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H.L Batra And Company v. State Of Haryana And Another
Factual and Procedural Background
The appellant entered into an agreement with the respondent in the year 1970-71 for construction of a workshop complex and service station at the bus-stand, Rewari. The contract contained an arbitration clause. Following disputes, the parties appointed an arbitrator outside court who, on 29-10-1975, rendered an award of Rs 5,070 in favour of the appellant. This first award was set aside by the Additional District Judge, Gurgaon on 06-11-1978, who directed the Chief Engineer of the respondent-State to appoint a fresh arbitrator.
By office order dated 09-02-1979, B. K. Wadhwa, Superintending Engineer, was appointed as the new arbitrator “for settling the disputes between the parties.” He issued a notice on 16-02-1979 inviting both parties to file their claims; the appellant filed its claims and the respondent filed counter-claims. On 20-12-1979, the arbitrator passed a non-speaking award of Rs 27,303 in favour of the appellant.
The Sub-Judge, Gurgaon set aside this second award on 14-10-1981, holding that the appellant had improperly enlarged the scope of arbitration by adding seven new claims to the thirty claims earlier filed before the first arbitrator. The District Judge affirmed this view in appeal and the High Court dismissed a subsequent revision. The present appellate court now reviews those concurrent decisions.
Legal Issues Presented
- Whether the second arbitrator’s jurisdiction was confined to the thirty claims originally submitted to the first arbitrator, rendering the seven additional claims beyond the scope of reference and the resultant award liable to be set aside.
- Whether the award was vitiated for being made beyond the statutory four-month period, in the absence of a valid extension of time.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The lower courts proceeded on the premise that the second arbitrator could only adjudicate the thirty claims previously filed. Examining the office order dated 09-02-1979, the appellate court determined that the appointment expressly empowered the arbitrator “for settling the disputes between the parties” without limiting him to any predefined set of claims. The arbitrator’s own notice of 16-02-1979 similarly invited the parties to submit all their claims. Accordingly, the inclusion of seven additional claims did not enlarge the reference but remained within the contractual disputes covered by the arbitration clause.
On the question of limitation, the contention that the award was time-barred was rendered moot because the parties had, by consent, extended the time for making the award. The court therefore concluded that neither ground relied upon by the courts below justified setting aside the award.
Holding and Implications
Holding: The judgments of the Sub-Judge, District Judge, and High Court are set aside. The award dated 20-12-1979 in the sum of Rs 27,303 in favour of the appellant is upheld, and a decree is passed accordingly with interest at 12% per annum from the date of decree until payment. The appeal is allowed; no order as to costs.
Implications: The decision reinstates the arbitral award and clarifies that, where the terms of reference broadly encompass “all disputes,” parties may submit additional claims arising out of the same contract without exceeding the arbitrator’s mandate. No new precedent was formally established beyond the immediate dispute between the parties.
1. This appeal relates to an award dated 20-12-1979 given by the arbitrator.
2. Originally the appellant had in 1970-71 entered into an agreement with the respondent for construction of a workshop and service station over the bus-stand at Rewari. The agreement contained an arbitration clause. On account of disputes between the parties, the arbitrator was appointed by the parties outside the court for deciding the disputes. The arbitrator gave his award on 29-10-1975 in favour of the appellants for a sum of Rs 5070. This award was ultimately set aside by the Additional District Judge, Gurgaon, vide his order dated 6-11-1978. By the said order the parties were directed to appear before the Chief Engineer of the respondents who was directed to appoint another officer of the rank of Superintending Engineer for giving a fresh award. Accordingly by office order dated 9-2-1979, pursuant to the said judgment of 6-11-1978 the Chief Engineer (Haryana) PWD, B&R Branch appointed B.K Wadhwa, Superintending Engineer, PWD, B&R Branch
“for settling the disputes between the parties, that is to say, M/s H.L Batra and Company on the one side and the State of Haryana through the Executive Engineer, Provisional Division, PWD, B&R Branch, Gurgaon on the other side in Agreement No. 22 for the year 1970-71 for the work of construction of a workshop complex and service station at Bus-Stand Rewari”.
Thereafter the arbitrator issued a notice dated 16-2-1979 directing both the parties to send their claims in duplicate to him. Accordingly the appellant sent its claims. The respondents filed counter-claims. The arbitrator by a non-speaking award dated 20-12-1979, awarded to the appellant a sum of Rs 27,303.
3. This award was set aside by the Sub-Judge, Gurgaon by an order dated 14-10-1981 on the ground that originally before the first arbitrator the appellant had filed 30 claims. Before the second arbitrator, it had filed 7 additional claims, thereby enlarging the scope of arbitration which was not permissible in law. The judgment proceeded on the basis that the second arbitrator was required only to consider the 30 claims originally filed before the first arbitrator and no others. This judgment has been upheld in appeal by the District Judge and a revision from the same has also been dismissed by the High Court.
4. The courts thus seem to have proceeded on the basis that the scope of the second arbitration was confined only to 30 claims which were originally filed before the first arbitrator. However, from the office order of 9-2-1979 which we have referred to and reproduced earlier, it is clear that the arbitrator has been appointed for the purpose of settling disputes between the parties. The terms of reference do not confine the second arbitration only to 30 claims. The first notice of the arbitrator dated 16-2-1979 calling upon both sides to file their claims also proceeds on the basis that the arbitration pertains to all the disputes between the parties. Therefore, the scope of the arbitration has not been enlarged by the appellant contrary to law. The claims filed by the appellant pertained to the said contract. Therefore, these disputed claims are within the terms of reference before the arbitrator. Even the counter-claim which has been filed has been considered by the arbitrator on the same basis. Therefore, the award cannot be set aside on the ground that it is beyond the scope of arbitration or the terms of reference to arbitration.
5. The order of the Sub-Judge dated 14-10-1981 also refers to the other contention relating to the award being time-barred because the arbitrator had not delivered the award within four months of his appointment. This point, however, does not survive for our consideration since it has been held that the time for making the award was extended by the consent of the parties.
6. In the premises the impugned judgments are set aside. The award dated 20-12-1979 for Rs 27,303 in favour of the appellant is upheld and a decree is passed in terms thereof with interest thereon at the rate of 12% per annum from the date of decree till payment. The appeal is allowed accordingly. No orders as to cost.
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