Decided on May 12,1967

Union Of Indiarepresenting Appellant
J P Sharma Sons Respondents


KAN SINGH, J. - (1.) THIS is an appeal under section 39 of the Arbitration Act and is directed against the judgment and decree of the learned District Judge, Bikaner, dated 28 -10 -1963, whereby the learned Judge awarded a decree of Rs. 4,26,528.90 paise in favour of the respondent and against the appellant on the basis of an award given by Shri S.P. Lal Deputy General Manager, Northern Railway on 12 -2 -1963 consequent to the dismissal of the objections filed by the appellant against the validity of the award The respondent has also filed a cross -objection and has prayed that interest be awarded on the amount decreed by the District Judge from the date of the decree till the realisation of the decretal amount. The main question that arises for consideration is about the validity of the award and we may briefly state the relevant facts as follows:
(2.) THE respondent firm was engaged as contractor by the Northern Railway for the purpose of performing all the work of porterage of goods at the various railway stations and goods -sheds falling in Zone No. 2 of the Bikaner Division of the Northern Railway. The terms and conditions of the contract were contained in an indenture dated 3 -4 -1957. The agreement came into force from 1 -4 -1957 and was terminable on 31 -3 -1960. There were two schedules A and B appended to the agreement which provided for the rates payable to the plaintiff -respondent for the various jobs to be done by it. According to the schedules the remuneration of the contractor was to be on the basis of per thousand maunds of goods handled or per vehicle or per man hour according to the nature of the work. It was also agreed between the parties that all other handling work not specified in the agreement was to be performed by the contractor at the rates to be mutually agreed upon by the railway administration and the contractor. The procedure for payment to the contractor was that he was to prepare and submit monthly bills on the basis of the goods handled during the previous month and the actual job done was to be certified by the Station Masters concerned on submission of the bills to the Divisional Superintendent. The Accounts Office was to certify the bills after a checking and payment was ordinarily to be made within six weeks of the submission of the bills. It was, however, laid down that pending final check from the several station -returns, the contractor was to be provisionally paid to the extent of 90 per cent of the amount claimed in the bills. The grievance of the contractor was that in disregard of the terms of the contract it was not paid an amount of Rs. 36,870 38 paise for the period from April, 1957 to August, 1958. It also felt aggrieved of certain unauthorised deductions made by the railway administration for the period from January, 1958 to September, 1958 to the tune of Rs. 1,24,715.44 paise. Then, according to it for the period from May, 1957 to December, 1958, certain bills for repacking stations and road side stations aggregating to Rupees 1,01,222.03 paise were not paid to it. Then it had a further grievance that the Station Masters had not submitted about 125 bills for the period from March, 1958 to January, 1959 to the tune of Rs. 40.000. The plaintiff respondent, according to it, made several demands to the railway administration for settlement of his claims, but it was not heard. Consequently after serving a notice under Section 80 of the Code of Civil Procedure the firm filed a suit against the Union of India for a sum of Rs. 3,17,728.81 paise in the Court of the District Judge, Bikaner on 21 -9 -59. However, the defendant -appellant applied under Section 34 of the Arbitration Act for staying the suit as, according to the Union of India, clause 33 of the agreement provided for arbitration in the matter of all disputes between the Union of India and the contractor. We will have occasion to refer to the arbitral clause a little later. To continue the narration, the District Judge accepted this application and stayed the suit leaving the parties free to get the matter adjudicated upon by the arbitrator provided in the agreement. Against this decision the respondent came in appeal to this Court but eventually it withdrew the appeal and agreed to go in for arbitration. The General Manager, Northern Railway by his order dated 21 -9 -62 appointed Shri S. P. Lal, Senior Deputy General Manager, Northern Railway to act as Arbitrator in the dispute between the railway administration and the contractor as owing to his previous heavy engagements and pressure of official work it was not possible for him to act as an arbitrator. The order of the General Manager is available at page 411 of the paper book. Accordingly by his letter dated 29 -8 -62 (available at page 420 of the paper book) Shri S, P. Lal called upon both the parties to submit