Gujarat High Court
Paschim Gujarat Vij Company Limited vs Yogesh Quarry And Concrete Works & on 21 February, 2014
Bench: Jayant Patel, Sonia Gokani
C/FA/1147/2008 CAV JUDGEMNT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
FIRST APPEAL No. 1147 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE Mr. JUSTICE JAYANT PATEL
and
HONOURABLE Ms. JUSTICE SONIA GOKANI
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1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
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 ?
5 Whether it is to be circulated to the civil judge ?
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PASCHIM GUJARAT VIJ COMPANY LIMITED....Appellant(s)
Versus
YOGESH QUARRY AND CONCRETE WORKS & 1....Defendant(s)
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Appearance:
Mr PREMAL R JOSHI, ADVOCATE for the Appellant(s) No. 1
Mr KG SUKHWANI, ADVOCATE for the Defendant(s) No. 1
NOTICE SERVED for the Defendant(s) No. 2
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CORAM: HONOURABLE Mr. JUSTICE JAYANT PATEL
and
HONOURABLE Ms. JUSTICE SONIA GOKANI
February 21, 2014.
CAV JUDGEMNT (PER : Hon'ble Ms. Justice SONIA GOKANI)
The appellant in this Appeal has challenged the legality and propriety of Page 1 of 27 C/FA/1147/2008 CAV JUDGEMNT the judgment and order dated 23rd March 2006 passed by the learned 5th Addl. Senior Civil Judge, Vadodara rendered in Civil Misc. Application No. 95 of 2004, rejecting the application preferred by the present appellant for setting aside the Award dated 22nd January 2004, in the following factual background. Factual background :
The appellant had advertised by way of local newspapers for the contract for manufacture and supply of poles, wherein, the respondents were found to be the successful bidder. Some disputes and differences arose between the parties, and therefore, the respondents/claimants filed Civil Misc.
Application No. 214 of 1982 under Sections 8 &9 of the Arbitration Act, 1940 before the learned Civil Judge [SD], Vadodara for the appointment of Arbitrator. The Court appointed one Shri M.S Iyengar, Chief Engineer [Arbitrations], Roads & Buildings Department, Government of Gujarat as the sole Arbitrator. However, Shri Iyengar vide his communication dated 30th January 1985 showed his unwillingness to act as an Arbitrator.
The respondent thereafter preferred Civil Misc. Application No. 130 of 1985 before the very Court for appointment of another arbitrator and the Court vide its order dated 30th June 1988 appointed Shri R.G Patel, retired Chief Engineer & Joint Secretary as the Sole Arbitrator. However, before the said Arbitrator undertakes the work of arbitration, he passed away and as a result, Page 2 of 27 C/FA/1147/2008 CAV JUDGEMNT the claimant filed yet another Civil Misc. Application No. 87 of 1998 for appointment of another Arbitrator and the learned 9th Jt. Civil Judge [SD], Vadodara appointed Shri A.B Marathe, retired District Judge as the sole Arbitrator for adjudicating the disputes by and between the parties on 2nd December 2000.
The respondent claimed compensation under different heads by filing statements of claim before the learned sole Arbitrator. Such claim statement also was objected to by the appellant and after adjudication of the disputes between the parties, the learned Arbitrator passed an award dated 22nd January 2004 whereby he directed the appellantcompany to pay a sum of Rs.
3,42,257=25p and the cost of Rs. 23,000/= to the respondentoriginal claimant with 12% interest per annum from 22nd April 2004, till realization on the principal amount.
An application, being Misc. Civil Application No. 95 of 2004, was made under section 14 of the Arbitration Act, 1940 ["Act" for short] by the appellant to direct the Arbitrator to produce original award alongwith evidences in the form of deposition and documents to be filed before the Court in compliance with the provisions of section 14 of the Act, with a further request to issue notice to the parties for filing the objections, wherein, summons/notice was issued by the Court to the parties to the proceedings.Page 3 of 27
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The appellant also filed an application before the Court seeking
direction of setting aside of the award passed by the Arbitrator being Misc.
