Allahabad High Court
M/S Sumac International Limited, Gomti ... vs U.P. State Sugar Corporation, Gomti ... on 28 September, 2018
Equivalent citations: AIRONLINE 2018 ALL 4403
Author: Mahesh Chandra Tripathi
Bench: Mahesh Chandra Tripathi
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Judgment reserved on 23.08.2018 Judgment delivered on 28.09.2018 Case :- MATTERS UNDER ARTICLE 227 No. - 4452 of 2018 Petitioner :- M/S Sumac International Limited, Gomti Nagar, Lucknow Respondent :- U.P. State Sugar Corporation, Gomti Nagar, Lucknow Counsel for Petitioner :- Jitendra Kumar Srivastava,Salil Kumar Srivastav,Yogendra Kumar Srivastava Hon'ble Mahesh Chandra Tripathi,J.
Heard Shri Gajendra Pratap, learned Senior Counsel assisted by Shri Salil Kumar Srivastava, learned counsel for the petitioner and Dr. Y.K. Srivastava appearing for the U.P. State Sugar Corporation.
By means of present writ petition under Art.227 of the Constitution of India, the petitioner-M/s Sumac International Ltd. through its Director is assailing the order dated 26.5.2018 passed by the Civil Judge (SD), Muzaffarnagar in Suit No.652 of 1995 by which the court below has rejected the petitioner's application filed under Section 15 of the Arbitration Act, 1940 (in short "the Act of 1940) for amending the award dated 1.10.2017 passed by Sole Arbitrator Justice Sushil Harkauli (Retd.) so far as interest specified in the award.
The record in question reflects that on 2.8.1989 an agreement was entered into between the respondent-Corporation as purchaser and the petitioner company as the seller to design, purchase, engineering lay out, manufacture, procure, supply machinery and equipment of complete sugar plant for purchaser's scheme of modernization-cum-expansion of their existing sugar plant of Rohana Kalan Distt. Muzaffarnagar from 1300 TCD to 2500 TCD. During the subsistence of the aforesaid agreement there arose a dispute between the petitioner company and respondent no.1-Corporation. A petition under Section 20 of the Arbitration Act, 1940 was moved before the Civil Judge, Muzaffar Nagar by the petitioner-company, numbered as Arbitration Case No.652 of 1995. The matter went upto to Hon'ble Supreme Court by way of Civil Appeal No.15357 of 1996 (arising out of SLP (C) No.9866 of 1996 (U.P. State Sugar Corporation v. M/s Sumac International, Ltd.). By judgment and order dated 4.12.1996 reported in (1997) 1 SCC 568 the Supreme Court allowed the appeal and disposed of the petition filed by the petitioner company before the court of Chief Judicial Magistrate/ Civil Judge, Muzaffarnagar under Section 20 and by that order Justice R.M. Sahai, a retired judge of the Supreme Court was appointed as Sole Arbitrator. Learned Arbitrator proceeded with the arbitration. The claim petition and the counter-claim were entertained. After exchange of pleadings, evidence was recorded and the arbitration case was proceeding at the stage of final arguments but unfortunately the matter could not proceed further due to sad and untimely demise of learned Arbitrator. Consequently, I.A. Nos.5 and 7 were moved in the aforesaid civil appeal, wherein by order dated 29.8.2013 Justice Sushil Harkauli, retired Judge of this High Court was appointed as Sole Arbitrator. A company named Indian Potash Ltd. was also impleaded a party during the arbitration proceedings but learned Arbitrator in his award held that the said impleaded company is not a party to the agreement in question therefore his jurisdiction is confined to decide rights and liabilities of the original parties to the agreement. Finally the Sole Arbitrator had pronounced the award on 1.10.2017 partly allowing the claim of the petitioner and dismissing the counter claim of opposite party in the following terms:-
"(i) The claimant will get from the first respondent to a lump sum amount of Rs.6,50,00,000/- (Rupees six crore fifty lakhs) as compensation in full and final settlement of its claim. The said amount will carry simple interest at ther ate of (six percent) 6% per annum from 07.12.1995 till the date on which this award is made rule of Court.
(ii) The claimant will also get from the first respondent refund of the full amount received by the said respondent from the bank as a result of invocation of all the bank guarantees. The said amount will carry simple interest at the rate of (eight) 8% from the date when the amount was received by the respondent from the bank till the date of this award and (six) 6% interest from the dated of this award till the date when this award is made rule of Court.
