Union of India v. M/S A.R. Khanna & Sons

2. The Respondent invoked the arbitration clause and the disputes were referred to the learned sole Arbitrator on 30'h May 2001. The Respondent filed a statement of claims raising the following disputes: "(I) Claim of Rs.40.000 by way of refund of security deposit/earnest money.

(il) Claim of Rs.2.75,811 for work done and not paid by the

(ilI) Rs.1,48,400 towards additional infructuous expenditure

(IV) Claim of Rs.7000 by way of refund of rebate deducted from running bills.

(V) Claim of Rs.1500 withheld towards cost of cement bags.

(VI) Claim of Rs.20.000 as cost of Arbitrator appointed by

(VII) Interest @ lS% p.a. from the day of amounts above stated fell due."

3. The Petitioner filed its reply to the statement of claims as well as counter claims.

4. By the impugned Award dated 25th January 2008. the learned Arbitrator rejected the first claim Ibr refund of security deposit. The learned ^,\rbitrator awarded a sum of Rs.1,88,406 under Claim No'2: a sum of Rs.91,600 in respect of Claim No.3; a sum of Rs.6,872 under Claim No.4; a sum of Rs.l500 under Claim No.5; a sum of Rs.30.000 under Claim No.6. The learned Arbitrator awarded interest at l2o/o per annum from 2nd May 1988 till 25'h January 2008. being the date of Award and future O.M.P. No.6l I & CS(OS) IYo.274 of 2008 Puge 3 of 6 40-_ interest at the rate of 18% per annum from the date of Award till the date of payment under Claim No.7.

5. This Court has heard the submissions of Ms. Geetaniali Mohan, learned counsel appearing for the Railways and Mr. Vivekanand, learned counsel appearing for the Respondent in O.M.P. No.6l[1] of 2008.

6. Learned counsel for the Petitioner Railways contended that the delay in completion of work was not attributable to the Railways and therefore the learned Arbitrator erred in returning a finding to that effect in the impugned Award.

7. The learned Arbitrator held that the initial delays were on the part of the Railways who failed to provide site for execution of the work to the Petitioner. There was short supply of cement and steel and there was delay in taking decisions during the execution of the work and in making payments. There was also a dispute regarding the final bills. These are all findings of fact which this Court does not propose to interfere with under Sections 30 & 33 of the Act. O.M.P. No.6t I A. CS(OS) No.274 of 2008 4l-

8. As regards Claim Nos.l to 6, this Court finds that the Arbitrator has given cogent and detailed reasons after discussing the evidence on record.

9. As regards Claim No.7, it is seen that the learned Arbitrator has awarded pendente lite interest on the basis that the arbitration clause in the agreement did not denude him of the power to do so. Clearly the learned Arbitrator failed to notice Clause 16(2) of the General Conditions of Contract ('GCC'), which applied to the contract in the instant case. which bars the payment of any pendente lite interest by the Arbitrator. That very clause was interpreted by the Full Bench of this Court in its decision dated 24'h February 2012 in FAO (OS) No.494 of 2010 titled Union of India v. M/s Conbes India Pvt. Ltd. and it was held that no pendente lite inlerest could be granted by an Arbitrator in deciding a dispute which involved the Railways arising out of a contract to which Clause 16(2) of the GCC applied. In that view of the matter, to the extent that the learned Arbitrator has awarded pendente lite interest at l2o/o per annum from 2''d May 1988 till the date of Award i.e. 25'h January 2008, the impugned Award cannot be sustained. Consequently, only to this limited extent the impugned O.M.P. No.6l I & CS(OS) No.274 of 2008 4 L- Award is modified. The rest of the Award is upheld.

10. Consequently, the impugned Award is modified only to the extent of disallowing pendente lite interest to the Respondent at l2o/o per annum from 2"d May 1988 to 25tr' January 2008. The rest of the Award is made rule of the Court. I l. the petition is disposed of in the above terms. CS(OS) No.274 of 2008