M/S. Madnani Construction ... vs Union Of India & Ors

2. The appellant, a private limited company, is carrying on, inter alia, various construction works for both the State and Central Government and their undertakings. The appellant's case is that an agreement dated 03.11.1981 was entered between the appellant and the North Eastern Railway for the construction of bridge island nos. 13 and 14 over the Kosi river. There were certain special conditions of the contract (hereinafter, SCC) and they stipulate that the General Conditions of Contract (hereinafter, GCC) and standard specifications of the North Eastern Railways shall form part of the aforesaid contract. In terms of the contract, the construction was to be completed by 15.02.1982. Certain payments were made to the appellant after completion of the contract but they were received by them "under protest". Thus, disputes cropped-up between the parties. The appellant is said to have served a notice dated 16.11.1983 for the appointment of an arbitrator to settle the 2 disputes. The General Manager of the respondent-

Railways by an order dated 24.03.1986 rejected the appellant's prayer for appointment of an arbitrator on the ground that the disputes were not arbitrable, as they fell under `expected matter' in the contract.

4. The learned Arbitrator gave his award on 13.4.1992 holding that the Railways should pay an amount of Rs.4,48,873.22 along with compoundable bank interest prevalent at that time from 16.11.1983 to 21.3.1992. In passing the award the Arbitrator relied on the Level book No. I, the Graph Sheets, the Log Book No. IA and the Log Book No. 4. The Arbitrator found that there were subsequent alterations and over writing in the entries made in the Log Book No.IA and the same were without any initials by the concerned authority on behalf of the respondent Railways. From such materials the Arbitrator held that all the manipulations/alterations/overwritings had resulted in reducing the quantities of the work done by the appellant. It was further observed that clause 21 (iv) of the special conditions was not followed by the respondent Railways at all. 4 Moreover in utter violation of the Railway rules and orders on the subject, the measurements were hardly entered in the measurement book directly and mostly entries in the measurement books were copied down from subsidiary records or note books. After recording such findings, the Arbitrator gave the aforesaid award.

7. On 1st December 1992, the Senior Civil Judge, Gorakhpur of the Court of Judge, Small Causes Gorakhpur made the award a Rule of Court and directed that a decree be prepared accordingly and directed that from the date of the award to the date of payment the rate of interest on the Bank loan is to be paid.

23. But it appears that in the instant case, the High Court has come to the aforesaid finding that the items mentioned above are excepted matters and non-arbitrable by completely ignoring the factual finding by the arbitrator and without holding that those findings are perverse.

(b) the pendente lite period i.e. from the date of reference to the date of award; and (c) the post- reference period i.e. from the date of the award to the date of realization.

(Emphasis supplied)

58. In view of such consistent views taken by both the Constitution Bench judgments, in G.C. Roy (supra) and N.C. Budharaj (supra), we are of the view that in the facts of this case, no interference is called for with the award passed by the arbitrator. The judgment of the High Court is, therefore, set aside and the award is upheld. The appeal is allowed.

59. There will be no order as to costs.