(iii) The claimant will also get costs of the litigation from the first respondent which is quantified at Rs.30,00,000/- (Rupees thirty lakhs)."
The said award dated 1.10.2017 was filed in the court of Muzaffarnagar on 3.10.2017 for making it rule of the Court under Section 17 of the Act of 1940 and the matter is still pending adjudication for the purpose of making rule of the Court.
On 09.11.2017 the petitioner company also filed an application under Section 15 of the Arbitration Act, 1940 for the enhancement of the rate of interest specified in the award on the amount of sum quantified to be paid to the petitioner under the award as according to the petitioner award contained obvious error in regard to rate of interest, which can be amended without affecting such decision. It is contended that the claim for correction was set up in the light of the judgment passed by Apex court in State of Rajasthan v. Ferro Concrete Construction,1 and accordingly the interest ought to have been amended to 16.5% as has been stipulated under Clause 13.8 of the agreement. It appears that meanwhile the Corporation had also filed an application under Section 30 of the Act of 1940 for setting aside the award, which was dismissed by the court below on 17.3.2018 and an appeal against it filed as FAFO No.1876 was dismissed by this Court on 26.4.2018.
By the order impugned dated 26.5.2018 the petitioner's application under Section 15 of the Act of 1940 has been rejected. The same has been assailed by means of present writ petition on the ground that the court below is fully empowered to amend and modify the award in case the award contained any obvious error. The court below ought to have consider as to whether there was an obvious error in the award regarding rate of interest inasmuch as whether the rate of interest provided in the award i.e. 6% and 8% is as per the agreement or according to law or not.
Shri Gajendra Pratap, learned Senior Counsel appearing for the petitioner company submits that the court concerned could have modified the award subject to limitation contained in Section 15-B of the Act of 1940. In support of his contention he has relied upon the judgment in State of Rajasthan v. Ferro Concrete Construction (Supra) (paras 64, 65, 67 and 71). He has also relied upon the judgment in Naraindas Lilaram Adnani v. Narsingdas Naraindas Adnani & Ors.,2; Secretary, Irrigation Department, Government of Orissa & Ors. v. G.C. Roy,3 and U.P. State Sugar Corporation Ltd. v. M/s Sumac International Ltd. & Anr.,4. He further made submissions that while passing the award learned Arbitrator after considering the submissions of the parties, pleading and evidence (documentary as well as oral) found that the respondent-Corporation is guilty of breach of contract and as per the agreement, which required the Corporation to earn irrevocable letter of credit, letter of credit was opened after considerable delay i.e. on 15.2.1991 although delivery guarantee was furnished on 13.11.1990. As such letter of credit was not 'irrevocable' inasmuch as it was admittedly revoked unilaterally by the respondent Corporation.
It is contended that as per Ferro Concrete Construction Pvt. Ltd. (Supra) in para 65 (a) where a provision has been made in any contract, for interest on any debt or damages, interest shall be paid in accordance with such contract. As such whatever interest is provided in the agreement is to be adhered. In case the same is not provided for purchaser, then in such eventuality, the interest is to be accorded as per agreement 13.4 i.e. bank lending rate. Once the breach of contract is established, the same is very much reflected by the award itself and the purchaser had breached the contract as a whole and invoked the bank guarantee, then the rate of interest had to be modified, corrected and there is obvious error while passing the award. In such eventuality, this Court is to see whether by deciding the application under Section 15-B of the Act, in case the same is not affecting the award/ decision, then it is to be modified vide M/s Burrakur Coal Co. Ltd. & Anr. v. Union of India & Ors.,5 and Asstt. Commissioner (CT) LTU v. Amara Raja Baterries Ltd.,6. At this stage the Court has to see whether the court below has rightly considered the application under Section 15 of the Act or not, where the court easily modified the award subject to limitation contained in the provisions contained therein. In support of his submissions he has relied upon para 65 of Ferro Concrete Construction Pvt. Ltd. (Supra), which is reproduced as under:-
"65. The position regarding award of interest after the Interest Act, 1978 came into force, can be stated thus :
(a) where a provision has been made in any contract, for interest on any debt or damages, interest shall be paid in accordance with the such contract.
(b) where payment of interest on any debt or damages is expressly barred by the contract, no interest shall be awarded.
