the case of Union of India v Major V.P.Ninjawan [Retd.], Arbitration Appeal No. 4 of 2001 decided on 19 th June, 2002 . [9]. It may be true that sub-Clause [3] of Clause 16 of the General Conditions of the Contract, prohibits the award of interest on earnest money etc. and a contractor is debarred from raising such claim. The aforesaid clause, however, can not be read or interpreted like a statute. A contractual clause can not be construed so unconscious, unfair or absurd to be termed as per-se arbitrary. The subject-clause is bound to satisfy the test of reasonableness and in conformity with public-policy. Can it be held that the Railways can withhold the 'earnest money' of a contractor for years even if he has executed the work to the entire satisfaction of the authorities? Would it not breed corruption in railways; harass the contractors and lead to avoidable litigation? What the clause in question really provides is that where CIVIL REVISION NO.3304 OF 2008. ::-5-:: the work contract remains operative for a long period and it takes time for the contractor to complete the allotted job, it is obvious that his 'security' or 'earnest money' shall remain with the railways till the contractor obtains a clearance certificate. In such a situation no interest can accrue on the earnest money. Contrary to it, in the case in hand the contractor was given no work at all and the contract was rescinded. Yet his earnest money was not returned for years, may be for extraneous considerations. [10]. For the reasons afore-stated, no case to interfere with the impugned orders is made out. Dismissed. However, the parties are left to bear their own costs. July 15, 2009. ( SURYA KANT ) dinesh JUDGE