Civil Application No. 45/2004. On the Arbitrator having filed such award before the Court both the sides have been heard at length in both the Misc.
Civil Application No. 95/2004 and 45/2004 and the Court rejected the application for setting aside the Award dated 22nd January 2004 by a detailed order and judgment dated 23rd March 2006.
The appellant has approached this Court against such order and judgment, raising various following grounds in the present appeal.
Impugned judgment is essentially attacked on the ground that the very issue of maintainability of arbitration proceedings was addressed to by the Arbitrator in accordance with law against the respondent and yet, to grant any amount to the respondent, is illegal and erroneous. It is also further challenged on the ground of perversity by emphasizing the fact that the amount of compensation granted in favour of the respondent is based on presumption and surmises and without there being any basis or documentary evidence, the Arbitrator awarded such an amount by exceeding his jurisdiction and such award has been confirmed by the Court, resulting into gross illegality and injustice to the appellant.
Oral Submissions :
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We have heard extensively learned advocate Shri Premal Joshi for the appellant and learned advocate Mr. K.G Sukhwani for the respondent. It is forcefully submitted by the learned counsel Shri Joshi on the point of maintainability of arbitral proceeding that the respondent firm admittedly was a partnership firm which did not possess registration at the time of filing the proceeding for appointment of sole arbitrator, and therefore, under section 69 of the Partnership Act, the very maintainability of such proceedings against the third party was a question. He put forth the case law on the subject and urged empathetically that the suit since is barred by Section 69 of the Partnership Act by an unregistered firm against the third party, no proceedings under the Arbitration Act also is permissible. He urged that the Supreme Court while so holding in a later decision rendered in case of U.P State Sugar Corporation Limited v. Jain Construction Company & Anr., reported in AIR 2004 SC 4335 has taken into consideration the judgment rendered in case of Delhi Development Authority v. Kochhar Construction Work [1998] 8 SCC 559. He further urged that this issue has gone against the respondent in an arbitration award, and hence, on that very count, the arbitration proceeding could not have resulted into passing of the award in favour of the respondent. He further urged that the subsequent registration of the firm also may not serve any purpose and therefore also, on this very ground, the present appeal deserves to Page 5 of 27 C/FA/1147/2008 CAV JUDGEMNT be allowed. Secondly, on the ground of perversity, he attempted to point out that though various issues have been addressed by the learned Arbitrator, without assigning any valid reason, the award has been passed. In absence of any evidence on record, the different claims made by the respondent have been examined and therefore also, the award deserves to be set at naught.
Per contra, learned advocate Shri K.G Sukhwani has urged that the registration of the firm was very much in existence. The receipt issued by the Registrar of Firms was also indicative of his having made such an application and the registration would relate back to the date on which the respondent had applied for registration. He further urged that by way of an affidavit, this issue has been explained elaborately and therefore, on factual matrix itself, the ground of maintainability is not tenable. He further more contended that three times Misc. Civil Applications for appointment of sole arbitrator under section 8 & 9 of the Act had been preferred before the learned Sr. Civil Judge at Vadodara right from the year 1982 and at no point of time, such a ground has been raised by the appellant. On the contrary, it is clearly mentioned in the order made on the last application, by which sole Arbitrator Shri Marathe was appointed that the parties had agreed and by way of consent, the learned Arbitrator was appointed and therefore, after two decades when the appellant had chosen to raise the objection with regard to the maintainability, the learned Page 6 of 27 C/FA/1147/2008 CAV JUDGEMNT Arbitrator had rightly not dismissed the proceedings on such ground of maintainability.
