# State of U.P. & Anr v. Gauri Shanker Singh Plaintiff/

- **Citation:** (2023) 2 ILRA 576
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-12-01
- **Case number:** First Appeal From Order No. 817 of 1993
- **Bench:** Dr. Kaushal Jayendra Thaker
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/state-of-u-p-anr-v-gauri-shanker-singh-plaintiff-49212
- **Pages:** 8

## Headnote

A. Arbitration and Conciliation Act, 1940Sections 30,33 & 20-Arbitration awardsetting aside- legality of- respondent
instituted a suit u/s 20 of Act-Arbitrator
by
award
directed
the
Contractor/
respondent to pay Rs. 4,47,875 to PWD
and Rs. 97,650 to respondent-Challenge
against-Aforesaid well-reasoned arbitral
award was interfered by the Court on the
ground that finding is bad-Reversal of
arbitral
award
found
erroneousInterference
with
impugned
order
declined. (Para 1 to 24)

The appeal is dismissed. (E-6)

List of Cases cited:

## Text

576 INDIAN LAW REPORTS ALLAHABAD SERIES
Judge, Gangsters Act, Court No. 5, Etah is
set aside to the extent it convicts and
sentences the appellant. The appellant is
acquitted of the charge of the offence of
murder for which he has been convicted.
The appellant is reported to be in jail, he
shall be released forthwith subject to
compliance of provisions of Section 437-A
Cr.P.C. to the satisfaction of the trial court.

23. Let a copy of this order/judgment
and the original record of the lower court
be transmitted to the trial court concerned
forthwith for necessary information and
compliance. The office is further directed
to enter the judgment in compliance
register maintained for the purpose of the
Court.
----------
(2023) 2 ILRA 576
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.12.2022

BEFORE

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

First Appeal From Order No. 817 of 1993

State of U.P. & Anr. ...Appellants
Versus
Gauri Shanker Singh
 ...Plaintiff/Respondent

Counsel for the Appellants:
S.C.

Counsel for the Respondent:
Sri A.K. Saxena

A. Arbitration and Conciliation Act, 1940Sections 30,33 & 20-Arbitration awardsetting aside- legality of- respondent
instituted a suit u/s 20 of Act-Arbitrator
by
award
directed
the
Contractor/
respondent to pay Rs. 4,47,875 to PWD
and Rs. 97,650 to respondent-Challenge
against-Aforesaid well-reasoned arbitral
award was interfered by the Court on the
ground that finding is bad-Reversal of
arbitral
award
found
erroneousInterference
with
impugned
order
declined. (Para 1 to 24)

The appeal is dismissed. (E-6)

List of Cases cited:
1. K. Marappan (Dead) Vs Superintending Engr.
T.B.P.H.L.C Circle Anantapur (2019) JX SC 391

2. Raveechee & Co. Vs U.O.I. (2018) AIR SC
3109

3. Puri Construction Pvt. Ltd. Vs U.O.I. (1989)
AIR SC 777

4. St. of Ori. Vs B.N Agrawal (1997) 2 SCC 469

5. FCI Vs JoginderpalMohinderpal (1989) 2 SCC
347

6. St. of U.P. & ors. Vs J.M. Cons. Co. FAFO No.
714 of 2005

7. K.P. Paulose Vs St. of Ker. & anr.. (1975) 2
SCC 236

8. Hind Builders Vs U.O.I. (1990) 3 SCC 338

9. DandasiSahu Vs St. of Orissa (1990) 1 SCC
214

10. Thawer Das Vs U.O.I. (1955) AIR SC 468

11. Raipur Dev. Authority & ors. Vs Chokhamal
& ors. (1989) SCC 721

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

1. Heard Sri Rathor for the appellantstate.

2. The State is aggrieved by the order
dated 1.5.1993 passed by VIth Additional
District Judge, Gorakhpur, whereby the
2 All. State of U.P. & Anr. Vs. Gauri Shanker Singh
577
application for setting aside the award
dated 5.2.1993 given by the Arbitrator has
aggrieved the State.

3. On hearing the matter, the appellant
- State was directed to deposit the amount
within 3 months vide order dated 13.8.1993
and which was to be paid to the respondent.

4. The brief facts as culled out from
the record, memo of appeal and the
judgment are where separate contracts were
executed on behalf of Government of U.P.
by
the
Superintending
Engineer,
Constructions
Division,
P.W.D.,
Gorakhpur, for the work which were
connected with the constructions of Clinic
Block,
Academic
Block
and
Hostel
Building in the Regional Health and Family
Planning Welfare Training Centre at
B.R.D. Medical College, Gorakhpur.

5. The litigation began when the
respondent instituted a Suit under Section 20
of the Arbitration Act, 1939 and an Arbitrator
was appointed so as to dispute the lis between
the parties. The court below appointed Sri
D.N. Srivastava, Gorakhpur and Sri S.C.
Srivastava, Chief Personal Officer, North
Eastern Railway, Gorakhpur, as Arbitrator that
was also challenged which was number as
F.A.F.O. No.746 of 1993.

