Gujarat High Court
State vs Nitin on 12 March, 1992
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
STATE OF GUJARATV/SNITIN CONSTTUCTIN CO....Defendant(s) C/FA/1379/1992 CAV JUDGEMNT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL NO. 1379 of 1992 FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
Yes 2 To be referred to the Reporter or not ?
Yes 3 Whether their Lordships wish to see the fair copy of the judgment ?
No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?
No 5 Whether it is to be circulated to the civil judge ?
No ====================================== STATE OF GUJARAT AND ANOTHER Versus NITIN CONSTRUCTIN CO.
====================================== Appearance:
MS VACHA DESAI, AGP for the Appellant(s) No. 1 - 2 MR PY DIVYESHVAR, ADVOCATE for the Defendant(s) No. 1 ====================================== CORAM:
HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 22/03/2013 CAV JUDGEMNT (PER : HONOURABLE THE CHIEF JUSTICE MR. J.B.PARDIWALA)
1. This Appeal under Section 39 of the Arbitration Act, 1940, is at the instance of the original respondent in proceedings under Section 14 of the Arbitration Act and is directed against the judgment and order passed by the learned Civil Judge (Senior Division), Mirzapur, Ahmedabad, dated 12th March 1992, and thereby making the award of the arbitrator, the rule of the Court. The arbitrator awarded a sum of Rs.30,01,017-34 ps. (Rupees Thirty Lac One Thousand Seventeen and Thirty Four Paise only) in favour of the respondent herein - original claimant, after adjusting the amount awarded towards the counterclaim of the State Government i.e. the appellant herein, to the tune of Rs.2,45,358.66 ps.
2. The facts shortly stated may be summed up thus:
3. The appellant floated a tender for the work of manufacturing and supplying prefab precast blocks of M-100 Class Mix CC of size 60x45x5 cms. for lining to canals of RBCD system of Karjan reservoir project.
The tender was filled in by the respondent herein, who is engaged in the business of construction, and the tender of the respondent herein being the lowest, came to be accepted by the appellant under Agreement No.D/4 of 1981-82 of the Executive Engineer, I.P.Dn.-No.5, Rajpipla.
4. The accepted tender amount was Rs.35,56,172-04 ps. against the estimated cost of almost the same amount. The work order was issued on 26th March 1982, providing 18 months time period to complete the project. The work, however, was completed on 19th November 1986, for which required extensions for time limit upto 24th December 1986 were granted by the appellant without levying any liquidated damages. Thus, the additional period during which the project was completed was 37 months and 24 days.
5. In all, 30 RA bills were paid for the work to the tune of Rs.33,40,311/-. The last RA bill was paid on 23rd September 1986.
6. It appears that certain disputes with regard to the contract agreement cropped up between the appellant herein and the respondent, as a result of which the dispute was referred for arbitration, as the terms of the agreement provide for appointment of Arbitrator in the event of dispute between the parties. One Mr.M.H.Vakharia came to be appointed as the Sole Arbitrator by the parties on 17th February 1988 vide Memorandum No.KRJN/3987/1705/ 71/K of the Government of Gujarat, Irrigation Department, Sachivalaya, Gandhinagar, and after adjudicating the claims and counterclaims, the Arbitrator published his award on 30th July 1989 in presence of the parties. Thereafter, the sole arbitrator submitted the said award in the Court of Civil Judge (Senior Division), Ahmedabad (Rural), for making the award the rule of the Court. On submitting the award, the same came to be registered as Civil Miscellaneous (Arbitration) Application No.150 of 1989.
7. The appellant herein filed objections against the award being Exh.8, under Section 30 of the Arbitration Act, 1940. The respondent herein filed its reply Exh.15 to the objections raised by the appellant. The appellant herein raised further objections vide Exh.22 dated 6th December 1991.
8. The trial Court adjudicated the objections against the award and made the award the rule of the Court. The trial Court passed an order that the respondent herein was entitled to recover Rs.30,01,017-34 ps. from the properties of the appellant with interest at the rate of 10% per annum from 16th July 1987 to 1st September 1988 and further interest at the rate of 17% per annum from 30th July 1989 till the date of drawing of decree of the requisite amount. The trial Court also awarded interest at the rate of 9% per annum from the date of order till realization of the amount.
9. The record further reveals that the respondent herein had filed an application under Sections 15 and 16 of the Arbitration Act, 1940, with a prayer to modify the award and grant interest pendente lite at the rate of 17% per annum. However, the said prayer was rejected by the trial Court.
