STATE OF RAJASTHAN AND ANR. versus M/S. NAV BHARAT CONSTRUCTION CO.

STATE OF RAJASTHAN AND ANR. versus M/S. NAV BHARAT CONSTRUCTION CO.

Since no set off or counter-claim was filed by appellant, arbitrator rightly did not consider it; subsequent claims after first reference are not barred under Order 2 Rule 2 CPC; contention regarding contract clause prohibiting interest was not raised before arbitrator or courts, so award of interest stands but rate reduced in light of dispute and circumstances.

Parties
Appellant: State of Rajasthan; Respondent: M/s. Nav Bharat Construction Co.
Jurisdiction
India
Judgment Date
27 November 2001
Procedural Posture
Civil Appeal / Supreme Court Final Disposition
Outcome
Appeal disposed of; SLP by contractor dismissed.
Legal Topics
Interest on Delayed Payment, Counter Claim Under Arbitration, Order 2 Rule 2 CPC Applicability
Arbitration Civil Procedure Interest on Delayed Payment Counter Claim Under Arbitration Order 2 Rule 2 CPC Applicability

Case Brief

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Parties

State of Rajasthan

Appellant

M/s. Nav Bharat Construction Co.

Respondent

Procedural Posture

Civil Appeal / Supreme Court Final Disposition

Legal Issues

  1. 1 Whether the arbitrator erred by not considering the appellant's counter-claim
  2. 2 Whether second reference to arbitrator was barred under Order 2 Rule 2 CPC
  3. 3 Whether arbitrator could award interest contrary to the agreement

Ratio Decidendi

Since no set off or counter-claim was filed by appellant, arbitrator rightly did not consider it; subsequent claims after first reference are not barred under Order 2 Rule 2 CPC; contention regarding contract clause prohibiting interest was not raised before arbitrator or courts, so award of interest stands but rate reduced in light of dispute and circumstances.

Court Disposition

Appeal disposed of; SLP by contractor dismissed.

Orders

  • Award modified as to rate of interest: respondent entitled to recover principal amount with interest at the rate of 6% only.
  • Parties to bear their own costs throughout.