# M/S R.N. Tandon & Sons v. Betwa River Board

- **Citation:** (2020) 1 ILRA 261
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-08-01
- **Case number:** First Appeal From Order No. 108 of 1991
- **Bench:** Dr. Kaushal Jayendra Thaker
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-r-n-tandon-sons-v-betwa-river-board-45040
- **Pages:** 8

## Headnote

A. Arbitration Conciliation Act, 1940 -
Section 30 and 33 - Terms of contract -
Importance - Award of the arbitrator is in
consonance with clause 8 and 9 of the
contract, which does not speak about
payment of interest - Arbitrator gave
cogent reasons holding that no interest
was payable - Judgment of the District
Court reversing the arbitral award is bad
in the eye of law - Held, Appellants are
entitled to the refund of the interest
deducted. (Para 20 & 21)
First Appeal From Order allowed. (E-1)
List of cases cited :-

## Text

1 All. M/S R.N. Tandon & Sons Vs. Betwa River Board
261
reduction. The High Court cannot obviously
increase the compensation in an appeal by
owner/insurer for reducing the compensation,
nor can it reduce the compensation in an
appeal by the claimants seeking enhancement
of compensation."

16. So far as the judgment relied by the
learned counsel for the claimant-respondents in
the case of Jitendra Khimshankar Trivedi
and others Versus Kasam Daud Kumbhar
and others (Supra) is concerned, in the said
case the Hon'ble Apex court has enhanced the
compensation exercising the jurisdiction under
Article 142 of the Constitution of India which
cannot be done by this court. The Hon'ble Apex
Court in the case of C.M.Singh Versus
H.P.Krishi Vishva Vidyalaya & others;
(1999) 9 SCC 40, has held that power to do
complete justice is conferred on it and the High
Court does not have such powers.

17. The appeal is, accordingly,
dismissed. No order as to costs.

18. The lower Court record and the
amount deposited before this court, if any,
shall be remitted to the concerned tribunal.
----------
(2020)1ILR 261

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.08.2019

BEFORE
THE HON'BLE DR. KAUSHAL JAYENDRA
THAKER, J.

First Appeal From Order No. 108 of 1991

M/S R.N. Tandon & Sons ...Appellants
Versus
Betwa River Board ...Respondent

Counsel for the Appellants:
Sri Ayush Khanna, Sri Atul Dayal, Sri N.
Sinha, Sri S.C. Budhwar, Sri S.P. Gupta,
Sri Avanish Srivastava

Counsel for the Respondent:
Sri U.N. Sharma, Sri A.K. Rai

A. Arbitration Conciliation Act, 1940 -
Section 30 and 33 - Terms of contract -
Importance - Award of the arbitrator is in
consonance with clause 8 and 9 of the
contract, which does not speak about
payment of interest - Arbitrator gave
cogent reasons holding that no interest
was payable - Judgment of the District
Court reversing the arbitral award is bad
in the eye of law - Held, Appellants are
entitled to the refund of the interest
deducted. (Para 20 & 21)
First Appeal From Order allowed. (E-1)
List of cases cited :-
1. K.Marappan (Dead) Versus Superintending
Engineer T.B.P.H.L.C. Circle Anantapur, 2019
JX(SC) 391
2. Raveechee and Company Versus Union of
India, AIR 2018 SC 3109
3. Puri Construction Pvt. Limited Versus Union
of India, AIR 1989 SC 777
4. State of Orissa Versus B.N. Agarwalla ,
(1997) 2 SCC 469
5. FCI Versus Joginderpal Mohinderpal, (1989)
2 SCC 347
6. First Appeal From Order No.714 of 2005,
State of U.P. and other Vs. J.M. Construction
Company, decided on 11.4.2019
7. K.P. Poulose v. State of Kerala & Anr.,
reported in [1975] 2 SCC 236
8. Hind Builders Vs. Union of India, (1990) 3
SCC 338
9. Dandasi Sahu Versus State of Orissa, (1990)
1 SCC 214
10. Thawer Das Vs. Union of India, AIR 1955
SC 468
262 INDIAN LAW REPORTS ALLAHABAD SERIES
11.Raipur Development Authority and other Vs.
Chokhamal and others, 1989 (2) SCC 721

(Delivered by Hon'ble Dr. Kaushal
Jayendra Thaker, J.)

