Birla Cement Works vs Union Of India
1997 Latest Caselaw 319 Del

JUDGMENT

M.K. Sharma, J.

(1) The respondent No.l through respondent No.2 entered into a rate contract with the petitioner for the supply of cement to all the Government and quasi-Government bodies against supply orders placed by them from time to time. The aforesaid rate contract contained an arbitration clause being clause No.25 of the contract between the petitioner and respondent No.l. In respect of the execution of the aforesaid contract disputes arose between the parties which in terms of clause 25 of the agreement was referred to the sole arbitration of the respondent No.3.

(2) The arbitrator appointed was The Additional Legal Advisor to the Government of India, Ministry of Law and Justice, Department of Legal Affairs. After entering upon the reference the arbitrator issued notice to the parties and after hearing the parties and perusing the pleadings and documents filed and relied upon by the parties made/published his award on 30.5.1991. In the said award the arbitrator held that the petitioners are entitled to an amount not exceeding Rs.2,62,033.00 which has been actually paid by them by way of interest to the Sales Tax Authorities, subject however, to the condition of submission of a statement duly certified by their statutory Auditors showing the actual amount paid by way of interest on the element of freight on the supply of stores made by petitioner to the respondents, in terms of the contract. The arbitrator, however, rejected the claim of the petitioner in inspect of payment of interest.

(3) On publication of the aforesaid award the petitioner filed the present petition seeking for filing of the award in this court. On notices having been issued on the said petition the arbitrator, respondent No.3 filed the award in this court in ordinal alongwith the records of the arbitration proceedings. After filing of the award both the petitioner and the respondents have filed their objections to the award within the statutory time limit. The objections filed by the petitioner were registered as I.A.No-2005/1993 and the objections of the respondents were registered as I.A.13139/1992. The objections raised by the petitioner relate to rejection of the claim of the petitioner in respect of claim for payment of interest on the amount of Rs.2,62,033.00 which stood awarded to the petitioner under the award. The objections of the respondent on the other hand relate to the award passed by the arbitrator awarding in favour of the petitioner an amount of Rs.2,62,033.00 which had been actually paid by them by way of interest to the Sales Tax Authorities subject to submission of the certificate to the respondents as indicated therein.

(4) I have heard the learned counsel appearing for the petitioner as well as respondents on the objections filed by them and also considered the award passed by the Arbitrator.

(5) In my considered opinion it would be relevant to take up first the objections raised by respondent No.l, since the said amount relates to payment of Rs.2,62,033.00 to the petitioner on which the petitioner has claimed interest which was rejected by the arbitrator and as against which the petitioner has filed its objections. The learned counsel appearing for the respondent No.1submitted that the aforesaid award passed by the arbitrator allowing reimbursement of the amount paid by the petitioner by way of interest to the Sales Tax Authorities is against the provisions of the Contract entered into between the parties. According to her the arbitrator had no power to grant any interest on the amount of Sales Tax paid by the petitioner. According to her the contract between the parties does not envisage payment of any such interest on the Sales Tax amount paid by the petitioner. In order to appreciate the contention of the learned counsel for the respondent No.l it would be necessary to refer to the contents of the award. The arbitrator has found that it is an undisputed fact that the petitioner had to pay sales tax on the element of freight in the light of the Supreme Court decision in 'the matter of Hindustan Sugar Mills Limited (43 Stc 13). The counsel appearing for the respondent No. 1 further submitted that payment of interest became necessary on account of negligence of the petitioner. The arbitrator, however, as a matter of fact found that in terms of clause 8(vi) of the rate contract the petitioner was bound to exhaust all remedies under the relevant statute for the purpose of contesting the correctness of the assessment and test the assessment order in writ proceedings in the High Court and Supreme Court. The arbitrator, on evidence on record has also found that the petitioner had done their best in terms of the contract in challenging the assessment order before the higher authorities including the Hon'ble Supreme Court. Subsequent to the decision of the Supreme Court the petitioner had no other alternative but to deposit the tax alongwith the interest on the tax payment. Similar issue as has been raised in the present case by the counsel for the respondent was also raised before the Arbitrator that the interest claimed by way of reimbursement is not legally payable in terms of clause 5 &8 of the rate contract. Considering the said submission the arbitrator held that the respondent No.1 is bound to pay the interest on the element of freight on the sales tax to the claimants, and in that view of the matter directed the said amount of Rs.2,62,033.00 to be paid by the respondents to the petitioner which amount has actually been paid by the petitioner by way of interest to the Sales Tax Authorities.

