IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE & THE HONOURABLE MR. JUSTICE P.Q.BARKATH ALI TUESDAY, THE 14TH JULY 2009 / 23RD ASHADHA 1931 Arb.A.No. 8 of 2005 & C.O. No. 72/05 --------------------- OPARB.22/1994 of III ADDL.SUB COURT, ERNAKULAM .................... APPELLANTS/RESPONDENTS ------------------------------ 1. UNION OF INDIA, REPRESENTED BY THE GENERAL MANAGER, SOUTHERN RAILWAY, PARK TOWN, MADRAS-3. 2. CHIEF ENGINEER (CONSTRUCTION), SOUTHERN RAILWAY, EGMORE, MADRAS-8. BY ADV. SRI.M.C.CHERIAN,SR.SC.,RAILWAYS RESPONDENT/PETITIONER --------------- P.P.XAVIER, RAILWAY CONTRACTOR, PIDIYANCHERIL HOUSE, CHAKKALAKKAL ROAD, KOCHI-15. ADV. SRI.S.RAMESH BABU THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 14/07/2009, ALONG WITH ARBA NO. 13 OF 2005 CO NO. 72 OF 2005 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE & P.Q. BARKATH ALI, JJ. ------------------------------------------------------- Arb. Appeal Nos. 8 & 13 OF 2005 & Cross Objection No. 72/05 in Arb. Appeal No. 8 of 2005 -------------------------------------------------------- Dated this the 14th day of July, 2009 J U D G M E N T Pius C.Kuriakose, J. The Union of India represented by General Manager, Southern Railway and the Chief Engineer, Southern Railway are the appellants in Arbitration Appeal No. 8 of 2005. They are referred to hereinafter collectively as the railway. The respondent in the appeal is the railway contractor. He is referred hereinafter as the claimant. There was an arbitration in respect of a contract work executed by the claimant for the railway. The joint arbitrators passed annexure-I award granting an amount of Rs.7,35,000/- to the claimant. Annexure -I award is a non-speaking award which was not challenged by the railway. Under annexure-I claim No. 7 which was a claim for interest has been declined. However, there is a direction in annexure – I that if the award amount is not paid within one month railway Arb. Nos. 8 & 13 of 2005 -2- would pay interest at the rate of 14% per annum to the claimant on the award amount. The appellant submits that the entire amount due under the award was paid to the claimant who has issued a no claim certificate to the railway. The appellant submits that thereafter the railway issued notice of annexure – II petition filed by the claimant (O.P. No. 22 of 1994) before the Sub Court, Ernakulam. To annexure – II, the railway filed annexure -III objections before the Sub Court. By Annexure – III the territorial jurisdiction, maintainability etc. of the petition was seriously challenged. On merits also the claims in the petition were disputed. The joint arbitrators who were impleaded as R3 and R4 in annexure – II remained ex parte. The Sub Court passed an order directing the arbitrators to file the award in court. Along with annexure – II which was Arb. O.P. No. 22 of 1994 the claimants filed Arb. O.P. No. 21 of 1994 in respect of another work and arbitration award passed by the Arb. Nos. 8 & 13 of 2005 -3- same arbitrators in relation to that work. Appellant submits that the position and stage of O.P. No. 21 of 1994 is the same as that of Arbitration O.P. No. 22 of 1994. While matters stood so, the claimant filed a common petition in the two arbitration O.Ps. which was numbered as IA. 719/03. Annexure -IV is copy of that IA. The prayer in annexure – IV was that the Sub Court may act on the basis of the signed copy of the award available in court and pass orders invoking sections 13, 15, 16, 30 and 33 of the Arbitration Act. Thus, though the scope of Arb. O.P. No. 22/94 was under section 14 of Arbitration Act, 1940, the prayer in the interlocutory application annexure- IV was to take a decision invoking sections 13, 15, 16, 30 and 33 also. By a common order dated 11-8-2004 annexure – IV IA was allowed by the Sub Court modifying the portion of the award relating to interest prior to passage of the award. Appellants submit that by the said order the Sub Court has Arb. Nos. 8 & 13 of 2005 -4- granted interest at the rate of 14% per annum to the claimant during the period 30-9-90 to 13-4-1994 which will amount to Rs.3,64,684/-. According to the appellants, the above order amounts to modification of the award passed by the joint arbitrators to the extent the same pertains to claim No. 7 which was specifically declined by the joint arbitrators. It is challenging the legality and propriety of the above order that the appellants have preferred Arb. Appeal No. 8/05. 