H.P. Krishivishva Vidyalaya vs Kulbhushan Sood

Deepak Gupta, J.—Admit. With the consent of the parties the appeal is taken up for final hearing today itself. This appeal u/s 37 of the Arbitration and Conciliation Act, 1996 (here-in-after referred to as the Act) is directed against the order of the learned Additional District Judge, Kangra at Dharamshala in Arbitration Case No. 3-P/2002 decided on 6.9.2008, whereby he has dismissed the objections filed by the present appellant against the award of the Arbitrator.

The facts, in brief, are that the appellant Himachal Pradesh Krishvishva Vidyalaya, Palampur, (here-in-after referred to as HPKVV), awarded the work of construction of Women Training Hostel at HPKV, Whether the reporters of the local papers may be allowed to see the Judgment? Yes.

Palampur to the respondent (here-in-after referred to as the Contractor). An agreement was entered into between the parties which contained an arbitration clause. Dispute arose between the parties and the contractor laid certain claims. These disputes were referred for resolution to the sole arbitrator, namely, Superintending Engineer, Arbitration, HPPWD, Solan. The Arbitrator awarded a sum of Rs. 2,14,700/- in favour of the contractor. The contractor was also awarded 12% interest on this amount for four years upto the date of award and future interest was awarded at the rate of 18%. This award was challenged on various grounds. The learned Additional District Judge rejected the contention of the University and upheld the award.

We have heard Shri Lokendar Paul Thakur, counsel for the appellant and Shri J.S. Bhogal Sr. Advocate with Mr. Suneet Goel counsel for the respondent.

The main contention made on behalf of the University is that the interest awarded is highly excessive. It has also been contended that the claim in respect of Item Nos. 5 and 7 is wrong and is liable to be setaside. By now, the law is more than well settled that the Court u/s 34 cannot sit as a Court of Appeal over the award of the Arbitrator. Even if the decision of the Arbitrator is wrong or incorrect, the Court cannot substitute its judgment for that of the Arbitrator. The grounds for setting aside of the award u/s 34 are very limited. These are (i) a party to the arbitration proceedings is under some incapacity; (ii) the arbitration agreement is not valid under the law; (iii) the party making the application was not given proper notice of the appointment of the Arbitrator or the arbitral proceedings or that there has been violation of the rule of natural justice; (iv) that the arbitral award deals with a dispute not contemplated by or not falling within the scope of the arbitration agreement; (v) the decision of the arbitral tribunal is improper; (vi) the arbitral tribunal did not follow the proper procedure; (vii) the award is in contravention of the provisions of the law; (viii) the award is against the public policy of India. None of these grounds are made out in the present case.

The last contention of Shri Lokendar Paul Thakur is that on equitable grounds the interest may be reduced and in respect of his contention he has relied upon the judgement of the Apex Court titled Rajendra Construction Company Vs. Maharashtra Housing and Area Development Authority and Others, . This contention is also without any force. The judgement of the Apex Court has been delivered on the facts of its particular case. This judgement arose out of arbitration proceedings under the Arbitration Act, 1940. There is vast difference under the old Arbitration Act and the Act of 1996. u/s 29 of the old Act the Court had the power while making the award as the rule of the Court to award interest from the date of decree at such rate as the court deemed reasonable. This power is missing in the present case. In fact, Section 31 (7) (b) stipulates that unless the award otherwise directs the same shall carry interest at the rate of 18%. This is a statutory rate of interest provided. No doubt, an arbitrator has the authority and jurisdiction to award lesser or higher rate of interest but for this he must give specific reasons otherwise the award would carry rate of interest as stipulated in the Act.

Therefore, we find no reason to interfere in the award. The appeal is without any merit and the same is dismissed accordingly.