Andhra HC (Pre-Telangana)
Andhra Pradesh State Trading ... vs S.G. Sambandan And Company, Rep., By Its ... on 7 February, 2006
Equivalent citations: 2006(2)ALD577, 2006(2)ALT139
Author: B. Seshasayana Reddy
Bench: B. Seshasayana Reddy
JUDGMENT D.S.R. Varma, J.
1. Heard both sides.
2. Since all the abovementioned Civil Miscellaneous Appeals and the Civil Revision Petition are inter-connected and arise out of a common order, dated 8-6-2001, in O.P.Nos. 11, 12 and 15 of 2000, passed by the IV Senior Civil Judge, City Civil Court, Hyderabad, they are heard together and are being disposed of by this common judgment.
3. The appellant in C.M.A. Nos. 2288, 2609 and 2622 of 2001 and the respondent in C.R.P.No.4073 of 2001 and C.M.A.No.2875 of 2001 is the Contractor while the appellant in C.M.A.No. 2875 of 2001 and the petitioner in C.R.P.No.4073 of 2001 and the respondent No. 1 and the respondent in C.M.A.Nos. 2288, 2609 and 2622 of 2001 respectively, is the Department and the respondent No.2 in C.M.A.No.2875 of 2001 is the learned Arbitrator.
4. For the sake of convenience, in this common judgment, Andhra Pradesh State Trading Corporation, represented by its Managing Director, Hyderabad and S.G. Sambandan & Company, represented by its Partner, Visakhapatnam, will be referred to as "the Department" and "the Contractor", respectively.
5. C.R.P.No.4073 of 2001 and C.M.A.No.2875 of 2001 are filed by the Department whereas C.M.A.Nos. 2288, 2609 and 2622 of 2001 are filed by the Contractor against the common order and decrees, dated 8-6-2001, passed by the IV SeniorCivil Judge, City Civil Court, Hyderabad, in O.P.Nos. 11, 12 and 15 of 2000.
6. The facts, shorn of, are that there was an agreement, dated 2-1-1979, between the Department and the Contractor for stevedoring, handling, clearing and loading of the imported cement at Visakhapatnam, As perthe agreement, the Managing Director of the Department is the Designated Arbitrator. Accordingly, owing to certain disputes, he was appointed as an Arbitrator. An interim award also was passed, which was challenged in O.S.No. 342 of 1994 on the file of IV Senior Civil Judge, City Civil Court, Hyderabad. Subsequently, the Department filed O.P.No. 111 of 1994 to have the Arbitrator changed. The Contractor filed O.P.No. 114 of 1994 seeking to extend the time for passing of the award. The dispute went up to the 'Hon'ble Supreme Court. Consequently, another Arbitrator was appointed. The said Arbitrator was a former Judge of the Hon'ble Supreme Court.
7. There were 25 claims in total, the total sum of which would come to about Rs. 1.38 Crores. The Department filed a counter claim for Rs. 11,36,627-37 paise. After filing claims and counter-claims, on 4-12-1999, the learned Arbitrator framed the issues. The award was passed on 3-4-2000 and as per the award, the Contractor was awarded a sum of Rs.54,93,478-16 paise. The counter-claim also was partly allowed whereby the Department was declared entitled to a sum of Rs. 2,01,432-40 paise. After deducting the said sum of Rs. 2,01,432-40 paise from the amount actually awarded to the Contractor, the net amount awarded to the Contractor would come to a sum of Rs.52,92,045-76 paise.
8. Challenging the said award, the Contractor filed OP.No. 11 of 2000 under Section-17 of the Arbitration Act, 1940 (for brevity "the Act"), to make the award rule of Court and also filed O.P.No.12 of 2000 under Sections-15, 16 and 17 of the Act to modify the award. The Department also filed O.P.No. 15 of 2000 under Sections-30 and 33 of the Act, to set aside the award.
9. The Court below, after considering the contentions of both parties and the material available on record, allowed O.P.No.11 of 2000, filed by the Contractor, and consequentially, dismissed O.P.Nos. 12 of 2000 and 15 of 2000, filed by the Contractor and the Department, respectively,
10. Challenging the order and decree, dated 8-6-2001, in O.P.No.11 of 2000, the Department filed C.R.P.No.4073 of 2001. This Court, initially, by order, dt.21-9-2001, granted interim stay of the award directing the Department to deposit fifty percent of the amount awarded by the learned Arbitrator along with accrued interest. Later, by order, dated 18-4-2002, this Court permitted the Contractor to withdraw the said amount without furnishing any security. However, on a subsequent date, a sum of Rs. 9,00,000/-was also directed to be deposited, which is still lying in the deposit.