2. Arb. Appeal No. 13/05 is also directed against the very same order in so far as it pertains to Arb. O.P. No. 21/94. It is submitted that the order amounts to modification of the award of the joint arbitrators, copy of which is produced as annexure – I in Arb. Appeal No. 13/05. By virtue of the modification an additional amount of Rs.6,44,199/- has become payable by the railway and in both Arb. Appeal Nos. 8/05 and 13/05 the appellants have Arb. Nos. 8 & 13 of 2005 -5- raised various grounds challenging the order of the Sub Court in the above IA. 3. Cross Objection No. 72 of 2005 is filed by the claimant in Arb. Appeal No. 8/05 and the ground urged therein is that claim No.7 raised by the claimant before the arbitrators in both the arbitrations should have been upheld. It is contended therein that the trial court having rightly held that claim No. 7 is liable to be allowed, interest should have been awarded during the period of one month from the date of the award till date of actual payment, i.e., from 18- 3-1994 till date of payment. To the memorandum of cross objection, objection is filed by the railway contending that the cross objection is not maintainable since the same does not fit in under any of the provisions of Section 39 of the Arbitration Act or rule 22 of Order 41 C.P.C. 4. Sri.M.C.Cherian, learned counsel for the railways and Mr. Sukumar, representing learned counsel for the Arb. Nos. 8 & 13 of 2005 -6- claimant addressed us very extensively on the grounds raised in the memorandum of appeal and memorandum of cross objections respectively. Our attention was drawn by the learned counsel to the relevant statutory provisions, viz. Sections 13, 14, 15, 16, 30 and 33 of Arbitration Act, 1940. Our attention was drawn also to various judicial precedents including the judgment of the Supreme Court in T.P. George v. State of Kerala, AIR 2001 SC 816 and the judgment in G.C.Roy's case. 5. Having anxiously considered the rival submissions addressed at the Bar in the light of the relevant statutory provisions and judicial precedents to which our attention was drawn by the learned counsel we are of the view that the impugned order passed by the learned Subordinate Judge can be sustained. Section 15(c) of Arbitration Act 1940 enables the court to modify and correct any award “where the award contains a clerical mistake or an error Arb. Nos. 8 & 13 of 2005 -7- arising from an accidental slip or omission.” In the instant case the amount which has been awarded under the impugned order is only pendente lite interest and the interest during the period from the date of accrual of cause of action till the date of initiation of the proceedings for arbitration. The court below noticed the four stages during which the claimant is entitled for interest in terms of judgment of Supreme Court and has awarded interest during the period from the date of accrual of cause of action till the date of the award. It is seen from the impugned order that there was no serious opposition raised before the Sub Court in awarding interest for the above period from 30-9-1990 till 13-4-1994. According to us, by awarding interest for the said period also the court below has only exercised its powers under section 15(c) of the Arbitration Act, 1940. Though it would appear as if there is some impropriety in rectifying the award on the basis of an Arb. Nos. 8 & 13 of 2005 -8- interlocutory application filed in an original petition wherein only provision of Section 14 had been invoked, we feel that the action of the learned Sub Judge can be approved since the result of the same is to render substantial justice to the claimant who would have otherwise lost these amounts which he was obliged to pay to his bankers towards interest on the loans advanced by them. Moreover, we notice that the railway did not have serious opposition to this before the Sub Court. 5. At the same time, we are not inclined to uphold the memorandum of cross objections. If the claimant was genuinely aggrieved in that claim No.7 raised by him was not adjudicated his remedy was to invoke section 14 of Arbitration Act, 1940, the only provision which was invoked by him in the main petitions filed by him. We would have thought in terms of relegating the issue for adjudicating claim No. 7 to the same arbitrators. We are informed by Arb. Nos. 8 & 13 of 2005 -9- both sides that at this distance of time it will become necessary to constitute a fresh arbitration trial. Under the above circumstance we are of the view that the appeals as well as the memorandum of cross objections can be dismissed. Accordingly the appeals as well as the memorandum of cross objections are dismissed, but in the circumstances parties are directed to suffer their respective costs. (PIUS C.KURIAKOSE, JUDGE) (P.Q.BARKATH ALI, JUDGE) ksv/-