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State of Rajasthan v/s Harnam Singh

    Civil Misc. Appeal Nos. 542 of 1999, 543 of 1999, 545 of 1999

    Decided On, 12 July 2011

    At, High Court of Rajasthan


    For the Appellant: L.K. Purohit, Advocate. For the Respondent: J.K. Bhaiya, Advocate.

Judgment Text

Dr. Vineet Kothari, J.

1. Heard learned counsels.

2. These appeals are directed against the order dated 22.7.1999 passed by the learned District Judge, Banswara making Rule of Court the arbitration award dated 14.12.1997 (in SB CMA Nos. 542/1999 and 543/1999) and 6.3.1998 (in SB CMA No. 545/1999) passed in favour of the claimant contractor.

3. Learned counsel for the State, Mr. L.K. Purohit submitted that the learned Court below has erred in making the arbitration awa

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rd as Rule of Court without considering any of the objections raised by the appellant State before the Arbitrator as well as the learned Court below. He submitted that under the contract awarded to the claimant contractor for undertaking certain civil works in Mahi Bajaj Sagar Project, Banswara, since the contractor failed to complete the work assigned to him, the appellant State had to invoke risk and cost clause (clause Nos. (2) and (3) of the contract) and got the said work completed from other contractor. He also drew the attention of the Court towards page 5 of the impugned order dated 22.4.1999, where the learned Court below gave finding in favour of the respondent applicant contractor that the State cannot by itself impose penalty and recovery damages from the applicant contractor for breach of contract without getting the same approved from the competent Court or independent authority. He submitted that this was a clear misconception of law with the learned Court below as under the contract in question State, even though party to the contract, has the power to impose penalty and recover damages in case the contractor failed to undertake and complete the work in question within the stipulated time. He, therefore, submitted that the impugned order deserves to be set aside. He also submitted that the learned Court below while making the arbitration award as Rule of Court has awarded further interest from the date of publication of award to the date of decree on the awarded sum, which is illegal and unsustainable and thus undue benefit has been conferred on the contractor while making the award as Rule of Court. This in his submission is non- application of mind by the learned Court below and matter, therefore, deserves to be remanded back to the learned Court below.

4. On the other hand, Mr. J.K. Bhaiya, learned counsel for the respondent contractor urged that Arbitrator has given clear finding that on account of non supply of lay out plans by the competent authority of the Irrigation Department, delay has occurred in completion of contract for which the Irrigation Department was found at fault by the Sole Arbitrator and, therefore, the learned Court below has rightly held that risk and cost clause could not have been invoked against the contractor for the work completed by the contractor, even though belatedly and, therefore, he was entitled to claim the amount under the said contract and same has been rightly awarded with interest.

5. I have heard the learned counsels at some length and perused the impugned order. This Court while admitting these appeals stayed the execution of the award by detailed order dated 13.9.1999. A perusal of the impugned order dated 22.4.1999 shows, prima facie, that the learned Court below has not considered the arbitration award before it in a proper perspective and even though the learned Arbitrator while giving the award in favour of the contractor did not give any cogent finding on the objections raised by the State, the same has been made Rule of Court without looking to the objections raised by the State again. It may be stated here that making the award as Rule of Court under the Act of 1940 is not a mechanical or rubber stamp exercise. The learned Court below ought to have examined the matter in a proper perspective and whether the Arbitrator has dealt with the objections and contentions raised by the State in a proper manner or not was required to be seen as that could have resulted in misconduct by the Arbitrator while passing the said award. Ignoring the objections raised by the State altogether or just brushing them aside, frustrates the very purpose of requirement of making the award Rule of Court by an independent Court of Law and therefore the said exercise cannot be done in a whimsical or cursory manner or by a non-speaking order. The impugned order dated 22.4.1999 suffers from that vice.

6. Therefore, this Court considers it expedient to set aside the impugned order dated 22.4.1999 and remand the matter back to the learned Court below for deciding the application under Section 20 read with Section 8 of the Arbitration Act, 1940 for making the award as Rule of Court once again.

7. Consequently, these appeals of State are allowed and the order passed by the learned Addl. District Judge, Banswara dated 22.4.1999 is set aside in all the three appeals and matter is restored to the learned Court below with a request to decide the same afresh expeditiously preferable within six months from today.

Appeals allowed.