He emphasized on the aspect of constructive res judicata. He also further urged that the Supreme Court in case of Firm Ashok Traders & Anr. v. Gurumukh Das Saluja & Ors., reported in AIR 2004 SC 1433 has been categorical that non registration would not bar the proceeding under the Arbitration Act, and while so holding, it has relied upon the decisions rendered in case of Kamal Pushp Enterprises v. D.R Construction Company, reported in AIR 2000 SC 2676. He also extensively dealt with the issue of alleged perversity and urged that for every claim that has been sanctioned by the learned Arbitrator, he has given sufficient reasonings to rationalize his conclusion, and therefore, it is absolutely untrue to say that the award is vulnerable on account of absence of reasonings or for want of any evidences. In support of his submissions, learned counsel Shri Sukhwani has placed reliance on the following decisions : [a] U.P vs. Nawab Hussain, reported in AIR 1977 SC 1680; [b] K.V George v. The Secretary to the Government, Water & Power Department, Trivandrum & Anr., reported in AIR 1990 SC 53; [c] P.K Vijayan v. Kamalakshi Amma & Ors., reported in AIR 1994 SC 2145;
[d] In case of State of Gujarat & Anr. vs. Nitin Construction Company
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First Appeal No. 1379 of 1992 :: Decided on 22/3/2013 : Coram - Hon'ble the Chief Justice Mr. Justice Bhaskar Bhattacharya & J.B Pardiwala, J.} Learned counsel further urged that there are plethora of judgments of the Apex Court to indicate that the power of the Court to setaside the award is restricted as set out in Section 30 and when none of the grounds mentioned in the said provision exists, the concerned Court was right in not acceding to the request for setting aside the award, and therefore, when no ground is made out for either setting aside the award or for reconsideration, the Court must dismiss the Appeal.
First ground of challenge : Issue of Maintainability Before adverting the facts and considering the challenge to the award on the ground of perversity, the issue of maintainability of the arbitral proceeding deserves consideration at this stage. The useful reference can be made to the following decisions:
[a] U.P State Sugar Corporation Limited v. Jain Construction Company & Anr., reported in AIR 2004 SC 4335;
[b] Firm Ashok Traders & Anr. vs. Gurumukh Das Saluja & Ors., reported in AIR 2004 SC 1433;
[c] Kamal Pushpa Enterprises v. D.R Construction Company, reported in AIR 2000 SC 2676;Page 8 of 27
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[d] Delhi Development Authority v. Kochhar Construction Works & Anr.,
reported in [1998] 8 SCC 559.
It can be noticed that the Supreme Court in case of U.P State Sugar Corporation Limited [Supra] has taken into consideration the decision rendered in case of D.D.A v. Kochhar Construction Work [Supra]. However, reference of the decision rendered in case of Kamal Pushpa Enterprises [Supra] is missing.
However, the Apex Court in the very year and the Bench of the same strength in case of Firm Ashok Traders & Anr. [Supra] taken note of the decision in case of Kamal Pushpa Enterprise [Supra] wherein the Supreme Court was directly and essentially concerned with the maintainability of the petition under Section 8 & 9 of the Arbitration Act in connection with unregistered partnership firm, and where the Apex Court has favoured the view of filing of the arbitration proceedings even by unregistered firms. Without further delving into this aspect, what is relevant and necessary for the purpose of present petition is the principles of constructive res judicata as well laid down in number of decisions rendered over a period of time.
Issue of constructive res judicata :
What can be noted is the fact that when three Misc. Civil Applications were preferred under sections 8 & 9 of the Arbitration Act, 1940 being Misc.
Civil Applications No. 214/1982; 130/1985 & 87/1998 in the factual Page 9 of 27 C/FA/1147/2008 CAV JUDGEMNT background narrated hereinabove, at no point of time, such issue was raised by the appellant herein. Not only that, as mentioned hereinabove, when the present Arbitrator Shri Marathe was appointed, the Court in its order dated 2nd December 2000 passed in Civil Misc. Application No. 87 of 1998 had noted that since both the parties had agreed and consensually a request was made for appointment of sole arbitrator, the Court had no option but to appoint the sole arbitrator. Thus, the appellant without referring to any right with regard to the challenge in connection with the non registration of the firm chose not to contest this aspect knowing fully well that the arbitration proceeding was for the differences and disputes which had arisen out of the contract, entered into by and between the parties. At no stage, the appellant chose to dispute this aspect and later on when it has attempted to nonsuit the respondent on the ground of maintainability, the principle of res judicata would need to be applied.
