TMI Blog1972 (1) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... nd payable by the appellant. Civil Miscellaneous Petition No. 5802 of 1971, by the State of Madhya Pradesh, the appellant in the Civil Appeal, is an application requesting this Court to decline to take the Award dated August 24, 1971 on its file. Without prejudice to the above prayer, there is a further request made to this Court to set aside or modify the Award in certain respects. The relevant facts leading up to the filing of the two applications may be adverted to The erstwhile State of Madhya Bharat and entered into a contract with M/s. Saith Skelton (-P.) Ltd., the first respondent, for the supply and erection of Pen, stocks for Gandhi Sagar Power Station, Chambal Hydel works. The acceptance of the contract was by tender No. Project/SE/2522-F/II/25 dated June 5, 1956. Under the said contract, the first respondent firm was required to supply material for the five penstocks of P.O.R. Jhalwar Road, Railway Station at Rs. 1,570 per M. Ton within the time stipulated, the total quantity being 463.939 M. Tons. The material was to be transported from Jhalwar Road Railway Station to the works site by the consignee, ,,he Madhya Bharat Government, and the work of erection was to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the appointments of Shri R. R. Desai, as an arbitrator and Shri R. C. Soni, as Umpire, were both invalid and not binding on the appellant. The firm filed all appeal before the High Court of Madhya Pradesh against the order of the Addl. District Judge. This appeal was later oil treated as a Revision and numbered as Civil Revision No. 415 of 1969. The High Court, by its order dated August 6, 1970 appointed Shri R. C. Soni as the Sole Arbitrator under s. 12(2) of the Act and accordingly modified the order of the Addl. District Judge, Mandsaur. The appellant filed Special Leave Petition No. 2370 of 1970 in this Court for grant of Special Leave to Appeal against the order of the High Court dated August 6, 1970. The firm entered caveat. On January 29, 1971, this Court ranted Special Leave land, by consent of parties, appointed an arbitrator, whose Award is sought to be made a decree of the Court by the respondent in its application C.M.P. No. 5801 of 1971 and is sought to be set aside by the appellant by C.M.P. No. 5802 of 1971. As the terms of the order passed by this Court are material, it is reproduced below : Special Leave is granted. The appeal is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground that the award of interest at 9% is very excessive. The question of pronouncing judgment according to the Award, as provided under s. 17 of the Act and which is the prayer in C.M.P. No. 5801 of 1971 will arise only if the prayer to set aside the Award made in C.M.P. No. 5802 of 1971, by the State, is rejected. Therefore, we will proceed to consider the contentions raised by Mr. 1. N. Shroff, learned counsel for the appellant, in support of the application C.M.P. No. 5802 of 1971. Mr. Shroff has raised the following four contentions: (1) The arbitrator had no power to suo motu file his Award, as he has done in this case, and as such no action can be taken on such an Award; (2) This Court is not the Court as contemplated by s. 14(2) read with S. 2(c) of the Act. Hence the filing of the Award in this Court is illegal and ineffective in law; (3) The arbitrator had no jurisdiction to award interest from a period anterior to the date of the award or reference; and (4) The Arbitrator has committed a manifest error in directing the refund of Rs. 15,414.19 P. when this amount has already been taken into account in arriving at the figure of Rs. 1,79,653.18 P. We will now proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, sent a copy of the signed Award to the parties. The appellant therein acknowledged receipt of the said signed copy of the Award by his letters dated 5th and 16th May, 1950; but he filed an application on March 30, 1951 in the Subordinate Judge s Court for passing a decree in terms of the Award. An objection was raised by the opponent that the application was out of time under Art. 178 of the Indian Limitation Act, 1908, as not having been filed within 90 days of the date of service of the notice of the making of the Award. It is also seen that the arbitrator on July 3, 1951 filed the original Award before the Court suo motu. The Subordinate Judge rejected the application filed on March 30, 1951 as barred by time. That order was confirmed by the High Court. This Court, after a consideration of s. 14(1) of the Act held that the serving, by the arbitrator on the appellant before this Court of a signed copy of the Award amounted to giving him notice in writing of the making of the Award. This Court further upheld, as correct, the view of the Subordinate Judge and the High Court that the application filed by the appellant, beyond the period prescribed under Art. 178 of the Indian Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitration proceedings under section 21, include a Small Cause Court." According to Mr. Shroff the Award should have been filed, not in this Court, but in the Court of the Addl. District Judge, Mandsaur, as that is the Court which will have jurisdiction to entertain the suit regarding the subject matter of the reference. We are not inclined to accept this contention of Mr. Shroff. It should be noted that the opening words of s. 2 are "In this Act, unless there is anything repugnant in the subject or context. Therefore the expression "Court will have to be understood as defined