Gauhati High Court
Smt. Bina Rani Dey And Ors. vs State Of Tripura And Ors. on 19 June, 1998
Equivalent citations: AIR1998GAU139, AIR 1998 GAUHATI 139, (1999) 1 ARBILR 142, (1999) 3 CIVLJ 121, (1998) 3 GAU LR 23
Bench: A.K. Patnaik, H.K.K. Singh
JUDGMENT Patnaik, J.
1.This is an appeal under Section 39(vi) of the Arbitration Act, 1940, against the order dated 14-6-93 of the learned Assistant District Judge, No. 2, West Tripura, Agartala, in Title Suit No. 65 (Arb) 83 setting aside the Award made by the Arbitrators.
2. The relevant facts briefly are that the appellant No. 1 is the wife, appellants Nos. 2 to 10 are the sons and appellants Nos. 11 to 13 are the daughters of late Gopal Chandra Dey. On the land of late Gopal Chandra Dey, respondents-1, 2 and 3 intended to draw a 66 KV line for power transmission. Late Gopal Chandra Dey objected to the drawal of said line on his land on which he was carrying on the business of manufacturing bricks in a brick kiln. When the respondents did not pay any heed to the said objection of late Gopal Chandra Dey, he instituted Title Suit No. 223/74 in the Court of learned Sadar Munsiff, Agartala and obtained an order of temporary injunction against the respondents restraining them from entering into the suit land, from erecting the said power transmission line over the suit land and from disturbing the plaintiffs possession in any way. Aggrieved by the said order of temporary injunction, the respondents preferred Misc. Appeal No. 21 of 1975 before the learned Subordinate Judge, Agartala, which was dismissed. During the pendency of the appeal, a compromise was arrived at between late Gopai Chandra Dey and the respondents and as per the said compromise, the power transmission line was to be shifted to the Eastern part of the land of late Gopal Chandra Dey and he was to be paid compensation. Pursuant to the compromise, T. S. No. 223 of 1974 was withdrawn and on 20-11-75 late Gopal Chandra Dey filed a petition before the Government claiming compensation of Rs. 4,43,295/- under various heads. The State Government, however, paid only Rs. 5,000/- as cost of trees and plants and Rs. 10,0007- as compensation. The appellants then filed an application under Sections 8 and 20 of the Arbitration Act, 1940, which was registered as Title Suit No. 63 (Arb)/83 and by order dated 14-12-83, the learned Subordinate Judge, West Tripura, Agartala, referred the dispute between the parties to the Arbitrator, namely, Secretary to the Govt. of Tripura, Public Works Department. Since the said Arbitrator did not enter into arbitration with reasonable despatch, he was removed by order dated 10-6-86 of the learned Subordinate Judge and Sri B. Das, an Advocate, and Sri R. B. Sinha, a retired District and Sessions Judge, were appointed as Arbitrators chosen by the appellants and the respondents respectively. The said two Arbitrators after conducting the arbitration proceedings filed their Award dated 30-11-92 awarding a total sum of Rs. 3,66,068.20 p. over and above the sum of Rs. 5,000/- and Rs. 10,000/- already paid by the respondents to the appellants as compensation with simple interest @ 12% per annum from 30-8-84 to the date when the Award was filed before the Court and from the date till the Award was made the Rule of the Court or till the date of realization, whichever was earlier. After receiving the notice of said Award, the respondents filed an application under Section 33 of the Arbitration Act, 1940, raising their objection to the Award, and the learned Assistant District Judge, No. 2, West Tripura, Agartala, after hearing the parties set aside the Award by the impugned order dated 14-6-93. Aggrieved, the appellants have filed this appeal.
3. At the hearing Mr. S. Deb, learned senior counsel, appearing for the appellants submitted that the Award was given by the two Arbitrators chosen by the appellants and the respondents in accordance with the provisions of Section 52 of the Indian Electricity Act, 1910, and that such an Award made by the Arbitrators chosen by the parties could only be set aside for an error apparent on the face of the Award or for misconduct as would be clear from Section 30 of the Arbitration Act, 1940. He submitted that it has been held by a long line of decisions in the cases of Champsey Bhara & Company v. Jivraj Balloo Spinning & Weaving Company Ltd., AIR 1923 PC 66; Union of India v. Bungo Steel Furniture Pvt. Ltd., AIR 1967 SC 1032, Municipal Corporation of Delhi v. M/s. Jagan Nath Ashok Kumar, AIR 1987 SC 2316; Indian Oil Corporation Ltd. v. Indian Carbon Ltd., (1988) 3 SCC 36 : (AIR 1988 SC 1340); Bijendra Nath Srivastava v. Mayank Srivastava, (1994) 6 SCC 117 : (AIR 1994 SC 2562); State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6 SCC 485 : (1994 AIR SCW 5061) and Trustees of the Port of Madras v. Engineering Constructions Corporation Limited, (1995) 5 SCC 531 : (AIR 1995 SC 2423), that the Court is not to sit in appeal over the Award made by the Arbitrator and will not re-appraise the evidence led before the Arbitrator, or question the reasonableness of the reasons given by the Arbitrator in the Award and that the Court will set aside an Award only if there is an error apparent on the face of the award or the arbitrator has misconducted the proceeding. But in the instant case, the learned Assistant District Judge has made re-appraisement of the evidence and has questioned the reasons given by the two Arbitrators and has set aside the Award. According to Mr. Deb, the whole approach of the learned Assistant District Judge to the Award of the Arbitrators has been that of an appellate Court contrary to the law as settled by the aforesaid decisions of, the Privy Council and the Supreme Court.
