State Of Rajasthan vs Larsen & Toubro Ltd.
1996 Latest Caselaw 957 Del

JUDGMENT

M.S. Jagannadha Rao, C.J.

1. This is an appeal by the State of Rajasthan against the order dated 10th January, 1994 passed in Suit No. 2484/87 dismissing the objections filed by the appellant against the majority award dated 12.9.1987 and making it a rule of the court and awarding interest at 12% p.a. from the date of award till realisation.

2. The learned counsel for the appellant confined himself only to two questions : (i) that there was no joint deliberation by and between the two arbitrators who gave the majority award on 12.9.1987 and the third Arbitrator, who gave a separate award later on 3.10.1987 and that the award of the majority should be held to be invalid, (ii) that because of the undue delay of about 18 months on the part of the arbitrators in passing the award, interest ought not to have been awarded for period during which the proceedings were pending before the arbitrtator.

3. There were three arbitrators in this case, Mr. C. R. Chopra, Dr. C. P. Gupta and Mr. S. K. Gupta. The majority award dated 12.9.1987 was given by Mr. C. R. Chopra and Dr. C. P. Gupta at New Delhi, while the minority award was given by Mr. S. K. Gupta on 3.10.1987 at Bikaner. Of them, Mr. C. R. Chopra was appointed by respondent, Mr. S. K. Gupta, Addl. Chief Engineer by the appellant, while the Institution of Engineers of India appointed Dr. C. P. Gupta, Professor of Civil Engineering, University of Roorkee.

4. The learned Single Judge found that, apart from whatever discussions the arbitrator had before 27.2.1986, when the hearing was completed, the majority arbitrators made all efforts to have a further meeting with the arbitrator Mr. S. K. Gupta, appointed by the appellant and the later did not cooperate and this was clearly revealed from the correspondence between the arbitrator placed on record and affidavit of arbitrators/parties. Learned Judge found that the delay of 18 months between date of last hearing and award was not attributable to the parties but due to the uncooperative attitude on One of the arbitrators and therefore there was no valid ground to refuse interest for period of pendency of the matter before the arbitrators.

5. Taking up the first point, it is to be noted that the arbitrators entered on the reference on 5.4.1983. There were several hearings and finally arguments were concluded on 27.2.1986. It was agreed by counsel that a non-speaking award could be given. It is the case of the majority arbitrators that upto July, 1987, is spite of their best efforts, the third arbitrator Mr. S. K. Gupta could not be contacted. We have on record a letter dated 11.7.1987 by Dr. C. P. Gupta (one of the arbitrators in the majority) written to Mr. C. R. Chopra (the other in the majority), referring to the later's letter dated 3.6.1987 stating that the third arbitrator Mr. S. K. Gupta (of Jaipur) had written to him (Mr. Chopra) "suggesting a meeting to finalise the award should be held at Delhi in mid-July". Mr. Chopra suggested that a meeting could be held between 10th-13th May, or 17th to 21st August. He suggested 10th August. The meeting could be held at the place of Mr. S. K. Gupta at Delhi. Copy of this letter was addressed to Jaipur address of Mr. S. K. Gupta. On 14.7.1987, Mr. C. R. Chopra (New Delhi) had written to Dr. C. P. Gupta (New Delhi), again with copy to Mr. S. K. Gupta (Jaipur) stating that it had not been possible for Mr. C. R. Chopra to contact Mr. S. K. Gupta of Jaipur and therefore he (Mr. Chopra) was furnishing the details of his findings to Dr. C. P. Gupta for the consideration of the two other arbitrators. It was also stated in that letter that after the approval of Dr. Gupta and Mr. S. K. Gupta, the arbitrators could sign a joint award in the format agreed during their last meeting.

6. On 31.7.1987, Dr. C. P. Gupta wrote to Mr. Chopra that he was in agreement with the findings arrived at by Mr. C. R. Chopra. Copy of this letter was again sent to Mr. S. K. Gupta at Jaipur.

7. Even though, the copies of these various letters reached Mr. S. K. Gupta's residence at Jaipur, there was, unfortunately no response from him. At that stage Mr. C. R. Chopra wrote a direct letter to Mr. S. K. Gupta on 22.8.1987, stating that he (Mr. Chopra) did not receive any letter from S. K. Gupta in reply to the letter dated 14.7.1987 and to the letter of Dr. C. P. Gupta dated 31.7.1987 and requested Mr. S. K. Gupta to write to him when he (Mr. S. K. Gupta) would be in Delhi so that they might have a meeting. He said :

"Kindly, write your telephone number at Jaipur. The matter is pending and we may meet soon to finalise it."

