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CASE NO.: Appeal (civil) 5281  of  1996

PETITIONER: T.P. GEORGE

       Vs.

RESPONDENT: STATE OF KERALA & ANR.

DATE OF JUDGMENT:       06/02/2001

BENCH: S. Rajendra Babu & S.N. Variava.

JUDGMENT:

S. N. VARIAVA, J. L...I...T.......T.......T.......T.......T.......T.......T..J

   This  Appeal is against a Judgment dated 15th  February, 1989  wherein the appeal filed by the Respondent was  partly allowed.

   Briefly  stated the facts are as follows:  The Appellant was  awarded  a  contract for construction of a  Main  Canal Driving  Tunnel of the Kallada Irrigation Project.  The work was  to  be  completed by 4th March, 1983.   A  Supplemental Agreement  dated 20th October, 1983 extending the period  of completion  was entered into.  As disputes arose between the parties  the  same were referred to a sole  Arbitrator,  who gave a reasoned Award dated 12th August, 1985.

   The Respondent filed objections to the Award, which were rejected  by a judgment dated 31st March, 1986 and the Award was made a rule of Court.

   In  the  Appeal,  before the High Court,  challenge  was restricted  to  Award  of claims under Items  12(i),  12(j), 12(k)  and award of interest from date of Award.  The Appeal filed  by the Respondent was partly allowed by the  impugned Judgment  dated  15th February, 1989.  By this Judgment  the Award  of claims under items 12(i) and 12(k) were set aside. Award  of  claim under item 12(j) was upheld.   Further  the award  of  interest was also set aside.  The only ground  on which  the  claims under Item 12(i) and 12(k) have been  set aside  are that the Arbitrator could not overlook the  terms of  the  contract  or  agreement.   It  is  held  that   the Arbitrator  could not have awarded these claims as they were contrary  to the Supplemental Agreement dated 20th  October, 1983.

   Mr.   Tripurary  Ray, pointed out that claim 12 (i)  was for loss in connection with the price escalation and that it was  under clause 32 of the original agreement.  He  pointed out  that  claim  12(k)  was  for  revision  of  rates.   He submitted  that  under  the original contract the  time  for completion  was fixed as 4th March, 1983.  He submitted that

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due  to  fault  of  the Respondents the work  could  not  be completed by that time.  He submitted that the Appellant was forced  to  execute the Supplemental Agreement in a form  as dictated by the Respondent as otherwise the Respondents were not  clearing  the pending bills of the Appellant.  He  drew attention of this Court to a letter dated 6th October, 1983, addressed  by  the Appellant to the Superintending  Engineer wherein  the Appellant, before execution of the Supplemental Agreement,  has recorded that he was protesting execution of the  Supplemental  Agreement and that he would be  executing the  Supplemental Agreement without prejudice to his claims. He  submitted  that even before writing of this  letter  the Appellant  had already, by a letter dated 5th October  1983, made his claims.  He pointed out that after the Supplemental Agreement   dated  20th  October,   1983  was  executed  the Appellant addressed another letter dated 24th November, 1983 to  the  Chief  Engineer,   stating  that  the  Supplemental Agreement   was  got  executed   under  coercion  and  undue influence  and that the same was executed without  prejudice to his claims.

   Mr.   Tripurary Ray submitted that one of the  questions before   the  Arbitrator  was   whether  this   Supplemental Agreement was binding on the Appellant and/or whether he had been  forced  to  sign  the  Agreement  and/or  whether  the Appellant was entitled to maintain his claims in view of the Supplemental  Agreement.  He pointed out that after  hearing parties  and considering the submissions of the  Respondents the  Arbitrator  had  by  a reasoned  Award  sanctioned  the claims.  He pointed out that in the Award the Arbitrator had held  that  the  delay  was  not due to  the  fault  of  the Appellant  and  that  the  Supplemental  Agreement  was  got executed  from  the  Appellant.   He pointed  out  that  the Arbitrator  had  held  that the Supplemental  Agreement  was without prejudice to the claims which had already been made. The  Arbitrator held that the Supplemental Agreement did not debar  the Appellant from making or maintaining his  claims. Mr.   Tripurary Ray submitted that this was a possible  view of  the matter.  He submitted that the Court should be  slow to interfere merely because another view was possible.

