# State of U.P. & Anr v. M/s V.B. Construction Co. Ltd. Bhiwani, Haryana & Ors

- **Citation:** (2020) 2 ILRA 1026
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-12-04
- **Case number:** FAFO No. 73 of 1989
- **Bench:** Dr. Kaushal Jayendra Thaker
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/state-of-u-p-anr-v-m-s-v-b-construction-co-ltd-bhiwani-haryana-ors-45154
- **Pages:** 7

## Headnote

A. Arbitration Act (10 of 1940), S.30 - Judicial
Review of arbitral Award - function of Courts
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
give effect to the award and make the parties
adhere to and obey the decision of their
chosen adjudicator (Para 9)

Held - Arbitrator considered each item threadbare
and has given his findings - while considering all the
claim, the Arbitrator has given cogent reasons - No
ground to upturn arbitral award

B. Arbitration and Conciliation Act - Grant of
pendente lite interest - 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.

Held - Awarding of interest does not warrant any
interference, however, interest is on higher side - the
interest shall be payable at the rate of 9% and not
at 12% as that was not the rate fixed. The appeal is
partly allowed. (Para 21)

Appeal Partly allowed (E-5)

List of cases cited :

## Text

1026 INDIAN LAW REPORTS ALLAHABAD SERIES
10.11.2008 from when Appellant has started
residing separately from respondent. The suit
has been instituted vide plaint dated 21.3.2009.
Therefore, the pre-requisite for grant of divorce
on ground of desertion i.e. expirty of two years
from the date of desertion, has to be in
existence on the date of institution of suit has
not been established by appellant. In view of
above, finding recorded by Court below that
appellant has failed to establish desertion on
part of respondent for a continuous period of
two years prior to institution of suit cannot be
said to be illegal, perverse or erroneous.

28. In view of discussions made herein
above, it cannot be said that findings recorded
by Court below that appellant has failed to
establish commission of 'cruelty' upon him by
respondent and also 'desertion' are illegal,
perverse or erroneous. As appellant has failed
to prove 'cruelty' and desertion on the part of
respondent on the basis of which he prayed for
a decree of divorce, Court below has rightly
dismissed the suit of appellant. Consequently,
this appeal fails and is liable to be dismissed. It
is accordingly dismissed. Costs made easy.
----------
(2020)02ILR A1026

APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 04.12.2019

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

FAFO No. 73 of 1989

State of U.P. & Anr. ...Appellants
Versus
M/s V.B. Construction Co. Ltd. Bhiwani,
Haryana & Ors. ...Respondents

Counsel for the Appellants:
S.C.
Counsel for the Respondents:
Sri P.P. Srivastava, Sri Lalji Sinha, Sri Pankaj
Narain

A. Arbitration Act (10 of 1940), S.30 - Judicial
Review of arbitral Award - function of Courts
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
give effect to the award and make the parties
adhere to and obey the decision of their
chosen adjudicator (Para 9)

Held - Arbitrator considered each item threadbare
and has given his findings - while considering all the
claim, the Arbitrator has given cogent reasons - No
ground to upturn arbitral award

B. Arbitration and Conciliation Act - Grant of
pendente lite interest - 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.

Held - Awarding of interest does not warrant any
interference, however, interest is on higher side - the
interest shall be payable at the rate of 9% and not
at 12% as that was not the rate fixed. The appeal is
partly allowed. (Para 21)

Appeal Partly allowed (E-5)

List of cases cited :

1. FCI Vs Joginderpal Mohinderpal (1989) 2 SCC 347

2. Steel Authority of India Ltd Vs Gupta Brothers
Steel Tubes Ltd. (2009) 10 SCC 63

3. Sumitomo Heavy Industries Ltd Vs Oil &
Natural Gas Commission of India (2010) 11
SCC 296

4. Rashtriya Ispat Nigam Ltd. Vs M/s Dewan
Chand Ram Saran reported as 2012 (5) SCC
306

5. J.G. Engineers Pvt. Ltd. Vs Union of India &
Anr.
2011
(5)
SCC
758
2 All. State of U.P. & Anr. Vs. M/s V.B. Construction Co. Ltd. Bhiwani, Haryana & Ors.
1027
6. State of Gujarat & Anr. Vs Nitin Construction
Company (Guj HC) First Appeal No.137 of 1992
Dt 22.03.2013