(c) where there is no express bar in the contract and where there is also no provision for payment of interest then the principles of section 3 of Interest Act will apply in regard to the pre-suit or pre- reference period and consequently interest will be payable :
(i) where the proceedings relate to a debt (ascertained sum) payable by virtue of a written instrument at a certain time, then from the date when the debt is payable to the date of institution of the proceedings;
(ii) where the proceedings is for recovery of damages or for recovery of a debt which is not payable at a certain time, then from the date mentioned in a written notice given by the person making a claim to the person liable for the claim that interest will be claimed, to date of institution of proceedings.
(d) payment of interest pendente lite (date of institution of proceedings to date of decree) and future interest (from the date of decree to date of payment) shall not be governed by the provisions of Interest Act, 1978 but by the provisions of section 34 of Code of Civil Procedure 1908 or the provisions of the law governing Arbitration as the case may be."
On the other hand, Dr. Y.K. Srivastava, learned counsel for the respondent-Corporation has vehemently opposed the writ petition and submitted that while moving the application (paper no.103 Ga) dated 9.11.2017 the petitioner could not be able to point out any obvious error in the award, which could be amended without affecting such decision, whereas the court is empowered to modify or correct the award. He has also placed reliance on the agreement dated 2.8.1989 entered into between the parties, whereas much emphasis has been placed by learned counsel for the petitioner on Clause 13.8 of the agreement, which clearly provided for seller's liability for interest and it does not provide for any liability of purchaser (respondent). Nowhere in the agreement any liability for payment of interest was fixed on the purchaser. Moreover the agreement itself is sacrosanct and even the sole arbitrator cannot travel beyond the scope and ambit of the agreement. Regarding the obvious error he has also placed reliance on the application so moved by the petitioner, wherein the ground for correction of award was taken as "obvious legal error". The "obvious legal error" has not only been thrice used in the said application but the same is also reiterated in the relief clause but there is no such ground available to the petitioner in Section 15 of the Act of 1940. In support of his submissions, he has also relied on Section 14, 15, 16, 17 of the Act of 1940 and has tried to contend that the same are composite in nature and every section is meant for specific purpose. He submits that even for the sake of argument, the claim set up by learned Senior Counsel appearing for the petitioner is accepted, then in such eventuality, the same may fall under Section 16 of the Act of 1940 but the claim under Section 15 of the Act of 1940 is unsustainable. Even in worst case, where the agreement is silent, then in such eventuality the same is to be seen in the light of the Interest Act, 1978. In this regard, learned counsel for the respondent has also invited attention of the Court to the State amendment by which Section 7-A has been inserted in the Act of 1940. As such his submission was firstly that the quantum of interest was at the discretion of the Arbitrator and secondly in addition to any interest awarded on such principal sum for any period prior to such commencement, with further interest at such rate not exceeding six percent per annum as the arbitrators or umpire may deem reasonable on such principal sum from the date of the award to the date of payment or to such earlier date as the arbitrators or umpire may think fit, but in no case beyond the date of the decree to be passed on the award. Such eventuality can only be seen in case the agreement is silent. Contrarily in the present matter nowhere the purchaser had to pay any interest. In support of his submissions, he has relied upon para 43 of G.C. Roy (Supra).
Dr. Y.K. Srivastava, learned counsel for the respondent-Corporation has also contended that in the garb of 'obvious error' the award passed by Arbitrator cannot be modified. In this regard he has also contended that the word "modify" means, according to Oxford Dictionary, to limit, restrain, to assuage, to make less severe, rigorous, or decisive; to tone down". It also means "to make partial changes in; to alter without radical transformation". In Rowland Burrows"'Words and Phrases', the word "modify" has, however, been defined as meaning "vary, extend or enlarge, limit or restrict". (Ref. M/s Burrakur Coal Co. Ltd. & Anr. (Supra).
Heard rival submissions and perused the record.
Before proceeding to decide the issue involved, it is necessary to refer to relevant provisions i.e. Sections 15, 16 and 17 of the Arbitration Act, 1940. They read as under:
"15. Power of Court to modify award.- The Court may by order modify or correct an award-
(a) where it appears that a part of, the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter referred; or
(b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or
(c) where the award contains a clerical mistake or an error arising from an accidental slip or omission.