The Apex Court in case of State of U.P v/s. Nawab Hussain [Supra] has held that this efficacious rule of evidence has been recognized over a period of time and is also applicable to the writ petitions. The Apex Court also referred to the decision rendered in case of Amalgamated Coalfields Limited v. Janapada Sabha, Chhindwara, reported in AIR 1964 SC 1013 to hold that the rule of constructive res judicata was in a sense a somewhat technical or artificial rule Page 10 of 27 C/FA/1147/2008 CAV JUDGEMNT prescribed by the Code of Civil Procedure. In the words of the Apex Court, "...
This rule postulates that if a plea could have been taken by a party in a proceeding between him and his opponent, he would not be permitted to take that plea against the same party in a subsequent proceeding which is based on the same cause of action; but basically, even this view is founded on the same considerations of public policy, because if the doctrine of constructive res judicata is not applied to writ proceedings, it would be open to the party to take one proceedings after another and urge new grounds every time; and that plainly is inconsistent with considerations of public policy to which we have just referred."
In case of K.V George v. Secretary to Government, Water & Power Department, Trivandrum [Supra], the Apex Court held that the principles of re judicata and constructive res judicata would be applicable to the arbitration proceedings. The claimant having raised some of the issues arising out of the termination of the contract in first claim petition was precluded from seeking second reference for the remaining issues.
In yet another decision rendered in case of P.K Vijayan v. Kamalakshi Amma & Ors. [Supra], the Apex Court held that, "..it is a sheer abuse of the process of the Court to raise at each successive stage different pleas to protract the proceedings.
It would be fair and just that the parties to raise all available relevant pleas in the suits or the proceedings when the action is initiated and the omission thereof does constitute Page 11 of 27 C/FA/1147/2008 CAV JUDGEMNT constructive res judicata to prevent raising of the same at a later point of time. Thereby, it must be deemed that they are waived."
In this case, as noted hereinabove, the parties had agreed to appoint a sole arbitrator never ever reserved the right to contend the aspect of maintainability before the Arbitrator. After nearly two decades of the first appointment of the sole arbitrator for adjudicating the lis between the parties when the question of maintainability on the ground of nonregistration had been raised which otherwise was available with the appellant herein at the first instance, the learned Arbitrator has rightly not sustained the contention of the appellant on this count.
We are concerned here essentially with the appointment of sole arbitrator by the Civil Court, and therefore, when such appointment had been made on a bipartite hearing on all contentions; including the legal contentions available with the parties are expected to be raised. In absence of any such contention at an appropriate time, later on may not preclude the Arbitrator to examine that legal contention but he is right in not accepting such contention of maintainability after lapse of huge time gap.
In the instant case also, the plea of maintainability could have been raised by the appellant at the first instance. Neither in the year 1982, nor in 1985 and even thereafter in the year 1998, when last application was made, such a Page 12 of 27 C/FA/1147/2008 CAV JUDGEMNT plea of maintainability was raised. On the contrary, what clearly emerges is the fact of giving consent to the appointment of the sole arbitrator before the Court concerned, which is a clear revelation of the fact that the pleas which were available and could have been raised in the proceedings at the initiation, when have been either omitted or not taken, it does constitute constructive res judicata. And thus, the principle governing the field would prevent raising of such pleas at the later point of time as they could be deemed to have been waived by the appellant, and therefore, the learned Arbitrator was correct not to have rejected the claim of respondent on the ground of maintainability of the arbitral proceedings.
On being satisfied of its having dealt with the issue adhering to the principles (of constructive res judicata) well laid down over the period of time, the issue of maintainability of the proceedings raised by the appellant is not finding favour with this Court.
