Kerala High Court
N.K.Raman Nair vs State Of Kerala And Another on 28 June, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE MARY JOSEPH
TUESDAY, THE 28TH DAY OF JUNE 2022 / 7TH ASHADHA, 1944
ARB.A NO. 12 OF 2007
AGAINST THE ORDER IN OPARB 201/1995 OF PRINCIPAL SUB COURT,
TRIVANDRUM DATED 22.06.2006
APPELLANT/CLAIMANT:
N.K.RAMAN NAIR
CONTRACTOR, CHOTTANIKKARA, ERNAKULAM DISTRICT.
BY ADV SRI.PEEYUS A.KOTTAM
RESPONDENTS/RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY SECRETARY, IRRIGATION DEPARTMENT,,
GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.
2 THE EXECUTIVE ENGINEER
KIP (MCS) DIVISION NO.II, ADOOR.
THIS ARBITRATION APPEALS HAVING COME UP FOR HEARING ON
13.08.2021, ALONG WITH Arb.A.21/2007 & 6/2008, THE COURT ON
28.06.2022 DELIVERED THE FOLLOWING:
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
-:2:-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE MARY JOSEPH
TUESDAY, THE 28TH DAY OF JUNE 2022 / 7TH ASHADHA, 1944
ARB.A NO. 21 OF 2007
AGAINST THE ORDER/JUDGMENT IN OPARB 200/1995 OF PRINCIPAL
SUB COURT, TRIVANDRUM DATED 22.06.2006
APPELLANT/CLAIMANT:
N.K.RAMAN NAIR
CHOTTANIKKARA, ERNAKULAM DISTRICT.
BY ADV SRI.PEEYUS A.KOTTAM
RESPONDENTS/RESPONDENTS:
1 STATE OF KERALA
SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM.
2 THE EXECUTIVE ENGINEER
KIP(MCS)DIVISION NO.II, ADOOR.
THIS ARBITRATION APPEALS HAVING COME UP FOR HEARING ON
13.08.2021, ALONG WITH Arb.A.12/2007 & 6/2008, THE COURT
28.06.2022 DELIVERED THE FOLLOWING:
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
-:3:-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE MARY JOSEPH
TUESDAY, THE 28TH DAY OF JUNE 2022 / 7TH ASHADHA, 1944
ARB.A NO. 6 OF 2008
AGAINST THE ORDER/JUDGMENT IN OPARB 199/1995 OF PRINCIPAL
SUB COURT, TRIVANDRUM DATED 22.06.2006
APPELLANT/CLAIMANT:
N.K.RAMAN NAIR
CHOTTANIKKARA, ERNAKULAM DISTRICT.
BY ADV SRI.PEEYUS A.KOTTAM
RESPONDENTS/RESPONDENTS:
1 STATE OF KERALA AND ANOTHER
SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM.
2 THE EXECUTIVE ENGINEER
KIP (MCS) DIVISION NO.11, ADOOR.
BY ADV GOVERNMENT PLEADER
OTHER PRESENT:
PP SRI DENNIS DEVASSY
THIS ARBITRATION APPEALS HAVING COME UP FOR HEARING ON
13.08.2021, ALONG WITH Arb.A.12/2007 & 21/20087, THE COURT
ON 28.06.2022 DELIVERED THE FOLLOWING:
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
-:4:-
C.R.
MARY JOSEPH, J.
-----------------------
Arb. Appeal Nos. 12 & 21 of 2007
and
Arb.Appeal No.6 of 2008
-----------------------
Dated this the 28th day of June, 2022
JUDGMENT
Appeals are originated from the judgments passed by
Principal Sub Court, Thiruvananthapuram on 22.06.2006
dismissing OP(A) No.199/95, OP(A) No.200/95 and OP(A)
No.201/95.
2. Original Petitions have been filed by one Mr.N.K.
Raman Nair who was a contractor for the work of 11KIP (MCs) for
laying Pipeline and allied works from the spouts at Ch.1395 m of
RBC minor and at Ch 315m of Edakkunnam RC minor
distributory. During the execution of the work, disputes and
differences arose between the claimant and respondents and
those were referred to an Arbitrator, who has pronounced
awards in the respective petitions on 27.07.1995. The awards
were forwarded to the court for making a decree and those were
taken on file respectively as OP Nos.199/95, 200/95 and 201/95.