16. Power to remit award.--(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit-
(a) where- the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or
(b) where the award is so indefinite as to be incapable of execution; or
(c) where an objection to the legality of the award is apparent upon the face of it., (2) Where an award is remitted under sub- section (1) the Court shall fix the time within which the arbitrator or umpire shall submit his decision to the Court:
Provided that any time so fixed may be extended by subsequent order of the Court:
(3) An award remitted under sub- section (1) shall become void on the failure of the arbitrator or umpire to reconsider it and submit his decision within the time fixed.
17. Judgment in terms of award.-- Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award."
Section 15 refers to the power of the Court to modify the award. Three eventualities have been mentioned. One of the eventualities as referred in Section 15(b) is, if the award is imperfect in form or contains "any obvious error", the same can be amended without affecting the decision of the Arbitrator. The Arbitrator derives power to decide the dispute under the agreement of parties. The Act of 1940 provides for arbitration with or without intervention of a court and it also provides for making the award rule of court and also for passing decree in terms of award. It provides that every arbitration agreement unless different intention expressed therein shall be deemed to exclude the provision set out in First Schedule of the Act of 1940. An award may be modified or remitted to the Arbitrator by the court for reconsideration. The court has power under Section 30 of the Act to set side the award, if it suffers from apparent error of law or if it is otherwise moreover the award made by the Arbitrator is final and binding on the parties.
In the present matter parties approached to the competent court for making award rule of the court with an object to ensure enforceability of award through instrument of the court. Generally the question of award of interest is to be dealt by the Arbitrator for three different periods namely (I) for the period commencing from the date of dispute till the date of arbitrator enters upon the reference; (ii) for the period commencing from the date of the arbitrator's entering upon reference till the date of making the award; and (iii) for the period commencing from the date of making of the award till the date the award is made the rule of the court or till the date of realisation, whichever is earlier.
In the present matter the Arbitrator made the award that the petitioner would be entitled to lumpsum amount of Rs.6.5 crores as compensation in full and final settlement of its claim. The same would carry simple interest at the rate of 6% per annum from 7.12.1995 till the date on which this award is made rule of court. Secondly the petitioner would also be entitled to receive refund of the full amount received by the respondent from the bank as a result of invocation of all the bank guarantees. The same would also fetch simple interest at the rate of 8% from the date when the amount was received by the respondent from the bank till the date of this award and 6% interest from the date of this award till the date when this award is made rule of court.
The Constitution Bench of Hon'ble Apex Court in G.C. Roy (Supra) considered the interest pendente lite and opined that interest pendente lite can be awarded by arbitrator having regard to the facts and circumstances of the case for doing complete justice between the parties where claim as to interest is made by the parties and the agreement does not contain anything to the contrary. Relevant paras 43 and 44 is extracted below:-
"43. The question still remains whether arbitrator has the power to award interest pendente lite, and if so on what principle. We must reiterate that we are dealing with the situation where the agreement does not provide for grant of such interest nor does it prohibit such grant In other words, we are dealing with a case where the agreement is silent as to award of interest. On a conspectus of aforementioned decisions, the following principles emerge:
(i) A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference. This is the principle of Section 34, C.P.C., and there is no reason or principle to hold otherwise in the case of arbitrator.
(ii) an arbitrator is an alternative form for resolution of disputes arising between the parties. If so, he must have the power to decide all the disputes or differences arising between the parties. If the arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the Court for that purpose, even though he may have obtained satisfaction in respect of other claims from the arbitrator. This would lead to multiplicity of proceedings.
(iii) An arbitrator is the creature of an agreement It is open to the parties to confer upon him such powers and prescribe such procedure for him to follow, as they think fit, so long as they are not opposed to law. (The proviso to Section 41 and Section 3 of Arbitration Act illustrate this point). All the same, the agreement must be in conformity with law. The arbitrator must also act and make his award in accordance with the general law of the land and the agreement.
(iv) Over the years, the English and Indian Courts have acted on the assumption that where the agreement does not prohibit and a party to the reference makes a claim for interest, the arbitrator must have the power to award interest pendente lite. Thawardas has not been followed in the later decisions of this Court. It has been explained and distinguished on the basis that in that case there was no claim for interest but only a claim for unliquidated damages. It has been said repeatedly that observations in the said judgment were not intended to lay down any such absolute or universal rule as they appear to, on first impression. Until Jena's case almost all the Courts in the country had upheld the power of the arbitrator to award interest pendente lite. Continuity and certainty is a highly desirable feature of law.
