IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN MONDAY, THE 16TH JUNE 2008 / 26TH JYAISHTA 1930 MFA.No. 954 of 1998() ----------------------------- OP(ARB).129/1995 of PRL.SUB COURT,THALASSERY .................... APPELLANT: RESPONDENT ------------------ K.M.ACHUTHAN & SONS, CONTRACTORS ENGINEERS, PALLIKKUNNU, CANNANORE. BY ADV. SRI.V.RAJGOPAL RESPONDENT: PETITIONER -------------------- UNION OF INDIA REP.BY THE COMMANDER WORKS ENGINEERS, KATTARI BHAG, NAVAS BASE P.O., KOCHI 4. BY ADV. SRI.K.RAMAKUMAR (SR.) SRI.JOHN VARGHESE, SCGSC FOR R1 SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 16/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT No representation. Dismissed for default. 16.06.2008 SD/- J.B.KOSHY, JUDGE, SD/- P.N.RAVINDRAN, JUDGE /TRUE COPY/ P.A. TO JUDGE J.B.KOSHY & P.N.RAVINDRAN, JJ. ------------------------------- M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) ----------------------------------- Dated this the 30th day of July, 2008 J U D G M E N T KOSHY,J. Appellant is a registered Contractor. He undertook contract for Provision of Residential Accommodation for DAD Staff at Cannanore under an arbitration agreement No.CWE/Cochin/8 of 1984-85 was signed. While the work was in progress, appellant raised disputes, as according to him, he is entitled to the amounts on the basis of the escalation actually occurred and O.S.No.213/1985 was filed before the Additional Sub Court, Thalassery. He also prayed that an arbitrator may be appointed to decide that question. A written statement was filed by the respondents to the effect that the delay was caused due to the act of the appellant. They are not liable to pay any escalation and they also M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) 2 contended that the stage has not come for raising arbitration dispute as contract was not yet completed. So the main contention was that the suit itself was premature as the stage for arbitration has not reached. The civil court considered the matter, allowed the suit and directed to appoint the arbitrator. The court by its judgment dated 31.1.1989, directed that the disputes should be referred to the Sole Arbitrator to be appointed by the Chief Engineer, Cochin Zone, Cochin, of the appellant as provided in the agreement. Hence, Sri.H.K.Nagaraja, Additional Chief Engineer, was appointed as the Sole Arbitrator. In the general conditions of the contract, there was a specific provision to refer all disputes to the Sole Arbitration to the Engineer/Officer to be appointed by the Chief Engineer, Cochin Zone, Cochin, whose decision shall be final, conclusive and binding. The agreement further provides as follows: “The Arbitrator shall give his award on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual items of disputes.” M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) 3 It shows that both the parties agreed that the disputes are to be referred to arbitration, to the Engineer/Officer appointed by the Chief Engineer. In fact, arbitrator was appointed at the request of the appellant. The order appointing the arbitrator was not challenged. Accordingly, arbitrator was appointed and both parties participated in the proceedings. Claims and counter claims were filed. Evidence was adduced. Documents were filed and some of the claims of the petitioner amounting to Rs.63,798/- were allowed. Among the counter claims also, two claims were allowed amounting to Rs.5,42,680/-. Both claims are awarded with 18% interest. Appellant filed O.P.(Arb).No.11/1991 with the following prayers: “a) this Honourable Court may be pleased to direct the 4th respondent, Sole Arbitrator to file the original award with all the documents taken by him into this Court and thereafter pass an order and consequently a decree in terms of the award on the claims preferred by the petitioner and to set aside the award in so far s it relates to M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) 4 the claims preferred by the respondents 1 to 3.” The respondents also filed O.P.No.129/1995 for passing the decree in terms of the award. The court below passed the judgment and decree in terms of the award making it a rule of the court. In other words, O.P. was filed by the respondent was allowed and O.P filed by the claimants in so far as to set aside the award in the counter claims were rejected. Hence, these appeals were filed. 2. Three main contentions are raised by the appellant. First contention raised is that as a Sole Arbitrator, Sri.H.K.Nagaraja, should not have been appointed as he is an Engineer connected with the works. We are unable to accept the above contention because petitioner himself filed the suit and as per the decree, Chief Engineer was directed to appoint the arbitrator in terms of the agreement and terms of the agreement itself provides for appointing an Engineer/Officer. So the arbitrator was appointed in terms of the agreement. M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) 5 After agreeing for such a clause, this contention cannot be raised. Secondly, even though it is stated that an oral objection was filed, no written objections were filed and the petitioner as well as the respondent participated in the proceedings, filed claims and counter claims, adduced evidence without any murmur and the award was passed. When the award is against the appellant, appellant cannot question the appointment of the sole arbitrator. Therefore, the above contention fails. Next contention is that arbitrator travelled beyond the terms of the reference, and therefore, award was passed without jurisdiction and therefore, it is liable to be set aside. According to the appellant, he only filed the suit for claiming escalation benefits because of the delay of the contract. On his application, arbitrator was appointed, and therefore, arbitrator can decide only the question regarding escalation etc. raised in the suit. We are unable to accept that point. Under the agreement, arbitrator can decide the entire disputes. In the written statement, respondents had clearly contended that appellant was himself M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) 6 responsible for the delay. Other contentions raised was that, at that stage, no arbitral dispute has arisen and claim was premature. The court after considering the above objections, found that in view of the arbitration clause, matter can be referred to the arbitrator with regard to the disputes arising out of the agreement. If there was no arbitration clause and petitioner filed a suit claiming some amounts before the civil court, respondent would be free to file his counter claim also. Here, when arbitration clause is there and arbitrator is appointed and the counter claims were filed as the term of reference as per the court order, he has to decide all disputes arising out of the contract. Therefore, it cannot be stated that arbitrator travelled beyond the scope of reference or his award is without jurisdiction. Next contention is that interest awarded is very high. 18% interest awarded was as per commercial practice. Under the provisions of the agreement, there was no obligation for the arbitrator to pass a speaking award but arbitrator only should give findings in each issue with amounts. That was devised on him and therefore, M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) 7 reasons for the findings of the arbitrator for awarding the amount need not be detailed by him and such award cannot be interfered by the court unless the arbitrator has committed misconduct or on the specific ground mentioned in the Act. Such grounds are not made out. However, considering the facts and circumstances of the case, we are of the opinion that instead of 18%, 9% interest from the date of the award for the claims and counter claims will serve the ends of justice and after deducting the amount payable to him as per the award, balance amount as decreed in the counter claim should be paid by the appellant with 9% interest from the date of award till the date of deposit. Appeals are accordingly allowed to the above limited extent. In the circumstances of the case, parties have to bear their costs. J.B.KOSHY, JUDGE P.N.RAVINDRAN, JUDGE prp J.B.KOSHY & P.N.RAVINDRAN, JJ. -------------------------------------------------------- M.F.A.NOS.954 OF 1998 & 1093 OF 2002 (D) --------------------------------------------------------- J U D G M E N T --------------------------------------------------------- 30th July, 2008