their respective claim petitions giving full details of the claim together with all relevant documents, He also directed that the respondent should submit a copy of the claim petition directly to the Chief Commercial Superintendent who was then to reply to the claim petition para by para Accordingly the respondent filed its claim petition on 10 -9 -62 (available at page 423 of the paper book). The railway administration submitted its reply and also made 3 counter claim. By his order dated 21 -8 -62 (available at page 521 of the paper book), after hearing both the parties, the arbitrator settled the procedure to be followed by him. The arbitrator directed that the railway administration would frame its reply to the points raised in the petition filed by the respondent and then after the reply of the railway was received, a date shall be fixed on which the parties would argue the different issues raised point by point so that the issues may be clear. The arbitrator was to either announce his judgment or reserve it as the circumstances on each point might demand. The copy of the order was served on both the parties. On 5 -12 -62 it was contended by the respondent before the arbitrator that he should take up the counter claim put in by the railway administration first after listening the arguments of both the parties. The arbitrator recorded the following minutes: 'The issue raised by the applicant is that the Railway should make out a complete claim, deduct from it all the amounts they have already received and give a net balance of the amount due from the contractors to the Railway. The Railway's contention is that the calculations of the amount would be done after some primary decisions are taken on the various issues involved and, therefore, they appear to maintain that first of all those issues should be decided. After those issues are decided, then they will work out the actual amounts on the basis of the decisions given on the various issues and the balance sheets will be struck on that basis. Considering the arguments of both the parties it has been decided to take up the issues involved in this case before arriving at the amounts payable in respect of each claim. Parties have been informed accordingly,Parties are allowed to strike out the issues iointly and they should meet me again after lunch in case they agree on the same.' It appears that the parties came forward with a list of issues and then the arbitrator incorporated the 10 issues in the following extract of the proceedings: 'The parties have come forward with a list of issues which they have referred for decision by the Court, The said issues are reproduced below: (1) Whether the rate in respect of handling of TR/CR Vans under item 18 of the Rate Schedule 'A' is applicable at all the stations, if not, at what stations? (2) Whether the petitioner is entitled to payment for handling of TR/CR Vans, both on inward as well as outward basis, at Repacking Stations as per item 18 of the Rate Schedule, if not, on what basis? (3) Whether the petitioner is entitled to special goods rate as per item 5 of the Rate Schedule 'A' in respect of TR/CR Vans containing special goods. If not, what rate is applicable? (4) Whether loose wool and loose cotton in boras can be classified as special goods? (5) Whether the rate in items 3 and 4 of Schedule A1 in respect of F. P. Cotton bales is applicable to F. P. Wool bales. If not, what rate is applicable? (6) Who is responsible for submission and preparation of bills in respect of the handling work at the stations? (7) Whether the contract has been wrongly terminated by the Railway Administration and if so, is the petitioner entitled to renewal of the contract? (8) Whether the petitioner is entitled to the interest as claimed? (9) To what amount, if any, the Railway Administration is entitled to recover from the petitioner? (10) Relief.' Then the arbitrator took up issues No. 1 for consideration and he passed the following order after hearing both the parties: 'My orders, therefore, are that handling of goods is known to all people dealing with the railway in the form of handling of good either the Officer in -charge of the operation or Contractors and mode of payment for such operations is that which is given in the Railway's interpretation. I, therefore, order that for dealing with the payment of CR/TR Vans, if at a station goods are unloaded or loaded, in such vans, the payment should be made on the maundage basis as given in items 1 to 5 of the Schedule 'A', while if the contents of CR/TR Vans are sorted out at any station and reloaded after sorting into one or more CR/TR Vans so that consignments for one destination or direction are put together, they should be paid for at the van rates i.e. item 18 of the Schedule 'A'.' Earlier to this, while recording the arguments he noted that the parties had accepted the interpretation that the arbitrator had given. Then the