State of Haryana v. M/s Ramesh Chander Contractor & Company & Anr.

Hon'ble Mr. Justice L.N. Mittal Present : Mr. Rajesh Garg, Additional Advocate General, Haryana for the appellant Mr. Rajesh Sethi, Advocate, for respondent no. 1 L.N. Mittal, J. (Oral) This is first appeal by State of Haryana assailing judgment dated 8.3.2010 passed by learned Additional District Judge, Sirsa thereby dismissing petition under section 34 of the Arbitration and Conciliation Act, 1996 (in short, the Act) filed by the appellant – State and partly allowing petition under section 34 of the Act filed by respondent no. 1 – Contractor M/s Ramesh Chander Contractor and Company. The contractor executed some work of the appellant State. F.A.O. No. 5158 of 2010 -2- Dispute arose between the parties. The dispute was referred to respondent no. 2 Arbitrator Mr. RP Bansal. The Arbitrator gave his award dated

30.12.2003 thereby awarding ` 1,62,640/- to the contractor with interest @ 9% per annum from the date of award till recovery. The said amount was awarded for 50% of the earth work i.e. 5885 Cum being half of 11771.25 Cum earth work done by the contractor holding that 50% earth had been brought from average lead of 2 kms. Appellant State in its petition under section 34 of the Act pleaded that opportunity of leading evidence was not given to the parties by the Arbitrator. It was also pleaded that contractor had not raised any objection while receiving payment of running bills wherein payment of earth work with 15 metre lead was made to the contractor and the objection was raised only at the time of final bill. On the other hand, the contractor in his petition alleged that the Arbitrator has proceeded on assumptions and presumptions and made out a new case of his own which was not set up by either party.

Learned Additional District Judge vide impugned judgment dated 8.3.2010 dismissed the petition of the State and partly allowed the petition of the contractor and modified the Arbitrator's award holding that the contractor is entitled to a sum of ` 3,25,280/- instead of ` 1,62,640/- awarded by the Arbitrator i.e. double the amount awarded by the Arbitrator F.A.O. No. 5158 of 2010 -3- with interest @ 9% per annum from the date of award till recovery. Feeling aggrieved, State has filed this appeal. I have heard learned counsel for the parties and perused the case file. Counsel for the appellant contended that the trial court could not sit as Court of Appeal over the award of the Arbitrator and could not have modified the award of the Arbitrator to grant double of the amount as awarded by the Arbitrator. On the other hand, counsel for the contractor respondent no. 1 contended that the Arbitrator had committed grave error in reducing the claim of the contractor to 50% of the earth work instead of awarding the claim for entire earth work done by the contractor.

It was pointed out that from the certificate of Sub Divisional Engineer, it was established that earth was not available within 2 kms throughout the entire length and thus claim for the entire earth work being beyond 2 kms should have been allowed. I have carefully considered the rival contentions. There is force in the contention of counsel for the appellant that the trial court could not sit as Court of Appeal over the award of the Arbitrator. The trial court has committed grave error and illegality in awarding double the amount that had been awarded by the Arbitrator to the contractor. The trial court has adjudicated upon the matter as Court of Appeal. However, it could not F.A.O. No. 5158 of 2010 -4- be done. The trial court could not have examined the merits of the claim of the contractor by examining the evidence and material on record. It was the function of the Arbitrator. What has been done by the trial court is not permissible within the purview of section 34 of the Act.

Even the contractor in his petition under section 34 of the Act had not pleaded that double the amount awarded by the Arbitrator be granted but nevertheless the trial court has done so. The trial court has assumed functions of the Arbitrator which is completely beyond the purview of the trial court. The contention of counsel for the contractor that claim for the entire earth work should have been granted by the Arbitrator appears to be forceful on cursory glance but the same could not be accepted. The State failed to prove that the earth was available or lifted within lead of 15 metres. However, it would not automatically lead to the conclusion that the contractor should have been granted claim for the entire earth work being beyond 2 kms. The Arbitrator, who was a technical expert, after examining the material on record, came to the conclusion that the contractor deserved his claim for 50% of the earth work and the same was granted in the award.