10. Being aggrieved by the order passed by the trial Court, making award of the arbitrator the rule of the Court, the appellant herein has come up with this Appeal under Section 39 of the Arbitration Act, 1940.
11. CONTENTIONS OF THE APPELLANT 11.1 Ms.Vacha Desai, the learned AGP appearing for the appellant, vehemently submitted that the trial Court although referred to the objections filed by the State being Exh.8, however, wrongly refused to look into the objections which were raised later in point of time i.e. after expiry of the period of 30 days as provided under Section 30 of the Arbitration Act, 1940. Ms.Desai tried to convince us by submitting that subsequent objections could also have been taken into consideration by condoning the delay as Section 5 of the Limitation Act, 1963 is applicable in such proceedings. Ms.Desai submitted that when Section 5 of the Limitation Act is read in light of Article 119 in the Schedule to the Limitation Act, 1963, it becomes clear beyond all doubts that Section 5 applies to applications made under the Arbitration Act, 1940, and specified in Article 119 of the Limitation Act. According to Ms.Desai, if Section 5, by virtue of its own force, was not applicable to such application made under the Arbitration Act, the legislature would not have used the expression any application and prescribed the period of limitation for making applications under the Arbitration Act, for the purposes specified in Article 119. Ms.Desai would contend that although an application for condoning delay is ordinarily necessary, it is not a mandatory requirement of law. In a given case, even on an oral application, the Court has got the jurisdiction to condone the delay if the facts and circumstances of the case so warrant. Ms.Desai, however, fairly conceded that in the present case no such application for condonation of delay for lodging objections being Exh.22 was filed, and at the same time, there is nothing on record to even suggest that any oral request was also made.
11.2 Ms.Desai would contend that the trial Court failed to consider an important question as regards the misconduct on the part of the arbitrator in accepting the total fees for the work of arbitration from the respondent. According to Ms.Desai, by such an act it could be said that the arbitrator had misconducted himself.
11.3 Ms.Desai further submitted that the Government vide letter dated 17th February 1988 had prescribed a specific obligation on the arbitrator to give award in writing and to state reasons. The arbitrator, while awarding Rs.1,70,000/- towards the first claim, extra rate of Rs.2/- in claim no.2, Rs.13,50,000/- in claim no.3 and Rs.13,10,000/- in claim no.4, failed to assign any cogent reasons for arriving at his conclusions. Ms.Desai submitted that the award of the arbitrator was liable to be set aside by the trial Court on that ground alone.
11.4 Ms.Desai would further contend that the trial Court failed to consider an important question of law that time was the essence of the contract as provided in Clause-50 of the tender agreement.
11.5 Ms.Desai would further contend that when time was extended for performance of the contract, the respondent had not asked or demanded for any extra amount and it was specifically informed to the respondent that he would not be entitled to extra amount.
11.6 Ms.Desai, in such circumstances, prays to set aside the order passed by the trial Court and allow the appeal.
12. CONTENTIONS OF THE RESPONDENT-CLAIMANT 12.1 Mr.P.Y.Divyeshwar, the learned advocate appearing for the respondent-claimant, vehemently submitted that there is no merit in the contention canvassed on behalf of the State that the objections which were lodged after expiry of 30 days should have been considered by the trial Court. According to Mr.Divyeshwar, there is no such provision in the Act which empowers the trial Court to take into consideration the objections lodged in piecemeal i.e. such objections which are raised after the expiry of the period of 30 days from the date of notice to the other side of filing of the award before the Civil Court.
12.2 Mr.Divyeshwar also submitted that there is no merit in the allegations of misconduct levelled against the arbitrator for collecting entire fees from the respondent before completion of the arbitration proceedings.
12.3 Mr.Divyeshwar would contend that there is no merit in this Appeal as the arbitrator, in his reasoned award, justified the reasons for allowing the claims of the respondent and the trial Court, while deciding the objections, very rightly did not interfere with the arbitral award in view of settled legal position.
12.4 Mr.Divyeshwar further submitted that none of the contentions as canvassed by the learned AGP fall under the limited scope of appeal under Section 39 of the Arbitration Act, 1940, more particularly, keeping in mind Section 30 of the Arbitration Act, 1940. He submitted that the trial Court has dealt with all the issues and has referred to various judgments fortifying his conclusions.
