Supreme Court of India
RAVINDRA & ASSOCIATESversusUNION OF INDIA
- Citation
- 2009 INSC 1193
- Decided
- 21 October 2009
- Disposal
- Appeal(s) allowed
Holding
The High Court wrongly interfered with the arbitral award; its judgment is set aside and the award, with interest at 12%, stands.
Summary
Ravindra & Associates, a contractor, completed a construction project for the Union of India on time but faced a payment dispute. The parties invoked an arbitration clause; the arbitrator awarded the contractor Rs 70,94,265 with 18% simple interest. The Principal Sub‑Judge in Kochi made the award a rule of court, reduced the interest to 12%, and dismissed the Union's application to set aside the award. The High Court of Kerala allowed the Union's appeal, effectively re‑examining the arbitrator's findings of fact and altering the interest rate. The Supreme Court held that the High Court had no jurisdiction to interfere with the arbitral award or act as an appellate court, set aside the High Court judgment, and confirmed the Sub‑Judge’s order, entitling the contractor to interest at 12%.
Issues considered
- Whether a High Court can interfere with and set aside findings of fact in an arbitral award
- Whether a High Court can act as an appellate court to an arbitral award
- Whether the interest rate reduced by the Sub‑Judge (12%) should be upheld over the arbitrator's rate (18%)
- Whether specific contract clauses cited by the parties are applicable to the disputed claims
- Whether the decision in Ramnath International Construction (P) Ltd. v. Union of India is applicable to the present facts
Subjects
arbitrationarbitral awardcourt interferenceconstruction contractinterest raterule of courtappellate jurisdictionfindings of fact
Judgment
_, [2009) 15 (ADDL.) S.C.R. 335
I
RAVINDRA & ASSOCIATES A
...
)
" v.
UNION OF INDIA
(Civil Appeal No. 2726 of 2004)
OCTOBER 21, 2009
B
[MARKANDEY KATJU AND ASOK KUMAR
GANGULY, JJ.]
->
Arbitration:
c
Award by arbitrator- Interference with, by court - Scope
I
of - Construction contract - Completed by contractor within
stipulated time - As regards payments, dispute arose between
parties and contractor filing a claim before arbitrator -
Arbitrator awarding a certain amount to contractor with simple D
-~
interest @ 18% for pre-reference period, pendent elite and
from date of award till date of decree/payment - Award made
rule of the court by Principal Sub-Judge - Interest on amount
awarded reduced to 12% - High Court allowing appeal of
employer - HELD: High Court has wrongly interfered with the
E
findings of fact recorded by arbitrator - Arbitrator made the
award after considering respective claims of parties -
Judgement of High Court set aside - Contractor would be
• + entitled to interest@ 12% as awarded by Principal Sub-
Judge.
F
State of Rajasthan vs. Puri Construction Co; J.:td. (1994)
6 SCC 485; Trustees of Port of Madras vs. Engineering
Construction Corporation Ltd. (1995) 5 SCC 531; EOG India
Ltd. vs. Bhagwati Oxygen Ltd. (2007) 9 SCC 503 and G. Ram
Chandra Reddy & Company vs. Union of India & Anr. (2009) G
6 sec 414, relied on.
"' _,t
Ramnath International Construction (P) Ltd. vs. Union of
India (2007) 2 SCC 453, distinguished.
335 H
336 SUPREME"COURT REPORTS [2009r1s. (ADDL.) S.C.R.
A -: ~ Case Law Reference:
(1994) s sec 48~ relied on Para 5
.''
(1995) 5 sec 531 ·: · relied on· Para 5
(2007) 9 SCC 503 . · - relied orL Para 5
B
(2009).'6 1SCC·:414 Ct'·/ relied~on·~:-.: .."1.. ::.1"Para 5
i~ t :· .. _;f)i. 'ft D
(2007) 2 SCC 453 distinguished Para 7
I
i
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
C 2726. of 2004.
;<1(/""'G -- _ <__,,_,,.,,·,'U 't~ ~. '.~;· ....,,.~.••\"~L , .... '.:"'" _...,.J._ -_ .. _ .~~. tj.
