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PETITIONER: THE HINDUSTAN VIDYUT PRODUCTS LTD.

       Vs.

RESPONDENT: STATE OF RAJASTHAN & ORS.

DATE OF JUDGMENT:       24/03/1999

BENCH: S.R.Babu, S.N.Phukan

JUDGMENT:

RAJENDRA BABU, J.  :

     The  District  Judge,  Jaipur City, appointed  a  sole arbitrator  to adjudicate upon the disputes that had  arisen between  the  parties  to  these appeals in  relation  to  a transaction by which the appellant had agreed to supply 3290 k.ms.   of  PANTHER  Conductor  to  the  respondent.   The appellant  filed  a detailed statement of claims and we  may summarise  the  same  as  follows :-  i)  Outstanding  bills 5,21,143.30

     ii) Steel price variation 13,23,661.93

     iii) Amount of Bank Guarantee 15,67,278.54

     ------------------------ 34,12,023.77

     LESS

     i) Raw Material - 11,38,800.48

     ii) Cash advance - 3,29,348.83

     - 14,68,149.31

     -----------------------        Rs.        19,68,149.31 ----------------------

     The  respondents also made claims which are as follows :-

     i) Damages on account of 28,65,555.17 risk purchase

     ii) Balance 20% cash advance 3,29,581.00

     iii) Interest @ 18% on 1,14,030.50 Rs.  3,29,581.00

     iv) Interest charges @ 18% 3,15,134.23 on 11,28,018

     v) Recovery on account of 3,93,321.35 excess payment @ 144/-  on  2652  km.   -----------------------  40,51,433.08 -----------------------

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     The respondent further stated that the appellant would be  given adjustment on return of the following raw material failing  which  should  be  ordered  to pay  a  sum  of  Rs. 47,27,771.20  :- i) Aluminium steel in the form of 3/8 size Aluminium wire rods 288.957 MT

     ii) H.T.G.  Steel wire 3.0 mm size 186.400 MT

     The  arbitrator  awarded the claims of the parties  in the  following terms :- Claim of claimant - petitioner Claim No.  Amount awarded

     1) 5,21,143.30 3,29,806.89

     2) 13,23,661.93 Nil

     3) 6,99,816.20 Nil

     4) 10,00,000.00 (damages) Nil

     Claim of Respondent Amount claimed Amount awarded

     1) 3,29,581.00 3,29,348.83

     2) 1,14,030.00 Nil

     3) 3,93,321.35 Nil

     Damages  for  the  purchase of 478 km  from  market  - 33,93,800-40

     Being the contract price of 478 km.  - 19,39,932-60

     --------------------   Balance  payable   by   Company 14,53,932.60  --------------------  Finally, the  arbitrator gave the following amount :-

     Company Respondent

     3,29,806.89 3,29,348.83

     14,53,932.60 -------------------- 17,82,781.43

     (-)  3,29,806.89  -------------------- Net payable  by Company  14,53,474.54  -------------------  It  was  further directed that since the Government has already recovered Rs. 15,67,278.54,  therefore, after adjusting Rs.   14,53,474.54 the  Company  is  entitled to receive Rs.   1,13,804/-  plus interest  @ 16%.  A letter was sent by the advocate for  the respondent  on the date when the award was made known to the parties  pointing  out that certain amount of adjusting  the cost  of raw material had not been awarded in favour of  the respondent and it is stated therein that this apparent error should   be   corrected  in   the  award.   The   arbitrator acknowledged  the objection having been raised and a  letter being  sent  to  him but he expressed  his  helplessness  to consider the same as after pronouncement of the award he had become functus officio.  The respondent filed an application in  Suit No.  122 of 1979 before the District Judge,  Jaipur city,  under Sections 15 and 16 of the Arbitration Act, 1940 for  correcting  the award.  The learned Judge rejected  the claim  made by the respondent and made the award the rule of the  court.   Against that order an appeal was filed in  the High  Court  and  the  High Court  allowed  the  appeal  and

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modified  the award directing the appellant to pay a further sum  of Rs.  11,38,800.48 to the company as the cost of  raw material  which  is  stated  to have been  admitted  by  the company  in  the statement of claim.  Hence this  appeal  by special leave.