7. State of Gujarat Vs Vijay Mistri Construction
& Anr (Guj HC) First Appeal No.3688 of 2012 dt
22.03.2013

8. Oil & Natural Gas Corporation Limited Vs
Essar Steel Limited 2000 (4) GLR 3652

9. Arosan Enterprises Limited Vs Union of India
& Anr. 1999(9)SCC 449

10. Continental Construction Limited Vs State
of UP 2003 (8) SCC 4

11. Assam State Electricity Board Vs Buildworth
(P) Ltd., AIR 2017 SC 3336

12. Gujarat Water Supply & Sewerage Board Vs
Unique Erectors (Gujarat) (P) Ltd., 1989 (1)
SCC 532

13. Irrigation Department, State Of Orissa Vs
G.C. Roy, 1992 1 SCC 508

14. Jugal Kishore Prabhatilal Sharma Vs
Vijayendra Prabhatilal Sharma AIR 1993 SC 864

15. Smt. Aruna Kumari Vs Government Of
Andhra Pradesh AIR 1988 SC 873

16 Rajasthan State Road Transport Corporation
Vs Indag Rubber Ltd 2006 (7) SCC 700

17. Bharat Coking Coal Ltd Vs Annapurna
Construction reported in 2003 (8) SCC 154

18. State of U.P. and others Vs J.M.
Construction Company FAFO No. 714 of 2005
dt 11.4.2019

19. K.Marappan (Dead) Vs Superintending
Engineer T.B.P.H.L.C. Circle Anantapur 2019
JX(SC) 391

20 Raveechee & Company Vs Union of India
AIR 2018 SC 3109

21
Ambica
Constructions
Vs
Union
of
India,(2017) 14 SCC 323

22 OIL and Natural Gas Corporation Limited
VsBirla Techneftegas Exploration Ltd F.A. No.
3256 of 2001 dt 7.4.2016

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

1. Heard Sri S.K. Mehrotra, learned
Standing Counsel for the State. None
appeared for the respondents even in the
revised call.

2. This appeal, at the behest of the
State, has been filed against the judgment
and order dated 22.11.1988 passed by
Civil Judge, Bijnor in original Suit No.
222 of 1986. The appeal challenges the
arbitral award as well as confirmation of
the same by the Court below.

3. The parties are referred to as State/
Appellant and Contractor /Respondent.

4. The facts for the purpose of our
decision as they are culled out from the
record that parties entered into the contract
but there were certain disputes regarding
certain items and the matter was referred
to the Arbitrator who passed the award in
favour
of
the
present
respondents.
Objections were raised by the appellant
herein with several contentions that were
dealt with by the first Court and rejected
the objections and made the award Rule of
the Court vide order dated 22.11.1988
which is challenged before this Court. The
record was missed and the appellant was
directed to reconstruct the same which has
been reconstructed. Rest of the documents
are filed along with the memo of appeal.'

5. It is submitted that the contracted
rate for work was Rs. 8.49 per cubic metre
and not Rs. 18 per cubic meter as awarded
by the Arbitrator.
1028 INDIAN LAW REPORTS ALLAHABAD SERIES

6. It is submitted that the diesel was
supplied by the Department despite that the
Arbitrator has awarded the amount for diesel
and though the work was performed at
Roorkee and payment was made at Haridwar,
the Court below had no jurisdiction to pass
orders. The District Bijnor where the
Collectorate is situated had no jurisdiction to
decide this matter as the contract was entered
into at Rorkee. The award was made at
Aligarh.

7. 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).

8. Sections 30 and 33 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."

"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."

9. 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
2 All. State of U.P. & Anr. Vs. M/s V.B. Construction Co. Ltd. Bhiwani, Haryana & Ors.
1029
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.

10. In backdrop of this it will have to
be decided as to whether can it be said that
the decision of arbitrator upheld by the
Court below is bad and was wrongly made
the Rule of Court as per Arbitration Act,
1940.

11. While perusing the award, 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.

12. While going through the
award, it is clear that while considering
all the claim, the Arbitrator has given
cogent reasons. The cement was not
given in time. The demand of the
claimant has been considered on the
economical as well as that which can
be granted as the State has objected to
the grant of any amount under the
provisions of Arbitration Act, 1940.
The objection taken by the State were
only general and no specific objection
item wise was taken and nor was
proved by evidence that contractor was
not entitled to the damages and
interest. They had filed their objection
vide Application NO. 654 of 1998.

Judgments on Arbitration Act,
1940

13. (I) Steel Authority of India
Ltd Vs. Gupta Brothers Steel Tubes
Ltd. (2009) 10 SCC 63 .

"...... The courts below have
currently held that the arbitrator has
gone
into
the
issues
of
facts
thoroughly, applied his mind to the
pleadings, evidence before him and the
terms of the contract and then passed
duly considered award and no ground
for setting aside the award within the
four corners of Section 30 has been
made out......... In what we have
already discussed above, the view of
the arbitrator in this regard is a
possible view. Consequently, appeal
has no merit and costs."