in s. 2(c) of the Act, only if there is nothing repugnant in the subject or context. It is in that light that the expression "Court" occurrmg in s., 14(2) of the Act will have to be understood and interpreted. It was this Court that appointed Shri V. S. Desai on January 29, 1971, by consent of parties, on an arbitrator and to make his Award. It will be seen that no further directions were given in the said order which will indicate that this Court had not divested itself of its jurisdiction to deal with the Award or matters arising out of the Award. In fact the indications are to the contrary. The dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trator when the decree passed in the suit was pending appeal before the High Court. Based upon s. 21, it was urged before this Court that the reference made by the trial court, when the appeal was pending, and the award made in consequence of such reference, were both invalid as the trial court was mot competent to make the order of reference. This Court rejected the said contention and after a reference to ss. 2(c) and 21 of the Act held that the expression "Court" occurring in s. 21 includes also the Appellate Court, proceedings before which are a continuance of the suit. It was further held that the word "suit" in s. 21 includes also appellate proceedings. In our opinion, applying the analogy of the above decision, the expression "Court" occurring in s. 14 (2) of the Act will have to be understood,in the context in which it occurs. So understood, it follows that this Court is the Court under s. 14(2) where the arbitration Award could be validly field. The decision in Union of India v. Surjeet Singh Atwal ([1969] 2 S.C.R. 211) relied on by Mr. Shroff, dealt with a different aspect and therefore, it is not necessary for us to refer to the same. The above reasoning leads us to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade the interest payable from June 7, 1958, on the ground that it was the date on which final inspection took place and when the amount become payable to the. respondent. Mr. Shroff referred us to a decision of the Judicial Committee and to certain decisions of this Court to the effect that s. 34 of the Code of Civil Procedure will not apply to the proceedings before an arbitrator, as he is not a Court and that interest cannot be awarded by way of damages. He further referred to those decisions in support of his contention that in the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest on an amount for a period before the institution of the suit, interest anterior to the date of the suit cannot be allowed. The decisions referred to by Mr. Shroff are Bengal Nagpur Raliway Company Limited v. Ruttanji Ramji and others(L.R. 65 I.A. 66), Seth Thawardas Pherumal v. The Union of India([1955] 2 S.C.R. 48), Mahabir Prashad Rungta v. Durga Datt([1961] 3 S.C.R. 639), Union of India v. A. L. Rallia Ram([1964] 3 S.C.R. 164), Vithal Das v. Rupchand and others([1966] Supp. S.C.R. 164) and Union of India v. Bungo Steel Furniture Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest were referred for arbition. From the decision in Firm Madanlal Roshanlal Mahajan v. Hukamchand Mills Ltd. Indore([1967] 1 S.C. R. 105), it is clear that if all the disputes are referred for arbitration, the arbitrator has power to award interest pendente lite, i.e. during the, pendency of the arbitration proceedings. In the case before there is no controversy that all the disputes including a claim for payment of the amount with interest was referred to the arbitrator. The arbitrator, as pointed out earlier, found that the firm was entitled to the Payment as price in the sum of Rs. 1,79,653.18 P. The arbitrator has further found that this amount became payable as balance price for the goods supplied by the firm on June 7, 1958, on which date the final inspection took place. If that is so, section 61 of the Sat-, of Goods Act, 1930 squarely applies and it saves the right of the seller (in this case the firm) to recover interest, where by law interest is recoverable. Sub-section (2) of s. 61, which is material is as follows : "61 (2) In the absence of a contract to the contrary the Court may award interest at such rate as it thinks fit on the amount of the Price- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of them claimed for payment of the amount, due to them with interest at 12% per annum under s. 61 of the Sale of Goods Act. Therefore, it follows that the rate of interest awarded is not excessive. As we have already held that the arbitrator has got power in this case to award interest from June 7, 1958 at the rate specified by him, the third contention of Mr. Shroff will have to be rejected. The last contention of Mr. Shroff relates to the direction regarding the refund of Rs. 15,414.19 P. The contention is that this amount has already been taken into account by the arbitrator when he directed the payment of Rs. 1,79,653.18 P. Mr. Shroff was not able to satisfy us that the amount, directed to be paid as refund, has been already taken into account in the amount fixed as the balance price payable by the State. Therefore, this contention also will have to be rejected-. Now that we have rejected all the contentions of Mr. Shroff raised in C.M.P. No. 5802 of 1971, it follows that the prayer asked for, therein cannot be granted. Now coming to C.M.P. No. 5801 of 1971, filed by the firm, that application is accepted and a judgment and decree are passed on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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