JUDGMENT
1. These two appeals have been filed against judgment and order dated 31.5.2001 passed by the learned District Judge, Varanasi, in Misc. Application No. 121 of 1999 and Misc Application No. 122 of 1999 rejecting two objections filed by the appellant - Union of India, under Section 34(1) of the Arbitration and Reconciliation Act 19/0 (hereinafter referred to as the 'Act'). The above two objections were against two awards passed with regard to two contracts entered into by the parties. As the terms of the contract and the parties were the same, the learned Judge disposed off the above two objections by passing the impugned common order which is under challenge in these two appeals.
2. The brief history giving rise to these appeals is that in connection with of two contracts between the parties some, disputes arose, and in accordance with the terms of the contract the disputes, were referred to an arbitrator, who after considering the evidence adduced by the parties gave his award dated 19.7.1999 in respect of the above two contracts Against these awards objections were preferred under Section 34 of the Act by the appellant asserting that the arbitrator had included those points, of dispute for which he had no jurisdiction because the competent officer of the department was authorized to deal with such matters. It was further pleaded by the appellant that the arbitrator had gone beyond his jurisdiction by adjudicating those disputes which could be disposed off by the officer of the department, and therefore. She award should be set aside. Against above two objections preferred by the Union of India, the respondent filed replies and pleaded that the arbitrator was appointed as per the terms of the agreement between the parties and all the disputes between the parties were placed before the arbitrator in accordance with the terms of the contract, and the arbitrator after considering the material placed before him by the parties decided the same by passing two awards in respect of the above two contracts. It was denied that the arbitrator had gone beyond his jurisdiction or had decided those points which were to be decided by any other competent authority. The contention from the side of the respondent was that all the disputes were to be referred to the arbitrator, and therefore, the trial Judge has committed no error in passing the impugned judgment.
3. We have heard the learned counsels for the appellant and respondent at length and have also gone through the material available on record.
4. The learned counsel for the appellant has argued that the contractor-respondent had advanced 16 claims whereas the appellant Union of India placed 6 claims before the arbitrator for decision but the arbitrator wrongly exercised his jurisdiction in respect of claim No. 1 which, according to the learned counsel for the appellant, could be decided by the competent officer of the department. Hence it was urged that the arbitrator had no jurisdiction to treat that dispute within his jurisdiction and the impugned award in respect of claim No. 1 is thus beyond the scope of the contract agreement between the parties. It was also argued from the side of the appellant that the award of 10% profit by the arbitrator is also unjustified particularly when no such work was done for which the profit has been awarded. It is also argued that there is no evidence to prove the above claim of profit of 10%. According to learned counsel for the appellant, the award of interest @ 12% P.A. was also excessive as by virtue of the amendment, by U.P. Act No. 57 of 1976 implemented from 1.1.1977, interest exceeding 6% P.A. could not be granted by the arbitrator. He has placed reliance on the ruling of this Court in Union of India v. Channa Bros. and Co., AIR 2001 Allahabad 42(DB) in support of his above argument. Another point raised from the side of the appellant before us is that the respondent while entering into the agreement, was aware about the source of availability of material to be supplied by him to the appellant and therefore the amount with regard to the expenses shown to have been incurred in supply of the material as well as place of dumping, awarded by the arbitrator was not at all justified and permissible as the contractor had accepted the terms of supply. The next point argued for the appellant is that the impugned award with regard to the loss on account of unapproachable site and legal misrepresentation to the extent of Rs. 3000/- was also not justified. The award by the arbitrator has also been challenged in respect of the claim No. 14 of the respondent on the ground that on account of delay on the part of the respondent in executing the contract the Union of India was constantly suffering loss and therefore the action taken by the appellant against the respondent for the cancellation of the contract was justified and no interest should have been awarded for such loss. On the basis of the above arguments, it is contended from the side of the appellant that the learned Judge has failed to consider these important points and has wrongly misinterpreted the wordings "all disputes" contemplated under the contract wrongly justifying the scope and jurisdiction of the arbitrator to decide such matters.
5. In reply to the above submissions, learned counsel for respondent has argued that the arbitrator was undoubtedly appointed in accordance with the terms of contract between the parties and after acceptance of the contract, the appellant had changed the location site for quarry without any justification and without specifying the difference of expenses to be incurred by the respondent due to the above change of site etc. Hence the arbitrator having taken up these matters in accordance with the terms of the contract was within his jurisdiction to deckle the disputes. It is argued that the arbitrator never went beyond his jurisdiction in deciding the controversy between the parties. Further, according to the respondent, the appellant pressed its objection against the award and contested the same before the arbitrator without taking any plea that some of the points were beyond the scope of the agreement. It is also contended that before the arbitrator the point of jurisdiction was never raised by the appellant, and therefore, according to the submission from the side of the respondent, the law of waiver and acquiescence would be applicable and now the appellant cannot raise these issues. Learned counsel for the respondent has relied upon the ruling of the Supreme Court in Punjab State Electricity Board and Ors. v. Ludhiana Steels Private Limited (1993) 1 SCC 205. Learned counsel for the respondent has further argued that there is limited scope for interference on objection filed under Section 34(1) of the Act, and the arbitrator having considered all the materials available before him, the learned Judge has committed no error in passing the impugned order.