11. The Contractor filed three appeals viz., (1). C.M.A.No. 2622 of 2001 against the dismissal of O.P.No.12 of 2000, filed by him, while C.M.A.Nos.2609 of 2001 and 2288 of 2001 are filed challenging the orders and decrees in O.P.Nos. 11 of 2000 and 15 of 2000 respectively.
12. At this juncture itself, we feel it expedient to mention that the said appeals are filed only to surmount the technical objection that is likely to be raised by the Department. In fact, the order and decree, dated 8-6-2001, passed in O.P.No. 11 of 2000 was already under challenge in C.R.P. No.4073 of 2001, filed by the Department. Therefore, C.M.A.No.2609 of 2001, which is filed challenging the award passed in O.P.No.11 of 2000, is virtually superfluous inasmuch as even if the same is allowed nothing would enure to the benefit of the Contractor since the same is the subject matter of C.R.P.No,4073 of 2001 filed by the Department.
13. C.M.A.No.2875 of 2001 was filed by the Department aggrieved by the order and decree, dated 8-6-2001, in O.P.No. 15 of 2000.
14. For precision and convenience, C.R.P.No.4073 of 2001 and C.M.A.No.2875 of 2001 were filed on one hand by the Department and C.M.A.Nos. 2622 of 2001, 2609 of 2001 and 2288 of 2001 are filed by the Contractor on the other.
15. First, we shall deal withC.R.P.No.4073 of 2001 and C.M.A.No. 2875 of 2001, filed by the Department, for the reason that it is the Department, which actually is a loser both before the Arbitrator and the Court below.
16. Sri Bimal Bhaskar, learned Counsel appearing for the Department, raises three contentions. They are-
Firstly the award was made beyond the period of four months, as postulated under Section 3 read with Clause (3) of the First Schedule of the Act;
Secondly the exhibits, which were marked before the earlier Arbitrator, were not marked before the subsequent Arbitrator; and Thirdly the Arbitrator did not file the record before the Court below, which is contrary to Sub-section (2) of Section 14 of the Act.
17. Sri D. Uday Bhaskar, learned Counsel appearing for the Contractor, contends that there was absolutely no irregularity in the conduct of the proceedings before the Arbitrator nor there was any misconduct attributed or made out against the Arbitrator. Further, all the records including the award of the Arbitrator were, in fact, very much available before the Court below. Therefore, no illegality or irregularity, much less apparent, in the award in order to satisfy the contingencies specified under Section 30 of the Act, to set aside, are present.
18. For ready reference, Section 30 of the Act, is extracted hereunder, which runs thus:
30. Grounds for setting aside award.-
An award shall not be set aside except on one or more of the following grounds, namely-
(a) that an arbitrator or umpire has misconducted himself or the proceedings;
(b) that an award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under Section 35;
(c) that an award has been improperly procured or is otherwise invalid.
19. Insofar as the first contention of Sri Bimal Bhaskar, learned Counsel appearing for the Department, is concerned, it is to be seen that as per Section 3 read with Clause (3) of the First Schedule of the Act, no doubt, four months' period has been prescribed. But, it cannot be said that Clause (3) of the First Schedule of the Act is totally unqualified.
20. For ready reference, Clause (3) of the First Schedule of the Act, is extracted hereunder, which runs thus:
3. The arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow.
21. From a bare reading of the abovequoted Clause, it is obvious that-
(a) the award shall be made by the Arbitrator within four months after entering on the reference; or if the Arbitrator was called upon by either of the party by a notice; or
(b) if the Arbitrator was called upon by either of the party by a notice in writing to the Arbitrator to act; or
(c) within such extended time as the Court may allow.
22. Therefore, it is abundantly clear that Clause (3) of the First Schedule of the Act does not make it totally mandatory that the Arbitrator shall make the award within four months. But, the said four months' period has to be computed as per the above conditions. In other words, computation of the said four months' period shall be subject to the above three said contingencies. Therefore, it cannot be said that if there is any delay, unless the same falls within the mischief of either of the above three contingencies, in our view, is not capable of vitiating the award.