1. Heard Sri Ayush Khanna, learned
counsel for the appellant. No Advocate
appeared for the respondent though name
of Sri A.K. Rai and Sri U.N. Sharma are
shown for the respondent and fresh notice
was also issued which has been received
by the respondents. The appeal is pending
since 1991. The respondents have been
negligent in appointing a counsel also.
Today
also,
no-one
represents
the
respondents though time and again notices
have been sent to them. The fact that on
the first occasion, jthe officer concerned
was of the view that no interest would be
charged from the appellant later on Suo
Motu on audit objection, interest was
ordered to be charged. The appellant has
already deposited the said interest because
of the order of the District Court which
upheld the objection of the respondent
herein, which is subject matter of
challenge before this Court.

2. By means of this appeal, the
appellant - contractor challenges the order
and judgment dated 15.11.1990 passed by
District Judge, Jhansi in Suit No. 13 of
1988 (M/s R.N. Tandon & Sons Vs. Betwa
River Board) allowing objections of the
respondents and refusing to accept the
award of sole arbitration.

3. The brief facts of the case are that
Betwa Board had entered into a contract
with M/s R.N. Tandon & Sons for the
construction of earth Dam on the left flank
of River Betwa at Rajghat from Km. 4.04
to 6.05 (Lot II) and the agreement was
executed with respect thereto on 14.1.1981
at Rajghat, district Lalitpur, U.P. There
was some dispute between the parties with
respect to the recovery of interest on the
cost of machines taken by the contractor -
appellant
herein.
AND
WHEREAS
DISPUTES pertaining to the 'Interest
charges on the cost of machines made
available to the claimant by the Board'
having arisen between the two parties, of
the said contract, the Chief Engineer (R),
Tetwa River Board, Nandanpura, Jhansi,
in pursuance of the aforesaid conditions of
contract, nominated me, as the sole
Arbitrator
under
his
No.4921/CE/BRB/Appeal-2
(Tandon)/dated 12/86. Ruling of the
Executive
Engineer
considered
unacceptable by the contractor arose for
the
first
time
when
the
Executive
Engineer, Rajghat Dam No.II, Chanderi
Proposed recovery of the interest. The
claimants asked for clarification from the
Superintending Engineer as per clause 52
of Agreement. S.E. Gave his decision that
recovery of interest on advance in form of
Machinery is well covered under clause 9
of special conditions of the contract read
along with clause 8 and 9 of the General
conditions. C.E. Examined the arguments
of both the parties gave his decision that
no interest charge is leviable on the cost of
machines and only cost is to be recovered
from claimant as shown in column 4 of
Annexure VII of the Agreement.

4. Learned counsel for the appellant
has relied on the following authoritative
pronoucements:-

(i) Hind Builders Vs. Union of
India, (1990) 3 SCC 338;

(ii) K Marappan (Dead) through
sole
LR
Balasubramanian
Vs.
Superintending Engineer TBPHLC Circle
Anantapur, 1019 LawSuit (SC) 977;
1 All. M/S R.N. Tandon & Sons Vs. Betwa River Board
263

(iii) State of U.P. and others Vs.
J.M.
Construction
Company,
FAFO
No.714 of 2005, decided on 11.4.2019 by
this High Court.

5. The main bone of contention in
this appeal is whether when the terms of
contract are silent about interest, can the
first appellate court reverse the finding of
the the Arbitrator held in favour of the
contractor holding that on the terms of
contract, no interest was payable by the
contractor.

6. Learned counsel Sri Khanna has
vehemently submitted that the decision
requires to be upturned as it is against
settled legal position and the District Court
has decided the matter as if it is deciding
an appeal and has tried to rewrite the
arbitral award and no interest was
chargeable from the appellant as held by
the arbitrator and by the authorities in their
Ist decision Suo Motu reviewed on audit
objection raised later on.