Second ground of Challenge : Perversity - Absence of reasonings :
Adverting to the second ground of challenge, it is contended by the learned counsel appearing for the appellant that the award is per verse on account of absence of reasonings and lack of evidence much emphasis is laid on the facts that arbitrator exceeded jurisdiction by granting compensation, which was never claimed and the Court below in confirming the same, without Page 13 of 27 C/FA/1147/2008 CAV JUDGEMNT considering the aspect of perversity.
It would be quite relevant and profitable to refer to the judgment of this Court rendered in case of State of Gujarat v. Nitin Construction Company {First Appeal No. 1379/2009 :: Decided on 22/03/2013} wherein the Court considered the scope and extent of examination by the Court of an award made by the Arbitrator, by relying on the various decisions of the apex Court. In paragraphs 16 & 17, the Court observed thus "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 arbitrator to 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 Page 14 of 27 C/FA/1147/2008 CAV JUDGEMNT 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 ever 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 Page 9 of 23 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 Page 15 of 27 C/FA/1147/2008 CAV JUDGEMNT 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 Page 16 of 27 C/FA/1147/2008 CAV JUDGEMNT 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 Page 17 of 27 C/FA/1147/2008 CAV JUDGEMNT 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 Page 18 of 27 C/FA/1147/2008 CAV JUDGEMNT 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 reappreciate 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, Page 19 of 27 C/FA/1147/2008 CAV JUDGEMNT 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 Page 20 of 27 C/FA/1147/2008 CAV JUDGEMNT 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.
(c) 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.
(d) 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 Page 21 of 27 C/FA/1147/2008 CAV JUDGEMNT terms of the reference."
Going by the parameters which can be deduced from these decision, it is to be noted that this Court does not sit in appeal and review the order of the Arbitrator. Even if another angle is feasible from the very set of evidence, the Court is not expected to replace its own reasons with those of the learned Arbitrator. For apparent error on the face of the award, if is made out, the award needs to be interfered with.
Although, in the instant case with great vehemence, learned counsel for the appellant had urged that the Arbitrator has misconducted himself for having exceeded his jurisdiction by awarding the claim not even requested for in the statement of claim by the claimant and on account of absence of any reason, much less cogent reasons, the Court would have jurisdiction to investigate into the merits of the case and examine the documents and oral evidence for the purpose of finding out that the arbitrator committed an error of law. As well laid down under the law, there could be no substantive evaluation of evidence by this Court unless those grounds exist for the Court to interfere with in wake of the total perversity in the award or the judgment.
We do notice that none of the grounds raised before us challenging the award on the ground of perversity is sustainable.
There is no dispute to the fact that the arbitrator is not expected to give Page 22 of 27 C/FA/1147/2008 CAV JUDGEMNT reasons in detail, while passing the award. However, if there is no error of law on the face of the award, interference would not be necessary. On thorough and complete examination of the material on record, we could notice that there is not a single claim which is absent in the statement of claims and yet the arbitrator awarded such claim to the respondent, and therefore, this ground of exceeding the jurisdiction merits no consideration.
With regard to the absence of the reasons also, the appellant had failed to substantiate this ground in as much as the award clearly depicts assigning of the reasons, while awarding or dismissing any of the claims of the respondent.
It will not be necessary for us to elaborate on each and every claim of compensation awarded in favour of the respondent, however, to negate the contention raised by the appellant and to give a few instances from the award itself, it can be unfailingly asserted that there are apt reasons given by the learned Arbitrator for award of every claim. It is to be noted that all the claims allowed in favour of the respondents are summarized at paragraph 31 of the award. From out of the total claim originally made by the petitioner of Rs. 30,05,739/=, the Arbitrator awarded a sum of RS. 3,78,626/=. Whereas, the respondentBoard claimed the total sum of Rs. 8,11,547=75p, which according to the Arbitrator was of Rs. 8,05,671=60p. The entitlement of the respondent was upheld to the tune of Rs. 36,368=75 p., and accordingly, the net amount the Page 23 of 27 C/FA/1147/2008 CAV JUDGEMNT petitioner was found to be entitled for was Rs. 3,42,257=25p. Following is summary given by the Arbitrator while allowing some of the claims : "[31] Issue No. (xvii) Therefore, what the claimant can get from the respondent can be summarized as under : (1) Rs. 75,000=00 Amount the claimant must have paid to the labour when the factory remained closed.