     After  referring  to  the decisions of this  Court  in Hindustan  Construction Company Limited v.  State of J &  K, 1992(4)  SCC 217;  State of Bihar v.  Hanuman Mal Jain, 1997 (11)  SCC  40;  M.C.D.  v.  Jagannath Ashok Kumar, 1987  (4) SCC   497  and  Naraindar   Lilaram  Adnani  v.   Narsingdas Naraindas  Adnani  &  Ors., 1995 Supp.  (1) SCC 312,  it  is submitted  that  the  finding  of the High  Court  that  the arbitrator has failed by over-sight to consider the claim of the  respondent  for  a  sum of  Rs.   11,38,800.48  is  not permissible at all and that the award needed modification is not correct and the scope for interference in such matter is very  much limited.  The learned counsel for the respondents urged that the High Court had correctly given effect to what was  obvious from the pleadings and no dispute regarding the same  had  arisen for adjudication.  The arbitrator set  out the  claims  of both the parties and made an  award  without setting  out  reasons for making such an award.  One of  the claims  made  by  the appellant has been referred to  by  us earlier  in  the course of this order which excludes one  of the  amounts,  i.e., Rs.  11,38,800.48 thus making  a  claim after  deducting  this amount for a sum of Rs.   9,68,149.31 and  the  respondents  had  claimed   return  of  left  over quantities  of aluminium products as its equivalent in money is  a  sum of Rs.  47,27,771.20.  The arbitrator  considered this  aspect  of matter as follows :- On merits I  hold  an consideration  of  the  entire evidence  including  accounts relating to bills sent by the company to the Government that the  company  refused to supply the remaining 478  kms.   of conducts   in  December  1973  and   this  refusal  had   no justification.   Thus  the  company   committed  breach   of contract  in  December  1973.  I compute  damages  for  this breach  in December 1973 at Rs.  33,93,800.  The  Government in  its statement of claim and the learned counsel for  both the  parties during arguments stated that Rs.   19,39,867.40 should  be  deducted  as  contract price  of  478  kms.   of conductor  from  Rs.  33,93,800 to arrive at the  amount  of damages  payable by the company.  Thus the company is liable to pay Rs.  14,53,932.60 as damage to the Government.

     As  a  result  of the above  mentioned  decisions  the company is entitled to receive Rs.  3,29,806.89 while it has to  pay  Rs.   3,29,348.83  plus  Rs.   14,53,932.60  to  he Government.

     Thus  the  Government  is   entitled  to  recover  Rs. 14,53,474.54 from the company.

     However,  the Government on 15.11.75 had recovered Rs. 15,67,278.54  from  the company by encashing bank  guarantee under  orders  of  the Supreme Court.   Therefore,  now  the Government  has  to refund Rs.  1,13,804/- to  the  company. The Supreme Court in its order had also directed that if the Government  has to refund any sum from the amount  recovered under  its  order, then the Government will refund the  same with  interest  at  the rate that the company  paid  to  its Bankers.   The  Dena Bank, New Delhi, has certified that  it has been charging interest at the rate of 16% per annum from the  company since April 1975.  The correctness of this rate has  not  been  challenged  on  behalf  of  the  Government.

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Therefore,  the  Government is liable to pay interest @  16% per  annum  from  15.11.75  on  Rs.   1,13,804.00  till  its payment.

     No other point was argued before us.

     Accordingly  I  hold after final adjustment  that  the company is entitled to recover as refund from the Government Rs.  1,13,804.00 with interest @ 16% per annum from 15.11.75 till realisation.

     The  Government  claims return of certain  amount  of aluminium  and  steel  wire   quantities  specified  in  its statement  of  claims.   Its claim is  that  the  Government imported  aluminium  and  purchase steel  wire  through  the company exclusively for manufacture of 3130 kms.  of Panthar conductor.   The  company  failed  to supply  478  kms.   of Panthan  conductor  and the said material to that extent  is with  the  company.  Accordingly, the company is  liable  to return  the  left over quantities or to pay  its  equivalent amounting  to Rs.  47,27,771.20.  I fail to see any force in this claim and I reject it.

     When  the claim either for return of the raw  material or for its price had been rejected, we fail to see as to how the respondent becomes entitled for adjustment of the amount regarding  raw material supplied and it cannot be termed  as an  inadvertent  error of a clerical or arithmetical  nature which  can be corrected under Section 15 of the  Arbitration Act.   The  High  Court  has exceeded  its  jurisdiction  in interfering with the award particularly when the award was a non-  speaking award and the claims made by the parties have been  borne  in mind by the arbitrator in passing the  award and  the arbitrator had not omitted any claim made by any of the  parties.   Therefore, we think the High Court  was  not justified  in interfering with the award which was made  the rule of the court by the District Judge, Jaipur city.

     We  allow this appeal, set aside the order made by the High  Court  allowing  the  claim of  Rs.   11,38,800.48  on account  of raw material supplied by the respondent.  If any amount  has  been paid by the appellant or deposited in  the court  pursuant  to an interim order made by this Court  the same  shall  be refunded and the security furnished  thereto shall stand discharged.