Union Territory Of J&K (Erstwhile ... vs M/S Rishi Dutt
2023 Latest Caselaw 2304 j&K

                                                                   S.No.17
        HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                        AT JAMMU

                                               Arb App No. 4/2021
                                               CM Nos. 8881 & 8882/2021
                                               CM No. 1047/2022
                                               CAV No. 2192/2021

1.   Union Territory of J&K (Erstwhile State) through
     Commissioner/Secretary to Government,
     Public Health Engineering Department
     (Now Jal Shakti Department),
     Civil Secretariat, Jammu.
2.   Chief Engineer, Public Health Engineering Department
     (Now Jal Shakti Department),
     Jammu                                               ....Appellant(s)

                         Through:- Mr. Amit Gupta, AAG

                         v/s

M/s Rishi Dutt, S/o Sh. Sohan Lal
R/o H.No. 22, Sadar Bazar, Nai Basti,
Jammu.                                                   ....Respondent(s)

                         Through:-

CORAM:        HON'BLE MR. JUSTICE SANJEEV KUMAR, JUDGE
              HON'BLE MR. JUSTICE MOHAN LAL, JUDGE

                               JUDGMENT(ORAL)

Sanjeev Kumar J.

1. This appeal filed in terms of Section 37 of the Jammu and Kashmir

Arbitration and Conciliation Act, 1996 (for short 'the Act') is directed

against the judgment of the learned Single Judge of this Court dated

15.03.2021 passed in Arb.P No. 33/2019, whereby the application filed by

the appellants herein under Section 34 of the Act, has been dismissed and

the award of the Arbitrator upheld.

2. The impugned judgment of the learned Single Judge is assailed on

multiple grounds, however, during the course of arguments, Mr. Gupta,

restricted his challenge to the award of cost of litigation twice by the

learned Arbitrator. He submits that this aspect of the matter was though

highlighted before the learned Single Judge, but the same has not been

considered and dealt with. He invited our attention to the award dated

22.11.2018 passed by a Sole Arbitrator, Engineer Vinod Sharma. He

submits that under Claim No.4, which deals with the Cost of Litigation,

the Arbitrator has awarded a sum of Rs. 1.00 lakh and under the head

Claim No.5-Cost of Arbitration, the Arbitrator has yet again awarded a

sum of Rs. 1.75 lakh representing the Cost of Arbitration on account of

arbitration including counsel fee and other expenses.

3. Mr. Gupta, however, argued that the grant of Cost of Litigation twice by

changing the nomenclature of the claim was beyond the jurisdiction of the

Arbitrator, therefore, not sustainable in law.

4. Heard Mr. Gupta, learned counsel for the appellants and perused the

material on record.

5. With a view to appreciating the arguments of Mr. Gupta, learned counsel

appearing for the appellants, we deem it appropriate to set out the award

by the Arbitrator on Claim Nos. 4 and 5, which for facility of reference are

reproduced hereunder:

Claim No.4 Cost of Litigation Petitioner has claimed Rs.5.00 lakhs on account of litigation and other expenses incurred by him for filing a petition for appointment of Arbitrator in the High Court for payment to Counsel etc. I partially sustain this claim and award an amount Rs.1.00 lakh against this claim Claim No.5 Cost of Arbitration.

The claimant has claimed the cost of Arbitration on account of Arbitration including counsel fee and other expenses.

I, partially sustain this claim and award an amount Rs.1.75 lakhs against them claim.

6. The argument of learned counsel for the appellants is that the Cost of

Litigation, if any, incurred by the respondent/claimant before the High

Court in proceedings leading to the appointment of Arbitrator could not

have been granted by the Arbitrator. Awarding of Cost of Litigation

disposed of by the High Court falls within the domain of the High Court

and the High Court while allowing an application for appointment of

Arbitrator has not granted any Cost of Litigation. It was, thus, beyond the

competence and jurisdiction of the Arbitrator to grant litigation expenses

incurred by the respondent/claimant for filing the petition for appointment

of Arbitrator before the High Court of J&K.

7. From reading of the order impugned, we do not find any discussion on this

aspect. As it appears from the impugned order, the learned Single Judge in

Paragraph-7 adverted to the grounds of challenge urged by the appellants

to assail the award passed by the Sole Arbitrator and came to a conclusion

that none of the grounds urged by the appellants were traceable to Section

34 of the Act except ground-C. Having said that, the learned Single Judge

did not appreciate the fact that the grant of litigation expenses by the

Arbitrator in respect of the petition disposed of by the High Court was not

within his jurisdiction, therefore, while awarding Claim No.4, the

Arbitrator had clearly exceeded his jurisdiction.

8. In view of the aforesaid, we agree with the submissions of the learned

counsel for the appellants that awarding litigation expenses in respect of

the expenses allegedly incurred by the respondent/claimant in contesting

the litigation before the High Court was, not within the jurisdiction of the

Arbitrator. Needless to say that the Arbitrator like a civil court is entitled

to award the Cost of Litigation and this Cost of Litigation to be awarded

by the Arbitrator in a given case must relate to expenses incurred by a

successful party before the Arbitrator. He has no jurisdiction or

competence to assess and award the litigation expenses, if any, incurred by

a successful party before the High Court or any court of law prior to his

appointment as Arbitrator.

9. We, therefore, hold that while awarding litigation expenses in relation to

the expenses allegedly incurred by the respondent/claimant in a litigation

disposed of by this Court were beyond the jurisdiction of the Arbitrator,

therefore, a case of Arbitrator having exceeded his jurisdiction in granting

aforesaid claim was clearly made out. The writ Court has failed to

appreciate this aspect of the matter, therefore, we find the judgment of the

learned Single Judge flawed on that account.

10. Since the claim figuring at Item No.4 of the award is clearly separable

from the other claims, therefore, we allow this appeal partially and set

aside the award of the Arbitrator to the extent of Item No.4, whereunder

the litigation expenses to the tune of Rs. 1.00 lakh have been awarded to

the respondent/claimant on account of Cost of Litigation allegedly

incurred by the respondent/claimant in a litigation disposed of by the High

Court. Rest of the award is, however, upheld.

11. The appeal along with connected application(s) is, accordingly, disposed

of.

                                     (Mohan Lal)                   (Sanjeev Kumar)
                                       Judge                              Judge
Jammu
16.10.2023
Vijay
                            Whether the order is speaking: Yes
                            Whether the order is reportable: Yes