(ii)
Sumitomo
Heavy
Industries Ltd Vs. Oil & Natural Gas
Commission of India (2010) 11 SCC
296

".... award was not only a
plausible one but a well reasoned
award.
In
the
circumstance
the
interference by the High Court was not
called for. In that view of the matter
we allow this appeal and set aside the
judgment of the learned Single Judge,
as well as that of the Division
Bench...."

(ii) Rashtriya Ispat Nigam
Ltd. Vs. M/s Dewan Chand Ram
Saran reported as 2012 (5) SCC 306

".... There was no reason for the
High Court to interfere in the view taken
by the arbitrator which was based, in any
case on a possible interpretation of clause
9.3. The learned single Judge as well as
the Division Bench clearly erred in
interfering with the award rendered by the
arbitrator. Both those judgments will,
therefore,
have
to
be
set-aside.
Accordingly, the appeal is allowed and the
impugned judgments of the learned Single
Judge as well as of the Division Bench, are
hereby set aside...."
1030 INDIAN LAW REPORTS ALLAHABAD SERIES

(iii) Reported as 2011 (5) SCC
758, in the case of J.G. Engineers Pvt.
Ltd. Vs./ Union of India & Anr.

(iv) First Appeal No.137 of
1992, in the case of State of Gujarat &
Anr. Vs. Nitin Construction Company,
judgment dated 22.03.2013 of the Hon'ble
High Court of Gujarat.

(v) First Appeal No.3688 of
2012, in the case of State of Gujarat Vs.
Vijay Mistri Construction & Anr.,
judgment dated 22.03.2013 of the Hon'ble
High Court of Gujarat.

(vi) Reported as 2000 (4) GLR
3652 in the case of Oil & Natural Gas
Corporation Limited V/s. Essar Steel
Limited, (Paragraph-8).

(vii) Reported in 1999(9)SCC
449, Arosan Enterprises Limited V/s.
Union of India & Anr.

(viii) Reported in 2003 (8) SCC
4, Continental Construction Limited
V/s.
State
of
U.P.,
Assam
State
Electricity Board V. Buildworth (P)
Ltd., AIR 2017,Gujarat Water Supply
& Sewerage Board V. Unique Erectors
(Gujarat) (P) Ltd., 1989 (1) SCC 532:
Irrigation Department, State Of Orissa
V. G.C. Roy, 1992 1 SCC 508 : Jugal
Kishore
Prabhatilal
Sharma
V.
Vijayendra Prabhatilal Sharma, AIR
1993 SC 864 and Smt. Aruna Kumari V.
Government Of Andhra Pradesh, AIR
1988 SC 873.

(ix) Rajasthan State Road
Transport
Corporation
Vs.
Indag
Rubber Ltd, 2006 (7) SCC 700 wherein
it has been held that the award can be set
aside on the ground of misconduct if
relevant documents are not considered by
the Arbitrator.

14. Therefore in light of decisions of
the Apex Court and the discussion herein
above, the scope of interference with the
findings of Arbitrator and confirmed by
the District Judge, on the basis of
principles would not permit to interfere
with the findings, as settled in view of
decision in case of Bharat Coking Coal
Ltd
Vs.
Annapurna
Construction
reported in 2003 (8) SCC 154.

15. As far as ground of jurisdiction is
concerned, the learned Judge has given
elaborate reasons. I do not think that there
is any perversity in the same. Hence, the
said submission cannot be granted to
upturn the arbitral award.

16. As far as the rate is concerned,
for that also reasons are assigned by the
learned Judge. Hence, in absence of the
parameter fixed for interference by this
Court in appeal, I do not find any reason to
interfere.

17. Learned Standing Counsel has
submitted that in the alternative, if the
award is not set aside, the interest awarded
by the Tribunal should be interfered with
as has been done by this Court in First
Appeal From Order No. 714 of 2005
(State of U.P. and others Vs. J.M.
Construction Company) decided on
11.4.2019.

18. Recently, 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 judgments go 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
2 All. State of U.P. & Anr. Vs. M/s V.B. Construction Co. Ltd. Bhiwani, Haryana & Ors.
1031
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."

19. Further, this Court considered an
identical clause in the contract in the case
of Ambica Constructions v. Union of
India,(2017) 14 SCC 323, wherein it
observed that the Clause of the GCC did
not bar the arbitrator from awarding
interest pendente lite and affirmed the
award passed by the arbitrator. The three
Judge Bench of this Court held that the
contention raised by the Union of India
based on the Clause of the GCC that the
arbitrator
could
not
award
interest
pendente lite was not a valid contention
and the arbitrator was completely justified
in granting interest pendente lite. Relying
on the three Judge Bench judgment in
Union of India v. Ambica Construction
(supra) and in Irrigation Deptt., State of
Orissa (supra), this Court held that the bar
to award interest on the amounts payable
under the contract would not be sufficient
to deny the payment of interest pendente
lite.

