(Prayer: Civil Miscellaneous Appeal is filed under Section 37 of the Arbitration Act, 1996, against the order passed in Arbitration O.P.No.3 of 2012 dated 05.06.2013 on the file of the Principal District Court, Tiruchirappalli.)
1. The appellant/petitioner has preferred this appeal challenging the order dated 05.06.2013 passed in Arbitration O.P.No.3 of 2012 on the file of the Principal District Court, Tiruchirappalli.
2. The respondent purchased a vacant land measuring 1125 sq.ft from the appellant on 09.7.1992 for a sum of Rs.37,125/-. They entered into a construction agreement dated 13.3.1994 for construction of residential building in the said vacant land. The cost of construction was fixed at Rs.2,71,827/-. The schedule of payment was also mentioned in the construction agreement. As per the construction agreement, the appellant agreed to complete the entire construction on or before 20.06.1994. The respondent paid a total sum of Rs.2,10,375/- as on 06.07.1994 including cost of land. According to the respondent, the appellant did not adhere to the schedule of construction as mentioned in the construction agreement. As per the construction agreement, the appellant has to complete mosaic, sanitary, electric and plumbing work etc., on or before 30.5.1994 and within a week from the date of completion of the same, a sum of Rs.47,612/- shall be paid. Further, after completion of the entire building on or before 20.6.1994, the respondent has to pay the last installment of Rs.47,612/- and the sanctioned loan would be released only on completion of each stage of construction. On 05.09.1994, one Jayalakshmi, the sister of the respondent inspected the construction and it was agreed between the appellant and sister of the respondent that 30% of the total construction has to be completed and both of them signed a letter to that effect. The officials of the bank inspected the construction on 20.9.1996 and informed the respondent that major work has not been completed and therefore, they refused to release the last two installments of Rs.47,612/- each.
3. According to the appellant, he has completed the construction as agreed upon, but the respondent committed breech of terms of construction agreement by not paying last two installments and statutory charges like electricity charge etc. Further, according to the appellant, the respondent failed to pay a total sum of Rs.1,40,577/- and therefore, the appellant did not hand over the possession of the house to the respondent. The respondent, his brother and his sister assaulted the appellant and he gave a complaint to the police. An FIR was registered in Cr.No.330 of 1997 and they were prosecuted in C.C.No.13 of 1998 but they were acquitted by criminal court. The respondent without paying balance amounts approached Consumer Forum alleging deficiency of service by the appellant. The said complaint was dismissed by the Consumer Forum. In the circumstances, the respondent filed O.S.No.651 of 1999 on the file of II Additional Subordinate Judge, Tiruchirappalli for recovery of possession of the building with all construction and for damages. An arbitration clause was incorporated as clause 9 in the construction agreement. Therefore, the appellant filed application in I.A.No.335 of 2000 in the said suit alleging that suit is not maintainable in view of arbitration clause. On 20.10.2005, the said application was allowed. Subsequently, by order dated 04.04.2008, the Court appointed one Kanagasabesan as Arbitrator. The Arbitrator by letter dated 09.09.2008 informed both the appellant and respondent about first date of hearing on 24.09.2008. Both the parties appeared before the Arbitrator on that day. The respondent filed claim petition before the Arbitrator claiming a sum of Rs.13,18,271/- The appellant sought time for filing his counter statement. The Arbitrator did not fix the next date of hearing on that day. The Arbitrator on 19.4.2009 sent a letter to the appellant and respondent fixing the date as 06.05.2009 for the hearing. The respondent appeared on that day. The notice sent to the appellant was returned to the Arbitrator with an endorsement "refused". The Arbitrator on that day considered the claim of the respondent and passed an award based on the claim of the respondent.
4. The appellant filed Arbitration O.P.No.3 of 2012 before the Principal District Judge, Tiruchirappalli. According to the appellant, no notice dated 19.4.2009 intimating the date of hearing was sent to the appellant. He denied that he refused to receive any letter from the Arbitrator. He also stated that the Arbitrator is a close friend/relative of advisor of the respondent and the Arbitrator acted in a biased manner. Therefore, he prayed for allowing the Arbitration OP and setting aside the award of the Arbitrator.
