CHIEF ENGINEER PANCHAYAT RAJ DEPT Vs. B BALAIAH

JUDGEMENT

(1.) THE twin cases have converged questions of importance, the elaboration thereof needs the essential facts touching them to be caged in a short compass. C M A. 768/84 arose against 0P. 141/83 to set aside the award under Section 30 of the Arbitration Act, 1940, (for short, "the Act',) and C. R. P. No. 2062/84 arose from 0 P No. 151 /83 to pass a decree under Section 17 of the Act in terms of the award dated October 7, 1983, in which the sole arbitrator awarded a 'consolidated sum of Rs. 19, 76,000/-. THE Court below dismissed the 0 P. and decreed the suit, making the award, the rule of the Court. THE dissatisfied State, through its organ, is the appellant and petitioner respectively.

(2.) ONE, Ch. Ramalinga Reddy, entered into an agreement dated January 4, 1980, with the Governor of Andhra Pradesh through his subordinate, for the construction of an earthen dam and summer storage tank near Darsi in Prakasam District, pursuant to the tenders called for. Though the initial contract was for a sum of Rs. 60, 41, 868-80 Ps. it was increased to Rs. 70,70,000/-. The execution of the work was to be completed by July 31, 1981, but spread beyond the contracted period. By letter dated June 22, 1982, the respondent requested the concerned to relieve him from contractual obligations under the State so as to enable him to contest the elections as a Member of the Legislative Council. By letter dated July 12, 1982, he undertook to bear the cost of unfinished work and also not to lay any future claims in respect of the contract, pursuant to which final payment was made on September 4,1982. The total sum paid to him was Rs. 70,00,000/-. It is not clear from the record as to what was the extent of and the amount expended towards the unfinished work and whether the respondent abode by the undertaking. But the contractor, through his General Power of Attorneythe respondent, subsequently initiated action claiming Rs, 53. 51 lakhs due and was entitled to be paid and issued notice under Section 8 of the Act for adjudication in terms of Clause73of the M D S S. (Madras Detailed Standard Specifications), by a sole arbitrator. The appellant resists the claim as well as the action, but ultimately, in C R P No. 1945/83, by judgment dated August 10, 1983, this Court upheld the action appointing the sole arbitrator, leaving open the question for the arbitrator to decide whether the respondent having given up the contract and agreed not to lay any future claim; could claim the amounts.

(3.) THE learned Advocate General raised three-fold contentions. It is a consolidated award comprising of 12 claims; Claim No. 9 pertains to refilling of cut off trenches and formation of bund on the right bank in a sum of Rs. 8,450/-and Claim No. 11 pertains to escalation charges in the cost of construction in a sum of Rs. 21,88.000/- Though the respondent laid Claim No. 9, ultimately expressly withdrew the same in his written arguments. THEre is no covenant in the contract to pay the escalation charges. This was resisted by the State. He has no jurisdiction to pass an award in respect of those two claims nor to take them into consideration but awarded consolidated sum in respect of all the twelve claims. THErefore the arbitrator committed legal misconduct in awarding those two claims. Since the award is inseparable the entire award is to be set aside. He relied on M/s. Basant Lal v. Bansilal (1) AIR 1961 SC 823 Union of India v. J N Misra (2) AIR 1970 SC 753 and M. Chelam- mayya v. Venkataratnam (3) AIR 1972 SC1121 Russel on Arbitration, 20th Edition, page 349 and Law of Arbitration, by R. S. Bachawat, 1983 Edition, page 87. He alternatively contended that with regard to the escalation charges, in the counter statement of the Government, it is expressly pleaded to call for the Income-tax returns of the respondent to establish as to what is the actual amount he incurred towards the escalation charges. THE arbitrator did not summon those documents though expressly requested; therefore he committed misconduct. He relied on Government of A. P. vs. M/s. Durga Rama Prasad Engineers and Contractors (4) 1975 (1) APLJ 45 (NRC) Union of India v. M/s. Mehta Teja Singh and Co. (5) AIR 1983 Delhi 297. and K. P. Poulose v. State of Kerala (6) AIR 1875 SC 1259 He further contended that the payment of interest at 12% from the date of award is clearly illegal in view of Section 34 of the Code of Civil Procedure which provides that interest shall be decreed only at the rate of 6%. He also further contended that the cross-objections of the respondent are beyond thirty days from the date of receipt of the notice. the respondent filed a Caveat under Sec. 148-A C P C. THE Court gave notice thereof and the respondent appeared through counsel at the time of admission on July 11, 1984 and opposed for stay. THErefore, the cross-objections have to be filed within 30 days from that date, but they were filed beyond limitation i.e. after 65 days. THErefore the cross- objections are not maintainable and the delay cannot be condoned. Though the right of the respondent to lay claim after giving an unconditional undertaking not to lay any claim was pursued unsuccessfully in the lower Court, it is not argued before us. THE need to go into that question though there is some substance in it, is obviated.