TMI Blog2008 (1) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... s the said sum of ₹ 17,69,608.73. ₹ 17 lacs was paid on 25.2.1976 and ₹ 70,000/- was paid on 6.8.1977.The contractor had made some claims and OMC wrote a letter dated 28.10.1978 in regard to the pending claims of the contractor. In view of the acknowledgement in writing on 28.10.1978 and payment of the ₹ 3,50,000/- on 4.3.1980, it can be said that in regard to the pending claims of the contractor, the limitation stood extended by three years from 4.3.1980 and at all events by three years from 28.10.1978. It is not in dispute that the contractor issued the notice invoking arbitration on 4.6.1980 and immediately filed a petition under section 8(2) of the Act for appointment of Arbitrator which was allowed on 6.10.1980. Therefore, whatever claims were made before the Arbitrator which was part of the claim of ₹ 50,15,820, was within time, having been made within three years from 28.10.1978 and 4.6.1980. Out of the claim of ₹ 95,96,616 made by the appellant before the Arbitrator, the claim for only ₹ 28,32,138/- was not barred by limitation. The remaining claims of the appellant aggregating to ₹ 67,64,488/- out of the total of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as existing or pending as on 28.10.1978 and 4.3.1980, namely ₹ 28,32,128 (out of ₹ 95,96,616) could have been considered by the Arbitrator. Relief to the parties - Whether the award is liable to be set aside on the ground that the arbitrator exceeded his jurisdiction? - When the claim made in the claim statement is after adjusting ₹ 149,88,566.90 paid by OMC towards the work, the arbitrator cannot proceed on the basis that only ₹ 120,01,659.90 was paid towards the work. As a result though the Arbitrator found that the amount payable towards claims at Items 1 to 16 was only ₹ 365,862.18, he awarded ₹ 32,83,243/- to the appellant, thereby increasing the liability of OMC by ₹ 29,86,871/-. By awarding more than what was claimed in the claim statement (by showing a lesser amount as having been paid by OMC though claim statement showed a higher amount), the Arbitrator clearly exceeded his jurisdiction. The Arbitrator thus committed a legal misconduct and the award to that extent is liable to be set aside. Therefore the amount awarded in respect of claims at items 1 to 16 by the Arbitrator is to be reduced by ₹ 29,86,871/-. The Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the face of the award in respect of the amount. It is not open to challenge. Therefore, the Award of the Arbitrator has to be upheld to an extent of ₹ 13,93,373.50. Thus, we allow these appeals in part, set aside the judgment of the High Court and direct a decree in terms of the award for a sum of ₹ 13,93,373.50 with interest at the rate of 12% P.A. from 1.8.1977 to date of award (28.11.1986) and at the rate of 6% P.A. thereafter, that is from 29.11.1986 till date of payment. - H. K. Sema, G. P. Mathur And R. V. Raveendran, JJ. For Appellant: A.K. Panda and T.S. Doabia, Sr. Advs., Rutwik Panda and Mridul Aggarwal, Advs For Respondents: C.S. Vaidyanathan, Sr. Adv., K.V. Viswanathan, Rajeev Singh and Anup Kumar Singh, Advs. JUDGMENT: Raveendran,. These appeals are filed against the common judgment dated 15.10.1999 passed by the High Court of Orissa in Misc. Appeal No.296/1998 filed by the respondents and Misc. Appeal No.198/1998 and Civil Revision No.109/1998 filed by the appellant. 2. The appellant is stated to be legal heir and successor in interest of N.C. Budhraja (hereinafter referred to as the contractor). M/s. Orissa Mining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contractor in respect of the contract no.30/F-2 as also other contracts, OMC sent the following letter dated 28.10.1978 to the contractor :- Re : Settlement of pending claims. You had called on Chairman, OMC, recently and apprised him of the dues receivable by you in respect of certain long pending matters such as mine benches work and raising at Kaliapani Quarry-I. In the matter of Kaliapani it has been decided to constitute a committee which will go separately into your claims and other facts, in which connection you are requested to give all possible help and assistance, so that your dues, if any, will be ascertainable. In regard to other pending matters, you had indicated yourself that you will give the details of claims and payment received by you. This may be given within a day or two so as to enable OMC to settle up the above at the earliest. 5. The contractor sent a reply dated 16.11.1978 enclosing therewith a statement quantifying his claims relating to contract no. 30F-2 (subject matter of these appeals) as also another contract (no. 2F-2). A Committee was constituted by OMC to scrutinize and recommend on the admissibility of the claims made by the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,040 with interest from 1.6.1986, as detailed below : Value of work done by the contractor : Rs.2,45,85,183.89 Less: Amounts paid by OMC to the Contractor : Rs.1,49,88,566.90 Balance due : (Rs.95,96,616.99) rounded off as : ₹ 95,96,616.00 Add: Interest on the said amounts from the respective dates : Rs.2,40,09,948.00 Add: Interest on belated Payments : ₹ 5,35,476.00 ₹ 2,45,45,424.00 Total : Rs.3,41,42,040.00 In the claim statement filed before the arbitrator, the nature and quantum of claim made was different from what was claimed in the letter dated 16.11.1978 which was considered by the Committee. In the claim statement the contractor abandoned claims to an extent of ₹ 21,83,692 out of the claim of ₹ 50,15,820/- made