5. The respondent filed counter statement and denied all the allegations made by the appellant. According to the respondent, the Arbitrator acted in a fair manner. The respondent also stated that Arbitration OP is not maintainable as appellant failed to file the said OP within the time limit as per the provisions of Arbitration and Conciliation Act 1996.
6. The learned Judge considered the rival contentions of the learned counsel for the appellant and respondent, held that the appellant has filed the Arbitration OP within the time limit and it is not barred by limitation. The learned Judge dismissed the Arbitration OP holding that the appellant failed to prove that the Arbitrator did not give proper opportunity to put forth his case and failed to prove that Arbitrator acted in a biased manner and he is a close friend/relative of advisor of the respondent. Against that order of dismissal, the present Civil Miscellaneous Appeal has been filed.
7. The learned counsel for the appellant contended as follows:
(i) The Arbitrator did not give proper opportunity of hearing to the appellant to put forth his case. The Arbitrator did not send notice of hearing to the appellant. The sister of the appellant, who was working as Assistant Post Master in Srirangam Post Office had manipulated and returned the cover sent to the appellant as "refused". The notice was sent to wrong address and it was not sent to the address in which the appellant received notice of first hearing. The appellant was not in station during that time. The learned Judge failed to consider the evidence of the appellant.
(ii) The Arbitrator exceeded his jurisdiction in awarding compensation under different heads, which are not covered by Arbitration clause in construction agreement. The Arbitrator is a close friend / relative of Advisor of respondent. The appellant came to know of this fact only subsequent to passing of Arbitration Award.
(iii) The learned Subordinate Judge did not have jurisdiction to appoint Arbitrator. As per Section 11 of Arbitration and Conciliation Act, 1996, only the Chief Justice of this Court has got power to appoint an Arbitrator.
8. The learned counsel for the appellant relied on following Judgments:
(i) (2010) 8 SCC 563 [RASHTRIYA CHEMICALS AND FERTILIZERS LIMITED], wherein in paragraphs 23 and 24, it has been held as follows:
"23. In Bharat Coking Coal Ltd. v. Annapurna Construction (2003) 8 SCC
154, this Court reiterated the legal position in the following words:
"There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameters of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record."
24. In MD, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. also this Court took the similar view and observed: (SCC p.646, para 43 "43. An Arbitral Tribunal is not a court of law. Its orders are not judicial orders. Its functions are not judicial functions. It cannot exercise its power ex debito justitiae. The jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject- matter of reference.""
(ii) (2011) 14 SCC 147 [OIL AND NATURAL GAS CORPORATION LIMITED VS. OFF-SHORE ENTERPRISES INC., wherein in paragraphs 11 and 12, it has been held as follows:
"11. On a careful consideration of the award with reference to the claim, we are of the view that the learned Arbitrators have acted beyond the reference and exceeded their jurisdiction in awarding Rs.36,38,50,000/-.
12. In Rajasthan State Mines and Minerals Ltd. vs. Eastern Engineering Enterprises - (1999) 9 SCC 283, this Court summarized the principles relating to interference with arbitral awards under Arbitration Act, 1940. Paras 44(e) to (i) which are relevant are extracted below : (SCC p.310, para 44)
"44(e) In a case of non-speaking award, the jurisdiction of the Court is limited. The award can be set aside if the arbitrator acts beyond his jurisdiction.
(f) To find out whether the arbitrator has travelled beyond his jurisdiction, it would be necessary to consider the agreement between the parties containing the arbitration clause. Arbitrator acting beyond his jurisdiction--Is a different ground from the error apparent on the face of the award.
(g) In order to determine whether arbitrator has acted in excess of his jurisdiction what has to be seen is whether the claimant could raise a particular claim before the arbitrator. If there is a specific term in the contract or the law which does not permit or give the arbitrator the power to decide the dispute raised by the claimant or there is a specific bar in the contract to the raising of the particular claim, then the award passed by the arbitrator in respect thereof would be in excess of jurisdiction.
