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TMI Blog1999 (2) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... and Contractors, the appellant in Civil Appeal No. 5961 of 1983. Contract for construction of group No. 2 consisting of block numbers 11 to 23 was entered into with M/s. Chabaldas Sons, Contractors. It appears that both the contractors could not complete the work assigned to them and disputes arose between them and the respondent-State. The contracts were terminated in between and the remaining parts of the work were got executed through other agencies. 3. The contracts entered into with the two contractors by the respondent- State of MP have an arbitration clause around which centers the controversy arising for decision in the two appeals. The same is extracted and reproduced hereunder. 3.5.29: DECISION OF SUPERINTENDING ENGINEER TO BE FINAL EXCEPT WHERE OTHERWISE SPECIFIED IN THE CONTRACT The decision of the Superintending Engineer of the Circle for the time being in respect of all questions and disputes relating to the meaning of the specifications designs drawing and, instructions here-in-before mentioned and as to the quality of workman ship or material used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1972 addressed a communication to the Chief Secretary, the Secretary to Government (Irrigation Department), the Engineer-in- Chief, the Superintending Engineer, and the Secretary Central Board Major Project lodging a strong protest to the action of the Superintending Engineer having delegated his function of taking decision in terms of the contract to the sub-committee. He submitted that the Superintending Engineer had there-by rendered himself incapable of taking the decision under the contract and therefore it was necessary to appoint an arbitrator and refer the disputes raised by the contractor for his decision. A list of disputes raised by the contractor was annexed with the letter with a request to take steps in the direction of appointment of an arbitrator. (5.1.) On 11.1.74 the Deputy Secretary to Government of MP (Irrigation Department) acting `by order and in the name of Governor of Madhya Pradesh' appointed Shri W.V. Oak, Chairman M.P. Electricity Board Jabalpur as the sole arbitrator for deciding the disputes between M/s. M.K. Shah Engineers and Contractors and the Government of Madhya Pradesh. The opening sentence of the letter states that the State Government i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government (Irrigation Department) `by order and in the name of Governor of Madhya Pradesh' appointed Shri C.M. Sanghvi as sole arbitrator to decide the disputes. The letter opens with a statement that the State Government were pleased to accord sanction in the case in which Shri C.H. Sanghvi had been appointed as an arbitrator to decide the disputes between M/s. M.K. Shah and the Government of Madhya Pradesh. (5.5.) The arbitrator Shri Sanghvi concluded the arbitration proceedings and made an award on 26.9.78. The award is a non- speaking one. The contractor had put forth claims aggregating to over ₹ 62 lacs while the respondent-State of MP had raised a debit against the contractor of over ₹ 28 lacs. There were also counter claims made by the respondent-State of M.P. on account of loss of revenue and interest on capital which was locked-up in incomplete works. (5.6.) The operative part of the award reads as under : I make and state the award as below :- The respondents, the State of Madhya Pradesh, will pay the claimants, M./s. M.K. Shah, the following : (a) ₹ 15,09,131 (b) Amount to be calculated (c) ₹ 5,28,752 (Rupee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28 days the arbitration could have been demanded. A petition under Section 33 of the Arbitration Act was filed before the court seeking determination of the effect of arbitration clause and inviting adjudication by the court on the plea of the State of Madhya Pradesh that the disputes raised by the contractor were not arbitrable in view of the arbitration clause. (6.2.) During the pendency of the above said petition, Shri K.L. Pandey expired. The contractor M/s. Chabaldas Sons made a demand for filling up the vacancy. The Government of Madhya Pradesh acceded with the request and on 26.11.77 appointed Shri C.H. Sanghvi, a sole arbitrator in place of Shri K.L. Pandey. This letter is also signed by Deputy Secretary of Government of Madhya Pradesh, (Irrigation Department) `by order and in the name of the Governor of Madhya Pradesh'. (6.3.) The contractor had put forth claims exceeding ₹ 70 lacs while the respondent-State had raised a debit of over ₹ 50 lacs against the contractor and had also preferred counter-claims. The award dated 26.9.1978 is a non-speaking award, operative part whereof reads as under: I make and state the award as below : The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by remitting the reference back to the arbitrator. It has also been held that there being no contract, usage or custom sustaining the award of interest by the arbitrator, the award to the extent to which it allows interest for prereference period was also liable to be set aside. 