State of Orissa Vs. Sudhakar Das (Dead) by Lrs. - Court Judgment

Excerpt:

.....32 of the constitution the three petitioners who were detained under section 3 of the conservation of foreign exchange and prevention of smuggling activities act, 1974, contended that in the matter of discharge of executive functions conferred upon him, the administrator of the union territory of goa, daman and diu who passed the impugned orders, is in the same position as a governor of a state or the president who must act on the aid and advice of the council of ministers and that in the instant case the orders of detention having been passed by the administrator himself instead of by the chief minister in the name of the administrator, were invalid. dismissing the petitions, held :1. (a) although section 46(2) of the union territories act, 1963 provides that all executive action of the administrator, whether taken on the advice of his ministers or otherwise shall be expressed to be taken in the name of the administrator, the administrator is not purely a constitutional functionary who is bound to act on the advice of the council of ministers and could not act on his own. the language of arts. 74 and 163 on the one hand and the language of section 44 of the union territories..........is sustained and the challenge to it fails.4. so far as the award of interest for pre-reference period is concerned, it appears appropriate to us, keeping in view the fact that the proceedings in this case have remained pending for almost one and a half decade and the arbitration started as early in 1975, to direct that the respondent shall execute the decree relating to the award of pre-reference interest only on furnishing a bank guarantee to the extent of that amount together with an undertaking that in the event the constitution bench, to which this issue has been referred to in executive engineer, dhankanal minor irrigation division, orissa v. n.c. budhiraj (dead) by l.rs. : air2000sc221 , decides against the decree-holder-respondents, the state shall be entitled to encash the bank guarantee. the respondents shall keep the bank guarantee alive during the pendency of the matter before the constitution bench and on furnishing the bank guarantee and the undertaking the respondents can execute the decree in that behalf.5. thus, the appeal is disposed of in above terms. the impugned judgment and decree shall stand modified accordingly. no costs.

Judgment:

ORDER

1. This appeal by special leave arises out of arbitration proceedings. The High Court of Orissa dismissed an appeal filed by the appellant against the order of Subordinate Judge, Bhubaneshwar making an award made by the Arbitrator a rule of the Court. The three main issues with which we are concerned in this appeal are:

1. Whether the Arbitrator could have granted an award for escalation in favour of the contractor ?

2. Whether the Arbitrator could have awarded pendente lite interest in favour of the contractor? and

3. Whether the Arbitrator could have granted interest for the pre-reference period?

2. It is not disputed that the arbitration agreement contained no escalation clause. In the absence of any escalation clause, an Arbitrator cannot assume any Jurisdiction to award any amount towards escalation. That part of the Award which grants escalation charges is clearly not sustainable and suffers from a patent error. The decree, insofar, as the award of escalation charges is concerned, cannot, therefore, be sustained,

3. It is conceded by Ms. Mana Chakraborty, learned Counsel for the State that the issue relating to the power of the Arbitrator to grant interest pendente lite where the agreement between the parties, as in the present case, did not prohibit grant o: interest and the dispute referred to the Arbitrator included the claim of interest, is no longer res Integra and stands settled in favour of the claimant and against the State in Secretary, Irrigation Department, Government of Orissa v. G.C. Roy : [1991]3SCR417 overruling the view to the contrary as expressed in Executive Engineer (Irrigation Balimela v. Abhaduta Jena : [1988]1SCR253 . The decree to the extent, it awards pendente lite interest in favour of the respondents, therefore, is sustained and the challenge to it fails.

4. So far as the award of interest for pre-reference period is concerned, it appears appropriate to us, keeping in view the fact that the proceedings in this case have remained pending for almost one and a half decade and the arbitration started as early in 1975, to direct that the respondent shall execute the decree relating to the award of pre-reference interest only on furnishing a bank guarantee to the extent of that amount together with an undertaking that in the event the Constitution Bench, to which this issue has been referred to In Executive Engineer, Dhankanal Minor Irrigation Division, Orissa v. N.C. Budhiraj (Dead) by L.Rs. : AIR2000SC221 , decides against the decree-holder-respondents, the State shall be entitled to encash the bank guarantee. The respondents shall keep the bank guarantee alive during the pendency of the matter before the Constitution Bench and on furnishing the bank guarantee and the undertaking the respondents can execute the decree in that behalf.

5. Thus, the appeal is disposed of in above terms. The impugned judgment and decree shall stand modified accordingly. No costs.