- (1.) Leave granted. Heard learned counsel for the parties. The Ahmedabad Municipal Corporation (AMC for short) decided to construct a bridge across the river Sabarmati. In that behalf AMC sought financial contribution from Ahmedabad Electricity Company (AEC), Oil & Natural Gas Commission (ONGC) and Gujarat State Road Transport Corporation (GSRTC). As the cost was estimated to be Rs.11 crores, it was agreed that AMC, AEC, ONGC and GSRTC will bear the cost in the ratio of Rs.4 crores, Rs.1 crore, Rs.2 crores and Rs.4 crores respectively. According to AMC, it was further agreed that in the event of the cost exceeding Rs.11 crores, the excess to the extent of Rs.1 crore would be borne by ONGC and AEC in the proportion of 2:1. AMC appointed AEC as its agent for construction of the bridge. The work was entrusted to the appellant for execution. The cost of construction turned out to be Rs.11,38,06,000/-. It is stated that the additional cost of Rs.38,06,000/- was borne by ONGC and AEC in the ratio of 2:1 as per the earlier understanding.
(2.) Thereafter, the contractor raised certain disputes in regard to its claims aggregating to Rs.1,33,36,200/-. The said disputes were referred to arbitration. AMC, AEC, ONGC and GSRTC were made respondents in the arbitration proceedings. The Arbitrator by award dated 15.6.1999, awarded a sum of Rs.20,14,860/- to the appellant contractor and directed that AMC and AEC shall pay the said amount with interest at the rate of 12% per annum from the date of award till date of realisation (in the manner set out in para 24 of the award). Feeling aggrieved by the award, AEC filed an application before the City Civil Court, Ahmedabad under Section 34 of the Arbitration and Conciliation Act, 1996 ('Act' for short). The City Civil Court by its judgment dated 15.9.2003 upheld the award directing the payment of Rs.20,14,860/- with interest at the rate of 12% per annum to the contractor. However, the trial court held that AMC was not liable to pay any amount. It held that AEC was liable to pay one-third of the award amount and ONGC was liable to pay two-third of the award amount. Consequently it directed AEC to pay RS.6,71,620/- plus interest and ONGC to pay Rs.13,43,240/- plus interest to the contractor.
(3.) Feeling aggrieved by the modification of the award, ONGC filed an appeal before the High Court of Gujarat. ONGC contended that having regard to the scope of Section 34 of the Act, the Court ought not to have shifted the liability from AMC to ONGC. On the other hand AMC supported the order of the trial court. The High Court by its judgment dated 27.9.2005 allowed the appeal. It held that the ONGC could not have been made liable to pay Rs.13,43,240/- with interest in modification of the award of the Arbitrator. The High Court was of the view that having regard to the nature of jurisdiction exercised under Section 34 of the Act, and as the provisions of Section 96 and Order 41 Rule 33 of CPC were inapplicable, the trial court could not have shifted the liability from AMC to ONGC. Therefore, the High Court set aside the decision of the trial court to the extent it held that ONGC was liable to pay Rs.13,43,240/- with interest.;