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Sri Chittaranjan Maity Versus Union of India

2017 (10) TMI 145 - SUPREME COURT OF INDIA

Arbitration proceedings - whether the Division Bench was justified in considering the arbitrability of the dispute for the first time in the appeal? - Held that:- Intervention of the court is envisaged only in few circumstances like fraud or bias by the Arbitrators, violation of natural justice. The court cannot correct the errors of the Arbitrators. Division Bench was not justified while considering the arbitrability of the disputes for the first time, particularly, when the respondent has not .....

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f ₹ 12,44,546/-. A sum of ₹ 38,82,150/- was deposited by the respondent which includes the award amount, interest for the pre-reference period, pendente lite and post-award interest. We have held that the appellant is not entitled for any interest. The appellant has already withdrawn 50% of the amount deposited by the respondent, which is in excess of the award amount exclusive of interest. Having regard to the facts and circumstances of the case, we deem it proper to direct the resp .....

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29.9.2011 in A.P.O. No.213/2009 in A.P. No.35/2006 whereby the Division Bench of the High Court of Calcutta has set aside the judgment and order of the learned Single Judge in A.P. No.35/2006 dated 27.1.2009. 3. Brief facts necessary for the disposal of these appeals are as follows: 4. On 20.3.1991, respondent invited tender for the execution of balance of earth for formation of banks for laying railway line, roads, platforms and miscellaneous work in connection with new goods terminal yard of .....

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arties regarding execution of work and its purported abandonment. The respondent issued notice dated 24.10.1991, seeking termination of the agreement. Another notice dated 15.11.1991 was issued to the appellant under Clause 62(1) of the GCC for rescission of the contract. However, at the request of the appellant through letter dated 2.4.1992, the validity of the contract was extended till 30.6.1992. The respondent further granted extension of time to complete the work upto July 1993. According t .....

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1996 Act ) for appointment of an Arbitrator for adjudication of the claims and disputes before the High Court of Calcutta. The Chief Justice of the High Court of Calcutta passed an order dated 6.12.2001, whereupon the General Manager, South-Eastern Railway, was directed to appoint Arbitrators from their panel within four weeks from the said date. Pursuant to the said order, the Arbitral Tribunal was constituted which adjudicated the disputes and claims raised by the appellant, as also the respon .....

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for any claim from the respondent in regard to which the dispute could not be adjudicated by the Arbitral Tribunal. As noticed above, the Division Bench has set aside the order of the learned Single Judge and also the award and directed holding of fresh reference by the Arbitral Tribunal. 8. Learned senior counsel appearing for the appellant submits that the Division Bench failed to appreciate the question that issuance of No Claims Certificate by the appellant was not urged before the Chief Ju .....

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t time. It is further submitted that the Tribunal has rightly passed an award and granted pre-award and pendente lite interest from 17.7.1992 till the realization of the award amount. 9. On the other hand, learned Additional Solicitor General appearing for the respondent submits that having regard to the No Claims Certificate issued by the appellant, the appellant has no right to make any claim except for security deposit of ₹ 15,000/- from the respondent. There was no arbitral dispute bet .....

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e dispute had arisen between the parties in relation to the contract in question. Therefore, the appellant filed an application before the Chief Justice of the High Court of Calcutta under Section 11(6) of the 1996 Act, for appointment of an Arbitrator in terms of the contract which was allowed and an Arbitral Tribunal was constituted for adjudication of the dispute. The Arbitrator after giving the parties opportunities of hearing and after considering the materials placed on record made and pub .....

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supplier. 1,80,000/- 54,000/- 6. Claim for remaining idle wage payment. 1,80,000/- 54,000/- 7. Claim for overhead charges, i.e., staff salary and house rent 22,000/- 15,000/- 8. Claim for blockage of capital and business loss 12,75,000/- 6,03,119/- 9. Claim for interest 1,58,23,193.16 12,44,546/- 11. Learned Single Judge had dismissed the application filed by the respondent for setting aside the said award. The issue relating to arbitrability of the dispute was not raised in the proceeding under .....

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the said plea either before the Arbitral Tribunal or before the learned Single Judge in the proceedings under Section 34 of the 1996 Act. 12. This Court, in Mcdermott International Inc. vs. Burn Standard Co. Ltd. and Others (2006) 11 SCC 181, has held that the party questioning the jurisdiction of the Arbitrator has an obligation to raise the said question before the Arbitrator. It has been held as under: 51. After the 1996 Act came into force, under Section 16 of the Act the party questioning .....

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he arbitrator opined that he had no jurisdiction in relation thereto an appeal thereagainst was provided for under Section 37 of the Act. 13. It is also necessary to observe that intervention of the court is envisaged only in few circumstances like fraud or bias by the Arbitrators, violation of natural justice. The court cannot correct the errors of the Arbitrators. That is evident from para 52 of the judgment in Mcdermott International Inc (supra), which is as under: 52. The 1996 Act makes prov .....

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um level and this can be justified as parties to the agreement make a conscious decision to exclude the court s jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it. 14. Therefore, the Division Bench was not justified while considering the arbitrability of the disputes for the first time, particularly, when the respondent has not urged the issue relating to No Claims Certificate before the Chief Justice, Arbitral Tribunal or before the learned Single Ju .....

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the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. In this Section, a specific provision has been created, whereby if the agreement prohibits award of interest for the pre-award period (i.e. pre-reference and pendente lite period), the A .....

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t in M/s. Ambica Construction vs. Union of India (2017) SCC OnLine SC 678, (C.A.No.410 of 2008, disposed of on 26.04.2017) learned senior counsel for the appellant submits that mere bar to award interest on the amounts payable under the contract would not be sufficient to deny payment on pendente lite interest. Therefore, the Arbitrator was justified in awarding the pendente lite interest. However, it is not clear from M/s. Ambica Construction (supra) as to whether it was decided under The Arbit .....

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ment prohibits award of interest for the pre-award period, the Arbitrator cannot award interest for the said period. Therefore, the decision in M/s. Ambica Construction (supra) cannot be made applicable to the instant case. 18. Learned Additional Solicitor General appearing for the respondent submits that the position of law for cases covered under the 1996 Act, i.e. if agreement prohibits award of interest then the grant of pre-award interest is impermissible for the Arbitrator, has been reiter .....

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. The Court has observed that in regard to the provision in the 1996 Act, the difference between pre-reference period and the pendente lite interest has disappeared insofar as award of interest by the Arbitrator is concerned. Section 31(7)(a) recognizes only two periods, i.e. pre-award and post-award period. 20. In Sree Kamatchi Amman Constructions vs. Divisional Railway Manager (Works), Palghat and Others (2010) 8 SCC 767, this Court was dealing with an identical case wherein Clause 16 of the G .....

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is Court, after referring to the provisions of Section 31(7)(a) of the 1996 Act, held that when the terms of the agreement had prohibited award of interest, the Arbitrator could not award interest for the pendente lite period. It has been held thus: 10. Thus, it had been specifically understood between the parties that no interest was to be paid on the earnest money, security deposit and the amount payable to the contractor under the contract. So far as payment of interest on government securiti .....

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