on 16.11.1978 and claimed only ₹ 26,32,128 from the original claim. The balance of the claim was fresh claims, not made earlier. The claim of ₹ 95,96,616 made before the arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 983.34 4. Transportation of excavated over burdened etc., within a lead of 2km beyond one km. 5361.09 5361.09 5. Clearing heavy jungle etc., 6201.72 3303.72 2898.00 6. Cutting and uprooting trees etc., 5 grith 29800.80 14205.60 15595.20 7. Cutting and uprooting trees etc., 5 to 10 grith 11352.00 3360.00 7992.00 8. Excavation of overburden in all kinds of rocks etc., upto 60m lead 3689850.00 3390979.12 298870.88 298870.88 9. Excavation of overburden in all kinds of rock etc., upto 2km distance and within lifts of 35m 10379041.20 10379041.20 10. Lift b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at Arbitrator as due to contractor in respect of items 1 to 16 Rs.32,83,243.00 8.2) Claims of contractor at Sl. No. 17 to 34 related to items of work not covered in the schedule to the contract, for which claim was made on the basis of damages/quantum meruit. As against the total of ₹ 70,56,573/55 claimed in regard to these 18 items (Items 17 to 34), the Arbitrator awarded in all ₹ 52,56,847/36. The details of the claims made by the appellant and the amount awarded in respect of each of them are as under : S.No. Description of item Amount Claimed Amount Awarded 17. Extra Head Lead for 90 m 2810144.10 2450042.88 18. Removal of excavated materials from the edge of the quarry 54888.60 50858.60 19. Unmeasured quantity of excavation 848372. 64 664720.00 20. Catch Water Drain 278842.50 27842.50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.00 as escalation in cost of labour and material. 8.4) Thus the Arbitrator awarded ₹ 102,66,901.66 to the appellant as detailed below (exclusive of interest), as against the claim of ₹ 95,96,616/- (exclusive of interest) made by the appellant : (i) Amounts award in respect of claims 1 to 16 Rs.32,83,243.00 (ii) Amounts awarded in respect of claims 17 to 34 (as against claim of ₹ 70,56,573/55) Rs.52,56,847.36 (iii) Amount awarded in respect of claim 35 as escalation (as against claim of ₹ 22,17,188/34) ₹ 17,26,811.00 Total award Rs.102,66,901.36 9. The contractor filed OS No.224/1986 for making the award rule of the court, on the file of the Civil Judge, Sr. Division, Bhubaneswar. The objections to the said award filed by OMC were registered as Misc. Case No.5/1987. The said court, by common judgment dated 21.3.1998, overruled the objections and directed that the award of the arbitrator be made the rule of the court and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error apparent on the face of the award? (iii) Whether the award is liable to be set aside on the ground that the arbitrator exceeded his jurisdiction ? (iv) To what relief the parties are entitled? Questions (i) and (ii) : 12. The Arbitrator held that the claims were not barred. He held : In the case of a suit, the date on which the cause of action arises is the date from which the limitation period starts. Under section 20, it is the date on which the right to apply accrues that determines the starting point. That starting point does not coincide with the date on which the cause of action for filing a suit arises. The same principle would apply to an application under section 8 of the Act. The claimant signed the final bill on 14.4.1977 under protest. It is not correct to say that the claimant accepted the final bill. All these factors show that negotiation was going on and the matter was in a nebulous and fluid stage. The committee gave its report in December, 1979. In March, 1980 some portion out of the money said to have been found due by the committee was paid on ad hoc basis. Notice was given by the contractor on 14.6.80. So, the dispute as to final bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgement must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear, then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. Stated generally, courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use is constructed under the item rate contract and the amount due in regard to work executed is Rs. two lakhs and certain part payments say aggregating to ₹ 1,25,0000/- have been made and the contractor demands payment of the balance of ₹ 75,000/- due towards the bill and the employer acknowledges liability, that acknowledgement will be only in regard to the sum of ₹ 75,000/- which is due. If the contractor files a suit for recovery of the said ₹ 75,000/- due in regard to work done and also for recovery of ₹ 50,000/- as damages for breach by the employer and the said suit is filed beyond three years from completion of work and submission of the bill but within three years from the date of acknowledgement, the suit will be saved from bar of limitation only in regard to the liability that was acknowledged namely ₹ 75,000/- and not in regard to the fresh or additional claim of ₹ 50,000/- which was not the subject matter of acknowledgement. What can be acknowledged is a present subsisting liability. An acknowledgment made with reference to a liability, cannot extend limitation for a time barred liability or a claim that was not made at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 8(2) of the Act for appointment of Arbitrator which was allowed on 6.10.1980. Therefore, whatever claims were made before the Arbitrator which was part of the claim of ₹ 50,15,820, was within time, having been made within three years from 28.10.1978 and 4.6.1980. 