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
In the meantime respondents filed petitions to reopen the award
and to declare the Arbitration agreement ineffective and to
dismiss the petitions above.
3. The Court considered the question, whether the
awards of the arbitrator should be made a decree of the court or
to set aside those. Time frame was fixed by this Court by order
dated 13.02.2006 passed in WP(C) No.2734/2006 to dispose of
all the three OPs before 30.06.2006.
4. It was contended by the respondents in the Original
Petitions in I.A. No.899/98 filed by them that the Kerala
Revocation of Arbitration Clauses and Re-opening of Awards
Ordinance, 1997 which obtained assent of the President of India
on 14.11.1997 and Revocation of Arbitration Clauses and
Re-opening of Awards Act (for short 'State Act') came into force
in the year 1998 takes away the Arbitration Clauses in
agreements and divested the authorities of Arbitrators to decide
the disputes. It was contended on its basis that all provisions in
the LCB condition with regard to arbitration have become
ineffective with the passing of the above enactment. It was
contended further that the arbitrator, by passing the awards in
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
question has exceeded his jurisdiction and thus misconducted the
proceedings. It was further urged that the remedy of the
aggrieved party is to approach the civil court for redressing his
grievances and obtaining reliefs. The awards passed by
arbitrator are sought to be set aside in the above context.
5. The claimants had filed objection in I.A.No.863/98 and
contended that the State Act has no retrospective effect, that the
vires and validity of the enactment were challenged before this
Court in O.P. No.4206/1998 and an interim order staying further
proceedings was passed in CMP No.7607/98, and that as per
Section 3 of Act 12 of 1998, the revocation clause will not affect
the award passed on 27.07.1995.
6. The arbitrator overruled the objections raised by the
respondents with regard to his appointment. He allowed claims
A, B and C and awarded a sum of Rs.92,100/- with future
interest at the rate of 18% per annum.
7. The court below has considered the preliminary
objection of the respondent on appointment of the arbitrator and
held that the arbitrator was not justified in overruling the
preliminary objection raised against his appointment. The court
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
below further held that the arbitrator being a government
servant, was bound by the provisions of the State Act and he
ought not to have entered on a reference to adjudicate the
disputes raised before it. Accordingly, it was found by the court
below that the proceedings before the arbitrator were devoid of
jurisdiction and have no validity at all and therefore the award is
liable to be set aside. After finding so, the court below has also
gone into the merits of the arbitration awards and held that the
awards of the arbitrator under claims A, B, C and G are
unsustainable and accordingly set aside those. Ultimately the
awards, having been passed by the arbitrator without
jurisdiction, were set aside.
8. According to Sri.Peeyus A Kottam, the learned counsel
for the petitioners the court below is highly unjustified in passing
the impugned orders. According to him the court below while
passing the impugned orders has exceeded jurisdiction vested in
it under Section 17 of the Arbitration Act, 1940 (for short 'the
Act'). According to him under 17 of the Act, the court below shall
only pass a decree in terms of the award. According to him,
under Section 30 of the Act, an aggrieved party is entitled to
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
apply for setting aside the award of the arbitrator only on errors
apparent on the face of the record and for misconduct of the
arbitrator while passing it. If the award is not set aside by
invoking jurisdiction under Section 30 of the Act, then the court
has jurisdiction only to confirm the award and make it an
enforceable decree.
9. According to him, the court below was highly erred
and unjustified in holding on the basis of the State Act which has
been stayed by the Division Bench of this Court by order passed
in O.P.No.4206/1998, that the arbitration clause in agreements
has been taken away and thereby the authority of the arbitrator
also to decide disputes referred to it. The court below overlooked
the fact that State Act which has operation only with effect from
14.11.1997 has no application in the context where awards were
passed by the arbitrator on 27.07.1995. According to him the
court below has gone wrong in holding that a request for
arbitration should not have been entertained by a Government
servant when it was settled otherwise by GO(MS) No.85/94 IRRD
dated 05.12.1994.
