UNION OF INDIA Vs. FIRM J P SHARMA AND SONS

JUDGEMENT

(1.) THIS is an appeal under sec. 39 of the Arbitration Act and is directed against the judgment and decree of the learned District Judge, Bikaner, dated 28-10-63, whereby the learned Judge awarded a decree of Rs. 4,26,528. 90 paise in favour of the respondent and against the appellant on the basis of an award given by Shri S. P. Lal, Deputy General Manager, Northern Railway on 12-2-63 consequent to the dismissal of the objections filed by the appellant against the validity of the award. The respondent has also filed a cross-objection and has prayed that interest be awarded on the amount decreed by the District Judge from the date of the decree till the realisation of the decretal amount. The main question that arises for consideration is about the validity of the award and we may briefly state the relevant facts as follows.

(2.) THE respondent firm was engaged as contractor by the Northern Railway for the purpose of performing all the work of porterage of goods at the various railway stations and goods-sheds falling in Zone No. 2 of the Bikaner Division of the Northern Railway. THE terms and conditions of the contract were contained in an indenture dated 3-4-57. THE agreement came into force from 1-4-57 and was terminable on 31-3-60. THEre were two schedules A and B appended in the agreement which provided for the rates payable to the plaintiff-respondent for the various jobs to be done by it. According to the schedules the remuneration of the contractor was to be on the basis of per thousand maunds of goods handled or per vehicle or per man hour according to the nature of the work. It was also agreed between the parties that all other handling work not specified in the agreement was to be performed by the contractor at the rates to be mutually agreed upon by the railway administration and the contractor. THE procedure for payment to the contractor was that he was to prepare and submit monthly bills on the basis of the goods handled during the previous month and the actual job done was to be certified by the Station Masters concerned on submission of the bills to the Divisional Superintendent. THE Accounts Office was to certify the bills after a checking and payment was ordinarily to be made within six weeks of the submission of the bills. It was, however, laid down that pending final check from the several station-returns the contractor was; to be provisionally paid to the extent of 90 per cent of the amount claimed in the bills: THE grievance of the contractor was that in disregard of the terms of the contract it was not paid an amount of Rs. 36,870. 38 paise for the period from April, 1957 to August, 1958. It also felt aggrieved of certain unauthorised deductions made by the railway administration for the period from January, 1958 to September, 1958 to the tune of Rs. 1,24,715. 44 paise. THEn, according to it for the period from May, 1957 to December, 1958, certain bills for repacking stations and road-side stations aggregating to Rs. 1,01,222. 03 paise were not paid to it. THEn it had a further grievance that the Station Masters had not submitted about 125 bills for the period from March, 1958 to January, 1959 to the tune of Rs. 40,000/ -. THE plaintiff-respondent, according to it made several demands to the railway administration for settlement of his claims, but it was not heard. Consequently after serving a notice under sec. 80 of the Code of Civil Procedure the firm filed a suit against the Union of India for a sum of Rs. 3,17,728 81 paise in the court of the District Judge, Bikaner on 21. 9-59. However the defendant-appellant applied under section 34 of the Arbitration Act for staying the suit as, according to the Union of India, clause 33 of the agreement provided for arbitration in the matter of all disputes between the Union of India and the contractor. We will have occasion to refer to the arbitral clause a little later. To continue the narration, the District Judge accepted this application and stayed the suit leaving the parties free to get the matter adjudicated upon by the arbitrator provided in the agreement. Against this decision the respondent came in appeal to this Court but eventually it withdrew the appeal and agreed to go in for arbitration. THE General Manager, Northern Railway by his order dated 21-9-62 appointed Shri S. P. Lal, Senior Deputy General Manager, Northern Railway to act as Arbitrator in the dispute between the railway administration and the contractor as owing to his previous heavy engagements' and pressure of official work it was not possible for him to act as an arbitrator. THE order of the General Manager is available at page 411 of the paper book. Accordingly by his letter dated 29-8-62 ( available at page 420 of the paper book ) Shri S. P. Lal called upon both the parties to submit their respective claim petitions giving full details of the claim together with all relevant documents. He also directed that the respondent should submit a copy of the claim petition directly to the Chief Commercial Superintendent who was then to reply to the claim petition para-by-para. Accordingly the respondent filed the claim petition on 10-9-62 ( available at page 423 of the paper book ). THE railway administration submitted its reply and also made a counter claim. By his order dated 