7. This is an appeal under Arbitration
Conciliation Act, 1940.

8. It is submitted by learned
Advocate that judgment of the Apex Court
in
K.Marappan
(Dead)
Versus
Superintending Engineer T.B.P.H.L.C.
Circle Anantapur, 2019 JX(SC) 391 and
in Raveechee and Company Versus
Union of India, AIR 2018 SC 3109, has
interpreted the role of the Courts while
hearing matters under the arbitration Act.
The judgment goes to show that pendente
lite interest will depend upon several
factors such as; phraseology used in the
agreement
clauses
conferring
power
relating to arbitration, nature of claim and
dispute referred to arbitrator, and on what
items power to award interest has been
taken away and for which period. The
Court observed:

"34. Thus our answer to the
reference is that if contract expressly bars
award of interest pendente lite, the same
cannot be awarded by the Arbitrator. And
that the bar to award interest on delayed
payment by itself will not be readily
inferred as express bar to award interest
pendente lite by the Arbitral Tribunal, as
ouster of power of the arbitrator has to be
considered on various relevant aspects
referred to in the decisions of this Court , it
would be for the Division Bench to
consider the case on merits."

9. The decision of Supreme Court in
Puri Construction Pvt. Limited Versus
Union of India, AIR 1989 SC 777 and
State of Orissa Versus B.N. Agarwalla ,
(1997) 2 SCC 469 and submits that in
view of the said judgment, the appeal
requires to be allowed as none of the
aspects which are needed for upturning the
well reasoned arbitral award and the
finding of facts and upholding the same do
not show that there was any perversity,
though it was not proved that any
misconduct or that there was breach of any
of the provisions under the Arbitration Act
which would call for interference by this
Court in its appellate jurisdiction.

10. The Apex Court in FCI Versus
Joginderpal Mohinderpal, (1989) 2 SCC
347 has held that the objection against an
arbitral award can be raised only if it falls
within the parameters fixed by the
provisions of Section 14, and 33 of the
Act, 1940. If the award satisfies that it is
based on equity, fair play, principles of
natural justice and established practice and
procedure then the award should not be
interfered. In proceedings of arbitration
264 INDIAN LAW REPORTS ALLAHABAD SERIES
there must be adherence to justice, equity,
law
and
fair
play
in
action. The
proceedings must adhere to the principles
of natural justice and must be in
consonance
with
such
practice
and
procedure which will lead to a proper
resolution of the dispute and create
confidence of the people for whose benefit
these processes are resorted to FCI Versus
Joginderpal Mohinderpal (supra).

11. Section 30 of the Act, 1940 read
as follows :

"Section 30. Grounds for setting
aside award. An award shall not be set
aside except on one or more of the
following grounds, namely:-

(a) that an arbitrator or umpire
has
misconducted
himself
or
the
proceedings

(b) that an award has been made
after the issue of an order by the Court
superseding the arbitration or after
arbitration proceedings have become
invalid under section 35;

(c) that an award has been
improperly procured or is other- wise
invalid."

12. Section 33 of the Act, 1940 read
as follows :

"33. Arbitration agreement or
award to be contested by application. Any
party to an arbitration agreement or any
person claiming under him desiring to
challenge the existence or validity of an
arbitration agreement or an award or to
have the effect of either determined shall
apply to the Court and the Court shall
decide the question on affidavits: Provided
that where the Court deems it just and
expedient, it may set down the application
for hearing on other evidence also, and it
may pass such orders for discovery and
particulars as it may do in a suit."

13. Thus, the judicial review of an
award has been circumscribed by Apex
Court
in
FCI
Versus
Joginderpal
Mohinderpal ( supra) wherein it has been
held that arbitration as a mode for
settlement of disputes between the parties,
has a tradition in India. It has a social
purpose to be fulfilled today,. It has a great
urgency today when there has been an
explosion of litigation in the courts of law
established by the sovereign power . It is,
therefore, the function of Courts of Law to
oversee that the arbitrators act within the
norms of justice. Once they do so and the
award is clear, just and fair, the Courts
should, as far as possible, give effect to the
award of the parties and make the parties
compel to adhere to and obey the decision
of their chosen adjudicator. It is in this
perspective that one should view the scope
and limit of correction by the court of an
award made by the arbitrator.

14. In backdrop of this it will have to
be decided as to whether can it be said that
the decision of arbitrator upturned by the
Court below is bad and was wrongly not
made the Rule of Court as per Arbitration
Act, 1940.