8: Shri G.L. Sanghi, learned senior counsel for the appellant in C.A. No. 5962 of 1983 and Shri M.K. Shah, the appellant in C.A. No. 5961 of 1983 appearing in person, have both attacked the legality of the orders of the High Court and the trial court submitting that the approach adopted by the two courts was basically wrong. It was also submitted that the State of M.P. had submitted to arbitration and thereby acquiesced in the arbitration proceedings and hence should not have been heard raising objection to the maintainability of the reference to arbitration in the manner in which it has been done. 9. It is well-settled that an arbitration award is not vitiated merely because the arbitrator has not given item-wise award and has chosen to give a lumpsum award. A lumpsum award is not a bad award. So also it is well- settled that an award need not formally express the decision of the arbitrator on each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of cases by itself. In our opinion, such class of cases would not exclude judicial determination of the disputes by the arbitrator or the court, as the case may be. (10.2) At pp. 504, 853-855, Hudson has dealt with Scott v. Avery type of arbitration clause, according to which the certificate of an architect or valuer is a condition precedent of the contractor's right of action. The courts will give effect to the condition unless (i) the condition has been waived, or (ii) the party seeking to set it up has somehow disentitled himself from doing so. 11. Russel opines in Arbitration (Twentieth Edition, at page 324) :- Where certificate is a condition precedent - In arbitrations under building and like contracts, the issue of an architect's or engineer's certificate is often made a condition precedent to a contractor's right to payment for work done by him. If in such a case there is a general reference of a dispute arising out of a refusal to issue a certificate, and the arbitrator determines that a certificate ought to have been given, he will normally have power to order payment for the amount for which the certificate should have been given . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision and in spite of persuasion and protests by the contractor, did not promptly take and communicate his decision on the disputes. The State Government ultimately yielded to the demand of the contractor by appointing an arbitrator. Once the arbitrator commenced the arbitration proceedings, the State of M.P. gave a second thought and receded its steps by choosing to raise an objection to the maintainability of the arbitration. The arbitrator allowed time to the Government of Madhya Pradesh for securing a judicial pronouncement on its objection under section 33 of the Act. The State of M.P. initiated proceedings under Section 33 of the Act, but did not pursue the same. Rather it agreed to the appointment of a new arbitrator in place of the previous one. 16. In C.A. No. 5962/83, in the case of M/s. Chabaldas Sons also, the situation is more or less similar. The appellants had stated the disputes demanding decision by the Superintending Engineer. The letter dated 26.7.1971 by the Executive Engineer, Barna Dam Division conveyed to the appellants that it was the decision of the Superintending Engineer to not to accept the claim preferred by the appellants. On 7.8.1971 the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 3.3.29 clearly suggests that the parties intended to enter into an arbitration agreement for deciding all questions and disputes arising between them through arbitrator and there-by excluding the jurisdiction of ordinary civil courts. Such reference to arbitration is required to be preceded by a decision of the Superintending Engineer and a challenge to such decision within 28 days by the party feeling aggrieved therewith. The steps preceding the coming into operation of the arbitration clause though essential are capable of being waived and if one party has by its own conduct or the conduct of its officials disabled such preceding steps being taken, it will be deemed that the procedural pre-requisites were waived. The party at fault cannot be permitted to set up the bar of non-performance of pre-requisite obligation so as to exclude the applicability and operation of the arbitration clause. 18. The subsequent conduct of the respondent in voluntarily agreeing to the appointment of the arbitrators in both the cases and not pursuing their objections under Section 33 of the Arbitration Act amounts to waiver on their part of the plea of non-compliance with the earlier part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared herein shall apply only to pending Proceedings . G.C. Roy's case was decided on 12.12.91. (21.1) Jena's case and G.C. Roy's case, both were considered by this Court in Hindu Construction Company Ltd. v. State of J K, AIR (1992) SC 2192. The arbitrator by his award dated 24.10.1972, had awarded interest at the rate of 6% p.a. from the date of reference (6.12.68) to date of payment or decree, whichever is earlier. By its judgment dated 28.8.92, vide para 5, this court following the decision in G.C. Roy's case held that the principle of Section 34 of the CPC which provides both for awarding of interest pendente lite as well as for the post decree period is applicable to proceedings before the arbitrator though the section as such may not apply. The award of interest as made by the arbitrator was upheld by this Court. (21.2.) In the cases at hand the awards have not been made rule of the court so far and are being so made by this court today. The award of interest pendente lite by the arbitrator deserves to be sustained. 22. Both the appeals are allowed. The Impugned Judgments of the High Court and the trial court - both are set aside in both th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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