Calcutta High Court (Appellete Side)
Steel Authority Of India Limited vs M/S. Tlt Engineering India Private on 4 February, 2020
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
1
01
04.02.2020
Ct. No. 37
ssd
FMA 406 of 2020
(FMAT 95 of 2020)
with
CAN 900 of 2020
Steel Authority of India Limited
Vs.
M/s. TLT Engineering India Private
Limited and another.
Mr. Dhruba Ghosh
Mr. Sarathi Dasgupta
Mr. Arijit Basu
...for the appellant.
Mr. Gopal Pahari
Mr. Bikram Chattopadhyay
Mr. Saunak Sengupta
...for the respondents.
The appeal arises out of the dismissal of a petition under Section 34 of the Arbitration and Conciliation Act, 1996. The primary ground urged by the appellant is that the impugned award dated April 17, 2016 is totally unreasoned and the court of the first instance erroneously took upon the burden of adjudicating on the disputes between the parties.
The award runs into some 17 pages. The contract between the parties also involved a Chinese party which was responsible for ensuring that the turbo blower that was to be installed at the Burnpur unit of erstwhile IISCO functioned properly. The respondent herein was to supply certain 2 components and was entitled to be paid for the supply. However, the ultimate responsibility of ensuring that the turbo blower functioned properly was that of the Chinese party.
There is no dispute that supplies were effected by the respondent to the appellant herein and some payments have also been made. However, it appears that the turbo blower failed to function properly and the commissioning was treated as having failed. Arbitration proceedings have been instituted by the appellant against the Chinese party which was responsible for ensuring the proper commissioning and function of the turbo blower.
The respondent pursued its claim for the price of the goods that it supplied and the services that it rendered. The principal contention of the respondent was that irrespective of whether the turbo blower was commissioned successfully, the respondent was entitled to be remunerated for its services and paid the price of the goods that it supplied. The principal defence of the appellant herein in course of the arbitral proceedings was that till the liability of the Chinese party was decided, the claim of the respondent herein could not be appropriately adjudicated.
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Over the 17 pages that is the arbitral award of April 17, 2016, the first 16 pages cover the dispute as to whether the respondent could have independently pursued its claim against the appellant herein de hors the claim lodged by the appellant against the Chinese party. The arbitral tribunal found that the respondent's claim against the appellant herein did not have to await the outcome of the appellant's claim against the Chinese party. However, upon arriving at such finding, the heads of claim made by the respondent were set out and the entirety thereof allowed without so much as a sentence by way of discussion on any head of claim.
It does not appear, on a reading of the counter- statement filed by the appellant before the arbitral tribunal, that any head of claim was admitted. There is no recording in the arbitral award that the appellant herein conceded any claim. Indeed, the counter- statement filed by the appellant herein reveals a robust challenge to the several heads of claim carried by the respondent to the reference.
In the light of the appellant's denial of every individual head of the claim made by the respondent herein, it was incumbent on the arbitral tribunal to adjudicate upon the entitlement of the claimant in the reference in respect of the various heads and, thereupon, ascertain the quantum 4 thereof. The arbitral award is singularly lacking in such regard. There is no whisper as to why the claimant was found to be entitled to any of the heads of claim, far less any hint of a discussion on the quantum thereof. In short, the arbitral award of April 17, 2016 may be seen to be completely bereft of reasons. The claims were not adjudicated nor the quanta assessed in respect thereof.
The Act of 1996 obliges an arbitral tribunal to furnish reasons in support of its award and the heads of claim, whether they succeed or fail. It is also opposed to public policy that an arbitral award, which ought to be the outcome by a process of adjudication, would not reveal how the mind was applied to the matters in issue to arrive at a cogent finding.
The court of the first instance acted wholly without jurisdiction in taking up the burden of adjudicating the disputes. This is clearly what an arbitration agreement forbids the court to do. The adjudication has to be undertaken and completed in course of the arbitral reference and the court, on receipt of a challenge to the award, exercises supervisory jurisdiction and the extent of interference is limited. Upon a court in receipt of a petition under Section 34 of the Act of 1996 discovering that the 5 arbitral tribunal had not furnished any or adequte reasons in support of the award, it is not for the court to undertake the adjudication to supply the reasons in support or to supplement the reasons that ought to have been found in the award itself. The court of the first instance misdirected itself in treating the petition under Section 34 of the Act of 1996 as a regular first appeal in a civil suit. The extent and the quality of jurisdiction exercised by a court under Section 34 of the Act of 1996 are completely different from the authority exercised by a civil court in seisin of a regular first appeal.
The judgment and order impugned dated December 24, 2019 are set aside. The arbitral award dated April 17, 2016 is also set aside. The parties are left free to have their disputes adjudicated by way of a fresh reference. The parties have agreed that such reference will be made to Justice Bhaskar Bhattacharya (retired). Accordingly, it will be open to the respondent to immediately initiate a fresh arbitral reference before the agreed arbitrator.
It is recorded that the parties have expressly agreed to the reference being taken to the arbitrator named above and they will be precluded from contending otherwise before any forum.
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FMA 406 of 2020 and CAN 900 of 2020 are disposed of on the above basis.
There will be no order as to costs.
Urgent certified website copies of the order, if applied for, be made available to the parties upon compliance with the requisite formalities.
(Sanjib Banerjee, J.) (Kausik Chanda, J.)