12.5 Mr.Divyeshwar, in such circumstances, submitted that the Appeal deserves to be dismissed.
13. Analysis :
As regards the award of an arbitrator under the Act, the law is well settled that the Arbitrator's adjudication is generally considered binding between the parties for he is a Tribunal selected by the parties and the power of the Court to set aside the award is restricted to cases set out in Section 30 of the Act, viz. (a) if the Arbitrator has misconducted himself or the proceedings; or (b) when the 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; or (c) when the award has been improperly produced or is otherwise invalid.
14. Under clause (c) of Section 30, the Court can set aside the award which suffers from an error on the face of the award. It is, however, not open to the Court to speculate, where no reasons are given by the Arbitrator, as to what impelled the Arbitrator to arrive at his conclusion. The jurisdiction of the Arbitrator is limited by the reference and if the Arbitrator has assumed jurisdiction not possessed by him, the award to the extent to which it is beyond the Arbitrator's jurisdiction, would be invalid and liable to be set aside. This position of law has been well settled by the Constitution Bench of the Supreme Court in Raipur Development Authority Vs. Chokhamal Contractors and ors., reported in 1989 (2) SCC 721. In Raipur Development Authority (supra) it has been held that an Arbitrator or umpire is under no obligation to give reasons in support of the decision reached by him unless under the arbitration agreement or the deed of submission he is required to give such reasons, and if the Arbitrator or umpire chooses to give reasons in support of his decision it is open to the Court to set aside the award if it finds that an error of law has been committed by the arbitrator or umpire on the face of the record on going through such reasons, and an award can neither be remitted nor set aside merely on the ground that it does not contain reasons in support of the conclusion or decisions reached in it except where the arbitral agreement or the deed by submission requires him to give reasons.
15. The position of law as aforesaid answers one of the main contentions of the appellant that the Arbitrator has failed to assign reasons while passing the award. As a matter of fact, on perusal of the award we find that the arbitrator in his own way has assigned reasons and we are convinced by the reasons assigned by the Arbitrator.
16. The scope and extent of examination by the Court of an award made by the Arbitrator has been laid down in various decisions. We may profitably quote decision of the Supreme Court in the case of Gujarat Water Supply & Sewerage Board Vs. Unique Erectors (Gujarat) (P) Ltd., reported in AIR 1989 SC 972, wherein the Bench held in para 9 as under:-
"It has to be noted that there is a trend in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards between the parties is pending adjudication by the Constitution bench of this Court. Even,however, if it be held that it is obligatory for the arbitratorto state reasons, it is not obligatory to give any detailed judgment. An award of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof. Short intelligible indications of the grounds should be discernible to find out the mind of the arbitrator for his action even if it be enjoined that in all cases of award by any arbitrator reasons have to be stated. The reasons should not only be intelligible but should also deal either expressly or impliedly with the substantial points that have been raised. Even in a case where the arbitrator has to state reasons, the sufficiency of the reasons depends upon the facts and the circumstances of the case. The Court, however, does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous. See the observations of this Court in Indian Oil Corporation Ltd. v. Indian Carbon Ltd., [1988] 3 SCC 36.
In M.C.D. Vs. M/s. Jagan Nath Ashok Kumar, reported in (1987) 4 SCC 497, the Supreme Court observed thus:-
"In this case, there was no violation of any principles of natural justice. It is not a case where the arbitrator has refused cogent and material factors to be taken into consideration. The award cannot be said to be vitiated by non-reception of material or non-consideration of the relevant aspects of the matter. Appraisement of evidence by the arbitrator is ordinarily never a matter which the court questions and considers. The parties have selected their own forum and the deciding forum must be conceded the power of appraisement of the evidence. In the instant case, there was no evidence of violation of any principle of natural justice. The arbitrator in our opinion is the sole judge of the quality as well as quantity of evidence and it will not be for this Court to take upon itself the task of being a judge of the evidence before the arbitrator. It may be possible that on the same evidence the court might have arrived at a different conclusion than the one arrived at by the arbitrator but that by itself is no ground in our view for setting aside the award of an arbitrator."
The Supreme Court further concluded:
"After all an arbitrator as a judge in the words of Benjamin N. Cardozo, has to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to "the primordial necessity of order in the social life".