20. The interest aspect is looked into
by the undersigned in First Appeal No.
3256 of 2001 ( OIL and Natural Gas
Corporation
Limited
Versus
Birla
Techneftegas
Exploration
Limited
decided on 7.4.2016 by the High Court of
Gujarat
wherein
the
following
observations are relevant and are extracted
herein below:-

"........28. Therefore in light of
decisions of the Apex Court and the
discussion hereinabove, the scope of
interference
with
the
findings
of
Arbitrators and confirmed by the District
Judge, on the basis of principles, we are
not inclined to interfere with the findings,
as settled in view of decision in case of
Bharat Coking Coal Ltd Vs. Annapurna
Construction reported in 2003 (8) SCC
154.

29. The award so far as interest
is concerned, reads as follows:

"With regard to contention (a)
above, it is contended by the respondent
that increase in HSD is not by operation of
law but on account of the administrative
orders and, therefore, the claim is not
maintainable under Article 23.1 which
deals only with variation in operating
costs on account of change in or
enactment of law in India or interpretation
of existing law in India after the date of
opening of price bid. To examine this
contention it is essential to refer to the
provisions of Essential Commodities Act,
1955. Section 2 of this Act in subsection
(a) defines "Essential Commodity". In sub
clause (viii) of clause (a) of section 2,
petroleum and petroleum products have
also
been
included
as
"Essential
Commodities Act, Central Government has
power to regulate and control the prices at
which an essential commodity may be
bought or sold. Therefore, increase in
prices of HSD being a petroleum product
is pursuant to the exercise of powers given
1032 INDIAN LAW REPORTS ALLAHABAD SERIES
to the Central Government under Section 3
of the Essential Commodities Act and is
therefore, on account of a change in law."

The Tribunal has relied on the
decisions of the Privy Counsel and Apex
Court and also relied upon the affidavit of
appellant filed before the Tribunal before
the Award passed.

The awarding of interest cannot
be said to be in any manner, warranting
any interference, however, the factum of
interest, in our view may be considered,
which in our view is on higher side looking
to prevalent practice at the relevant time.
The quantum of interest, if reduced to 9%
from 15%, the same would meet with ends
of justice. As a result thereof, we modified
the same and factum of interest is ordered
to be reduced from 15% to 9%. The rest of
the award is not interfered in any
manner."

21. Hence, the interest shall be
payable at the rate of 9% and not at 12%
as that was not the rate fixed. The appeal is
partly allowed. The arbitral award and the
order of the Court below shall stand
modified to the aforesaid extent.

22. Interim relief granted by this
Court on 8.12.1989 shall stand vacated
forthwith.
The
amounts
if
yet
not
deposited, the same be deposited by
recalculating
the
appellants
as
expeditiously as possible with the interest
accrued not later than 12 weeks from
today and, if the amount has already been
deposited, the respondent shall refund the
amount to the State namely 3% of the
award made within three months from
today failing which the State shall be at
liberty to take action as per the provisions
of law as they have failed to appear when
the matter is being taken up.

23. This Court is thankful to Sri S.K.
Mehrotra,
learned
Standing
Counsel
appearing for the State for restructuring
the matter and ably assisting the Court.
However, no earlier orders has been
placed on record of this Court.
----------
(2020)02ILR A1032

APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 05.02.2020

BEFORE

THE HON'BLE MANISH KUMAR, J.

FAFO No. 847 of 2006
with
FAFO No. 256 of 2007
with
FAFO Defective No. 678 of 2008

United India Insurance Company Ltd.
 ...Appellant
Versus
Smt. Shashi Prabha & Ors....Respondents

Counsel for the Appellant:
Jitendra Narain Misra

Counsel for the Respondents:
J.K. Shukla

A Civil Law-Motor Vehicles Act (59 of
1988)
- Section 149 (2)
- Fitness
Certificate as defence - In the instant
case there was no fitness certificate for
plying the offending vehicle - Held -
Requirement of fitness certificate of
vehicle is not available as a defence u/s
149(2) to the Insurance Company to
escape the liability from payment of
compensation - Further if the vehicle is
used for private service and not for public
vehicle, then fitness certificate is not
required (Para 40, 42)

B. Civil Law-Motor Vehicles Act (59 of
1988) - Ss 166, 168 - Future Prospect -