8. Accordingly to the majority arbitrators, no reply was sent by Mr. S. K. Gupta. It is however the contention of Mr. S. K. Gupta that he sent reply to the above letter of Mr. C. R. Chopra on 27.8.1987. But the said letter, in spite of several opportunities before the learned Single Judge, was not filed. In fact, to queries as to whether Mr. S. K. Gupta agreed in that letter, if at all such a reply dated 27.8.1987 was sent he was willing to meet Mr. Chopra and Dr. C. P. Gupta on any particular date, there has been no clarification by Mr. S. K. Gupta. This is such a crucial fact in the case and it is not understandable as to why a copy of the letter if any, dated 27.8.1987 was not produced by Mr. S. K. Gupta.

9. On 12.9.1987, C. R. Chopra and Dr. C. P. Gupta issued notice to the respondent company and to the Executive Engineer of appellant State stating that, in the matter of the reference, they had that day made and signed the award. Copy was sent to Mr. S. K. Gupta, Jaipur, with note :

"The award (copy enclosed) is made in the context of our deliberations and in the format agreed during last meeting."

Even thereafter, there was no assertion by Mr. S. K. Gupta by way of a reply that he wrote a reply on 27.8.1987. Instead, he went on to pronounce his own award on 3.10.1987 with covering letter dated 3.10.1987 informing the parties that he did to agree with the award made by the other two arbitrators and that he had therefore made a separate award and signed the same on 3.10.1987.

10. From the above correspondence, it is clear that arguments were closed on 27.2.1986 and thereafter, inspite of best efforts Mr. C. R. Chopra and Dr. C. P. Gupta were not able to get any response from Mr. S. K. Gupta for a joint meeting, though dates for a meeting were suggested to Mr. S. K. Gupta. On 14.7.1987, Mr. C. R. Chopra communicated his finding to Dr. C. P. Gupta with copy to Mr. S. K. Gupta. That letter again contemplated another meeting but there was no response from Mr. S. K. Gupta. On 31.7.1987, Dr. C. P. Gupta agreed with findings of Dr. C. R. Chopra. Then Mr. C. R. Chopra wrote a direct letter to Mr. S. K. Gupta on 22.8.1987 stating that he did not receive any letter from Mr. S. K. Gupta in relation to the findings communicated on 14.7.1987. Though, Mr. S. K. Gupta contended that he sent a reply on 27.8.1987 copy has not been filed nor its contents disclosed. It is then that Mr. Chopra and Dr. C. P. Gupta signed their award on 12.9.1987 and sent copy to Mr. S. K. Gupta. The later did not reply but passed a separate award on 3.10.1987.

11. Deliberations between all arbitrators need not be by sitting together at one place. In a case where attempts by two arbitrators for having a further joint meeting with the third arbitrator fail and the findings of one are sent to the other does not respond, the said correspondence is, in our opinion, sufficient to say that there has been "discussion or negotiations" or "deliberations" and the said correspondence would, in our view, satisfy the legal requirements of deliberations between all the parties.

12. Once there was no response to the findings communicated to the 3rd arbitrator on 14.7.1987, and a reminder was sent on 22.8.1987, and there was no reply from Mr. S. K. Gupta, it was reasonable for Mr. C. R. Chopra and Dr. C. P. Gupta to proceed on the basis that the 3rd arbitrator was, at any rate not willing to agree with their findings.

Mustil & Boyd's Commercial Arbitration, (2nd Ed. 1989) lays down as follow :

"Where the reference is to more than one arbitrator all the arbitrators must act together unless the arbitration agreement provides otherwise. The parties are entitled to an impartial and fair consideration and resolution by the arbitrator acting together of all issues in the case.

This involves taking into account of the views of a dissenting arbitrator even if it is clear he will be in the minority."

They also say and this is important here :

"But so long as this governing principle is adhered to the arbitrators need not conduct the whole of their business in the physical presence of one another : arbitrators frequently have to communicate with one another by telephone, telex or letter ......"

13. It is clear from the analysis of the facts set out above that the two majority arbitrators "negotiated or deliberated" with the third arbitrator but did not get response from him for a joint sitting and then communicated their findings to him and sought his response, sent a reminder and only thereafter proceeded on the basis that the third arbitrator was obviously not in agreement and pronounced their award. The above procedure, in our view clearly satisfies the requirements of law and the rulings quoted by the appellant. Mangan Lal Gangaram Tahoz v. Ramali Bondargi , and Bhogilal Purshottam v. Chimanlata Amritlata (AIR 1928 Bombay 49), requiring joint deliberation between arbitrators were rightly distinguished by the learned Single Judge.

14. On the question of grant of interest, the learned Single Judge referred to the correspondence which we have set out above and came to the conclusion that the parties were in no way responsible for the delay and that the delay occurred because of the absence of response from the appellant's arbitrator Mr. S. K. Gupta. We agree with this view and the majority arbitrators had jurisdiction to award interest upto date of decree and for the court to grant interest from date of decree to date of payment. Secretary, Irrigation Department, Government of Orissa v. G. C. Roy .

15. Appeal allowed.