In P.M. Paul Vs. Union of India, reported in (1989) Supp 1 SCC 368, the Supreme Court held as under:-
"It was submitted that if the contract work was not completed within the stipulated time which it appears was not done then the contractor has got a right to ask for extension of time, and he could claim difference in price. This is precisely what he has done and has obtained a portion of the claim in the award. It was submitted on behalf of the Union of India that failure to complete the contract was not the case. Hence, there was no substance in the objections raised. Furthermore, in the objections raised, it must be within the time provided for the application under Section 30 i.e., 30 days during which the objection was not specifically taken, we are of the opinion that there is no substance in this objection sought to be raised in opposition to the award. Once it was found that the arbitrator had jurisdiction to find that there was delay in execution of the contract due to the conduct of the respondent, the respondent was liable for the consequences of the delay, namely, increase in prices. Therefore, the arbitrator had jurisdiction to go into this question. He has gone into that question and has awarded as he did."
In one of the recent pronouncements of the Supreme Court in the case of Ravindra Kumar Gupta and Company Vs. Union of India, reported in (2010) 1 SCC 409, the Supreme Court has considered the law with regard to the scope and ambit of the jurisdiction of the Courts to interfere with an arbitration award after taking note of catena of judgments. The relevant paragraphs are quoted below:
9.
The law with regard to scope and ambit of the jurisdiction of the courts to interfere with an arbitration award has been settled in a catena of judgments of this Court. We may make a reference here only to some of the judgments. In the case of State of Rajasthan v. Puri Construction Company Ltd. 1994 (6) SCC 485 : (1994 AIR SCW 5061), this Court observed as follows:
"The arbitrator is the final arbiter for the dispute between the parties and it is not open to challenge the award on the ground that the arbitrator has drawn his own conclusion or has failed to appreciate the facts. In Sudarsan Trading Co. v. Govt. of Kerala, 1989 Ind law SC 463 : (AIR 1989 SC 890) it has been held by this Court that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised. There may be a conflict as to the power of the arbitrator to grant a particular remedy. One has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction. Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid is a decision within the competency of the arbitrator. By purporting to construe the contract the court cannot take upon itself the burden of saying that this was contrary to the contract and as such beyond jurisdiction. If on a view taken of a contract, the decision of the arbitrator on certain amounts awarded is a possible view though perhaps not the only correct view, the award cannot be examined by the court. Where the reasons have been given by the arbitrator in making the award the court cannot examine the reasonableness of the reasons. If the parties have selected their awn forum, the deciding forum must be conceded the power of appraisement of evidence. The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator.
In the case of Municipal Corpn. of Delhi v. Jagan Nath Ashok Kumar, 1987 (4) SCC 497 : (AIR 1987 SC 2316), it has been held by this Court that appraisement of evidence by the arbitrator is ordinarily never a matter which the court questions and considers. It may be possible that on the same evidence the court may arrive at a different conclusion than the one arrived at by the arbitrator but that by itself is no ground for setting aside the award. It has also been held in the said decision that it is difficult to give an exact definition of the word 'reasonable'. Reason varies in its conclusions according to the idiosyncrasies of the individual and the time and circumstances in which thinks. In cases not covered by authority, the verdict of a jury or the decision of a judge sitting as a jury usually determines what is 'reasonable' in each particular case. The word reasonable has in law prima facie meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably knows or ought to know. An arbitrator acting as a judge has to exercise a discretion informed by tradition, methodized by analogy disciplined by system and subordinated to the primordial necessity or order in the social life. Therefore, where reasons germane and relevant for the arbitrator to hold in the manner he did, have been indicated, it cannot be said that the reasons are unreasonable."
10. In the case of Arosan Enterprises Ltd. v. Union of India, 1999 (9) SCC 449 : (1999 AIR SCW 3872), this Court upon analysis of numerous earlier decisions, held as follows:-
"36.
Be it noted that by reasons of a long catena of cases, it is now a well-settled principle of law that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the court to reappraise the evidence is unknown to proceedings under section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. In the event however two views are possible on a question of law as well, the court would not be justified in interfering with the award.
37. The common phraseology "error apparent on the face of the record" does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The Court as a matter of fact cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the, arbitrator is a possible view the award or the reasoning contained therein cannot be examined."
11. This view has been reiterated by this Court in the case of Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd. 2003 AIR SCW 3041:
"53.
In the light of the aforesaid decisions, in our view, there is much force in the contention raised by the learned counsel for the appellant. However, the learned senior counsel Mr. Dave submitted that even if the award passed by the arbitral tribunal is erroneous, it is settled law that when two views are possible with regard to interpretation of statutory provisions and or facts, the Court would refuse to interfere with such award.