,·:'~'From the uudgmerit &10rder dated-15:1.2003· of the High
Court·of Kerala~at~Ernakulam iffMisc,\Firsf.Appea1 No. 53.:of
1998 "·(8.')·.·, - ....~~-..·''.·-','.' f'.'· I ~' - - ' .., . . •
h.,. -~ v ! • . '· ._ ·- ; . • '
D :..· ;~<-.:· .; "'Y~~ :..'"~r ::. J---~ :~:.; I''"":.~ . ~. :._, 1 ·v~'J ..,;:f::.i .... ~-,..: , "'
· ...:. Sudhir 9ha.ridr~ •.:_Mu~esh Jai_n,J~tpal Saha ~nd ~sha Jain ~-
MadanJor the ~ppell~nt;_;, "'':<., . ~~.... •\' .. r- ,'. • -~. :
~·. )~":"':...; f,.- i~ .'.j"\ .,...i.+,.., - 'i'•• ~ -~ . ' r: '"'> '•· -'.""'"-.-· ... ~ -.. -~ .... - • ,,
. . ·.Mohan' Jain: AS~~~Dihesh Tha~tir, Indra ·sawhney; Rohini
Muktferjee,vSubasll
""' l 't'i ' .
Kaushik,' Rekha F>anciey:~n'Ci ·s-Jshrria ·suri
'!' .. - ·~ "._., ., , . ~" ' ,, ... • '· "';.,.._ '~ • • • . - •.
E to~ t~~.R,es~o~~e.~!:' · 1: :; ,_ .-· • • ~, ··, ~:. ·~ ·:~'.} •• ; , .. · ,
r.~fhecfollowifl'gl:Order' 'Of the Court was ·delivered;
r~ ~r·.: '\',,..._;.>·· .~~-- - ,. _ ...·,\ '...:~. . . ,~,~~ _~_~'-- ~ .·\;\'"•:::-:""'·';;,.,. 1...
}"''
F 1. Heard learned counsel for the parties.
··~~~;1·r-~ c_:~ . . . _.J •. 1.>1~\~· ....... :.:. ... ~ .·~ .. '·~, .~~\; h~~- :~ '":. .• ~ -~
, .2 .. :Th1s appeal by special
; • ' • • v
•
leave
•
;. '
has. ".:;:t-:-
. -. .
':'""".
been'filed, against
~... _, J , r
- •
ther-1
~4 ·• •• • • ¥. \.., ' ~ ~ •- • ~
judgment. and; order, dated J 1.5.1.2003 .of the
.,.. • - -..~' · 1
.Higli.
,J , __ . + #·Y
Court
~_,..-..-
• · ...,.
of .,/!' \.• \ """"'"" 1 ! , • • .... ,.. < •::':' .I ~ ~ l I , • ,,,.
Kerala at Ernakulam~whereby
• ~- ·~~
,j. ~_,
the
f
High
.... ...
....... ...._;j"
.Court ~~has
~~\<'
allowed
·\l~~., -- -· ('..
the .:.. \, · " ' · .... 0.\ ••. ! '
G ~RP..~~I ~i.l~d !>Y~!~~ re~P.qf'!d~nt he!e}p~ ~~~!.n~t ~~,~.,?rd~r,.~dC!_t~d.
9.10.1996 of the Principal Sub Judge, ~ochL:.o,-. .·•i·· .Y t. cl b
....L
, . r·c,3.iLf appe~.~ that.t~~"~ppe~tant.YJ.a~ fl~a~d-~d a,con~r,act for
construction of married accommodation for., petty: officers
.A·::J.,. l ...
of the 1.1- •..,•., __.,~jl~lt,'°'·~~-- l..,-i::.._~ ~'.,V
Navy at Rameswaram, Koclii. The value of the worl< awarded
H
RAVINDRA & ASSOCIATES v. UNION OF INDIA 337
f was Rs. 5,44,47,087/-. The work which commenced on A
24.12.1990 had to be completed by 23.6.1993 and admittedly
it was completed by the said date.
4. Disputes arose between J:he parties and the parties
invoked the arbitration clause provided in the General B
Conditions of Contract. The claimant-appellant made claims
under 25 heads. The arbitrator awarded to the claimant a sum
-;
·-of Rs. 70,94,265/- and allowed simple interest at the rate of
18% from the date of accrual for cause of action till date of
reference, from the date of reference till date of award and from
the date of award till the date of decree or date of payment
c
whichever is earlier. An application by the appellant-claimant
was filed before the Principal Sub Judge, Kochi to make the
... award a Rule of the Court. The respondent-Union of India also
filed an application for setting aside the award of the arbitrator.