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
10. The learned counsel has also relied on 1997 (3) ILR
(Kerala Series) P.349, AIR 1989 SC 1263, AIR 2001 SC 2933, AIR
2001 SC 846, 2004 (5) SCC 109 and 2003 SAR (Civil) 949 to
strengthen his contention that court while exercising jurisdiction
under Section 17 of the Act ought not to have re-appreciated the
evidence as it is not sitting in appeal over the award placed
before it. Raising contentions of the nature above, the learned
counsel urged that interest of justice demands interference of the
impugned orders, by this Court.
11. It is pertinent to note from the impugned orders that
preliminary objection raised by the State in I.A.No.899/98 that
the arbitration clause in agreements stand revoked by State Act
and therefore, the power of the Arbitrator to decide the disputes
or differences is lost, was overruled by the Arbitrator in it's award
for the reason of non-restrospectivity in its operation.
12. The court below has reversed the finding and upheld
the preliminary objection raised against jurisdiction of the
arbitrator and the sustainability of the award passed by him. At
the very same time the court below has also gone into the merits
of the findings of arbitrator on various claims raised by the
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
claimant before the arbitrator which were answered in his favour,
set aside some of those.
13. The court below on arriving at a finding primarily that
the arbitrator's power to decide disputes or differences among
the parties has been taken away by State Act ought not to have
dealt with the other findings of the arbitrator. Once it is found
that the arbitrator is not empowered to exercise jurisdiction to
pass an award, the award itself is non est in law. Therefore, the
court below even after holding that the arbitrator is
disempowered by the State Act to pass an award has dealt with
the findings rendered by it on merits and set aside some of
those. The court below delved on the correctness of the findings
on merits which in the backdrop of it's finding on lack of
jurisdiction of the arbitrator itself was an unwanted one. The
court below by proceeding to delve on the correctness of the
findings of the arbitrator on claims of the claimant, has acted as
if, the arbitrator has power to do so. Court below by such an
exercise has proved itself inconsistent in its own findings and
thereby has gone wrong.
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
14. There cannot be any dispute on the coming into force
of the State Act in the year 1998 and operation of it with effect
from 14.11.1997. Therefore, there is no scope for any doubt to
entertain that the State Act is prospective in operation. The
reference of disputes and differences among the parties before
the arbitrator and assumption of jurisdiction by it over those
being in the year 1995, the State Act received the assent of the
President on 14.11.1997, cannot have any application. The
arbitrator has rightly overruled the objection raised by the
respondents before it on it's lack of jurisdiction.
15. Now it is turn to delve on the jurisdiction of the court
below under Section 17 of the Act. Sections 14, 15 and 16 of the
Act refers respectively about the manner in which the award
passed by it shall be dealt with, the power of the court to modify
the award and remit the award. The provisions are extracted
hereunder for convenient reference:
"14. Award to be signed and filed.
(1) When the arbitrators or umpire have made their award, they
shall sign it and shall give notice in writing to the parties of the
making and signing thereof and of the amount of fees and
charges payable in respect of the arbitration and award.
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
(2) The arbitrators or umpire shall, at the request of any party to
the arbitration agreement or any person claiming under such
party or if so directed by the Court and upon payment of the fees
and charges due in respect of the arbitration and award and of
the costs and charges of filing the award, cause the award or a
signed copy of it, together with any depositions and documents
which may have been, taken and proved before them, to be filed
in Court, and the Court shall thereupon give notice to the parties
of the filing of the award.
(3) Where the arbitrators or umpire state a special case under
clause (b) of section 13, the Court, after giving notice to the
parties and hearing them, shall pronounce its opinion thereon and
such opinion shall be added to, and shall form part of, the award.
15. Power of Court to modify award. The Court may by order
modify or correct an award-
(a) where it appears that a part of, the award is upon a
matter not referred to arbitration and such part can be separated
from the other part and does not affect the decision on the matter
referred; or
(b) where the award is imperfect in form, or contains any
obvious error which can be amended without affecting such
decision; or
(c) where the award contains a clerical mistake or an error
arising from an accidental slip or omission.
