Central Board of Secondary Education vs Ramayana Press

Valmiki J Mehta, J.—By this petition u/s 34 of the Arbitration and Conciliation Act, 1996, the petitioner M/s Central Board of Secondary Education challenges the Award of the sole Arbitrator dated 19.12.2003 only with respect to the aspect of grant of labour wastage/idle labour charges to the respondent. The Arbitrator has awarded an amount of Rs. 1, 05,000/-to the respondent/claimant under this claim.

Under the contract, the petitioner supplied paper to the respondent and the respondent was to convert the paper into answer sheets and re-supply them back to the petitioner. The respondent alleged that on account of delay in supply of the paper, it suffered loss due to idle labour and therefore this claim was filed before the Arbitrator along with other claims. The Arbitrator has allowed this claim by giving the below mentioned reasoning:

Even during the proceeding before the High Court or while filing the claim before the Arbitrator it was not felt necessary by the Claimant to give these details or to furnish the copies of the Attendence Registers. There is nothing to establish the authenticity or genuineness of this Attendence Register since the Claimant could not produce any audited accounts or details of bank transactions, etc. as proof of the amount spent by him on labour or the number of person engaged by him in various capacities and how much expenditure was incurred on them during different months. In the absence of any collaboration or any basis to establish the authenticity of the Attendence Registers or the details of the money spent on this account I reject these documents. Moreover, we have to go by the conditions of tender as elaborated/modified by letter of CBSE dated 29.10.1997. There is no requirement for the Claimant to engage labour before the work is awarded to him and the contract becomes final, which would be after accepting the conditions of letter dated 29.10.1997 and on depositing of the security money as well as the bank guarantee. Thus, no claim could be made for any labour engaged prior to 7.11.1997 when the bank guarantee was submitted. There has been some delay in supply of paper and it could reasonably be expected that the Claimant would engage labour for execution of time bound work immediately but the paper was supplied to him only on 29.11.1997. There was a delay of 21 days and for this the Claimant could reasonably be expected to be compensated for the idle labour. In the absence of details of the labour engaged and wages paid to them, specific amount cannot be worked out but on a general basis a loss of Rs. 5,000/- per day on the cost of workers, electricity, idling of machinery, etc. would be reasonable and I accordingly award an amount of Rs. 1,05,000/- to the Claimant for the loss suffered by him due to late supply of paper by 21 days.

No doubt, ordinarily, this Court does not interfere with an Award u/s 34, however, where the Award is wholly illegal and perverse, this Court is duty bound to interfere with such an Award. The facts of the present case show that the claim for labour wastage/idle labour was in fact a fanciful claim because the evidence filed by the respondent/claimant was dis-believed by the Arbitrator. Further, no proof of actual payment by the respondent/claimant to the labour was filed during the arbitration proceedings. The aforementioned portion of the Award shows that the Arbitrator has clearly dis-believed the evidence as filed by the respondent/claimant, however, in spite of the same, the Arbitrator has allowed the claim. This in my opinion is wholly illegal and perverse. Once there is no proof of labour being engaged or being paid, there cannot arise any question of any charges payable towards labour wastage/idle labour. Further, even assuming that there is employment of labour, what is the actual amount payable to it had to be proved. Admittedly, there was nothing on the record before the Arbitrator to allow such a claim.

It has been held by the Supreme Court in the case of State of Rajasthan and Another Vs. Ferro Concrete Construction Pvt. Ltd., that unless and until, there is some evidence, an Arbitrator cannot allow a claim. The ratio of the judgment of the Supreme Court in the case of Ferro Concrete Pvt. Ltd. (supra) clearly applies to the facts of the present case, inasmuch as the admitted facts are that no evidence which has been filed by the respondent, has been believed by the Arbitrator that the respondent in fact, engaged labour or paid any amounts to such labour. Thus the Award is based on no evidence and hence the Award is wholly illegal and perverse and is liable to be set aside.

I, therefore, accept the objections and set aside the Award so far as it grants an amount of Rs. 1,05,000/- to the respondent/claimant for alleged labour wastage. Since principal claim is set aside, the interest on such amount also will automatically be set aside.

With the aforesaid observations, the objection petition is allowed to the extent that claim as granted by the Award for labour wastage is set aside. The petition is disposed of, in terms of the above, without any order as to costs.