D. Khosla & Company vs Y.N.R. Rao And Anr.
1993 Latest Caselaw 232 Del

JUDGMENT

S.C. Jain, J.

(1) This is a petition under Section 14 and 17 of the Arbitration Act for making the Award dated 23rd December, 1989 the Rule of the Court. In brief the facts of the case, as are apparent, are that in a dispute between M/s. D.Khosla & Company (hereinafter referred to as the petitioner) and the Chief Engineer, Delhi Zone, Delhi Cantt. (hereinafter referred to as the respondent No.2), pertaining to contract agreement No. CE(RCP) 86 of 82-83, reference was made to Shri Y.N.R. Rao, Chief Engineer (hereinafter referred to as respondent No. 1) to act as a Sole Arbitrator vide reference letter No. 13600/WC/369/E8 dated 19th May, 1988. The respondent No.1 entered upon the reference and held the arbitration proceedings between the petitioner and respondent No.2 . The respondent No. I on 23rd December, 1989 has made and published his Award and gave due notice of the same to the petitioner and respondent No.2. In these circumstances, M/s. D. Khosia and company, the petitioner has filed this petition praying that the respondent No. 1 be directed to file the Award and the arbitration proceedings in the Court and the same be made the Rule of the Court.

(2) Noti, Advocate for Petitioner.ce was issued and the Arbitrator filed the Award and the arbitration proceedings and on 14th March, 1990 notice of filing of the Award was issued to the parties. Respondent No. 2 filed objections to the said Award being 1.A. No. 4845 of 1990 under Sections 30 and 33 of the Arbitration Act, 1940 pleading, inter alia, that the said Award is invalid, illegal and non est and is liable to be set aside on the sole ground that the Arbitrator was to make and publish the Award within a period of four months after entering on the reference or within such extended lime as the Court may allow, but the Arbitrator has failed to make and publish the Award within the said period and therefore, the Award made after the expiry of the said period is void. On merits it is pleaded that the Arbitrator has misconducted himself and the proceedings and he did not give proper hearing to the parties after 16.10.1989. He had no authority to award interest pendente lite to the petitioner and the Award is liable to be set aside on this ground. There are errors apparent on the face of the Award and that the legal proposition forming the basis of the Award have been wrongly applied 'by the Arbitrator, He has also not properly appreciated the evidence. The Award has been passed in gross and flagrant violation of the first principles of natural justice, equity and good conscience.

(3) These objections have been contested by M/s. D. Khosia and Company, the petitioner herein, who filed a written reply pleading, inter alia, that the objections to the Award filed by respondent No. 2 are not maintainable and are liable to be dismissed. The Arbitrator has made and published the Award within the extended time as both the parties have agreed to extend the time. Rather the respondent No.2 took part in the proceedings even after the expiry of time. It is also pleaded that the Arbitrator gave full opportunity to the parties to plead and argue their respective cases which is borne out from the record. The Arbitrator has neither misconducted himself or the proceedings and there is no error apparent on the face of the Award. The legal proposition forming the basis of the award have been rightly applied by the Arbitrator. The Arbitrator has made his Award after due consideration of the pleadings and the evidence of the parties and no principle of law had been violated by the Arbitrator. After filing these objections none appeared on behalf of respondent No. 2. On 8.4.1992 respondent No.2 was directed to be proceeded ex-parte.

(4) Today also none appears on behalf of the said respondent and, therefore, I have heard counsel for the petitioner and gone through the record.

(5) A perusal of the record shows that as per the terms of the agreement between the parties all disputes, between the parties to the Contract (other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the contract to the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender documents. The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defense. The Arbitrator may proceed with the arbitration, exparte, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings. The Arbitrator may, from time to time with the consent of the parties, enlarge, the time up to but not exceeding one year from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with the sums awarded, separately on each individual item of dispute. The Award of the Arbitrator shall be final and binding on both parties to the contract.