54. It is true that if the arbitral tribunal has committed mere error of fact law in reaching its conclusion on the disputed question submitted to it for adjudication then the Court would have no jurisdiction to interfere with the award. But, this would depend upon reference made to the arbitrator : (a) if there is a general reference for deciding the contractual dispute between the parties and if the award is based on erroneous legal proposition, the Court could interfere; (b) It is also settled law that in a case of reasoned award, the Court can set aside the same if it is, on the face of it, erroneous on the provision of law or its application; (c) If a specific question of law is submitted to the arbitrator, erroneous decision in point of law does not make the award bad, so as to permit of its being set aside, unless the Court is satisfied that the arbitrator had proceeded illegally."
12. In the M/s. Kwality Manufacturing Corporation v. Central Warehousing Corporation it was held :
"10.
At the outset, it should be noted that the scope of interference by courts in regard to arbitral awards is limited. A court considering an application under Section 30 or 33 of the Act, does not sit in appeal over the findings and decision of the arbitrator. Nor can it reassess or re-appreciate evidence or examine the sufficiency or otherwise of the evidence. The award of the arbitrator is final and the only grounds on which it can be challenged are those mentioned in Sections 30 and 33 of the Act. Therefore, on the contentions urged, the only question that arose for consideration before the High Court was, whether there was any error apparent on the face of the award and whether the arbitrator misconducted himself or the proceedings."
13. Again it is reiterated in the judgment of Madhya Pradesh Housing Board v. Progressive Writers and Publishers (2009) 5 SCC 678 : (2009 AIR SCW 2484) as follows :
"28.
The finding arrived at by the arbitrator in this regard is not even challenged by the Board in the proceedings initiated by it under Section 30 of the Act. It is fairly well settled and needs no restatement that the award of the arbitrator is ordinarily final and the courts hearing applications under Section 30 of the Act do not exercise any appellate jurisdiction. Reappraisal of evidence by the court is impermissible."
14. In this case, the Supreme Court notice the earlier judgment in the case of Ispat Engineering and Foundry Works, B.S. City, Bokaro v. Steel Authority of India, B.S. City, Bokaro [(2001) 6 SCC 347] :
(2007 AIR SCW 2723) wherein it was held as follows :
"4.
Needless to record that there exists a long catena of cases through which the law seems to be rather well settled that the reappraisal of evidence by the court is not permissible. This Court in one of its latest decisions [Arosan Enterprises Ltd. v. Union of India (1999) 9 SCC 449 : (1999 AIR SCW 3872)] upon consideration of decisions in Champsey Bhara and Co. v. Jivraj Balloo Spg. and Wvg. Co. Ltd. [AIR 1923 PC 66], Union of India v. Bungo Steel Furniture (P) Ltd. [(1967) 1 SCR 324] : (AIR 1967 SC 1032) N. Chellappan v. Secy., Kerala SEB [(1975) 1 SCC 289] : (AIR 1975 SC 230), Sudarshan Trading Co. v. Govt. of Kerala [(1989) 2 SCC 38], State of Rajasthan v. Puri Construction Co. Ltd. [(1994) 6 SCC 485] : (1994 AIR SCW 5061) as also in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan [(1999) 5 SCC 651]: (1999 AIR SCW 1831) has stated that reappraisal of evidence by the court is not permissible and as a matter of fact, exercise of power to reappraise the evidence is unknown to a proceeding under Section 30 of the Arbitration Act, 1940. This court in Arosan Enterprises categorically stated that in the event of there being no reason in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, interference would still be not available unless of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. This Court went on to record that in the event, however, two views are possible on a question of law, the court would not be justified in interfering with the award of the arbitrator if the view taken recourse to is a possible view. The observations of Lord Dunedin in Champsey Bhara stand accepted and adopted by this Court in Bungo Steel Furniture to the effect that the court had no jurisdiction to investigate into the merits of the case or to examine the documentary and oral evidence in the record for the purposes of finding out whether or not the arbitrator has committed an error of law. The court as a matter of fact, cannot substitute its own evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties."
17. From the various decisions referred to above, it could safely be stated that:
(a) In the award, the arbitrator is not required to give reasons in detail.
(b) The award can be set aside only on the ground of error of law on the face of it, I.e. to say, if the award is based upon any legal proposition which is erroneous.