6. The claim petition came to be filed
before the Arbitrator. The appellant also
contested the same. The Arbitrator by their
award dated 5.2.1993 directed the Contractor -
respondent to pay Rs. 4,47,875/- to the Public
Works Department, Construction Division,
Gorakhpur and Rs. 97,650/- was directed to be
paid by the appellant to the respondent and
made the award rule of the Court.

7. After the elaborate order of the
Arbitrators it was made the award of the
Court which is under challenge under
Section 39 of the Arbitration Act. There
were 5 contract bonds between the parties
for performing certain works and the
procedure for appointment of Arbitrator, in
case of dispute between the parties, was
laid down in clause 34 of the conditions of
contract and the procedure for appointment
of Arbitrator on a suit filed by the plaintiff
under Section 20 of the Arbitration Act and
the appointment of Arbitrators against the
provisions of clause 34 of the conditions of
contract,
was
illegal
and
without
jurisdiction.

8. It is submitted that under Section
34, on a dispute being referred, the Chief
Engineer has the jurisdiction to appoint an
Arbitrator and the procedure having not
been followed in accordance with the terms
and
conditions
of
Contract,
the
appointment of Arbitrators as nominated by
the Board was illegal and the award given
by such Arbitrators is void.

9. While just submitting that there is
misconduct of the Arbitrator, this Court
does not find any such argument before the
court below. The judgment is a well
reasoned judgment of the learned court
below on the contors of the arbitration.

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

11. 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
578 INDIAN LAW REPORTS ALLAHABAD SERIES
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."

12. 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.

13. 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
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).

14. 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."

15. 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
2 All. State of U.P. & Anr. Vs. Gauri Shanker Singh
579
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."

16. 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.

17. 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.

18. 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.

19. 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
580 INDIAN LAW REPORTS ALLAHABAD SERIES
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 shortfall 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
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 JaipurDelhi 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
2 All. State of U.P. & Anr. Vs. Gauri Shanker Singh
581
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."

20. 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:-

(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."

21.

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
582 INDIAN LAW REPORTS ALLAHABAD SERIES
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.

22. 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.

23. 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 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.

24. This Court has limited jurisdiction
to interfere in the matter. No case is made
out to interfere in the well reasoned
judgment of the court below. Hence, this
appeal stands dismissed.

25. If the amounts are still not
deposited, they shall be deposited with
interest.

26. Record and proceedings be sent
back
to
the
Trial
Court.
2 All. Branch Manager, National Insurance Co. Ltd. Vs. Pramod Kumar Yadav & Ors.
583
----------
(2023) 2 ILRA 583
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.01.2023

BEFORE

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

First Appeal From Order No. 1907 of 2004

Branch Manager, National Insurance Co.
Ltd. ...Appellant
Versus
Pramod Kumar Yadav & Ors.
 ...Opp. Party/Respondents

Counsel for the Appellant:
Sri V.K. Birla

Counsel for the Respondents:
Sri Sajjan Kumar Yadav, Sri Kailash Singh
Yadav

A. Accident Claim-Workmen's Compensation
Act, 1923-Section 3, 4(a)-challenge toaward-substantial
question
of
law-
deceased was a driver and he had a valid
driving licence-Nothing has been proved by
the Insurance Company that the driver did
not have a proper driving licence-Apex
Court has settled the insurance company
with liability even on the smallness of the
amount-In fact the substantial question of
law raised are the question of facts-the
finding of the Commissioner is not perversethe question of law framed by the
Insurance Company are answered against
it.(Para 1 to 11)

B. As per Apex Court judgment insurance
has to be paid by Insurance Company
from the date of accident-Thus, this issue
is no longer res-integra and is decided
against the appellant. (Para 4)

The appeal is dismissed. (E-6)

List of Cases cited:
1. Oriental Ins. Co. Vs Siby Geoge& ors. (2012)
4 T.A.C. 4 SC

2. New India Assr. Co. Ltd. Vs Kamla & ors..

3. North East Karnataka Road Trans. Corpn Vs
Smt. Sujatha Civil Appeal No. 7470 of 2009

4. Golla Rajanna Etc Vs Div.Mgr. & anr. (2017) 1
TAC 259

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

1. By way of this appeal, the appellant
had challenged the award and after the
allegation of the advocate, despite the fact
that notice was served, no one has appeared
on behalf of the appellant.

2. As far as the respondents are
concerned, the notice has been served and
Shri Kailash Singh Yadav, learned counsel
has been instructed to appear on their behalf.

3. The present appeal involves
following substantial questions of law:

a) Whether even if any employee is
entitled for the compensation under the
Workmen Compensation Act, it is open for
the insurer to avoid that liability on the
ground that the deceased driver was not
holding driving license and there had been
any breach of policy conditions?

b) Whether the case was covered
under
Section
3
of
the
Workmen's
Compensation Act 1923, and if not, whether
the
Appellant
Company,
being
the
indemnifier only, is liable to pay any
compensation?

c) Whether the court below
could have granted interest @ 12% p.a.
that too from the date of accident?