STATE OF RAJASTHAN versus PURI CONSTRUCTION CO. LTD. AND ANOTHER

Citation: [1994] SUPP. 3 S.C.R. 616 · Decided: 16-09-1994 · Supreme Court of India · Bench: M.N. VENKATACHALIAH · Disposal: Disposed off

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Judgment (excerpt)

.A 
STATE OF RAJASTHAN 
v. 
PURI CONSTRUCTION CO. LTD. AND ANOTHER 
SEPTEMBER 16, 1994 
B 
[M.N. VENKATACHALIAH, C.J. AND G.N. RAY, J.] 
Arbitration Act, 1940-Section 30-Scope of-Setting aside of 
award--Grounds for-Legal misconduct-Meaning of-evidence cannot be 
reappraised by the Court-Conclusion on a question of law referred to the 
C Arbitrator cannot be reversed merely because a different opinion is pos-
sible-Lumpsum award without detailed computation may be made-Sections 
15 and 16--Arbitration Act, 1940. 
Arbitration Act, 1940-Section 30-Misconduct-Meaning and scope 
D of-Arbitrator accepting brief for a party during pendency of arbitration 
proceedings-Fact within the knowledge of the other party-No objection 
raised-Held, -misconduct cannot be alleged before the Court. 
E 
Limitation Act, 1963-Article 119-0bjection to award not raised 
within 270 days of notice of filing of award-Held, barred by limitation. 
Arbitration Act, 1940-Sections 29, 15, 17 and 2o-Interest-Claim of 
interest from date of breach at an enhanced rate-Held, cannot be allowed 
in the facts and circumstances of the case. 
The applicant and the respondent entered into a contract for con-
F 
struction of a dam. The contract had an arbitration clause. During the 
course of the execution of the contract, certain disputes arose between the 
parties. The High Court in a petition under Section 20 of the Arbitration 
Act, 1940 referred the disputes for arbitration. Against the order of the 
High Court, the applicant filed a Special Leave Petition before this Court. 
G This Court appointed the nominee of the applicant, Shri C.M. Lodha and 
the nominee of the respondent Shri A.B. Rohtagi as the arbitrators. Both 
were retired High Court judges. A retired judge of this Court was ap-
pointed as the Umpire. 
On 21.11.1992, the arbitrators made a joint award of Rupees one 
H crore in favour of the respondent and filed it before this Court as per the 
/ 
(\ 
616 
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STAIB v. PURI CONSTN. CO. LID. 
617 
direction of this Court. The applicant filed an objection petition to the said A 
award alleging misconduct by the arbitrators. The applicant further al-
leged that the arbitrators misconstrued the clause of the contract, misap-
preciated evidence of the witnesses and that they have recorded incorrect 
findings which are contrary to the record. 
The respondents filed its written statement to the objection petition 
filed by the applicant stating that the objections raised in the objection 
petition were not admissible and the award could not be set aside or 
modified or remitted to the arbitrators for reconsideration within the 
ambit of Sections 15, 16 and 30 of the Arbitration Act, 1940. The respon-
dent also filed an application under Sections 15, 17, 18, 28 and 29 of the 
Arbitration Act, 1940 for making the award the rule of the Court, for award 
of interest from 24.2.1979 of in lieu thereof from 30.5.1979 i.e., the date of 
breach of contract by the appellant, and for enhancement of the rate of 
interest to 18%. 
B 
c 
The applicant filed an additional objection by way of affidavit of one D 
of its employees in which it was alleged that the nominee of the respondent 
Shri A.B. Rohatgi had accepted a brief for the respondent during the 
pendency or the arbitration proceedings and had argued the appeal before 
this Court. This, according to the applicant, amounted to grave and 
serious misconduct on the part of the arbitrator. The respondent, in reply, 
contended that the applicant had participated in the arbitration proceed-
ings having full knowledge that Shri Rohatgi had appeared for the respon-
dent in the appeal, but never raised any objection to his continuance as 
an arbitrator. The respondent had also agreed to extend the time for 
making of the award despite knowledge of the abov~ fact. The respondent 
further contended that the additional objection filed by the applicant was 
barred having been filed ~70 days after the notice of filing of the award. 
Rejecting the objections raised by the applicant while disposing of 
application, this Court: 
E 
F 
HELD : 1.1. The a}>plicant was aware of Shri Rohatgi's appearance as G 
a counsel of the respondent in an appeal before this Court but despite such 
knowledge, it did not raise any objectio'l either before the arbitrators or 
before this Court during the pendency of the arbitration proceedings but 
chose to make various submissions from time to time before the arbitrators 
and invited adjudicatio

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