(h) The award made by the Arbitrator disregarding the terms of the reference or the arbitration agreement or the terms of the contract would be a jurisdictional error which requires ultimately to be decid- ed by the Court. He cannot award an amount which is ruled out or prohibited by the terms of the agreement. Because of specific bar stipulated by the parties in the agreement, that claim could not be raised. Even if it is raised and referred to arbitration because of wider arbitration clause such claim amount cannot be awarded as agreement is binding between the parties and the arbitrator has to ad- judicate as per the agreement. This aspect is absolutely made clear in Continental Construction Co. Ltd. (supra) by relying upon the following passage from M/s. Alopi Parshad v. Union of India : [1988] 3 SCR 103 which is to the following effect:
5. .........
(i) The arbitrator could not act arbitrarily, irrationally, capriciously or independently of the contract. A deliberate departure or conscious disregard of the contract not only manifests the disregard of his au- thority or misconduct on his part but it may tantamount to mala fide action."
(iii) (2003) 8 SCC 154 BHARAT COKING COAL LTD. VS. ANNAPURNA CONSTRUCTION, wherein in paragraphs 21 and 22, it has been held as follows:
"21 In Associated Engineering vs. Govt. of A.P. [(1991) 4 SCC 93], this Court clearly held that the arbitrators cannot travel beyond the parameters of the contract. In M/s. Sudarsan Trading Co. v. The Govt. of Kerala [(1989) 2 SCC 38], this Court has observed that an award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdiction and evidence of matters not appearing on the face of it, will be admitted in order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has been determined outside the award, whatever might be said about it in the award by the Arbitrator. This Court further observed that an arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award.
22. There lies a clear distinction between an error within the jurisdiction and error in excess of jurisdiction. Thus, the role of the arbitrator is to arbitrate within the terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled beyond the contract, he would be acting without jurisdiction, whereas if he has remained inside the parameter of the contract, his award cannot be questioned on the ground that it contains an error apparent on the face of the record."
(iv) (2006) 1 SCC 86 STATE OF RAJASTHAN VS. NAV BHARAT CONSTRUCTION CO., wherein in paragraph 27, it has been held as follows:
"27. There can be no dispute to the well established principle set out in these cases. However these cases do not detract from the law laid down in Bharat Coking Coal Ltd's case or Continental Construction Co. Ltd's case (supra). An arbitrator cannot go beyond the terms of the contract between the parties. In the guise of doing justice he cannot award contrary to the terms of the contract. If he does so he will have misconducted himself. Of course if an interpretation of a term of the contract is involved than the interpretation of the arbitrator must be accepted unless it is one which could not be reasonably possible. However where the term of the contract is clear and unambiguous the arbitrator cannot ignore it."
(v) (1999) 8 SCC 122 [STEEL AUTHORITY OF INDIA LTD VS J.C. BUDHARAJA, GOVERNMENT AND MINING CONTRACTOR, wherein in paragraphs 16 and 17, it has been held as follows:
"16. Further, the Arbitration Act does not give any power to the arbitrator to act arbitrarily or capriciously. His existence depends upon the agreement and his function is to act within the limits of the said agreement. In Continental Construction Co. Ltd. v. State of M.P. [1998 (3) SCC 82], this Court considered the clauses of the contract which stipulated that the contractor had to complete the work in spite of rise in the prices of materials and also rise in labour charges at the rates stipulated in the contract. Despite this, the arbitrator partly allowed the contractor s claim. That was set aside by the Court and the appeal filed against that was dismissed by this Court by holding that it was not open to the contractor to claim extra costs towards rise in prices of material and labour and that the arbitrator misconducted himself in not deciding the specific objection regarding the legality of the extra claim. ....
17. It is to be reiterated that to find out whether the arbitrator has travelled beyond his jurisdiction and acted beyond the terms of the agreement between the parties, the agreement is required to be looked into. It is true that interpretation of a particular condition in the agreement would be within the jurisdiction of the arbitrator. However, in cases where there is no question of interpretation of any term of the contract, but of solely reading the same as it is and still the arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award would be arbitrary, capricious and without jurisdiction. Whether the arbitrator has acted beyond the terms of the contract or has travelled beyond his jurisdiction would depend upon facts, which however would be jurisdictional facts, and are required to be gone into by the court. The arbitrator may have jurisdiction to entertain claim and yet he may not have jurisdiction to pass award for particular items in view of the prohibition contained in the contract and, in such cases, it would be a jurisdictional error. For this limited purpose reference to the terms of the contract is a must. Dealing with a similar question this Court in New India Civil Erectors (P) Ltd. v. Oil and Natural Gas Corpn. held thus: (SCC p. 79, para 9)
It is axiomatic that the arbitrator being a creature of the agreement, must operate within the four corners of the agreement and cannot travel beyond it. More particularly, he cannot award any amount which is ruled out or prohibited by the terms of the agreement. In this case, the agreement between the parties clearly says that in measuring the built-up area, the balcony areas should be excluded. The arbitrators could not have acted contrary to the said stipulation and awarded any amount to the appellant on that account.?"