21-8-62 ( available at page 521 of the paper book) after hearing both the parties, the arbitrator settled the procedure to be followed by him. THE arbitrator directed that the railway administration would frame its reply to the points raised in the petition filed by the respondent and then after the reply of the railway was received, a date shall be fixed on which the parties would argue the different issues raised point-by-point so that the issues may be clear. THE arbitrator was to either announce his judgment or reserve it as the circumstances on each point might demand. THE copy of the order was served on both the parties. On 5-12-62 it was contended by the respondent before the arbitrator that he should take up the counter claim put in by the railway administration first after listening the arguments of both the parties. THE arbitrator recorded the following minutes: "the issue raised by the applicant is that the Railway should make out a complete claim, deduct from it all the amounts they have already received and give a net balance of the amount due from the contractors to the Railway. THE Railway's contention is that the calculations of the amount would be done after some primary decisions are taken on the various issues involved and, therefore, they appear to maintain that first of all those issues should be decided, After those issues are decided, then they will work out the actual amounts on the basis of the decisions given on the various issues and the balance sheets will be struck on that basis, Considering the arguments of both the parties it has been decided to take up the issues involved in this case before arriving at the amounts payable in respect of each claim. Parties have been informed accordingly. Parties are allowed to strikeout the issues jointly and they should meet me again after lunch in case they agree on the same. " It appears that the parties came forward with a list of issues and then the arbitrator incorporated the 10 issues in the following extract of the proceedings: "the parties have come forward with a list of issues which they have referred for decision by the Court. THE said issues are reproduced below- (1) Whether the rate in respect of handling of TR/cr Vans under item 18 of the Rate Schedule 'a' is applicable at all the stations, if not, at what stations? (2) Whether the petitioner is entitied to payment for handling of TR/cr Vans, both on inward as well as outward basis, at Repacking Stations as per item 18 of the Rate Schedule, if not, on what basis? (3) Whether the petitioner is entitled to special goods rate as per items 5 of the Rate Schedule 'a' in respect of TR/cr of Vans containing special goods. If not, what rate is applicable? (4) Whether loose wool and loose cotton in boras can be classified as special goods? (5) Whether the rate in items 3 and 4 of Schedule Al in respect of F. P. Cotton bales is applicable to F. P. wool bales. If not, what rate is applicable. (6) Who is responsible for submission and preparation of bills in respect of the handling work at the stations? (7) Whether the contract has been wrongly terminated by the Railway Administration and if so, is the petitioner entitled to renewal of the contract? (8) Whether the petitioner is entitled to the interest as claimed? (9) To what amount, if any, the Railway Administration is entitled to recover from the petitioner? (10) Relief. " THEn the arbitrator took up issue No. 1 for consideration and he passed the following order after hearing both the parties: "my orders, therefore, are that handling of goods is known to all people dealing with in the railway in the form of handling of goods either the Officer Incharge of the operations or Contractors and the mode of payment for such operations is that which is given in the Railway's interpretation. I, therefore, order that for dealing with the payment of CR/tr Vans, if at a station goods are unloaded or loaded, in such vans, the payment should be made on the maundage basis as given in items 1 to 5 of the Schedule 'a', while if the contents of CR/ TR Vans are sorted out at any station and reloaded after sorting into one or more CR/tr Vans so that consignments for one destination or direction are put together, they should be paid for at the van rates i. e. item 18 of the Schedule 'a'. " Earlier to this, while recording the arguments he noted that the parties had accep-ted the interpretation that the arbitrator had given. THEn the arbitrator noted the arguments of the parties regarding each issue and he also noted in the proceedings whatever concessions had been made by the parties but he did not give his decision on any issue. THE observations that the arbitrator had made from time to time are also contained in the proceedings.

(3.) LASTLY we may turn to issue No. 3. It was argued by the defendant that although the suit before the District Judge was for a smaller amount, the award had been given for a much larger amount. In repelling this plea the learned District Judge observed that some claims were specifically reserved in the plaint and the claim put forth before the arbitrator covered the entire period of the contract and all kinds of claims. In the circumstances, according to him, it could not be said that the arbitrator had acted without jurisdiction. Consequently he decided this issue also against the defendant.