State of H.P. and Another vs Surender Pal

Surjit Singh, J.—Nobody appears for the respondent.

I have heard the learned Assistant Advocate General, appearing for the objection-petitioners.

Respondent Surender Pal, who is a Government Contractor, was awarded work of laying sewerage lines in Mandi town, by the objection-petitioners, sometime in the year 1993. A written agreement was executed between the parties, which contained an arbitration clause. Arbitration clause provided for adjudication of any dispute, arising between the parties, by an Arbitrator.

A dispute arose between the parties. Respondent made claim, in respect of eleven items, while the objection-petitioners made claim, in respect of four items. All the claims were referred to Arbitrator, namely Arbitrator-cum-Superintending Engineer (Design), Dharamshala. Arbitrator gave his award on 1st November, 2008. As per this award, a sum of Rs. 35,116/-, with interest at the rate of 10%, which was corrected vide corrigendum dated 10th November, 2008, was awarded in favour of the respondent and against the objection-petitioners.

Objection-petitioners have challenged the award, on the ground that the same is against Public Policy of India. Petition was filed, u/s 34 of the Arbitration and Conciliation Act, for setting aside the award. Objection-petitioners have challenged the award of a sum of Rs. 1,14,123/-, on account of refund of hire charges of compressor, in favour of the respondent and rejection of their claim for compensation under Clause (2) of the agreement.

It is submitted by the learned Assistant Advocate General that when the respondent had claimed only a sum of Rs. 84,220/-, on account of refund of hire charges of air compressor, Arbitrator was not competent nor did he have the jurisdiction to award a sum of Rs. 1,14,123/- on that count. He says that the Arbitrator exceeded his jurisdiction and, thus, the award given by the Arbitrator, in respect of the aforesaid claim of hire charges of air compressor, is liable to be set aside or atleast modified.

Submission made by the learned Assistant Advocate General is supported by a judgment of the Apex Court in J.C. Budhraja Vs. Chairman, Orissa Mining Corporation Ltd. and Another, In that case, contractor had claimed a sum of Rs. 95,96,616/-(excluding interest), but the Arbitrator awarded a sum of Rs. 1,02,66,901.36 (excluding interest). Hon''ble Apex Court held that the Arbitrator had exceeded his jurisdiction, which amounted to legal misconduct and the award, to the extent of Rs. 6,70,285/-, which was in excess of the claimed amount, held to be invalid.

In view of the above stated position, it is held that the award of Arbitrator, in respect of claim for refund of hire charges for air compressor, is invalid to the extent of Rs. 29,903/-.

As regards the rejection of claim of the Objection-petitioners, for compensation under Clause (2), Arbitrator has held that the objection-petitioners had waived the claim on this count. Reason given by the Arbitrator is that in reply dated 28th August, 1999 submitted to the Arbitrator, Executive Engineer had stated that no penalty had been imposed upon the contractor. The claim was not on account of penalty but on account of compensation under Clause (2) and a sum of Rs. 16,097/- had specifically been claimed on this count. Consequently, it is held that rejection of claim for compensation, under Clause (2), was contrary to the material on record. Thus, the objection-petitioners are held to be entitled to a sum of Rs. 16,097/-, on account of compensation, under Clause (2).

As a result of the above discussion, objection-petition is allowed and amount of award is reduced from Rs. 3,35,116/- minus ( Rs. 29,903/- + Rs. 16,097/- = Rs. 46,000/-) to Rs. 2,89,116/-.

Petition stands disposed of.