15. While perusing the award
26.7.1998, it is found that the arbitrator
considered each item threadbare and has
given his findings. Can it be said that
arbitral award does not fulfill the contours
of principles which are required to be
followed by an arbitrator under the Act,
1940. Item No.5 is taken as illustration so
as not to burden the judgment but to come
to the conclusion as to show that the
Arbitrator and the Judge both had applied
the legal acumen.
1 All. M/S R.N. Tandon & Sons Vs. Betwa River Board
265

16. This Court in First Appeal
From Order No.714 of 2005, State of
U.P. and other Vs. J.M. Construction
Company, decided on 11.4.2019, has
summarised the principles for deciding
matters under the Arbitration Act, 1940 &
1996 wherein in paragraph no.24 it is
observed as follows:-

"In
Rajasthan
State
Road
Transport
Corporation,
the
learned
counsel
for
the
respondent-Company
submitted that in fact there was no
material on which the finding was
recorded by the Arbitrator. In support
thereof, learned counsel invited our
attention to a decision of this Court in the
case of K.P. Poulose v. State of Kerala &
Anr., reported in [1975] 2 SCC 236
wherein it was held that the award can be
set aside on the ground of misconduct if
relevant documents are not considered by
the
Arbitrator.
Therefore,
we
asked
learned
counsel
for
the
appellant-
Corporation to substantiate the finding
recorded by the arbitrator that it is based
on the material on record. In pursuance to
the direction given by this Court, learned
counsel for the Corporation filed an
affidavit on 12.7.2006 and submitted that
the document wherein the details on
divisionwise average kilometer of new
tyres and retreaded tyres along with
average short-fall in guaranteed kilometers
for the various periods was on record of
arbitrator and same was produced before
us. The details were given of all the
Divisions i.e. Bharatpur, Jaipur, Sikar,
Kota,
Ajmer,
Bikaner,
Jodhpur
and
Udaipur. In all these eight divisions for the
various period i.e. from June 1991 to
February, 1994 the details have been given
to substantiate the allegations that what
was the average mileage of the new tyre
and what was the average mileage given
by the retreaded tyres and on that basis,
the short-fall was given and accordingly,
the amount of loss was worked out. These
details which were placed before us
formed part of the record before the
arbitrator. The arbitrator in his detailed
award has recorded his finding on the
basis of the average performance of new
vehicle tyres with that of the retreaded
tyres of the Company and on that basis he
has
worked
out
the
assessment
in
paragraph 17 of the award. Paragraph 17
of the award reads as follows :

"The RSRTC has compared the
performance of retreaded tyres with the
performance of new tyres in each division.
In each division, as mentioned earlier, the
road conditions, the vehicles used, the
weather conditions, the general driving
skills of the drivers and the level of
maintenance and upkeep of vehicles were
similar for the new tyres as well as
retreaded tyres. The retreaded tyres should
have given a kilometerage of 46,000 or 95
% of the life of new tyres. Therefore, the
assessment of the performance done by the
RSRTC is strictly in conformity with the
provisions of clause 5 of the agreement.
Notwithstanding the acceptance by the
respondent of an error of judgment in
guaranteeing 46,000 kms for a retreaded
tyre, from the Statements enclosed by the
claimant with its letters mentioned in para
5 of this order, it is clear that the retreaded
tyres performance fell short of the
guaranteed level. I, therefore, find claim of
the RSRTC to be fully justified."