16. Power to remit award.
(1) The Court may from time to time remit the award or any
matter referred to arbitration to the arbitrators or umpire for
reconsideration upon such terms as it thinks fit-
(a) where- the award has left undetermined any of the
matters referred to arbitration, or where it determines any matter
not referred to arbitration and such matter cannot be separated
without affecting the determination of the matters referred; or
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
(b) where the award is so indefinite as to be incapable of
execution; or
(c) where an objection to the legality of the award is
apparent upon the face of it.,
(2) Where an award is remitted under sub- section (1) the Court
shall fix the time within which the arbitrator or umpire shall
submit his decision to the Court:
Provided that any time so fixed may be extended by subsequent
order of the Court.
(3) An award remitted under sub- section (1) shall become void
on the failure of the arbitrator or umpire to reconsider it and
submit his decision within the time fixed."
16. Section 17 of the Act provides for the power of the
court on placement of the award before it to make it Rule of the
court or a decree.
Section 17 reads:
"17. Judgment in terms of award. Where the Court sees no cause
to remit the award or any of the matters referred to arbitration
for reconsideration or to set aside the award, the Court shall,
after the time for making an application to set aside the award
has expired, or such application having been made, after refusing
it, proceed to pronounce judgment according to the award, and
upon the judgment so pronounced a decree shall follow and no
appeal shall lie from such decree except on the ground that it is in
excess of, or not otherwise in accordance with, the award."
Under Section 17 of the Act on expiry of the time fixed for
applying for setting aside the award or on refusal of one such
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
application already made, the court shall proceed to pronounce a
judgment according to the award and upon pronouncement of it,
a decree shall follow and appeal shall not lie against such decree,
except on twin circumstances contemplated under Section 17
itself, i.e. when the judgment of the court is in excess of or not
otherwise in accordance with, the award. Therefore the court
wherein an award was filed it shall proceed to pronounce a
judgment and a decree shall follow such judgment.
17. Section 30 of the Act is also relevant as it provides for
the grounds for setting aside an award. It reads:
"30. Grounds for setting aside award. An award shall not be set
aside except on one or more of the following grounds, namely:-
(a) that an arbitrator or umpire has misconducted himself or the
proceedings
(b) that an award has been made after the issue of an order by
the Court superseding the arbitration or after arbitration
proceedings have become invalid under section 35;
(c) that an award has been improperly procured or is otherwise
invalid."
18. A Division Bench of this Court has held in Jose P.O. v.
State of Kerala [2016 (2) KHC 889] in a context where the award
passed by an arbitrator in respect of claim No.16 was accepted
and other claims were set aside, that finding of the Court cannot
be sustained in view of the fact that the disputes were expressly
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
referred to arbitration and it cannot be said that the decision on
such disputes by the arbitrator is beyond the scope of reference.
The dictum laid down is extracted hereunder :
"In view of the law laid down by the Apex Court in the
decision referred to above, the finding of the Court below that,
while awarding amounts under Claim Nos.4,11,13 and 15 the
arbitrator travelled beyond the terms of the agreement and
misconducted himself cannot be sustained. In view of the fact
that the disputes were expressly referred to arbitration, it cannot
be said that the decision on such disputes by the arbitrator is
beyond the scope of the reference. S.30 of the Arbitration Act,
1940, inter alia, provides that an award can be set aside on the
ground that an arbitrator had misconducted himself or the
proceedings, or that the award had been improperly procured or
is otherwise invalid. An error apparent on the face of the award,
is a ground for setting aside the award under S.30 or for remitting
the award to the Arbitrator under S.16(1) (c) of the Act. In an
application under S.30 of the Act, the Court has no jurisdiction to
investigate into the merits of the case or to reexamine the
documentary and oral evidence on the record for the purposes of
finding out whether or not the arbitrator has committed an error
of law. In such circumstances, the conclusion is irresistible that,
while setting aside the award passed by the arbitrator under
Claim Nos.4,11,13 and 15 on the ground that, while awarding
amounts under those heads the arbitrator travelled beyond the
terms of the agreement and misconducted himself, the Court
below has exceeded its jurisdiction under S.30 of the Act. In that
view of the matter, we find absolutely no grounds to sustain the
impugned judgment of the Court below to the extent of setting
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
aside the award passed by the arbitrator under Claim Nos.4,11,13
and 15. "
19. In Joseph Philip v. Varkey Mathai and others [1978
KHC 380], the sequence of events show that an application to
set aside an award was filed long after the expiry of the period of
limitation prescribed under Article 119 of Limitation Act, 1963.