~~ D
The Sub-Judge allowed the application of the appellant and
made it a Rule of the Court, but awarded 12% interest on the
amount awarded from the date of decree till realization and
dismissed the application of the respondent-Union of India.
Aggrieved against the order dated 9.10.1996 of the Sub-Judge,
Kochi the respondent herein preferred an appeal before the E
High Court which has been allowed by the impugned judgment
and order. Hence, the present appeal.
.. ~
5. In our opinion, the High Court wrongly interfered with the
arbitration award and practically acted as a Court of Appeal, F
which it could not do (See : State of Rajasthan vs. Puri
Construction Co. Ltd. (1994) 6 SCC 485; Trustees of Port of
Madras vs. Engineering Construction Corporation Ltd. (1995)
5 SCC 531; EOG India Ltd. vs. Bhagwati Oxygen Ltd. (2007)
9 SCC 503 and G. Ram Chandra Reddy & Company vs. G
Union of India & Anr. (2009) 6 SCC 414).
--+
6. As regards the allegation that while in the contract
mixture provided for in the contract is M/15, but in fact, M/20
was used, it has been held by the arbitrator that this was done
at the insistence of the Department. The arbitrator also held that H
~
33~ SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.
A the relevant drawing for M/15 mixture and the drawing relied
upon by the respondent did not find place in the list of drawings
forming part of the tender documents. Hence, in our opinion,
the High Court has wrongly interfered with the findings of the
arbitrator as regards claim Nos. 1 and 9.
8
7. As regards claim No. 10(b) relating to payment of over-
time to labour it has been contended by the learned counsel
for the appellant that there was a delay in supply of stores by ),•
the respondent and therefore the labour had to be retained for
a longer period of time than envisaged under the contract and
c hence overtime charges had to be paid to the labour.
8. In this connection, the learned counsel appearing for the
respondent has· relied upon the decision of this Court in the
case of Ramnath International Construction (P) Ltd. vs. Union
~-~
D of India (2007) 2 SCC 453. We have gone through the said
decision. In our opinion that decision has no application to the
case at hand as in that case the contractor sought and obtained
extensio'n of time for execution of the contract whereas in the
present case neither extension of time was sought for, nor in
E fact, granted for completion of the contract. Hence, the
aforesaid decision is clearly distinguishable. Clause 11 (c) of
the General Conditions of Contract has no application in this
case at all. t ..
9. As regards Claim No. 12 relating to difference in price
F of wood frames for doors and windows, it is stated that no doubt
the contract provided for teak wood but it was changed to
second class hard-wood at the insistence of the Department.
The High Court has in this regard relied upon the decision of
the Board of Officers who has made its assessment by relying
G upon Clause 62(G) of the General Conditions of Contract which
provided that the decision of the Garrison Engineer would be
final unless it was set aside in appeal. In the present case, the
price was not fixed by the Garrison Engineer at all. Moreover,
the Board of Officers had made an inquiry in the matter after
H three vears and the arbitrator, in our opinion, rightly held that
RAVINDRA & ASSOCIATES v. UNION OF INDIA 339
=$
; such an inquiry was of no consequence. A
10. As regards Claims No. 20 and 23 relating to escalation
. ....
in prices of material, in our opinion, the arbitrator has given his
findings of fact and the High Courtmisread Clause 18 of the
Special Conditions of Contract.
8
11. For the reasons given above, we are of the opinion
that the High Court has wrongly interfered with the arbitration
-;
award. Accordingly, the appeal is allowed and the impugned
judgment and order is set aside.
c
12. We may also point out that in para 12 of the judgment
there appears to be a typographical error inasmuch as the
.. Principal Sub-Judge Kochi has reduced the interest from 18%
to 12% and not 10%, as wrongly recorded in the impugned
-¥ judgment. We make it clear that the appellant is entitled to D
interest @ 12%, as awarded by the Principal Sub Judge, Kochi.
,_ ·.
Appeal allowed. No order as to the costs.
R.P. Appeal allowed .
.. ..,
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