17. In regard to the claims aggregating to ₹ 95,96,616/- made in the claim statement filed before the Arbitrator, only claims aggregating to ₹ 28,32,138 related to and formed part of the said pending claim of ₹ 50,15,820. The appellant did not make a claim in regard to the remaining ₹ 21,83,692. Therefore, out of the claim of ₹ 95,96,616 made by the appellant before the Arbitrator, the claim for only ₹ 28,32,138/- was not barred by limitation. The remaining claims of the appellant aggregating to ₹ 67,64,488/- out of the total of ₹ 95,96,616/- being fresh claims, were not pending claims in respect of which the acknowledgement was made. Therefore the said fresh claims aggregating to ₹ 67,64,488 made for the first time in the claims statement filed on 27.6.1986 were clearly barred by limitation. 18. The learned counsel for the appellant submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of limitation. Such a contention cannot be countenanced. As noticed above, the cause of action arose on 14.4.1977. But for the acknowledgement on 28.10.1978, on the date of invoking arbitration (4.6.1980), the claims would have been barred by time as being beyond the period of limitation. The limitation is extended only in regard to the liability which was acknowledged in the letter dated 28.10.1978. It is not in dispute that either on 28.10.1978 or on 4.3.1980, the contractor had not made the fresh claims aggregating to ₹ 67,64,488 and the question of such claims made in future for the first time on 27.6.1986, being acknowledged by OMC on 28.10.1998 did not arise. 20. Another aspect requires to be noticed. The contractor was N.C.Budhraja. The original claim (which was the subject matter of letter dated 28.10.1978, subjected to examination by the Committee as per report dated 7.12.1979, and towards which ₹ 3,50,000/- was paid) made by the contractor N.C. Budhraja aggregated to ₹ 50,15,820. The Appellant who is his LR cannot for the first time make a fresh claim before the Arbitrator, which was never made by N.C. Budhraja. The Appellant could only pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) (iv) : 22. In the claim statement filed before the arbitrator the appellant showed the value of work done as ₹ 2,45,85,183.89 and the total payments made by OMC as ₹ 149,88,566.90. Thus he claimed the balance due as ₹ 95,96,616. Even while calculating the interest on the amount outstanding, the claimant proceeded on the basis that he has received in all, ₹ 1,49,88,566.90 from OMC. The prayer before the arbitrator in the claim statement was for the award of ₹ 95,96,616 in regard to the work done after giving credit of ₹ 1,49,88,566.90. The categorical stand of the contractor and the appellant all along has been that OMC had paid in all a sum of ₹ 149,88,566.90. But during the course of the arbitration proceedings, the appellant contended that out of ₹ 149,88,566.90 received from OMC and taken into credit towards this contract, a sum of ₹ 29,86,871/- was being appropriated towards other contracts and therefore the payments made by OMC towards this contract should be taken as ₹ 120,01,695.90. The arbitrator has mechanically accepted the said altered stand contrary to the claim statement and proceeded to determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on the face of the award. Award of amounts in excess of claim (referred to in paras 22, 23 and 24) clearly amount to exceeding the jurisdiction. All these, that is awarding amount towards time barred part of the claim of ₹ 67,64,488, and awarding amounts of ₹ 29,86,871, ₹ 670,285 and escalation in cost at a rate more than what is claimed, are all legal misconducts and the award in regard to those amounts are null and void. There is however some overlapping of the aforesaid amounts. 26. Does it mean that the entire award should be set aside? The answer is no. That part of the award which is valid and separable can be upheld. That part relates to the claims which were validly before the Arbitrator, which were part of the existing or pending claims of ₹ 50,15,820 and which were not barred by limitation. As stated above they were the claims which were existing or pending in 1978, 1979 and 1980 (considered by the committee and payment made by OMC) which were carried before the Arbitrator to an extent of ₹ 28,32,128. Only the amounts awarded by the Arbitrator against those claims can be considered as award validly made in Arbitration, falling within j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While exercising the said power, the court cannot reappreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case the award in question could have been made. Such award can be set aside on any of the grounds specified in section 30 of the Act. In Hindustan Tea Co. vs. M/s K. Sashikant Co. - 1986 (Supp.) SCC 506, this Court observed thus : The Award is reasoned one. The objections which have been raised against the Award are such that they cannot indeed be taken into consideration within the limited ambit of challenge admissible under the scheme of the Arbitration Act. Under the law, the Arbitrator is made the final arbiter of the dispute between the parties. The award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. Therefore, the Award of the Arbitrator has to be upheld to an extent of ₹ 13,93,373.50. 28. In view of the foregoing, we allow these appeals in part, set aside the judgment of the High Court and direct a decree in terms of the award for a sum of ₹ 13,93,373.50 with interest at the rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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