LexK.V. GEORGE versus SECRETARY TO GOVT., WATER AND POWER DEPARTMENT, TRIVANDRUM & ANR.
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A K.V. GEORGE v. SECRETARY TO GOVT., WATER AND POWER DEPARTMENT, TRIVANDRUM & ANR. OCTOBER 5, 1989 . [SABYASACHI MUKHARJI AND B.C. RAY, JJ.] Arbitration Act 1940-Sections 30, 33 and 41-Arbitrator to make award after considering claims and counter claims of the parties- Failure to do so is misconduct-Principles of res·judicata applicable to C arbitration proceedings. The appellant, a contractor had entered into a contract with the Respondent on 22nd April 1978 for the construction of an embankment across Mnsaliyar Podom between chainage 2573.5 M-to 2827 M of E.B. D Main conal of Kallada Irrigation Project. Under the contract-agree- ment, the work was to the completed by March 30, 1980 i:e. two years ftom the date of selection notice which was dated March 30, 1978. The appellant having failed to complete the work as per the terms of the contract, the Respondent by a notice dated 26.4.80 cancelled the con- tract at his riskcand cost. Consequent there-to the appellant filed a I; claim before the named Arbitrator (Case No. 132 of 1980), claiming enhancement of rates in respect of the earth work involved in the con- tract. He also claimed interest on delayed payment and costs. The respondent resisted the claim and urged that the appellant was not entitled to any enhancement, as the appellant should have visualised and assessed the position before entering into work contract which was to be completed within 2 years. According to respondent the appellant had not even completed 35% of the work. Respondent, No. 2, therefore, filed a"counter-ciaiin for-Rs~28,84,ooo: G H The Arbitrator made the award on 22.1.1981 in respect of rlaim No. I therby directing the Respondents to pay 35 per cent increase in the agreed rate for the item of earth work. However claim regarding interest on delayed payment was disallowed. As regards the counter- claim filed by the Respondent, the Arbitrator ordered that those issues will be considered separately and thus no award in respect thereof was made. The appellant thereupon filed O.P. ·(Arbitrator) 81 of 1981 before the Sub-Judge Trivandrum for making the award a rule of the Court. 398 K.V. GEORGE v. SECY. TO. GOVT., WATER DEPTT. 399 The Responde_nts having raised objection to the making of the award a Rule of the Court, the Sub-Judge remitted the reference to the arbitrator by his order dated 18.8.81 for fresh consideration, as the arbitrator had failed to consider the couuter-claim made by the respon- dent. The appellant applied for review of the said order passed by Sub-Judge. Contemporaneously, the ap_pellant filed another claim_,peti- tion before the arbitrator (case No. 276of1980) in respect of the wrong- ful termination of the contract and made claim in respect of 13 items. On 29th October 1981, the arbitrator made an award whereby he ordered that the re-arrangement of the work should not be at the risk and cost of the appellants. He also ordered 30% increase in rates for all items of work carried out by the appellant, except however those items, which stood covered by his earlier award. Some of the other claims were also allowed. The appellant tiled O.P. (Arbitrator) 296 of 1981 for making the second award a Rule of the Court to which the Respondents raised objections. The Sub-Judge by his order dated. March 18, 1982 made the award a rule of the Court dismissing_ the plea of_ res-,judicata raised by the Respondents. The Respondents b~ing dissatisfied wit_h the order passed by Sub-Judge preferred two appeals before the Kerala High Court. The High Court allowed both the apeals holding that the Sub-Judge couid not review his order of the facts of the present case. The High Court also held that principle of constructive res-judicata would apply to the arbitration case. Accordingly the High Court set aside the orders of the Sub-Judge as also the award and directed that the arbitrator shall dispose of the Arbitration case No. 132 of 1980 afresh in the light of the Judgment of Sub-Judge in O.P. (Arbitrator) No. 81 of 1981 and in accordance with Jaw after taking into considera- tion the claim of the appellant and the counter claim of the Respon- dents. Hence these appeals by the appellant by Special Le'!ve. Dismissing the appeals, this Court, HELD: It is the duty of the Arbitrator while considering the claims of the appellants to consider also the counter claims made on behalf of the Respondents and to make'the award after considerin
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