arbitrator noted the arguments of the parties regarding each issue and he also noted in the proceedings whatever concessions had been made by the parties but he did not give his decision on any issue. The observations that the arbitrator had made from time to time are also contained in the proceedings. After arguments had been heard issuewise, the arbitrator by his order dated 19 -1 -63 (available at page 661 of the paper book) called upon both the parties to furnish factual information in detail after carrying out a joint check of the actual work done during the period of the contract on Bikaner Division. The information was to be given month -by -month and broken up under certain major heads indicated in the letter. In pursuance of this letter both the parties submitted a joint statement which is available at page 668 of the paper book. Against the several entries the parties gave their own remarks where they differed. On the basis of the joint statement furnished by the parties the arbitrator prepared a summary of the joint statement and found that the net amount claimed by the contractor was Rupees 5,90,886.49 paise and the arbitrator allowed Rs. 4.26.828 90 paise disallowing the remaining amount On 12 -2 -63 the arbitrator pronounced his award which is available at page 673 of the paper book and is in the following terms: 'In the matter of Arbitration between M/s. J. P. Sharma and Sons, Handling Contractors, Sri Ganganagar and the Union of India represented through Northern Railway, regarding Handling Contract on Bikaner Division in respect of contract executed by the parties in respect thereof on 3rd April, 1957. Whereas the said disputes and differences were referred to me, S. P. Lal, Senior Deputy General Manager, Northern Railway, Baroda House New Delhi and whereas, the said disputes and differences were contained to the statement* of facts and counter -state - ments produced before me during the hearing. I, S. P. Lal, having entered into the reference and having duly considered the said statements of facts before me and having heard in my office on 21 -9 -62, 5 -12 -62. 21 -12 -62,22 -12 -62 and 8 -1 -63 and duly considered all the arguments and having gone through all the material and papers. I hereby give my award as under: I award that the claimant be paid a total amount of Rs, 4,26,828.90 paise (rupees four lacs twenty six thousand eight hundred and twenty eight and ninety paise only) by the Railway Administration in full and final settlement of all the claims of the parties including claim for parcel traffic, miscellaneous services and all other types of services rendered to each other. The parties will bear their respective costs. The stamp charges amounting to Rs. 75 shall be borne by claimant. Honorarium for arbitration, amounting to Rs, 135 for 4 days (of more than 2 hours duration) and 1 day (of less than 2 hours) shall be payable by the Railway Administration to me and clerkage due to the Stenographer amounting to Rs 45 shall be paid by the claimant. New Delhi. Dated 12th February, 1963. Sd/ - S. P. Lal, 12 -2 -62 ARBITRATOR '
(3.) THIS award was filed in the court of the learned District Judge. Bikaner by the arbitrator on 25 -2 -63. The Union of India filed objections against this award under Section 30 of the Arbitration Act on 28 -3 -63. It was contended that the award was bad as the arbitrator had committed misconduct in deciding the case. It was urged that the arbitrator did not apply his mind in examining the counterclaim of the railway administration, that he did not decide the matter on each issue, that the award was very vague as it did not show what the dispute was and what was the judgment of the arbitrator about the dispute, that no evidence had been taken by the arbitrator, that the arbitrator had gone beyond the terms of reference by including claims for parcel and other miscellaneous services, that the arbitrator had no jurisdiction to award an amount of Rs. 4,26,828.90 paise when in the suit the plaintiff had claimed only Rs 3,17,728.81 paise, that the arbitrator had not taken into account the sums already paid to the contractor, that the amount awarded by the arbitrator was not correct, and that the claim filed by the respondent contained extraneous matters which had not been referred to the arbitrator. The objections were contested by the respondent. The District Judge framed the following issues on 12 -7 -63: '(1) Whether the award is vague and is liable to be set aside? Burden on the defendant. (2) Whether the arbitrator has gone beyond the terms of reference and has otherwise misconducted the proceedings? If so, what shall be its effect? Burden on the defendant. (3) Whether the arbitrator had no jurisdiction to give award for the amount exceeding the amount of the suit filed by the plaintiff and if so, what will be its effect? Burden on the defendant. (4) Relief';

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