(6) Another submission of the learned counsel appearing for the respondent No.l is that the operative portion of the award is uncertain and vague. It is stated that while awarding Rs.2,62,033.00 in favour of the petitioner as has actually been paid by the petitioner by way of interest to the Sales Tax Authorities, it was held by the Arbitrator that the same would be subject to the submission of a statement duly certified by the statutory Auditors showing the actual amount paid by way of interest on the element of freight in the sales lax.

(7) The Supreme Court in State of Rajasthan Vs. Pun Construction Co. Ltd. & Another; reported in It 1994(6) Sc 412 has held that the Arbitrator is the final arbiter for the disputes between the parties and it is not open to challenge the award on the ground that the arbitrator has drawn his own conclusions or has failed to appreciate facts. It was further held that the court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to bargain or contract between the parties. The Supreme Court in that decision has further held that whether a particular amount was liable to be paid is a decision within the competency of the arbitrator and by purporting to construe the contract the Court cannot take upon itself the burden of saying that this was contrary to the contract and as such beyond jurisdiction.

(8) The contention of the learned counsel for the respondent No.l that the award of the arbitrator in favour of the petitioner to an amount of Rs.2,62,033.00 which has been actually paid by the petitioner by way of interest to the Sales Tax Authorities is beyond the scope of the contract cannot be accepted in view of the aforesaid ratio of the decision of the Supreme Court. The arbitrator, on consideration of the relevant clauses of the contract has come to a definite conclusion that the interest amount actually paid by the petitioner to the Sales Tax Authorities is liable to be reimbursed to the petitioner and this court has no power and jurisdiction to come to a different conclusion on appreciation of records and the clauses of the contract. Accordingly, the contention of the learned counsel on that count is found to be without any merit.

(9) In respect of the next submission of the learned counsel for the respondent No. 1 that the operative portion of the award is vague and uncertain, I have considered the said submission in the context of the conclusions arrived at by the Arbitrator. In my considered opinion the award passed by the arbitrator making payment of Rs.2,62,033.00 subject to the submission of a certificate by the petitioner to the respondent No.2 cannot be termed as vague or uncertain. The payment of the said amount was made conditional subject to submission of the aforesaid certificate by the petitioner to the respondent No. 1. It clearly appears from the contents of the award that the fact that the petitioner has paid the interest to the Sales Tax Authorities is not disputed. In view of the aforesaid position, it was not at all necessary for the arbitrator to put any condition for payment of the aforesaid amount making it subject to the submission of the aforesaid certificate. However, if the arbitrator thought it fit to be more accurate and put a condition before making the petitioner entitled to the aforesaid amount, it cannot be said that the award passed by the arbitrator is vague or uncertain. Accordingly, the objections raised by the respondent No.1 in respect of the present award are found to be without any merit and are accordingly rejected.

(10) Next coming to the objections raised by the petitioner as against rejection of their claim for payment of interest on Rs.2,62,033.00 . I may only record that payment of interest on a particular amount is entirely within the domain and discretion of the arbitrator. If on the facts and circumstances of a particular case the arbitrator has exercised his discretion not to allow any interest on a particular sum, the same cannot be said to be in any manner illegal and this court also has no power and jurisdiction to upset the said part of the award. Accordingly, the award passed by the arbitrator in respect of the same is also upheld and the objections of the petitioner stand rejected.

(11) In the result, both the objections filed by the petitioner as also by the respondent No.1 stand rejected. The award is made a Rule of the Court. Let a decree be drawn up in terms of the award. In addition the petitioners shall be entitled to interest @ 15% per annum from the date of the decree till the date of realisation in terms of Section 29 of the Arbitration Act. No costs.