6. Before taking up the submissions made by the parties' counsel, we have to consider the points which can be raised while challenging an award given by an arbitrator. In State of Rajasthan v. Puri Construction Co., Ltd. and Anr. (1994) 6 SCC 485 the Apex Court while dealing with the question of the grounds for setting aside an award has observed as follows:
"Since the arbitrator is a judge by choice of the parties, and more often than not, a person with little or no legal background, the adjudication of disputes by an arbitration by way of an award can be challenged only within the limited scope of several provisions of the Arbitration Act, and the legislature in its wisdom has limited the scope and ambit of challenge to an award in the Arbitration Act. By and large the courts have disfavoured interference with an arbitration award on account of error of law and fact on the score of misappreciation and misreading of the materials on record and have shown definite inclination to preserve the award as far as possible. As reference to arbitration of disputes in commercial and other transactions involving substantial amount has increased in recent times, the courts were impelled to have fresh look on the ambit of challenge to an award by the arbitrator so that the award does not get undesirable immunity. In recent times, error in law and fact in basing an award has not been given the wide immunity as enjoyed earlier, by expanding the import and implication of "legal misconduct" of justice and the same is not reduced to mockery of a fair decision of the lis between the parties to arbitration. However, in the anxiety to render justice to the party to arbitration, the court should not reappraise the evidence intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the arbitrator is, according to the understanding of the court, erroneous. Such exercise of power which can be exercised by an appellate court with power to reverse the finding of fact, is alien to the scope and ambit of challenge of an award under the Arbitration Act. If a question of law is referred to an arbitrator and the arbitrator comes to a conclusion, it is not open to challenge the award on the ground that an alternative view of law is possible. Even if it is assumed that on the material on record, a different view could have been taken and the arbitrators have failed to consider the documents and materials on record in their proper perspective, the award is not liable to be struck down in view of the judicial decisions referred to hereinbefore. Error apparent on the face of record does not mean that on close scrutiny of the import of documents and materials on record, the finding made by the arbitrator may be held to be erroneous. An error of law or fact committed by an arbitrator by itself does not constitute misconduct warrant interference with the award."
7. When we go through the record, we find that the appellant has failed to point out anything with regard to any controversy between the parties to consider such dispute to be beyond the jurisdiction of arbitrator. The terms of the contract between the parties were that all the disputes between the parties were to be referred to the arbitrator. Accordingly disputes between the parties were referred to the Arbitrator. We find that no objection with regard to jurisdiction of the arbitrator was raised from the side of the appellant, and therefore, at this stage of this case, it cannot be inferred that the arbitrator had gone beyond his jurisdiction. As regards Item-A Group (1st) and with regard to claims No. 2, 3, 4, 5, 6, 14 and 16 the arbitrator was appointed in accordance with the terms of the contract between the parties. Hence in our opinion the amount pertaining to the above items cannot be held to be wrongly awarded. On the question of award of interest @ 12% per annum, The Court in Union of India v. Channa Bros. And Co. (supra) held that in view of para 7-A inserted by virtue of Section 24 of U.P. Civil Laws (Reforms and Amendment) Act, 1976, the arbitrator had no jurisdiction to award interest exceeding 6% P.A. for the period prior to the date of making reference or pendentelite. In view of this decision the award of interest @ 12% per annum for the period to the date of making reference or pendentelite has to he taken to be wrong exercise of jurisdiction by the arbitrator and to this extent the award as well as the impugned order have to be modified. So far as the other points raised from the side of the appellant are concerned, as already observed by us, the objection with regard to jurisdiction of the arbitrator with regard to these claims of the respondent having not been raised before the arbitrator, the same cannot be reagitated in this appeal.
8. In view of above observations of the Apex Court, in absence of any material from the side of the appellant to support its objections against award, the question of considering any misconduct on the part of arbitrator on account of any misreading or misappreciation of material on record does not arise.
9. The awards having been given by the arbitrator after considering the material available before him, is liable to be confirmed with the modification on the question of grant of interest as observed above.
10. The result of the above discussions is that the present appeals have no force except for the modification in the awards of the arbitrator and impugned orders for the grant of interest @ 6% per annum in place of 12% per annum for the period prior to the date of making reference or pendentelite. Appeal disposed off accordingly.
11. We pass no order as to costs.