   Mr.   G.  Prakash supported the impugned judgment on the ground  that  once the Appellant executed  the  Supplemental Agreement  he could not make any claims.  He submitted  that the  Supplemental Agreement provided that such claims  could not  be made.  He submitted that the Supplemental  Agreement was  binding  on the Appellant.  He submitted that the  High Court  was  right  in  holding   that  the  Arbitrator   had misconducted   himself   by  awarding    contrary   to   the Supplemental Agreement.

   We  have considered the rival submissions.  It is to  be seen  that the question, whether the Supplemental  Agreement dated  20th  October,  1983   debarred  the  Appellant  from pursuing  his  claims,  was before the Arbitrator.   Such  a question  having been referred to the Arbitrator the view of the  Arbitrator  would  be  binding if it is  one  which  is possible.   The  Arbitrator has taken note of the  Appellant letters  dated 6th October, 1983 and 24th November, 1983 and come  to  a conclusion that the Supplemental  Agreement  had been  got  executed and that the same was  executed  without prejudice  to the claims which had already been made.   This is a possible view.

   We have seen the impugned judgment delivered by the High

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Court.   The High Court has not at all considered the letter dated  6th  October, 1983 and 24th November, 1983 nor  dealt with  the  question  as to whether or not  the  Supplemental Agreement  was  got executed.  The High Court has  not  even considered  the effect of the Supplemental Agreement  having been  executed  without  prejudice to the claims  which  had already  been  made.  Even if the High Court had  considered these  aspects  it could not have substituted its views  for those  of  the Arbitrator as it could not be said  that  the view  taken  by the Arbitrator is unreasonable or one  which cannot  be arrived at by a reasonable person.  In this  view of  the matter the impugned Judgment cannot be sustained and is set aside in respect of claims under items 12(i) and (k).

   The next question is whether the High Court was right in setting aside the award of the interest from the date of the Award.   This Court has held in the case of Jagdish Rao  and Brothers  vs.  Union of India reported in 1999 (1) Arb.   LR 696,  that the award of interest ought to be granted in  all cases  when  there  is a decree of money  unless  there  are strong  reasons  to decline the same.  In the case  of  M/s. Jagdish  Rai & Brothers vs.  Union of India, reported in  JT 1999  (2) S.C.  268, this Court has held that there are four stages  of  grant of interest, viz.  (1) from the  stage  of accrual  of cause of action till filling of the  arbitration proceedings,  (2) during pendency of the proceedings  before arbitrator,  (3)  future  interest arising between  date  of award  and date of the decree and (4) interest arising  from date  of  decree  till realisation of award.  The  power  of Court to grant interest from date of decree is not in doubt. In  the case of Hindustan Construction Co.  Ltd.  v.   State of  Jammu  and Kashmir reported in AIR 1992 S.C.  2192  this Court  has  held that the Arbitrator is competent  to  award interest from the date of the Award.  This Court has held in the  case of Secretary Irrigation Department, Government  of Orissa  and ors.  vs.  G.C.  Roy reported in 1992 (1) S.C.C. 508,  that  the  Arbitrator  has  power  to  grant  interest pendente  lite.  Recently in the case of Executive Engineer, Dhenkanal  Minor Irrigation Division, Orissa, etc.  etc.  v. N.C.   Budharaj  (Dead) by LRs.  etc.  etc.  reported in  JT 2001  (1) S.C.  486, this Court has held that Arbitrator can award  interest  for the pre-reference period.  Thus as  per law  laid down by this Court interest can be awarded at  all four  stages.   The reasoning given by the High  Court  that interest  cannot  be  awarded  by  the  Arbitrator  is  thus fallacious  and  cannot  be  sustained.   In  our  view  the direction  to  pay  interest from date of  Award  cannot  be faulted.   The  impugned  judgment  to the  extent  that  it disallows  the  interest from the date of the Award  is  set aside.

   However,  the  impugned judgment to the extent  that  it upholds  the  Award under item 12(j) is upheld.  The  Appeal stands  disposed of accordingly.  There shall be no order as to costs.