State of Gujarat vs T.D. Vania and Another

M.D. Shah, J.—This appeal u/s 39 of the Arbitration Act arises from a judgment and decree dated 31-8-1989 passed by the learned Judge, City Civil Court No. 11, Ahmedabad, in Civil Misc. Application No. 625 of 1988 whereby the application filed by the Arbitrator - the present respondent No. 1 u/s 14(2) of the Indian Arbitration Act was allowed.

The facts in brief are that in pursuance of invitation to tender for supply of 700 metric tons of white writing papers by the present appellant-State through the Industries Commissioner and Central Purchase Officer, the tender submitted by the present opponent No. 2 was accepted. However, since a dispute arose between the parties about quality of papers, withholding of payments, etc. the matter was referred to Sole Arbitrator, Mr. T.D. Vania, Deputy Secretary to the Government of Gujarat, Legal Department, Sachivalaya, Gandhinagar, as per Cluase No. 22 of the tender agreement. Upon affording opportunity of hearing to the parties concerned, the learned Sole Arbitrator published his award vide award on 16-6-1988. Thereafter, the learned Arbitrator filed Civil Misc. Application No. 625 of 1988 in the City Civil Court u/s 14(2) of the Act along with the original award and records and proceedings and it is also an application u/s 17 of the Act authorizing the Court to make the award rule of the Court, if nothing is found objectionable as stipulated under Sections 15 and 16 of the Act. However, the State of Gujarat raised objections by filing Civil Misc. Application No. 830 of 1988. Both these applications were heard together by the learned City Civil Judge, Court No. 11, Ahmedabad, and the learned Judge vide impugned judgment and decree dismissed Civil Misc. Application No. 830 of 1988 filed by the State and allowed Civil Misc. Application No. 625 of 1988 filed by the learned Arbitrator and made the award rule of the Court, giving rise to the present appeal by the State challenging the judgment dated 31-8-1989 rendered in Civil Misc. Appln.No.625 of 1988.

Heard learned AGP, Mr. N.J. Shah for the appellant-State and learned Counsel, Mr. A.C. Gandhi, for the respondent No. 2, the main contesting party.

Mr. Shah submitted that the judgment and decree passed by the court below is contrary to law and evidence on record. He further submitted that as per Section 34 of Civil Procedure Code, interest @ 6% only would have been awarded, however, the court below, relying on a decision of the Apex Court in the case of Gujarat Water Supply and Sewerage Board Vs. Unique Erectors (Gujarat) (P) Ltd. and Another, awarded interest @ 9%. According to him, the judgment on which reliance was placed by the court below was not referring to Section 34 but was referring to Interest Act, 1978 and hence, reliance was wrongly placed by the court below and therefore, awarding of interest @ 9% was illegal and improper. He further submitted that trial court held that the Court has discretion to award interest @ 6% u/s 34 of CPC and in that case, interest only @ 6% ought to have been awarded. Therefore, the trial court committed a gross error in holding that the claimant is entitled to interest @ 9%. He therefore sought to reduce the rate of interest from 9% to 6%.

There is no force in the said submission. It is to be noted that the Apex Court in the judgment relied on by the trial court awarded interest @ 9% considering Section 3(1)(a) of the Indian Interest Act, 1978. Since said rate of interest was found to be reasonable as per the law laid down by the Apex, said rate was awarded by the court below.

This Court has gone through the judgment and decree of the trial court. It was rightly held by the trial court that once an award was filed by the Arbitrator, the court has very limited power to interfere. However, only when the award is found to be illegal and improper, the court can interfere with the same. In the present case, no illegality or impropriety as having committed by the court below has been noticed by this Court nor could be pointed out by the learned AGP so as to interfere with the findings arrived by the court below. Hence, the appeal is required to be dismissed.

The appeal is accordingly dismissed.