The Civil Court has no jurisdiction to sit in appeal over the award and review the reasons assigned by the arbitrator and the award cannot be set aside merely because by process of inference and arguments it could be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.
The award cannot be interfered with even in the case where on an interpretation of any contract or documents, two views are plausible and the arbitrator accepts one view while the other view is more appealing to the Court.
(e) The award can be set aside by the Civil Court if the arbitrator has misconducted himself or the arbitrator has acted contrary to or gone beyond the terms of the reference.
18. In the present case, a contention as regards misconduct on the part of the artbitrator has been raised very vociferously. Such contention is based on the premise that the arbitrator had collected the entire fees from the respondent before completion of the arbitration proceedings, although, according to the terms of the agreement, the fees of the arbitrator and expenses were to be borne by both the sides equally.
19. So far as the aspect of misconduct is concerned, it appears from the material on record that the directions for payment of fees and expenses were given to the appellant as well as the respondent herein by the arbitrator vide his letters dated 22nd June 1989 and 8th July 1989. It appears that inspite of such communication to the appellant, they failed to deposit their share of fees and expenses, as a result of which, when the respondent deposited the requisite amount of their share, they also deposited the amount towards the share of the appellant. As a result, in the final award, the appellant was directed to pay to the respondent, an amount of Rs.10,600/- to be paid by the respondent to the arbitrator on behalf of the appellant towards arbitrator s fees and expenses.
20. We are of the opinion that in the facts of the present case, it would be difficult for us to accept the contention of the learned AGP that the arbitrator has misconducted himself by accepting entire fees and costs from the respondent. Due to unusual delay with the Government in depositing the amount, if the balance amount towards the share of the appellant was deposited by the respondent, then it cannot be said that the arbitrator had received any pecuniary inducement, which might have some effect on the determination of the matter submitted to him for his adjudication.
21. In the present case, at no point of time, it is alleged by the State Government that the sole arbitrator was prejudiced against the State Government or that he had received any pecuniary inducement from the respondent, which would have any effect on his determination of the matter submitted to him for adjudication. The arbitrator was entitled to recover fees and costs from the parties as prescribed in the arbitration agreement and that the arbitrator has recovered only the prescribed fees. On the contrary, in the final award, the appellant has been directed to pay the requisite amount to the respondent towards fees and costs of the Arbitrator.
22. In the aforesaid context, it would not be out of place to quote a passage by Russel on arbitration, which is as under:
Practice not to deliver award until charges paid. Lien for fees:
It is usual for an arbitrator to settle for himself what he considers a proper remuneration for his trouble. On giving notice to the parties that the award is ready for delivery, it is advisable also to notify them what is the amount of his charges in order that the party who comes to take up the award may be prepared to pay them. Either party can then take up the award. The arbitrator has a lien for his reasonable costs on the award and submission, and on any remoranda or valuation obtained by himself from other persons for his own guidance, but not on documents put in evidence before him by the parties. As the retention of the award is practically the chief security on which he can rely for the satisfaction of his claim, the practice commonly prevails not to deliver the award upto the party seeking to take it up until the charges have been paid. Where the party who takes up the award is not by the terms of its provision to be the party ultimately liable to pay them, he may recover from his opponent all the costs of the award that its directions impose upon the latter.
From the aforesaid passage, it is clear that after giving notice to the parties that the award is ready for delivery, the arbitrator has to supply them what is the amount of his charges so that parties can pay them. It has also been observed that the practice which commonly prevails is not to deliver the award upto the party seeking to take it up, until the charges have been paid. As observed earlier, the directions for payment of fees and expenses were given to the appellant by the arbitrator vide his letters dated 22nd June 1989 and 8th July 1989 but in spite of such communication to the appellant, the appellant failed to deposit their share of fees and expenses.
23. Thus, we find no merit in the contention of the learned AGP as regards alleged misconduct on the part of the Arbitrator.
24. We shall now deal with the submission canvassed on behalf of the appellant as regards non-consideration of the objections raised by the appellant vide Exh.22 by the trial Court on the premise that the same were time barred as they were not filed within a period of 30 days as provided in Article 119, Clause-B of the Limitation Act, 1963.
25. The Civil Court in the present case, took the view that the appellant first in point of time filed objections vide Exh.8 and the same were within the period of 30 days. The said objections were considered by the Civil Court and were rejected. The trial Court took the view that the objections which were filed on 13th January 1992 were beyond the period of 30 days and such being the position the Court was not obliged in law to consider such objections.