(v) Interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). For doing complete justice between the parties, such power has always been inferred.
44. Having regard to the above considerations, we think that the following is the correct principle which should be followed in this behalf:
Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (alongwith the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes-or refer the dispute as to interest as such-to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view."
In Naraindas Lilaram Adnani (Supra), Hon'ble the Apex Court considered Section 15 (1) (b) and 16 of the Act of 1940 and held that correction of an obvious error in the award not affecting the decision is permissible. Relevant para 9 of the said judgment is quoted as under:-
"9. Under Section 15(b) of the Arbitration Act, 1940, the Court may, by order, modify or correct an Award inter alia where the Award is imperfect in form, or contains any obvious error which can be amended without affecting such decision. Obviously the court cannot substitute its own order for the Award of the Arbitrator. But any obvious error in the Award can be corrected by the court provided it does not affect the decision given by the Arbitrator. In the present case the decision of the Arbitrator is clear, namely, that the Narain Niwas property is exclusively the personal property of the appellant Naraindas. It is also clear that respondents 1 and 2 cannot claim any part of it by virtue of their being partners in the firm of Lilaram Kewalram (India). The only reason why the Arbitrator has not granted any consequential relief seems to be his impression that the possession of respondents 1 and 2 was governed by the provisions of the Bombay Rent Act. This being clearly a mistake, it is possible to correct the same without affecting the decision of the Arbitrator. After all, the Award must be couched in a form which would lead to finality. It should not be in a form which compels the parties to embark upon further litigation. If the mistake of the Arbitrator is allowed to stand as it is, it would clearly lead to further litigation between the parties although their rights, inter se, are clearly decided by the Arbitrator. The mistake, therefore, can be corrected under Section 15(b) of the Arbitration Act 1940."
In Visakapatnam Municipal Corporation v. K. Satyanarayana & Co.,7 Hon'ble the Apex Court while considering the pendente lie interest held that court had no jurisdiction to grant pendente lite interest where claim to pendente lite interest was rejected by arbitrator and the claimant instead of filing any objection to the award under Section 30 sought a decree in terms of award albeit with interest from the date of reference.
For the purposes of deciding the controversy in hand, it would be appropriate to have a glance on relevant paragraphs of the application under Section 15 of the Act of 1940, which is quoted as under:-
"6. that in the agreement dated 2.3.1989, under Clause 13.8 of the agreement the sellers liability of interest has been provided @ 16.5% p.a. in case any equipment of material is not received at the site within 15 days from the date of payment in respect thereof is made to the seller by the purchaser. From the above, it is therefore, clear that the provision for the interest has been made in the contract @ 16.5% per annum on the money which has been paid by the purchaser to the seller for the material, in case the material is not received at the site within 15 days from the date of the payment. Though this condition of payment of interest is by seller to the purchaser, but it would also apply vice versa and even in the situation where the payment of money is becomes due to the seller from the purchaser. Here as per the aforesaid award it has been determined by the learned Arbitrator that the aforesaid money has become due to the seller from the purchaser which the purchaser is liable to pay to the seller with interest. Photo State copy of the agreement dated 02.08.1989 is being annexed herewith as Annexure No.a-2 to this application.
7. That the rate of interest has already been settled in the contract and the learned Arbitrator ought to have applied same rate of interest of 16.5% per annum as stipulated under clause 13.8 of the agreement.
8. That the learned Arbitrator by providing only 6% and 8% of the interest over the first and second claim, awarded in favour of the applicant, has committed obvious legal error under Section 15 of the Arbitration Act, 1940.
9. That under Section 15 of the Arbitration Act, 1940, the Court has been empowered to modify or correct an award where the award contains any obvious legal error which can be amended without effecting such decision.
10. That in this particular case by modifying the rate of interest over the claims awarded in favour of the applicant from 6% and 8% to 16.5%, learned Court would rectify the obvious legal error and there will be no need to set aside the award and hence the error would be corrected without effecting the decision of the award."
