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TMI Blog1989 (1) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant V.B. Patel, D. Patel, T.H Pandey and R.P. Kapur For the Respondents Soli J. Sorabjee, Atul Setalwad, N.J. Mehta, P. Shah, S.K. Sharma, S. Sharma and P.H. Parekh JUDGMENT This is an application for leave to appeal under Article 136 of the Constitution from the judgment and order of the High Court of Gujarat dated 29 th April, 1988. To appreciate the questions involved herein, few facts have to be emphasized. In 1978, the State Government of Gujarat undertook a scheme known as Bhavnagar City Water Supply Scheme . TheScheme was divided into two parts: (i) Raising Main; and (ii) Gravity Main. Raising Main was divided into two sections, namely, 10.1 k.ms. and 7.4 k.ms. steel welded pipeline. On or about 15/16th December, 1978, the State Government issued letter of approval to the bargain between the parties on certain terms. On 12th January, 1979, two contracts were awarded to the respondent No. 1 for Rs. 1,29,39,691 and Rs.94,30,435 which provided the dates of completion as February 1979 and the 3rd week of September, 1980 respectively. On 29th March, 1981 the respondent No. 1 filed the Civil Suit No. 588 of 1981 in the City Civil Court with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said two works in question should be referred to the sole arbitrator and the Board could also be entitled to put counter-claims before him. The consent terms also provided the following terms: "That the arbitration proceedings shall be started de novo meaning thereby that the earlier appointment and proceedings before the Sole Arbitrator Shit G.G. Vaidhya shall be inoperative and void. That the Board shall have a right to agitate all points both in fact and in law before the Sole Arbitrator as per the terms and conditions of the contract including the question of arbitrability within the meaning of clause 30 of the contract. Both parties shall have a right to be represented by an Advocate and/or their representatives. The expenses of arbitration shall be borne by .both the parties as per rules of Government in this behalf. That both parties shall agree to extend time as and when necessary for competition of arbitration proceedings. That a formal agreement for arbitration shall be executed between the parties defining the scope of Arbitration. _ That the provisions of the Indian Arbitration Act, 1940 shall apply to the proceedings before this Sole Arbitrator." On 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. So, these issues were gone into and it appears that the parties had agreed and proceeded on the basis that the claims may be examined and it was not necessary to decide preissue of arbitrability and it was agreed that aH the claims be decided claimwise. So, it cannot be said that the arbitrator had acted arbitrarily in discussing all the questions raised before him without first deciding the question of arbitrability or non-arbitrability of an issue as such. The Court in its judgment has discussed the conduct of the parties. It appears that the Court found that the parties themselves had agreed that the arbitrator should decide claimwise and on merit. The Court so found, and in or opinion, rightly. The arbitrator so proceeded. There was no error committed by the arbitrator in so conducting himself. It was, secondly, contended that out of the numerous claims before the arbitrator, some of which, according to the petitioner, were ex facie not arbitrable and some were withdrawn including the claims for interest of Rs.54,61,073 and compound interest of Rs.82,26,039. and in the award no basis or indication was given as to which claim was rejected and further of the amount which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decide the question of arbitrability. The arbitrator has rested by stating that he had heard the parties on the point of arbitrability of the claim and the ,counter-claim. He has further stated that after considering all the above aspects and the question of arbitrability or non-arbitrability he had made the award on certain aspects. Reading the award along with the preamble, it appears clear that the arbitrator had decided the arbitrability and the amount he has awarded was on the points which were arbitrable. The contention that the arbitrator had not decided the question of arbitrability as a preliminary issue cannot also be sustained. A reference to the arbitrator s proceedings which were discussed in detail by the High Court in the judgment under appeal reveal that the procedure adopted by the arbitrator, i.e., that he will finally decide the matters, indicated that the parties had agreed to and the arbitrator had proceeded with the consent of the parties in deciding the issues before him and in not deciding the question of arbitrability as a separate, distinct and preliminary issue. The arbitrator has made his award beating all the aspects including the question of arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable . Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and the circumstances in which he thinks. The word reasonable has in law prima facie meaning of reasonable in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know. See the observations on this point in Municipal Corporation of Delhi v. M/s. Jagan Nath Ashok Kumar Anr., [1987] 4 SCC 497. Judged by the aforesaid yardstick the award cannot be condemned as unreasonable. There is, however, one infirmity in the award which is apparent on the face of the award which in the interest of justice as the law now stands declared by this Court, we should correct, viz., the question of interest pendent lite. The right to get interest without the intervention of the Court and the powers of the court to grant interest on judgment have been examined by this Court in Executive Engineer (Irrigation) Balimela and Ors. v. Abhaduta Jena Ors., [1988] 1 SCC 418 which observations were also followed by this Court in State of Orissa Ors. v. Construction India, [1987] Supp. SCC 709. In accordance with the principles stated therein and the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equally apply to enable this Court to do this in these proceedings. In this connection, it is necessary to consider whether the date of commencement of the arbitration proceedings should be taken as the date of the reference or the date on which the arbitrator entered upon the reference as the date of the calculation of interest. In this case, the proceedings commenced on 2nd April, 1984 and the arbitrator entered upon the reference on 22nd August, 1984. Having regard to the facts and the circumstances of the case, it is necessary, in our opinion, to take 22nd August, 1984 as the date. It is also necessary to consider whether the date of award should be taken as the date of its making or its publication. The award was made on 8th July, 1985 and it was published on 19th July, 1985, and, therefore, the latter date would be taken as the date of the award. We would, however, delete the interest awarded by the arbitrator for the period from 22.8.1984 till the date of the award and confine the interest on the principal sum of Rs.57,65,273 to interest at 9 per cent from 6.8.1981 till 21.8.1984 (which has been worked out at Rs.29,82,443). However, in exercise of our powers under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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