(vi) (2003) 5 SCC 705 [OIL AND NATURAL GAS CORPORATION LTD. VS. SAW PIPES LTD., wherein it has been held as follows:
"B. Aribitration and Conciliation Act, 1996 - Sections 34(2)(a)(v), 24, 28 and 31(3) - Court's power under Section 34(2)(a)(v) to interfere with the award - Scope - An award contrary to substantive provisions of law or the provisions of the Arbitration and Conciliation Act or against the terms of contract, held, would be patently illegal - Hence, would be subject to interference under Section 34(2)(a)(v) - Respondent contractor entering into a contract with appellant ONGC to supply pipes of specified description by the specified date - Terms of contract entitling ONGC to recover damages at the stipulated rate for delay, if any, in supply of the goods and further stating the same to be agreed and genuine pre-estimate of damages and not as penalty - Further, the terms of contract authorising ONGC to deduct the amount of such damages from the contractor's Bill - Moreover, the terms of contract while providing for payment of interest on delayed payments, specifically stating that no interest would be paid on disputed claims - At a subsequent stage, at the contractor's request, ONGC extending the time for the supply of the goods subject to the condition that ONGC would recover the agreed stipulated damages - ONGC deducting the amount of the damages accordingly - Contractor disputing such deduction before Arbitral Tribunal - Arbitral Tribunal holding the deduction to be wrongful on the ground that ONGC had failed to establish that it had suffered any monetary loss, and directing the same to be refunded together with interest - Such an award, held, violative of Section 28(2) and (3) and totally unjustified - Hence, set aside under Section 34(2) - Further held, in respect of situations where it was impossible to assess or prove damages, the specified terms of the contract itself had made a provision in consonance with Sections 73 and 74 of Contract Act."
(vii) (2013) 4 CTC 432 R.NARAYANA VS. INDIA INFO LINE SECURITIES PRIVATE LIMITED AND ANOTHER, wherein in paragraphs 23 to 26, it has been held as follows:
"23. The fact that the Arbitrator concluded the proceedings and passed an award even before the receipt of the necessary documents and even before the petitioner could make his submissions on those documents, is clearly borne out to us by a letter dated 29.5.2006 sent by the National Stock Exchange of India Limited to the petitioner. It must be remembered that the National Stock Exchange nominated the Arbitrator. The relevant portion of the said letter dated 29.5.2006 of the National Stock Exchange reads as follows :
"During the hearing held on January 13, 2006 written submissions made by both the parties submitted were exchanged. Further, the arbitrator directed the trading member to submit the details of the Jet Airways securities traded on March 14, 2005. Vide letter dated January 16, 2006 you had sought some additional documents from the trading member and the same was forwarded to the trading member and the arbitrator on January 17, 2006. The trading member submitted copies of the contract note on January 31, 2006 and the same was forwarded to you vide letter dated January 31, 2006. Further, vide letter dated February 6, 2006 you requested the Exchange to verify the veracity of the contract notes submitted by the trading member. The Exchange vide letter dated February 7, 2006 provided the details of the trades executed in your client code "NSWAMI" on March 14, 2005 by the trading member. A copy of the same was forwarded to the arbitrator.
As per the Bye-law 13(b) of Chapter XI of the Bye-laws of the Exchange the arbitration award has to be passed normally within 3 months from the date of entering reference (the date of first hearing). Since the period of three months was expiring on January 7, 2006, the arbitrator requested for additional time of one month for the completion of the arbitration matter under Bye-law 13(c) of Chapter XI of the Bye-laws of the Exchange. Accordingly, extension of one month was granted by the Relevant Authority to the arbitrator to make the award. The award dated February 7, 2006 made by the sole arbitrator was received by the Exchange on February 8, 2006 and the same was forwarded to you and the trading member on February 8, 2006."
