NEPA LIMITED Vs. SARDAR SANTOSH SINGH AJMANI

JUDGEMENT

(1.) THESE appeals have been preferred by the appellant under Section 37 (1) (b) of the Arbitration and Conciliation Act, 1996, against the order dated 10-9-2001 passed by learned Addl. District Judge, Burhanpur. By an order dated 22-1-1999, Additional District Judge, Burhanpur directed Nepa Limited, Nepanagar, (a Government of India undertaking) to appoint an Arbitrator in respect of dispute regarding unpaid price of bamboo transportation by the respondent contractor. Common question arises in these appeals.

(2.) THE facts are noticed from M. A. No. 1440 of 2001, (Nepa Limited, Nepanagar v. Jaswant Singh ). In terms of Clause 15 of the tender notice the Chairman-cum-Managing Director, Nepa Limited appointed Shri R. C. Tandon, Sr. Advocate, as Sole Arbitrator requesting him to commence the arbitration proceedings. The contractor filed a dispute claiming Rs. 6,12,902. 25 paise as unpaid price of bamboo transportation made during June to October, 1996 and further claimed interest @ 24% per annum upto 30-4-1999 amounting to Rs. 3,98,356. 85 paise, total Rs. 10,11,259. 10 paise in addition to future interest and costs. The Nepa Limited denied the claim submitting inter alia that there was no breach of Clause 5 (1) and (2) of the contract so that the arbitration Clause 15 was not attracted. There is no cause for arbitration. Transportation having been completed there was no occasion to refer the dispute to Arbitrator. Unpaid price of transportation charges is recoverable by civil suit. Nepa Nagar Limited has been declared a sick industry and the enquiry under Section 16/17, Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "sica"), were pending before the Board for Industrial and Financial Reconstruction (hereinafter referred to as "bifr") so that the arbitration proceedings can not be continued being barred under Section 22 of SICA. There was no stipulation to pay interest.

(3.) DURING the progress in proceedings on 1-11-1999, it was "admitted" between the parties that a balance of Rs. 5,71,181. 94 paise was outstanding against Nepa Limited. By an award dated 30-3-2000, the Arbitrator found inter alia that Clause 15 of the agreement providing for settlement of dispute by arbitration survives though the work had been completed. The Arbitrator has jurisdiction to make an award irrespective of fact that Nepa Limited is declared sick industry and enquiry under Section 16/17 of SICA were pending. The contractor is not entitled to benefit of the Interest Act, 1978. The contractor is entitled to interest for preference period under Section 34 of the Code of Civil Procedure. Interest @ 6% per annum from 1-1-1997 till making of the award was awarded. It was held that the Arbitrator has no power to award future interest.