23. We are fortified by the view taken by the Hon'ble Supreme Court in State of Punjab v. Hardyal AIR 1985 SC 920.
24. It is apposite to notice the pertinent observations made by the Hon'ble Supreme Court, in Hardyal's case AIR 1985 SC 920, which runs thus;
14. The policy of law seems to be that the arbitration proceedings should not be unduly prolonged. The arbitrator therefore has to give the award within the time prescribed or such extended time as the court concerned may in its discretion extend and the court alone has been given the power to extend time for giving the award. As observed earlier, the court has got the power to extend time even after the award has been given or after the expiry of the period prescribed forthe award. But the court has to exercise its discretion in a judicial manner. The High Court in our opinion was justified in taking the view that it did. This power, however, can be exercised even by the appellate court. The present appeal has remained pending in this Court since 1970. No useful purpose will be served in remanding the case to the trial Court for deciding whether the time should be enlarged in the circumstances of this case. In view of the policy of law that the arbitration proceedings should not be unduly prolonged and in view of the fact that the parties have been taking willing part in the proceedings before the arbitrator without a demur, this will be a fit case, in our opinion, for the extension of time. We accordingly extend the time for giving the award and the award will be deemed to have been given in time.
25. From the above observations, it is further obvious that, no doubt, the Arbitrator has to pass the award within the time prescribed or within the extended period, as the Court concerned may deem just in its discretion and such a power is vested only with the Court as to whether the period for passing the award can be extended or not.
26. It is further clear from the said decision that the apex Court consciously observed that the proceedings shall not be unduly prolonged and the very act of a party taking willing part in the proceedings before the Arbitrator without a demur has no right to raise this objection.
27. On this issue, a learned single Judge of this Court in APSRTC, Mushirabad, Hyderabad v. Venkat Reddy and Ors. basing on the decision of Madhya Pradesh High Court in Ramsahai v. Harischandra observed, at paragraph No.9, as under:
It is clear from such views held by various High Courts that an arbitrator can be said to have entered on the reference only when he applies his judicial mind to the disputes between the parties taking up the matter for hearing and begins to examine the witness and hears the submissions made by both parties and not the time when he calls for the claim statements or counter statements from the parties. In the present case, the arbitrator had only granted time to the revision petitioner to file his counter statements, which were not yet filed. Therefore, it cannot be said that the provisions of para 3 of the I schedule of the Act are violated in the present case, nor can it be said that the arbitrator had failed to pass his award within four months as contemplated under the said provisions and thereby became functus officio. The lower Court has, therefore, clearly erred in revoking the authority of the named arbitrator solely on the ground that he did not make his award within four months and that there was delay on his part in making such award.
28. From the said judgment, it appears that the learned Judge of this Court had taken the said view, basing on the judgments of other High Courts, that the Arbitrator can be said to have "entered on the reference", as contemplated under Clause (3) of the First Schedule of the Act, only when he applies his judicial mind to the disputes between the parties by taking up the matter for hearing and begins to examine the witness and hears the submissions advanced by both parties and not the time when he calls for the claim statements or counter statements from the parties.
29. In the instant case, admittedly, the second Arbitrator was appointed on 27-3-1999 and a claim was filed on 7-8-1999 and a counter claim was filed on 4-9-1999. All preliminary issues that were raised by the Department have been disposed of on 4-12-1999 and the issues for determination were also framed on the same day i.e. on 4-9-1999.
30. Therefore, in the above circumstances, there was no occasion for the learned Arbitrator before 4-12-1999 to apply his mind to the actual disputes or issues involved. He could frame the issues for determination only on 4-12-1999 and, hence, application of mind as regards the dispute between the parties would start commencing from that date only i.e. 4-12-1999. If that date is to be taken into account, for the purpose of Clause (3) of the First Schedule of the Act, the award was supposed to have been passed within four months thereafter i.e, on or before 4-4-2000 and, admittedly, the award was passed on 03-04-2000. Therefore, we are of the considered view that the award was passed strictly within the period prescribed by the statute viz., the award should be passed within four months. Accordingly, the first contention of the learned Counsel appearing for the Department is rejected,
31. Insofar as the second contention is concerned, the learned Counsel appearing for the Department contend that certain documents, which were produced by the claimant before the first Arbitrator, in order to substantiate his claim, were not produced before the subsequent Arbitratorand, hence, the findings recorded by the second Arbitrator have to be set aside and the Court below erred in agreeing with the reasoning of the second Arbitrator.