24. Therefore, it is clear from the above letter that the petitioner was seeking copies of documents in support of his defence and that the first respondent was also furnishing the same, even after the conclusion of the hearing on 16-01-2006 and the passing of the Award on 6.2.2006. This confirms the contention of the petitioner that he was under an incapacity to defend his case properly before the Arbitrator.
25. As contended by the learned Senior Counsel for the petitioner, Section 23 of the Act, lays down the procedure for filing Statements of Claim and Defence. Under sub-section (2) of Section 23, the parties are required to submit, all documents they considered to be relevant, along with their Statements. Alternatively, they must at least add a reference to the documents that they will submit. But a perusal of the Statement of Claim made by the first respondent shows that the relevant documents were not enclosed.
26. As a matter of fact, Section 24 also lays down the procedure to be adopted by the Arbitral Tribunal. Sub-section (2) of Section 24 requires the Arbitral Tribunal to give sufficient advance notice of any hearing, for the purpose of inspection of documents, goods or other properties. But unfortunately, the Arbitral Tribunal did not adhere to any of these procedures. Even when the petitioner was collecting evidence, to the knowledge of the Arbitrator, the Arbitrator closed the proceedings and passed the Award. The Arbitrator did not even put the petitioner on notice that he was closing the proceedings and that no more documents could be called for. A useful reference could be made to a passage from Justice R.S.Bachawat's Law of Arbitration and Conciliation (5th Edition-2010) at page 1547. It reads as follows:-
"The Arbitrator will be guilty of misconduct if he makes the Award without giving distinct notice that the proceedings are closed and he will proceed to make his Award."
Therefore, the petitioner was justified in thinking that the proceedings had not been concluded."
9. Per contra, the learned counsel for the respondent contended that the Arbitrator was chosen by the appellant himself and respondent gave consent for appointment of the said Arbitrator. The Arbitrator was appointed as per the memo filed by the appellant dated 04.1.2008 and joint memo dated 12.2.2008 filed by appellant and respondent. As per clause 9 of construction agreement, an Arbitrator has to be appointed by mutual consent by both the parties. Therefore, as per Section 8(1) of the Conciliation and Arbitration Act, 1996, the Court has power to refer the matter to Arbitration, if parties agreed for the same. Therefore, appointment of Arbitrator by II Additional Subordinate Judge, Tiruchirappalli, is valid. The Arbitrator is not a friend/relative of advisor of respondent. The Arbitrator did not act in a biased manner, but conducted the proceedings in a fair and proper manner in accordance with law. Sufficient and proper opportunity was given to the appellant to put forth his case, but he failed to appear before the Arbitrator. Notice was sent to the correct address and appellant refused to receive the same. The Arbitrator also informed the staff of the appellant about the date of hearing, but he failed to appear before the Arbitrator. The respondent proved before the Arbitrator, his claim as per law and Arbitrator considered all the documents relied on by the respondent in a proper perspective and passed the award.
10. The Arbitrator has not exceeded his jurisdiction in passing the award. As per clause 9 of the Construction Agreement, all disputes arising out of agreement including claims about payment, completion of work will be referred to Arbitrator. The appellant failed to hand over the building after completion of construction within due date and all the loses suffered by respondent falls within the ambit of "enforcing completion of any work pending". Even if the respondent has not paid the cost of the building as agreed upon, the same has to be adjudicated as per the clause "enforcing any payment of claim'' and therefore, prayed for dismissal of this Civil Miscellaneous Appeal.
11. I have considered the rival submissions of both sides and also perused the materials on record.
12. Points for consideration:
(1) Whether the appointment of Arbitrator by the learned II Additional Subordinate Judge, Tiruchirappalli, is valid and legal;
(2) Whether the appellant was given the opportunity to put forth his case or whether the Arbitrator did not follow the principles of natural justice;
(3) Whether the Arbitrator has exceeded his jurisdiction and passed award granting amounts to the respondent beyond the scope of the Arbitration Clause in construction agreement.
