General Marketing And ... vs Union Of India
1997 Latest Caselaw 489 Del

JUDGMENT

Anil Dev Singh, J.

1. The parties entered into a rate contract on March 4, 1971 pursuant to which the petitioner was to supply spare arts of Terex make of earth moving and construction equipment of USA/Canada/UK origin for the period February 17, 1971 to February 16, 1974. It is not disputed that the supplies continued beyond the stipulated period fixed in the contract.

2. Disputes arose between the parties which were referred to Shri N.S. Mehta, Additional Legal Adviser to the Government of India, on November 15, 1975. Mr. N.S. Mehta entered upon reference and called upon the petitioner to file a statement of claim on January 29, 1976. Subsequently, Dr. Bakshish Singh was appointed as an arbitrator in place of Mr. N.S. Mehta when he demitted the office of the Additional Legal Adviser. On July 29, 1977, Dr. Bakshish Singh rendered his award in favour of the respondent. However, this award came to be set aside by Sultan Singh, J. on November 23, 1979. Thereafter, on April 29, 1980, Shri P.S. Kakkar, Additional Legal Adviser, Ministry of Law, was appointed as an arbitrator. On October 25, 1982 Mr. Kakkar resigned and in his place Dr. P.C. Rao was appointed as the sole arbitrator on July 11, 1983. Even Dr. P.C. Rao resigned on September 9, 1983 which necessitated the appointment of Mrs. R. Lakshmanan as the new arbitrator on March 20, 1984. Mrs. Lakshmanan entered upon reference and gave her award in favour of the respondent on October 19, 1984. This award was set aside on February 14, 1992 by Jaspal Singh, J. with a direction to the respondent to appoint another arbitrator. However, the respondent despite the direction did not appoint the arbitrator which led to filing of OMP No. 52/92 by the petitioner. On July 26, 1993 Satpal, J. appointed Mr.Justice D.R. Khanna, a retired Judge of this Court,as an arbitrator. Justice Khanna made and published his award on April 19, 1994. This award has been challenged by the respondent Union of India.

3. I have gone though the award and I find that there is no error apparent on the face of the award in regard to the award of a sum of Rs.5,33,852.48 in favour of the petitioner. The arbitrator has given reasons for his finding that the said sum is due to the petitiioner. It is well settled that the arbitrator is the final judge of all the questions both of law and fact. The court while examining the award for the purpose of section 17 of the Arbitration Act is not empowered to go into the merits of the findings arrived at by the Arbitrator as it is not sitting in an appeal over the views of the arbitrator. The court cannot examine and reassess the material which the arbitrator had an opportunity to examine and assess. It is also well settled that the arbitrator has been made a final arbiter of disputes between the parties .

4. Therefore, the award of the arbitrator allowing the claim of the petitioner for the amount of Rs.5,33,225.48 along with arbitration costs of Rs.1,000/- has to be affirmed. The main grievance of the respondent seems to be with regard to the grant of pendente lite interest by the arbitrator. Learned counsel for the respondent submitted that the arbitrator granted the interest mechanically and without appreciating that the arbitrator could not have granted interest for the period prior to the date on which he entered upon reference. The learned counsel points out that though Mr. Justice D.R. Khanna was appointed as an arbitrator on July 26, 1993, he awarded interest from January 1976, a date anterior to his appointment as an arbitrator.

5. I have considered the submission of the learned counsel. It may be recalled that the matters in disputes were referred for arbitration as far back as in January 1976. It is another matter that the various arbitrators who were appointed resigned and the two awards made by Dr. Bakshish Singh and Mrs. Lakshmanan were set aside by the court. It cannot be disputed that the arbitration proceedings have remained pending since the year 1976 for no fault of the petitioner. In these circumstances, therefore, the arbitrator was justified in granting interest from January 1976 till the date of the award. I am supported in this conclusion by the decision of the Supreme Court in Santokh Singh Arora v. Union of India and others, , in which the Supreme Court while considering a similar question observed as follows :-

"The appellant has raised an objection that interest should have been awarded for the entire period, i.e. with effect from April 1,1968, the date the respondents withheld the payments and the appellant took legal action in the matters, and that it should not have been confined to the period during which the matter was pending arbitration before the learned arbitrator and his predecessor, Shri Justice A.C. Gupta. We find considerable merit in his submission. In Secretary, Irrigation Department, Govt. of Orissa v. G.C. Roy (C.A. No. 1403 of 1986, decided on December 12, 1991): (reported in 1992 AIR SCW 389), a Constitution Bench of this Court has dealt with the question of award of interest pendente lite by the arbitrator and it has been laid down that in a case where the agreement between the parties does not prohibit grant of interest and the parties have referred all their disputes to arbitration without reference to the Court, the arbitrator has a power to award interest pendente lite. Here, the matteer has been pending in arbitration ever since the Chief Engineer appointed Lt. Col.L.K. Raisinghani as the arbitrator by order dated December 18,1968. The learned arbitrator has awarded interest 12% per annum for the period November 21, 1983, the date on which the dispute was referred to the arbitration of Shri Justice A.C. Gupta, till the date of the award made by the learned arbitrator. This indicates that the learned arbitrator wanted to award interest in respect of the period during which the matter was pending in arbitration before him and Shri Justice A.C. Gupta. Since interest was being allowed for the period during which the matter was pending in arbitration before Shri Justice A.C.Gupta and the learned arbitrator, the interest should have also been allowed in respect of the period during which the matter had been pending in arbitration ever since he Chief Engineer appointed Lt. Col. L.K. Raisinghani as the arbitrator by order dated December 18, 1968 and the matter was pending before the said arbitrator or his successor or in the courts in connection with proceedings arising out of the said arbitration. We are of the opinion that the appellant is entitled to be compensated for denial of his legitimate dues during the period from December 18, 1968 till the date of the award of the learned arbitrator. The appellant is also entitled to be compensated for the costs incurred in prosecuting his remedies before the arbitrators as well as in the courts below and before this Court."

6. As would be evident from above, the pendente lite interest should be allowed for the period during which the matter remains pending in arbitration whether before one arbitrator or his successor.

7. In view of the aforesaid discussion, the award of the arbitrator is made a rule of the court and a decree in terms thereof is hereby passed. The award of the arbitrator will form part of the decree. In case the respondent does not make payment of the decretal amount within eight weeks from today, the petitioner will be entitled to interest at the rate of 14% per annum from the date of decree till realisation. The petitioner will be entitled to costs of the proceedings initiated under section 17 of the Arbitration Act.