From bare perusal of the aforesaid paragraphs of the application under Section 15 of the Act of 1940, it is apparent that entire claim in the garb of obvious error had been claimed on the basis of Clause 13.8 of the agreement. For the purposes of deciding the said aspect, it would be appropriate to quote para 13.8 of the agreement, which talks about the seller's liability for interest:-
"13.8 Seller's Liability for Interest a. In case any equipment or material is not received at the site within fifteen days from the date payment in respect thereof is made to the Sellers by the Purchasers then interest at the rate of 16.5 (sixteen and half) per cent per annum shall be paid by the Sellers to the Purchasers from the date payment as aforesaid is made till the date the material or equipment is received at site.
b. In case the Sellers fail to complete the supply of plant & machinery within the time specified in Clause 5.1, the Sellers shall be liable to pay the Purchasers interest at the rate of 16.5 (sixteen and half) percent per annum compounded half yearly on the amount of advance paid to the Sellers reckoned from the stipulated date of commissioning of the plant as specified in Clause 5.1."
From the perusal of the aforesaid, it is apparent that no such liability is fixed on the purchaser.
As per para 13.8 of the agreement, which provides seller's liability for interest, it is clearly stipulated that in case any equipment or material is not received at the site within fifteen days from the date payment in respect thereof is made to the Sellers by the Purchasers then interest at the rate of 16.5 (sixteen and half) per cent per annum shall be paid by the Sellers to the Purchasers from the date payment as aforesaid is made till the date the material or equipment is received at site. It further provides that in case the Sellers fail to complete the supply of plant & machinery within the time specified in Clause 5.1, the Sellers shall be liable to pay the Purchasers interest at the rate of 16.5 (sixteen and half) percent per annum compounded half yearly on the amount of advance paid to the Sellers reckoned from the stipulated date of commissioning of the plant as specified in Clause 5.1.
The Court has proceeded to examine the complete terms and conditions of the agreement and find that the said agreement is meticulous and without any ambiguity. The claim which has been tried to be set up under Section 15 of the Act of 1940 that though the condition of payment of interest is by seller to the purchaser as per Clause 13.8 but it would also apply vice versa and even in situation where payment of money becomes due to the seller from purchaser, such claim is beyond scope and ambit of Section 15 of the Act of 1940. The rate has already been settled between the parties as per the agreement.
Under Section 15(b) of the Arbitration Act, 1940, the Court may, by order, modify or correct an Award inter alia where the Award is imperfect in form, or contains any obvious error which can be amended without affecting such decision. In such situation, the Court cannot travel beyond or substitute its own order for the award passed by Arbitrator but in case any such obvious error in the award is reflected, the same may be corrected by the Court provided it does not affect the decision given by the Arbitrator. In the present matter, as indicated above, the decision of the Arbitrator is clear and unambiguous and as such the same does not warrant any interference.
Learned counsel for the petitioner could not point out any manifest error apparent on the face of record in the impugned order so as to justify interference by this Court in extra ordinary jurisdiction under Article 227 of the Constitution of India.
The court below has recorded categorical findings of fact and unless these findings are shown perverse or contrary to record resulting in grave injustice to petitioner, in writ jurisdiction under Article 227, this Court exercising restricted and narrow jurisdiction would not be justified in interfering with the same.
In supervisory jurisdiction of this Court over subordinate Courts, the scope of judicial review is very limited and narrow. It is not to correct the errors in the orders of the court below but to remove manifest and patent errors of law and jurisdiction without acting as an appellate authority.
This power involves a duty on the High Court to keep the inferior courts and tribunals within the bounds of their authority and to see that they do what their duty requires and that they do it in a legal manner. But this power does not vest the High Court with any unlimited prerogative to correct all species of hardship or wrong decisions made within the limits of the jurisdiction of the Court or Tribunal. It must be restricted to cases of grave dereliction of duty and flagrant abuse of fundamental principle of law or justice, where grave injustice would be done unless the High Court interferes.
A Constitution Bench of Apex Court examined the scope of Article 227 of the Constitution in Waryam Singh and another Vs. Amarnath and another8 and made following observations at p. 571 :
"This power of superintendence conferred by article 227 is, as pointed out by Harries, C.J. in Dalmia Jain Airways Ltd. Vs. Sukumar Mukherjee AIR 1951 Cal. 193, to be exercised most sparingly and only in appropriate cases in order to keep the Subordinate Courts within the bounds of their authority and not for correcting mere errors".
