Decided on October 17,2008



- (1.)THE instant miscellaneous appeal under Section 39 of the arbitration Act, 1940 (for short `the Act, 1940') is directed against the order dated 25-2-1994 passed in Misc. Civil Suit no. 1-A/91 whereby learned District Judge has rejected the application under Section 30- (a) and (c) of the Act, 1940 of the appellant and allowing the application under Section 14 (2) of the Act has passed the judgment and decree in terms of the award dated 28th April, 1989 by the sole arbitrator.
(2.)UNDISPUTED facts are that the respondent was awarded contract for "construction of Bunker and Additional Crusher for Manikpur Colliery". The value of the contract was rs. 6,48,135/- and the period for completion of the contract was 9 months. However, the aforesaid period was extended from time to time with the consent of both the parties up to 30th april, 1989. The respondent raised a dispute in the year 1982 in respect of certain extra work executed by the contractor, which were not mentioned in the original agreement. The dispute between the parties was regarding the rate at which work of dewatering executed by the contractor is to be paid. The Chairman-cum-Managing Director of the appellant vide his memo dated 15th/19th December, 1985 appointed Shri K. Vijayan, Chief Engineer (Eandm), WCL, bilaspur, as sole arbitrator for finalization of the rate for extra item of dewatering work executed in the aforesaid work. Learned Sole Arbitrator vide his award dated 20th April, 1989, finalized rate for extra item of dewatering work executed by respondent @ Rs. 3. 50/- per kilo litre; the work of dewatering was quantified at 2,23,757. 11 kilo litre being undisputed quantities recorded in the Measurement Book. It was also directed that amount payable to the respondent shall carry interest @ 12% per annum from the date of award till date of payment or date of decree whichever is earlier.
(3.)THE respondent filed an application under Section 14 (2)of the Act, 1940 and prayed for filing of the award. The appellant filed an objection under Section 30 (a) and (c) of the Act, 1940 for setting aside/remission of the award stating therein that rate for dewatering has been arbitrarily fixed at rs. 3. 50 per kilo litre without any basis. The contractor himself accepted running bills for the extra work @ 80 paise per kilo litre without any objection and, therefore, the arbitrator was not justified in awarding extra rate. During the arbitration proceedings, the plaintiff had asked for production of GMSOR 1975 which contains rate of Rs. 1. 60 per kilo litre for such work; the plaintiff had himself claimed dewatering @ Rs. 3/- per kilo litre before C. M. D. in his claim, which was challenged by the objector and in the circumstances, the dispute was referred to the Arbitrator for adjudication of the rate for extra work. However, the Arbitrator had exceeded terms of reference and did not consider material documents available on record and he is guilty of technical/judicial misconduct in conducting proceedings; the Arbitrator was referred the dispute for finalization of the rate for extra item of dewatering work executed in the construction of Bunker and crusher at Manikpur Colliery by the respondent. However, he exceeded his jurisdiction by allowing interest @ 12% per annum from the date of award though he was not competent to award interest.

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