26. In our view, to appreciate the aforesaid contention raised by the appellant, two provisions of the Arbitration Act, 1940, would be a guiding factor. Section 17 thereof provides that where the Court sees no cause to remit the award or any of the matter 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 was 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 30 provides that an award shall not be set aside except on 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.
The Scheme of the Arbitration Act thus goes on the supposition that an arbitration award would normally meet approval and become the rule of Court, but the objection to such a course is also not ruled out. Limitation for the purpose is prescribed under Art.119 of the Limitation Act, 1963, which is reproduced as under:-
"119.
Under the Arbitration Act, 1940-
(Description of suit) (Period of limitation) (Time from which period begins to run) "(a) for the filing in The date of service of Court of an award; Thirty days the notice of the making of the award. (b) for setting aside The date of service of an award or getting -do- the notice of the an award remitted filing of the award." for reconsideration. 27. As
is plain from this provision, two different types of applications are conceived of. The Article appears in Third Division of the Schedule titled as- 'Applications'. Under sub-article (a), a 30 days limitation is prescribed for the filing in Court of an award from the date of service of the notice of the making of the award. Obviously such an application is attracted for the purpose of making the award a rule of Court and would normally be filed by a party in whose favour the award tends to be. Now before the award can be made rule of the Court, the affected party need be served for the purpose, lest it has any objection, as conceivable under Section 30 of the Arbitration Act. For that purpose sub-article (b) provides that the prescribed period of limitation is 30 days for setting aside an award or getting an award remitted for reconsideration commencing from the date of the service of the notice of the filing of the award. From the scheme of things, it is patent that an application conceived of under sub-article (a) is directed towards making the award the rule of the Court, and on the other hand one under sub-article (b) is directed towards setting aside the award or getting the award remitted for reconsideration and not letting it become the rule of Court.
28. Although the claims in respect of two applications are opposite to each other, but we are of the opinion that they are not inter-gripped as normally a plaint and a written statement are in a civil suit. Each respective application is to stand and fall on its own legs. Each has its own goal to achieve. That seems to us the reason why two different claims were sub-divided in Article 119 under separate sub-heads. If such distinction is kept in mind, it is discernible that on the mere fortuitous circumstances of the Court taking some time to pass a decree making the award rule of the Court, a right would not accrue to the applicant under sub-article (b) to amend his objection petition and raise all sorts of new pleas and objections, after the period of 30 days, supportive of its claim to set aside the award etc. If such a course were to be permitted, it would transgress the salutary rule of limitation prescribed by the statute.
29. It is only those objections which are raised within a period of 30 days shall be liable to be considered by the Civil Court and any objection raised subsequent in point of time, beyond the period of 30 days, shall not be liable to be considered as the Court will have no jurisdiction to consider such objections.
30. Thus, in our opinion, the submission of learned AGP as regards non-consideration of the objections by the Civil Court filed beyond the period of 30 days deserves to be rejected.
31. So far as other submissions are concerned, as canvassed on behalf of the appellant, they are on the merits of the award passed by the arbitrator and the decree passed by the Civil Court making the award the rule of the Court. It is now a well settled position of law that as the parties choose their own arbitrator, they cannot, when the award is good on the face of it, object to the decision either upon law or facts. Therefore, even when an arbitrator committed a mistake either in law or in fact in determining the matters referred to him but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award would not be liable to be set aside notwithstanding the mistake. Taking into consideration the settled position of law as stated above and having gone through the entire materials on record, we are of the view that the Court below duly scrutinized the evidence and has justifiably made award of the arbitrator the rule of the Court. With regard to the claims and question, the arbitrator has given elaborate reasons. Therefore, findings recorded by the arbitrator cannot be said to be either perverse or based on no evidence. In exercise of our powers under Section 39 of the Arbitration Act, it is not permissible for us to substitute the view of the Court below with our own opinion on appreciation of evidence. Such a course is not permissible to the High Court while examining objections to the award under Section 30 of the Arbitration Act, 1940.
32. As a result of the aforesaid discussion, we do not find any merit in this Appeal and the same deserves to be dismissed. Consequently, the Appeal stands dismissed. However, on the facts and in the circumstances of the case, there shall be no order as to costs.
(BHASKAR BHATTACHARYA, CJ.) (J.B.PARDIWALA, J.) *malek Page 23 of 23