13. Point No:1:
The respondent filed O.S.No.651 of 1999 on the file of II Additional Subordinate Judge, Tiruchirappalli for recovery of possession of the building with all construction as per the agreement dated 13.3.1994 and for damages. The appellant filed I.A.No.335 of 2000 alleging that the said suit is not maintainable in view of Arbitration clause in construction agreement. Clause 9 of construction agreement reads as follows:
"Any dispute or difference arising under the agreement with regard to interpretation and meaning of any of the terms and conditions and for enforcing any payment of claim or for enforcing completion of any work pending arising in to this agreement shall be referred to an Arbitrator who shall be appointed by the parties hereto by mutual consent."
14. The learned Judge considering this clause allowed the interlocutory application filed by the appellant. Subsequently, the appellant filed memo dated 04.1.2008 nominating Kanagasabesan as Arbitrator. On 12.2.2008 both appellant and respondent filed joint memo consenting for appointment of Kanagasabesan as Arbitrator. Based on joint memo, the learned Subordinate Judge appointed the said person as Arbitrator.
15. The appellant denied having nominated the said Kanagasabesan as Arbitrator, but the memo filed by the appellant in I.A.No.335 of 2000 in O.S.No.651 of 1999 was marked as Ex.A.1 before the Principal District Judge in Arbitration OP.No.3 of 2012. The appellant only initially nominated Kanagasabesan as Arbitrator. The respondent gave his consent. After arbitration proceedings were over in Arbitration OP, the appellant contended that Arbitrator was close friend/relative of the advisor of the respondent and arbitrator acted in a biased manner. He also contended that he came to know about the relationship between the advisor of the respondent and Arbitrator at the later stage only. The appellant failed to prove this contention by any acceptable evidence. Therefore, the contention of the learned counsel for the appellant that he has not nominated the said Kanagasabesan, has no force.
16. As per Section 8 of Arbitration and Conciliation Act, 1996, the Court has power to refer the parties to arbitration if they agreed for the same. In the present case, both appellant and respondent agreed for Arbitration and filed a joint memo dated 12.2.2008. Therefore, appointment of Kanagasabesan as Arbitrator by the learned II Additional Subordinate Judge, Tiruchirappalli, is not contrary to law. Further, as per clause 9 of the Arbitration clause of construction agreement, contemplates that an arbitrator has to be appointed by mutual consent. Therefore, the contention of the learned counsel for the appellant that only the Chief Justice of this Court has power to appoint Arbitrator, has no force in view of the facts stated above.
17. The Judgments relied on by the learned counsel for appellant in AIR 2006 SC 450 (1) [M/S. S.B.P. AND CO. V. M/S. PATEL ENGINEERING LTD. AND ANR is not applicable to the facts of the present case. Point No.1 is answered accordingly.
18. Point No.2:
According to the learned counsel for the appellant, notice alleged to intimate the second date of hearing on 06.05.2009 was not sent to the appellant and he did not refuse to receive the same. Further, the learned counsel for appellant contended that the sister of the appellant, who was working as Assistant Post Master in the Post Office, Srirangam manipulated the letter and returned the said letter to Arbitrator with an endorsement "refused". According to the learned counsel for the appellant the appellant was not in station during that time. From the above, it is seen that the appellant has taken contradictory stand with regard to the notice intimating the second date of hearing as 06.5.2009. Further, the appellant has not denied that the Arbitrator informed his staff about the date of hearing. The appellant has not chosen to examine the post man or any other official of Post Office to substantiate his case that the sister of the respondent in her capacity as Assistant Post Master was responsible for returning the said letter with endorsement ''refused''. Except his sole evidence before the Principal District Judge, Tiruchirappalli, no other evidence was produced to substantiate his case.
19. The learned Principal District Judge considered the entire materials on record and held that proper opportunity was given to the appellant and he did not file his objection before the Arbitrator and put forth his case.
20. It is pertinent to note that the appellant appeared before the Arbitrator at the first instance and took time for filing his statement. The Arbitrator also inspected the property in question in the presence of the appellant. In the circumstances, the appellant failed to verify the further proceedings either directly from the Arbitrator by himself or through his advocate. Therefore, the contention of the learned counsel for the appellant that no opportunity was given to him and Arbitrator violated the principles of natural justice, are not acceptable.