The Constitution Bench of Apex Court in Nagendra Nath Bora and Another v. Commissioner of Hills Division and Appeals, Assam & Others9 settled that power under Article 227 is limited to seeing that the courts below function within the limit of its authority or jurisdiction.
Hon'ble Apex Court had an occasion to examine this aspect of the matter in the case of Mohd. Yunus v. Mohd. Mustaqim & Others10 in which Hon'ble Apex Court observed that the supervisory jurisdiction conferred on the High Courts under Article 227 of the Constitution is limited "to seeing that an inferior Court or Tribunal functions within the limits of its authority," and not to correct an error apparent on the face of the record, much less an error of law. For this case there was, in our opinion, no error of law much less an error apparent on the face of the record. There was no failure on the part of the learned Subordinate Judge to exercise jurisdiction nor did he act in disregard of principles of natural justice. Nor was the procedure adopted by him not in consonance with the procedure established by law. In exercising the supervisory power under Article 227, the High Court does not act as an Appellate Court or Tribunal. It will not review or reweigh the evidence upon which the determination of the inferior court or tribunal purports to be based or to correct errors of law in the decision."
The said view has also been reiterated by the Apex Court in Laxmikant Revchand Bhojwani & Another v. Pratapsing Mohansingh Pardeshi11 and the Apex Court had again cautioned that the High Court under Article 227 of the Constitution cannot assume unlimited prerogative to correct all species of hardship or wrong decisions. It must be restricted to cases of grave dereliction of duty and flagrant abuse of fundamental principles of law or justice, where grave injustice would be done unless the High Court interferes.
A three-Judge Bench of Hon'ble Apex Court in Rena Drego (Mrs.) v. Lalchand Soni & Others12 again abundantly made it clear that the High Court cannot interfere with the findings of fact recorded by the subordinate court or the tribunal while exercising its jurisdiction under Article 227. Its function is limited to seeing that the subordinate court or the tribunal functions within the limits of its authority. It cannot correct mere errors of fact by examining the evidence and re-appreciating it.
In Virendra Kashinath Ravat & Another v. Vinayak N. Joshi & Others13 Hon'ble Apex Court held that the limited power under Article 227 cannot be invoked except for ensuring that the subordinate courts function within its limits. The High Court cannot, while exercising jurisdiction under Article 227, interfere with findings of fact recorded by the subordinate Court or Tribunal. Its function is limited to seeing that the subordinate Court or Tribunal functions within the limits of its authority. It cannot correct mere errors of fact by examining the evidence and re-appreciating it.
It is well settled that power under Article 227 is of the judicial superintendence which cannot be used to up-set conclusions of facts, howsoever erroneous those may be, unless such conclusions are so perverse or so unreasonable that no Court could ever have reached them. (See: Chandra Bhushan Vs. Beni Prasad & ors.14; Savitrabai Bhausaheb Kevate & ors. Vs. Raichand Dhanraj Lunja15; and Savita Chemical (P) Ltd. Vs. Dyes & Chemical Workers' Union & Anr.,16.
Power under Article 227 of the Constitution is not in the nature of power of appellate authority enabling re-appreciation of evidence. It should not alter the conclusion reached by the Competent Statutory Authority merely on the ground of insufficiency of evidence. (See: Union of India & ors. Vs. Himmat Singh Chahar17.
In Ajaib Singh Vs. Sirhind Co-opeative Marketing cum Processing Service Society Ltd.18, the Apex Court has held that there is no justification for the High Court to substitute its view for the opinion of the Authorities/ Courts below as the same is not permissible in proceedings under Articles 226/227 of the Constitution.
In Mohan Amba Prasad Agnihotri Vs. Bhaskar Balwant Aheer19, the Court said that jurisdiction of High Court under Article 227 of the Constitution is not appealable but supervisory. Therefore, it cannot interfere with the findings of fact recorded by Courts below unless there is no evidence to support findings or the findings are totally perverse.
In Indian Overseas Bank Vs. Indian Overseas Bank Staff Canteen Workers' Union20, the Court observed that it is impermissible for the Writ Court to reappreciate evidence liberally and drawing conclusions on its own on pure questions of fact for the reason that it is not exercising appellate jurisdiction over the awards passed by Tribunal. The findings of fact recorded by the fact finding authority duly constituted for the purpose ordinarily should be considered to have become final. The same cannot be disturbed for the mere reason of having based on materials or evidence not sufficient or credible in the opinion of Writ Court to warrant those findings. At any rate, as long as they are based upon some material which are relevant for the purpose no interference is called for. Even on the ground that there is yet another view which can reasonably and possibly be taken the High Court can not interfere.