"9. This is the finding of fact
given by the arbitrator. As against this,
learned Single Judge as mentioned above,
has held that there was no assessment in
each
division
in
similar
conditions.
Therefore, the learned Single Judge set
aside the award but it is not factually
correct. As mentioned above, there was a
266 INDIAN LAW REPORTS ALLAHABAD SERIES
comparative assessment given by the
Corporation and that was part of the record
before the arbitrator and on that basis the
finding of fact was recorded by the
arbitrator.
Learned
counsel
for
the
respondents strenuously urged before us
that the performance of new tyres and of
retreaded tyres on roads like Jaipur-Delhi
would be better as against the road of
Jaipur-Lalsot. Therefore, there was no
assessment of performance of the new
tyres vis-a-vis the retreaded tyres supplied
by the Company in similar conditions. In
fact, an average has to be taken of each
division. It is not necessary that in each of
the divisions of the Corporation, the road
conditions will be similar. Once the
company has entered into an agreement
knowing
fully
well
the
conditions
obtaining in the State of Rajasthan that all
the routes in the State are not the roads of
Class `A' category but there are roads of
Class `A', Class `B' and Class `C'
categories also. Therefore, the average
performance has been recorded taking into
consideration this aspect. It is unlikely that
all over the State of Rajasthan the road
condition
like
Jaipur-Delhi
will
be
available for all other divisions. Therefore,
in
all
the
divisions
the
average
performance
has
been
taken
into
consideration. The assessment has been
based on average of similar conditions of
the roads i.e. the good quality as well as
the poor quality. Therefore, average
performance of the new tyres with the
retreaded tyres has to be taken on the basis
of roads available in Rajasthan. The
average running of the new tyres on these
road conditions with that of the retreaded
tyres was to be compared to find out
whether the performance of retreaded tyres
was up to 95% average or not. After
assessing the comparative assessment and
going through the materials on record the
arbitrator has recorded his finding. It was
for the company if they wanted more
information or wanted to allege that the
road conditions are not similar or that the
performance of the tyres which were fitted
in the rear axle or on the front axle would
not be the same, all these details if it
wanted, it could have obtained from the
Corporation but they did not do so and
only at this stage the company wants to
bring
this
factual
controversy
that
retreaded tyres were not used in similar
conditions. This argument at this belated
stage cannot be accepted as all the
materials have been considered by the
arbitrator
and
after
taking
into
consideration the average of each tyre in
each region of the corporation has worked
out that the performance of the retreaded
tyres was not to the extent of 95%. This
was a finding of fact recorded by the
arbitrator and the same was made rule of
the court by the District Judge. But the
learned Single Judge erroneously took
upon himself to sit as a court of appeal and
disturbed this finding of fact. In our
opinion, the view taken by the learned
Single Judge of the High Court cannot be
sustained."

17. During the pendency of this
appeal, stay has not been granted. The
appellant has seen that the amount
awarded by the District Judge is secured
by way of bank guarantee or any other
security. Clause-9 of contract reads as
under:-

"(iii)
Clause-9
Special
Conditions (modified):

Plant and Machinery:

The
plant
and
equipment
procured by the Board shall be made
available to the contractor on terms and
conditions laid down as under:-
1 All. M/S R.N. Tandon & Sons Vs. Betwa River Board
267

(A) Plant/equipment available
for the work for exclusive use by the
contractor:

(i) The plant and equipment as per
Annexure-VII, procured by the Board for
execution of part of work under the contract to
shall have to be taken over by the contractor at
the cost occassioned to the Board which has
been indicated in Col.4 of the said Annexure.
This coast shall be set-off against the total
amount of advance for equipment admissible
to the contractor under Clause-8 (modified) of
the General Conditions of contract and shall
be recovered in accordance with Clause-9 of
the same condition of the contract."

18.

Clause-9
of
the
General
conditions does not speak about payment
of interest is the submission of Sri Khanna
as a special condition which is at page 180
of the paper-book. He has further relied on
the judgment of the Apex Court in Hind
Builders Vs. Union of India, (1990) 3 SCC
338, K Marappan (Dead) through sole LR
Balasubramanian
Vs.
Superintending
Engineer TBPHLC Circle Anantapur,
1019 LawSuit (SC) 977 and State of U.P.
and
others
Vs.
J.M.
Construction
Company, FAFO No.714 of 2005, decided
on 11.4.2019 by this High Court., which
has interpreted the contract to mean that
where
there
are
two
interpretations
possible, the Arbitrator's view would
prevail. In this case, in fact there was no
two views possible. The view taken by the
Arbitrator is laud and clear and the
Arbitrator's view was such that the first
court should not have interfered. Similar
view has been reiterated recently by the
Apex Court and this Court is the
submission of Sri Khanna.

