IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL. A.O. NO. 430 of 2005 State of Uttaranchal through Collector Nainital and two others .. Appellants. Vs. M/s Ganesh Construction Company …Respondent. Mr. P.C. Bisht, Brief Holder for the appellants. Mr. C.K. Sharma, learned counsel for the respondent. Dated: 08-04-2008 Hon’ble B.C. Kandpal, J. This appeal has been preferred by the appellants against the judgment and order dated 1-7- 2005, passed by District Judge, Nainital in Misc. Case No. 72 of 2004, State of Uttaranchal and others vs. M/s Ganesh Construction Company. 2- Brief facts of the case are that a contract agreement No. 01/S.E./85-86 dated 23-12-1985 was entered into between Irrigation Department and Ganesh Construction Company to construct Kota Wir. A dispute arose between the parties and Sri G.P. Chaturvedi, Chief Engineer, East Ganga was appointed sole Arbitrator to settle the dispute, who gave his award dated 24-7-2001. Against the said award the State of Uttaranchal filed objection which was numbered as Misc. Case No. 72 of 2004. The objection of the State mainly was that the Construction Company did not complete the work in spite the period for completion of work was extended by six months. Therefore, the final measures were taken of the work done by the Company in the presence of the persons of Construction Company, hence, there would not have been any dispute pertaining to payment of the value of the work done by the 2 Construction Company and the Arbitrator has exceeded his jurisdiction by allowing the claim Nos. 1,3,14 and 19 in favour of the Construction Company. Objection was also raised against awarding of the interest. 3- M/S Ganesh Construction Company also filed objection before the learned District Judge and supported the award given by the Arbitrator. 4- The learned District Judge after hearing learned counsel for the parties and considering the objections of the State and going through the impugned award, rejected the objection of the State and made the award dated 24-7-2001 as rule of the court, vide judgment and order dated 1-7-2005. 5- Feeling aggrieved the State has preferred this appeal before this Court. 6- Heard learned counsel for the parties and perused the record. 7- Learned Brief Holder, appearing on behalf of the appellants has submitted that Arbitrator has misconducted himself in allowing the claims in favour of the respondent. According to him the respondent could not complete the work within stipulated period and he was given six months more time to complete the work but it failed to do so, hence final measurement of the quantity of work done by the Company was made and entire payment has been made to it but the learned Arbitrator has ignored the above fact and wrongly allowed the claims. Learned Brief Holder also submitted that the Arbitrator has also committed mistake by awarding 16% interest per annum from the date of final measurement 3 of the work done by the Company, i.e. 24-2-1988 on the amount so awarded. He also contended that the learned District Judge also fell in error in making the award as rule of the court. 8- On the other hand learned counsel for the respondent has opposed the submission raised by the learned counsel for the appellants and contended that the Arbitrator has allowed the claims after considering the material on record and hearing both the parties and on the factual aspect this court can not sit as a court of appeal and the finding of the Arbitrator is not to be disturbed. 9- From perusal of impugned award it appears that the Arbitrator has partly allowed claim Nos. 1, 3, 14, and 19 and other claims were rejected. 10- Under claim No.1, the Arbitrator awarded Rs. 4,860/- towards 25% excess work done by the Company due to the hard rock. The Arbitrator has given reason that there was provision of decrease and increase in the contract agreement upto 25%, hence it cannot be said that the Arbitrator has travelled beyond the provision of the agreement. 11- Under claim No.3, the claim of the Company was that Caustic soda was mixed in the cement and concrete in the construction work, at the instruction of the department and this was not agreed in the contract agreement. The Arbitrator awarded Rs. 2,534/- towards cost of caustic soda. The Department has not disputed this fact that caustic soda was mixed in the cement and concrete, hence the Arbitrator has not acted arbitrarily while awarding the cost to the Construction Company. 4 12- Under claim No.14 the Arbitrator has awarded a sum of Rs. 6,000/- towards expenses borne by the Company for keeping the tools and plants etc at the site. According to the Company the information of rescission of the contract was communicated to the respondent after six months and as such he had to pay for up keeping the tools and plants at the site. This fact is not disputed to the Department that the respondent was informed after about six months for the rescission of its contract, therefore, the Arbitrator has awarded the claim for the loss actually suffered by the respondent at the hands of the Department. The Arbitrator has awarded Rs. 6000/- @ Rs. 1000/- per month for a period of six months. 13- Under claim No.19 the Arbitrator awarded a sum of Rs. 3,195/- towards deduction made by the Department for extra cement consumed by the Company at the site without the prior approval of the Department. According to the Department the Company consumed 142 extra bags of cement without approval of the Department and hence the deduction has rightly be made from its bill. The Arbitrator has given the finding that the Company had to construct labour camp, drainage, cube layout and plate farm and certainly the cement would been consumed on the above work, therefore, 50% of the claim was awarded. It was not the case of the Department that the cement was consumed by the Company in some other purpose rather than the work of the Department. Therefore, the Arbitrator has awarded this claim within the ambit of contract work. 14- In view of above discussion, I do not find any force in the submission raised by the learned counsel for 5 the appellants, so far as it relates to allowing the claims of the Company by the Arbitrator. 15- Second part of argument of learned counsel for the appellants relates to interest awarded by the Arbitrator on the amount awarded in favour of the Company. The Arbitrator has awarded interest on the award amount of Rs.16, 589/- @ 16% per annum from 24-2-1988, the date when the final measurement of the work done by the Company was taken. The Arbitrator further awarded interest 4.5% per annum from the date of judgment or the date of making the award as rule of the court, whichever is earlier. The learned Arbitrator while awarding interest @ 16% per annum from the date of final measurement of the work done by the company has not recorded any reason as to why the interest should be awarded and the same cannot be said to be reasonable. In my opinion, the learned Arbitrator has travelled beyond his jurisdiction while awarding the interest @ 16% and the same should be deleted from the impugned award. 16- As regards the interest @ 4.5 % per annum from the date of judgment or making the award as rule of the Court, I think it should be enhanced by 6% per annum, looking to the rate of interest prevalent at the relevant time. 17- Therefore, the appeal is liable to be partly allowed. 18- Accordingly, the appeal is partly allowed. The impugned award dated 24-7-2001 is modified up-to the extent that the Department/appellants shall not be liable to pay interest @ 16% per annum as has been awarded 6 by the Arbitrator on the award amount of Rs.16,589/- and this part of award is deleted. However, the interest payable by the appellants on the above amount of award of Rs. 16,589/- will be @ 6% per annum instead of 4.5%, from the date of judgment or making the award rule of the court, whichever is earlier, as has been awarded by the Arbitrator. The impugned judgment and order 1-7- 2005, passed by the learned District Judge also stands modified accordingly. (B.C. Kandpal, J.) ISB 7