In Union of India Vs. Rajendra Prabhu21, the Apex Court observed that the High Court, in exercise of its extraordinary powers under Article 227 of the Constitution, cannot re-appreciate the evidence nor it can substitute its subjective opinion in place of the findings of Authorities below. Similar view has been reiterated in State of Maharashtra Vs. Milind & ors.22; Extrella Rubber Vs. Dass Estate (P) Ltd.23; and Omeph Mathai & ors. Vs. M. Abdul Khader24.
In Surya Dev Rai Vs. Ram Chander Rai and others25, it was held by the Apex Court that in exercise of supervisory power under Article 227, High Court can correct errors of jurisdiction committed by subordinate Courts. It also held that when subordinate court has assumed a jurisdiction which it does not have or has failed to exercise a jurisdiction which it does have or jurisdiction though available is being exercised in a manner not permitted by law and failure of justice or grave injustice has occasioned, the Court may step in to exercise its supervisory jurisdiction. However, it also said that be it a writ of certiorari or exercise of supervisory jurisdiction, none is available to correct mere errors of fact or law unless error is manifest and apparent on the face of the proceedings such as when it is based on clear ignorance or disregard of the provisions of law; or, a grave injustice or gross failure of justice has occasioned thereby.
In Jasbir Singh Vs. State of Punjab26, the Apex Court said:
"...while invoking the provisions of Article 227 of the Constitution, it is provided that the High Court would exercise such powers most sparingly and only in appropriate cases in order to keep the subordinate courts within the bounds of their authority. The power of superintendence exercised over the subordinate courts and tribunals does not imply that the High Court can intervene in the judicial functions of the lower judiciary. The independence of the subordinate courts in the discharge of their judicial functions is of paramount importance, just as the independence of the superior courts in the discharge of their judicial functions."
In Shalini Shyam Shetty and another Vs. Rajendra Shankar Patil27, the Apex Court said that power of interference under Article 227 is to be kept to the minimum to ensure that the wheel of justice does not come to a halt and the fountain of justice remains pure and unpolluted in order to maintain public confidence in the functioning of the tribunals and Courts subordinate to High Court. The above authority has been cited and followed in Kokkanda B. Poondacha and others Vs. K.D. Ganapathi and another28 and Bandaru Satyanarayana Vs. Imandi Anasuya29.
In Abdul Razak (D) through Lrs. & others Vs. Mangesh Rajaram Wagle and others30 (2010) 2 SCC 432, Apex Court reminded that while exercising jurisdiction under Article 226 or 227, High Courts should not act as if they are exercising an appellate jurisdiction.
In T.G.N. Kumar Vs. State of Kerala and others31, the Court said that power of superintendence conferred on the High Court under Article 227 of the Constitution of India is both administrative and judicial, but such power is to be exercised sparingly and only in appropriate cases in order to keep the subordinate courts within the bounds of their authority.
In Commandant, 22nd Battalion, CRPF and others Vs. Surinder Kumar32, Apex Court referring to its earlier decision in Union of India Vs. R.K. Sharma33 observed that only in an extreme case, where on the face of it there is perversity or irrationality, there can be judicial review under Articles 226 or 227.
Similar view has also been taken in Oriental Insurance Co. Ltd. Agra (M/s) vs. Kishore Kapoor34 and in Maksood Ali vs. Prescribed Authority/City Magistrate, Bulandshahr and 2 others35. Hon'ble the Apex Court in Dr. Kazimunnisa (Dead) by L.R. vs. Zakia Sultana (Dead) by L.R. & ors36 has observed in para-36 as under:-
"36) Lastly, we find that the High Court while reversing the findings of the Special Court decided the writ petition under Article 227 like a first Appellate Court by appreciating the entire evidence little realizing that the jurisdiction of the High Court while deciding the writ Petition under Article 227 is not akin to appeal and nor it can decide the writ petition like an Appellate Court."
In view thereof, I find no justification warranting interference with the order impugned in this writ petition.
The writ petition sans merit and is accordingly dismissed.
Order Date :- 28.09.2018 SP/