19. It is further submitted by the
counsel for the contractor that while
reading the aribtral award, it cannot be
said that it falls within the parameters as
envisaged under Section 30 of Act, 1940.
It cannot be said that the arbitrator has
misconducted himself and that there is any
error apparent on the face of record. The
factual errors are not open for correction
by a Court. It is submitted that no mistake
of fact is justiciable hence in view of the
decision of the Apex Court in Dandasi
Sahu Versus State of Orissa, (1990) 1
SCC 214 wherein it has been held that the
arbitrator, in the case of a reference made
to him in pursuance of an arbitration
agreement between the parties, being a
person chosen by parties and was apprised
as the sole arbitrator of all the questions
and the parties bind themselves as a rule,
to accept, the award as final and
conclusive. The arbitrator need not give
any reasons and even if he commits a
mistake either in law or in fact in
determining the matter referred to him,
where such mistake does not appear on the
face of the award, the same could not be
assailed or quashed or upturned. The
award could be interfered with only in
limited circumstances as provided under
Section 16 and 30 of the Arbitration Act,
1940. In this situation the Court has to test
the award with circumspection.

20. While considering the factual
background and interpreting the arbitral
award and the order of the District Judge, the
award of the arbitrator is in consonance with
clause 8 and 9 of the contract. The District
Court seems to have return the judgment as if
it was sitting in appeal and deciding the Suit
which could not have been done. The
authorities were also of the view that no
interest could have been charged from the
appellant but they reviewed their own
decision which became subject matter of
arbitration and the arbitrator gave cogent reasons
268 INDIAN LAW REPORTS ALLAHABAD SERIES
for allowing the appellant's application and
held that no interest was payable. This
well
reasoned
arbitral
award
was
interfered by the court on the ground that
the finding is bad though he referred to
several judgments he himself embarked on
fact finding mission and appreciated on the
basis that the arbitrator had committed an
error and relying on AIR 1955 SC 468 in
the case of Thawer Das Vs. Union of
India and misread the award as if there
was an error apparent on the face of
record. The modified clause 9 did not
permit any interest and the advance was to
be given without any interest. The arbitral
award also was based on the decision of
the Apex Court in 1989 (2) SCC 721,
Raipur Development Authority and other
Vs. Chokhamal and others. The reasons
were well assigned by the arbitrator, thus,
the judgment of the District Court
reversing the arbitral award is bad in the
eye of law and contrary to the contours of
arbitral award being set aside by courts.

21. This appeal is allowed. The
appellants are entitled to the refund of the
interest deducted. The security could be
encashed. The judgment of district Court
is quashed and is set aside.

22. Record and proceedings be sent
back to the Trial Court. The award of the
Tribunal shall be made rule of the court
under the Arbitration Act, 1940.

23. This Court is thankful to Sri
Khanna for ably assisting the Court in
getting this matter of 1991 disposed of.
----------
(2020)1ILR 268

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.10.2019

BEFORE
THE HON'BLE PRADEEP KUMAR
SRIVASTAVA, J.

First Appeal From Order No. 344 of 2012

National Insurace Co. Ltd. ...Appellant
Versus
Om Prakash Pandey & Ors. ...Respondents

Counsel for the Appellant:
Sri Amit Manohar

Counsel for the Respondents:
Sri Akhilesh Ch. Srivastava, Sri Ramesh Ch. Pathak

A. Motor Accident Act, 1988 - Section 165
- Claim petition - Locus of brother of
deceased - If there is no other legal heir
of the deceased, the brother is a legal
representative
and
is
competent
to
maintain claim petition - Person who is to
get the property of deceased will be a
legal representative - Tribunal found the
name of the claimant has been mutated
in revenue records after the death of
deceased and both brothers were living in
a joint family - Tribunal rightly concluded
the claimants to be legal representative
of the deceased - Argument that the
claimants are brother and bhabhi is only
relevant for the purpose of determining
dependency which is significant for the
purpose of ascertaining the quantum of
compensation. (Para 11)

B.
Motor
Accident
Act,
1988
-
Compensation - Calculation - Age of
deceased was found between 30 to 35
years, therefore, applied the multiplier of
15
-
The
amount
of
compensation
determined by the tribunal is in lower side
and need not to be disturbed. (Para 12)

First Appeal From Order dismissed. (E-1)

List of cases cited :-

1. Sarla Verma Vs. Delhi Transport Corporation
Ltd.,
AIR
2009
SC
3104