(2) Rs. 23,512=00 Labour Escalation charges (3) Rs. 1,17,800=00 Refund of bank guarantee amount. (4) Rs. 21,957=00 For losses suffered on being forced to work beyond the contract period.
(5) Rs. 1,19,457=00 Payable as per final bill but withheld for unexplained reasons.
(6) Rs. 15,900=00 Sales Tax refund
(7) Rs. 5,000=00 For payment made to labour etc for having
to work with defective 284 bags of cement.
===========
Rs. 3,78,626=00 Total
Rs. 36,368=75 Amount which the respondent is entitled
to recover from claimant
===========
Rs. 3,42,257=25 Net amount recoverable by claimant."
For claim no.8, the award is of Rs. 75,000/=. Learned Arbitrator had discussed the issue at paragraph 18 of its Award and exhaustively considered the fact that the factory remained closed for want of cement for 121 days and for 24 days for nonavailability of HT steel; calculating the production of poles and the total number of labours employed and the payment made to it, the total amount of Rs. 75,000/= which the claimant would have required to spend Page 24 of 27 C/FA/1147/2008 CAV JUDGEMNT for 151 days when the factory remained closed. And therefore, the said amount of compensation is awarded.
Towards labour escalation charges the sum of Rs. 23,512/= is awarded, and such discussion finds place at paragraph 25 of the award. The oral version given by Dayaljibhai Chandarana was of Rs. 23,512/=. In absence of any challenge to the amount paid towards the labour escalation by the otherside, based on the detailed reasons, the arbitrator concluded to award the said amount under this head.
We also notice that while refunding the amount of bank guarantee to the tune of Rs. 1,17,800/=, the Arbitrator noted that the GEB encashed the bank guarantee on 5th September 1990 where in fact it owed the claimant a sum of Rs. 1,19,457=90p. The bank guarantee was furnished by way of security deposit till the matter was decided by the Arbitrator, the GEB was unable to intimate the Arbitrator that such an order was in fact passed by the competent authority. Therefore, it concluded that GEB wrongly encashed the bank guarantee which was needed to be refunded to the respondent.
{A} The award is specific in respect of the reasonings assigned by the Arbitrator to the issue of registration of the partnership firm. On having found that the claimant failed to prove registration of the firm. On this count also, cogent reasons are given by the Arbitrator while holding this issue in favour of Page 25 of 27 C/FA/1147/2008 CAV JUDGEMNT the respondents which require no reproduction here. {B} The Apex Court in Ravindra Kumar Gupta & Company v. Union of India [Supra] had in terms held that, "..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 own 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."
Thus, the appraisement of evidence by the arbitrator is ordinarily never a matter which the Court questions and considers in coming to a different conclusion from the self same set of evidence and that by itself cannot be a ground for setting aside the award.
This Court since is not to go into whether it can be a correct view but when the evidence leads to conclude that it is a possible view then also, no interference is warranted. From the cumulative examination of the entire material, none of the grounds raised in this Appeal is found sustainable. Both the learned Arbitrator and the Court below have acted in accordance with law and the decisions are not vulnerable on any of the grounds raised in the present appeal.
Resultantly, appeal fails. Dismissed accordingly with no order as to Page 26 of 27 C/FA/1147/2008 CAV JUDGEMNT costs.
{Jayant Patel, J.} {Ms. Sonia Gokani, J.} Prakash* Page 27 of 27