21. Point No.3:
As per clause 9 of the construction agreement, any dispute or difference for enforcing any payment of claim or for enforcing completion of any work pending, arising in this agreement shall be referred to an Arbitrator to be appointed by mutual consent. Therefore, the Arbitrator has power to consider the claim of the appellant for enforcing any payment, if any due to him or any claim of the respondent for completion of any work pending, arising in respect of construction agreement. There is no agreement between the parties for the respondent to claim damages when the appellant fails to complete the construction within the time limit or fails to hand over possession of building. The respondent can only seek an award directing the appellant to complete the construction as per the construction agreement and seek for handing over possession to him. In construction agreement, there is no clause which makes appellant to pay damages or interest to the respondent. Admittedly, the respondent did not pay the last two installments on the ground that the appellant did not complete the work as per the schedule. In the circumstances, the respondent ought to have invoked Arbitration clause to enforce the completion of agreed construction.
22. It is not the case of the respondent that he offered to pay electricity charges and other statutory dues as per construction agreement. In a claim before the Arbitrator, the respondent has submitted that a sum of Rs.98,577/- can be deducted from his claim of Rs.14,16,848/- and pass an award for Rs.13,18,271/-. These amounts the respondent has claimed in addition to possession of the property and also Rs.200/- per day from the date of award till the date of handing over. The Arbitrator awarded both compensation of Rs.13,18,271/- as well as Rs.200/- per day till the handing over the house from the date of award i.e., 02.10.2009. The Arbitrator has exceeded his jurisdiction by awarding various amounts claimed by the respondent. As per clause 9 of the construction agreement, the respondent can only enforce completion of work. Admittedly, the respondent has not paid a sum of Rs.98,577/-. According to the appellant, the respondent has to pay a sum of Rs.1,40,577/- being the last two installments and electricity charges and other charges. Therefore, the learned counsel for the respondent contended that amounts which the respondent is not entitled can be deleted and the award could be confirmed with regard to the other parts.
23. Considering the rival contentions, I hold that the contention of the learned counsel for the appellant that the Arbitrator has exceeded his jurisdiction and thereby misconducted himself, has considerable force and it is acceptable.
24. It is pertinent to note that the Arbitrator awarded interest on Rs.2,10,577/- paid by the respondent, but failed to award any interest on Rs.98,577/- admittedly, payable by the respondent. The Arbitrator has also failed to consider that respondent has to pay for electricity charges and other statutory charges. The appellant is entitled to deduct Rs.1,40,577/- being Rs.98,577/- payable by the respondent being the last two installments as well as electricity charges and other statutory charges from the amount payable as ordered by this Court.
25. The Arbitrator has failed to see that all the claims for money by way of compensation made by the respondent before the Arbitrator are beyond the scope of clause 9 of construction agreement. The claim of money by respondent relates to damages, loss of salary, court expenses and Advocate fees. These items are not contemplated in Arbitration clause. By considering and awarding these amounts to the respondent, the Arbitrator has not properly appreciated clause 9 of construction agreement and thereby, misconducted himself by exceeding his jurisdiction and acted arbitrarily.
26. In the circumstances, the contentions of the learned counsel for the appellant that Arbitration award has to be set aside, has considerable force and Judgments relied on by the learned counsel for the appellant in this regard are squarely applicable to the facts of this case.
27. In the result, this Civil Miscellaneous Appeal is partly allowed setting aside the award of the Arbitrator directing the appellant to pay a sum of Rs.13,18,271/-. The portion of the award directing the appellant to hand over the possession of the building to the respondent, is confirmed. The appellant is directed to pay a sum of Rs.3000/- per month from the date of award i.e. 02.10.2009 till handing over possession to the respondent, after deducting Rs.1,40,557/- payable by the respondent. If the appellant fails to hand over the possession within three months from the date of receipt of the order, it is open to the respondent to execute the arbitration award with regard to possession as a decree as per the provisions of Arbitration and Conciliation Act, 1996 as well as Code of Civil Procedure. No costs. Consequently, connected miscellaneous petition is closed.