(6) Under the provisions of the arbitration clause of the said contract agreement No. CE(RCP)/86 of 82-83, Shri Y.N.R. Rao, Chief Engineer-was appointed as the Sole Arbitrator by the Chief Engineer, vide letter No. 13600/WC/369/E8 dated 19th May, 1988. The Arbitrator entered upon the reference on 27th May, 1988 when the called upon the parties to submit their claims along with the documents in support thereof. The parties submitted their claims before the Arbitrator and also made their case known to him and the Arbitrator after hearing the parties and going through the record, made and published his Award on 23rd December, 1989. This Award is within the period of one year from the date he entered upon the reference. The question now arises whether after the expiry of six months, the parties had jointly agreed for enlarging the time for making and publishing the Award. In this regard, the record shows that both the parties have been taking part in the proceedings before the Arbitrator and that they never objected that the time for making and publishing the Award had already expired. In this case the reference to the arbitration has been made without the intervention of the Court. In such cases the parties may agree to be bound by an Award made beyond time prescribed. An Arbitrator being a domestic tribunal, the parties to the procedure can by mutual consent extend the time for making the Award. The mutual consent may be either express or implied. It can be inferred from the conduct and acquiescence of the parties to the arbitration. Generally speaking, an Award made beyond time is invalid. But where the parties agree to extend time, an Award can be made even after the expiry of the period specified in order or agreement. Section 28(2) indicates one exception to the rule that the Arbitrator cannot enlarge time on his own. However, he can enlarge time for making an Award if after entering on the arbitration the parties mutually agree to such enlargement. It is not the requirement of law that power to enlarge time by a subsequent agreement must be stipulated in the arbitration agreement. Such consent of the parties must be a post reference consent. If the parties to an arbitration proceeding take part and the Arbitrator makes Award after the expiry of time, it should be presumed that the parties to the proceedings have assented to the continuance of the arbitration proceedings by acquiescence. In such case the Arbitrator is competent to continue in office and pass an Award which will have valid effect.

(7) In this case the parties by their mutual consent, conduct and acquiescence had agreed for the extension of time and that as is apparent from record, the Award was made and published within a period of one year during the extended term is valid and the objection filed by the respondent in this regard has no merit. Regarding the objections raised by the respondent No.2 that the Arbitrator has misconducted himself and the proceedings and that he has not appreciated the evidence on record and that there are errors apparent on the facet of the Award; a perusal of the record shows that the respondent No,2 has taken these objections just for objection sake. The Arbitrator gave full opportunity to both the parties to submit their claims, file documents in support of their respective claims and also gave opportunity of personal hearing to them. It is only after going through the documents, evidence on record and respective submissions made by both the parties, he made and published the Award. There is no error apparent on the face of the Award. This Court has no power to reappreciate the evidence in these proceedings under Section 14 and 17 of the Arbitration Act. The Arbitrator being a domestic tribunal has the power to appreciate the evidence, of course, judicially. In this case, there is nothing on record to show and prove that the Award has been passed in gross and flagrant violation of principles of natural justice, equity and good conscience.

(8) Regarding the plea taken by the respondent No.2 that the Arbitrator had no authority to award interest pendente lile, reference can be made to a decision of the Supreme Court in the case of Secretary. Irrigation Department. Government of Orissa & Ors vs. G.C. Roy wherein their Lordships of the Supreme Court of India after examining the earlier case law and the relevant provisions on this point came to the conclusion that the Arbitrator has the power to grant interest pedente lite and the grant of interest to be presumed to be an implied term of the agreement. A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference, This is the principle of Section 34, Civil Procedure Code . and there is no reason on principle to hold otherwise in the case of arbitrator. In view of this latest decision of the Supreme Court, this objection taken by the respondent No.2 also does not hold good. From whatever point of view we may take, the Arbitrator has neither misconducted himself nor the proceedings and there is no error apparent on the face of the Award. The legal propositions forming the basis of the Award have been rightly applied by the Arbitrator. The Arbitrator has made and published his Award after due consideration of the evidence on record and no principles of law have been violated by him.

(9) I, therefore, dismiss the objections filed by the respondent No.2, and make the Award dated 23rd December, 1989 the Rule of the Court. The decree sheet be prepared in terms of the Award. No order as to costs in these proceedings before the Court.