32. It is to be seen that this submission, in fact, was urged before the learned Arbitrator also. However, both the parties, upon summoning, produced large number of debit slips and they were found to be authentic by the learned Arbitrator. In this regard, a specific finding had been recorded by the learned Arbitrator in the award. It was further recorded by the learned Arbitrator that each debit slip contains the proof of employees and total amounts paid by the Contractor were mentioned in those debit slips.
33. The reason recorded by the learned Arbitrator, to summon the debit slips to be produced before him, appears to be that in the interregnum there is change in the management of the Contractor and many documents were not traceable. Since the cause of action for the claim was subsisting before the learned Arbitrator, it was the obligation of the Contractor to establish his claim and, hence, the debit slips were directed to be produced and accordingly produced. Therefore, we do not find any irregularity or illegality much less material or any legal misconduct attributable to the learned Arbitrator in this regard.
34. This reasoning of the learned Arbitrator had been accepted by the Court below when the same question was again urged by the Department. We do feel that there is cogent reasoning given by the Court below in the impugned common judgment, which was passed only after taking into consideration the entire material, including the evidence, available on record, while agreeing with the finding recorded by the learned Arbitrator. Therefore, this Court again need not necessarily re-appraise the whole evidence on record, which was adduced both before the learned Arbitrator as well as the Court below, and arrive at a different conclusion.
35. It is to be further noted that until and unless the conditions under Section-30 of the Act are satisfied, the Civil Court need not interfere with every aspect, more so, on trivial issues, and need not deal with the merits of the case and arrive at a different conclusion than the one arrived at by the Arbitrator.
36. Further, the settled proposition is that the Civil Court or High Court cannot, sit in judgment over the award passed by the Arbitrator, as an appellate Court on every issue, particularly, of course, subject to the exceptional circumstances mentioned under Section 30 of the Act, which are already extracted above.
37. Therefore, we are of the considered view that the Department had failed on this ground also. Accordingly, the second contention of the learned Counsel appearing for the Department is rejected.
38. Insofar as the third contention of the learned Counsel appearing for the Department that since the learned Arbitrator did not file the record before the Court below, the same amounts to contravention of Sub-section (2) of Section 14 of the Act, it is useful to notice Sub-section (2) of Section 14 of the Act, which is thus:
The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the Court and upon payment of the fees and charges due in respect of the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in Court, and the Court shall thereupon given notice to the parties of the filing of the award.
39. The above provision deals with the procedure to communicate the same to the parties after passing of the award. It further postulates that it is incumbent upon the Arbitrator to cause the award and a singed copy of it together with depositions and all the documents placed before him to be filed in the Court.
40. In this context, from a perusal of the record, including the impugned common order, it appears that the entire record, including the award, was made available to the Court below upon requisition made by it, before passing the impugned common order. However, the manner in which the award, along with its record, passed by the learned Arbitrator came before the Court below viz., through either of the parties is not forthcoming and the same is not relevant for the present purpose, so long as the entire record before the learned Arbitrator was placed before the Civil Court for adjudication of the matter in compliance of Sub-section (2) of Section 14 of the Act. It is to be construed that the condition postulated under Sub-section (2) of Section 14 of the Act had been complied with. Even if there is any minuscule deviation, the same need not be attached with any significance.
41. Except the grounds urged above, no other grounds are urged before us. The said grounds urged before us are answered accordingly in favour of the Contractor and against the Department.
42. For the aforementioned reasons, the impugned common order, passed by the Court below, insofar as O.P.No. 11 of 2000 is concerned, does not warrant any interference by this Court and the same is liable to be confirmed and is confirmed and the Civil Revision Petition No.4073 of 2001 is liable to be dismissed and, accordingly, the same is dismissed.
43. C.M.A.No.2609 of 2001 was filed by the Contractor against the impugned order passed in O.P.No. 11 of 2000. As the impugned order passed in O.P.No. 11 of 2000 is confirmed in C.R.P.No. 4073 of 2001, the appeal C.M.A.No. 2609 of 2001 is dismissed as redundant,
44. In view of the order passed in C.R.P.No. 4073 of 2001, no orders are necessary in C.M.A.Nos. 2288, 2622 and 2875 of 2001 and they are liable to be dismissed.
45. Accordingly, C.M.A.Nos. 2288, 2622 and 2875 of 2001 are dismissed. However there shall be no order as to costs.