i.e. 30 days from the date of service of the notice of filing of the
award and the court refused to set aside the award and
pronounced a judgment according to the terms of the award and
passed a decree in terms thereof. It was held by the Court :
"7. S.17 of the Act says that the court is bound to
pronounce judgment according to the award and pass a decree in
terms thereof after the time for making an application to set aside
the award has expired or an application having been made was
rejected by the court. If no application was made within the
period of 30 days as prescribed under Art.119 of the Limitation Act
and the delay was not condoned by the court in terms of S.5 of the
said Act, the court has to proceed to pronounce the judgment.
8. S.30 and 33 mention the grounds on which an award is
liable to be set aside and the application for setting aside the
award on any one of the grounds mentioned is specifically referred
to in S.33. If no application is made within the time stipulated as
aforesaid that is, within 30 days from the date of service of the
notice of the filing of the award, as provided under Art.119 of the
Limitation Act (and not under Art.137 as wrongly contended on
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
behalf of the appellant), the consequences mentioned under S.17
will immediately follow."
20. A Division Bench of this Court by judgment dated
09.07.2013 delivered in James Varghese and another v. State of
Kerala and others (O.P No.4206/1998 and companion matters)
has held the State Act to be beyond the legislative competence of
the Kerala State Legislature and as such held the same to be
unconstitutional. This Court has also held that the State Act had
the effect of annulling the awards of the arbitrators and
judgments and decrees passed by the Courts and therefore,
encroaches upon the judicial power of the State. Being
aggrieved thereby State of Kerala approached the Apex Court by
filing appeals, (The Secretary to Government of Kerala,
Irrigation Department and others v. James Varghese and others
Civil Appeal No.6258/2014 and connected appeals). The Apex
Court considered two important questions of law in the above
appeals with regard to the legislative competence of Kerala State
Legislature to enact the State Act and whether it encroaches
upon the judicial power of the State.
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
21. In Civil Appeal supra after elaborately discussing with
the scheme under Sections 15, 16 and 17 of the 1940 Act the
Apex Court has held as follows :
"We have, hereinabove, elaborately considered the
scheme under Sections 15, 16 and 17 of the 1940 Act. The
perusal of the said scheme would clearly reveal that before
making an award "Rule of Court by passing a judgment and
decree, the court is required to take into consideration
various factors, apply its mind and also exercise its discretion
judicially. We find that the aforesaid provisions have not
been considered in the case of G.C Kanungo (supra). The
perusal of the aforesaid provisions, as has been considered
by us hereinabove, would clearly show that the power
exercised by the court under Section 17 of the 1940 Act is a
judicial power. We are thereof of the view that the findings
in this respect as recorded by this Court in paragraphs 15 to
18 in the case of G.C Kanungo (supra) would be per incuriam
the provisions of the 1940 Act."
The Apex Court has also held in the case supra :
"That the High Court of Kerala is right in law in holding
that the State Act encroaches upon the judicial power of the
State and is therefore liable to be struck down as being
unconstitutional"
22. Therefore, this Court is not hesitant to hold that the
court below is erred and unjustified in setting aside the
arbitration awards on the ground that the State Act has cancelled
the arbitration clauses and thereby revoked the authority of
Arb. Appeal Nos. 12 & 21 of 2007
and Arb.Appeal No.6 of 2008
arbitrators to pass awards. The State Act was declared as
unconstitutional by the Apex Court in Civil Appeal referred to
Supra and therefore, the power of the arbitrator and validity of
the awards passed by him are restored.
In the result, the impugned orders passed by the court
below in OP(A) No.199/95, OP(A) No.200/95 and OP(A)
No.201/95 are set aside. All Original Petitions are remanded to
the court below for reconsideration in the backdrop of Sections
15, 16 and 17 of the Act and in case no grounds to modify the
award or remit it to the arbitrator are made out, to pass a
judgment only in terms of the award and also to draw a decree in
terms of it. The court below shall pass a decree within a period
of four months from the date on which a certified copy of this
judgment is received there.
Sd/-
MARY JOSEPH,
JUDGE.
ttb