4. Mr. P. Deb Roy, learned Government Advocate, Tripura, appearing for the respondents, on the other hand, submitted that a reading of the impugned order of the learned Assistant District Judge would show that he has set aside the award its he has found that the material documents had been ignored, and that the Arbitrators have misconducted the proceedings. He cited the decision of the Supreme Court in the case of K. P. Poulose v. State of Kerala, AIR 1975 SC 1259, for the proposition that where material documents arc ignored by the Arbitrator, the Award can be set aside for misconduct on the part of the Arbitrator in conducting the proceedings. He also relied on the decision of the Supreme Court in the case of Continental Construction Co. Ltd v. Stale of Madhya Pradesh, AIR 1988 SC 1166, in support of his submission that if no specific question of law is referred, the decision of the Arbitrator on that question is not final, however, much it may be within his jurisdiction and that where the Arbitrator has made an error in respect of such question of law and such error appears on the face of the Award, the Court can always set aside the said Award. He contended that following the aforesaid principle of law, the learned Assistant District Judge has set aside the Award of the Arbitrators for reasons which have been given in the impugned order. He also pointed out that no objection had in fact been filed by the appellants to the application under Section 33 of the Arbitration Act filed by the respondents for setting aside the Award and relying on the decision of the Supreme Court in the case of Madan Lal v. Sunder Lal, AIR 1967 SC 1233, he contended that in the absence of such objection within the period of limitation, the Award could be set aside by the learned Assistant District Judge.
5. It appears from the award mat the arbitrators awarded a sum of Rs. 1,50,000/- as compensation to the appellants due to stoppage of manufacturing of bricks for three years from 1973 to 1975 @ Rs. 50,000/- per annum. The reasons given for awarding the said compensation by the Arbitrators were that the manufacturing of bricks was held up for three years because of the threatening by the respondents to post the Tower just contiguous East of the brick-kiln and that even if the appellants had succeeded in getting an injunction order from the Court of learned Munsiff, it would have taken several years to end the dispute and during this long period, the father of the appellants could not be expected to make bricks and burn them for running of his business. This reasoning given by the Arbitrators has been questioned by the learned Assistant District Judge in the impugned order and according to the learned Assistant District Judge, since the respondents were restrained by the injunction order and they had to discontinue the drawal of 66 KV line over the suit property, there was no disturbance in manufacturing bricks from the said brick-kiln situated over the suit land. Learned Assistant District Judge has further held that the Arbitrators ought to have considered Ext.-37, which is a letter dated 30-10-75 of late Gopal Chandra Dey to the Technical Officer, Rural Industry Project, to the effect that the brick-kiln was functioning well for which late Gopal Chandra Dey required loan. It further appears from the Award that the compensation at the rate of Rs. 50,000/- per annum for three years was granted by the Arbitrators because they found from the evidence of P.Ws. Sankar Chandra Dey and Anil Kumar Paul that late Gopal Chandra Dey used to earn Rs. 50,000/- to Rs. 52,0007- per annum by selling about 20,00,000 bricks annually and that the application of late Gopal Chandra Dey to the Director of Small Scale Industries indicated that he earned Rs. 60,000/-per annum by selling bricks. The aforesaid evidence was corroborated by Exhibit -39, which is a communication by the Director of Industries, Tripura dated 3-5-75 to late Gopal Chandra Dey sanctioning a loan of Rs. 20,000/- for the brickkiln industry. The learned Assistant District Judge has, however, found fault with the aforesaid determination of compensation by the Arbitrators at the rate of Rs. 50,000/- per annum and has held that P.W. 1 has admitted in his evidence that late Gopal Chandra Dey used to pay income-tax over his yearly income of Rs. 50,000/- for his said business, but no documentary evidence was furnished by the appellants and in the absence of such documentary evidence a presumption should have been drawn either that the documentary evidence had been concealed or that had the documentary evidence been produced the yearly income of Rs. 50,000/- would have been proved to be false and baseless. The learned Assistant District Judge has further held that the documents marked as Exts. 6 and 39 do not in any way show that the yearly income of late Gopal Chandra Dey was Rs. 50,0007- from the brick industry.
6. By the Award, the Arbitrators awarded Rs. 1,60,000/- as compensation to the appellants for non-user of land approximately measuring 3 kanis and4 gondas due to the order of the District Magistrate-cum-Collector exhibited as Exhibit-9. The basis for the claim of Rs. 1,60,000/- for non-user of the aforesaid land was that the appellants could not utilise the land measuring 3 kanis and 4 gondas because of the over-head 66 KV power transmission line. The Arbitrators have found the said claim of Rs. 1,60,0007- as compensation to be justified and reasonable but have held that the amount of Rs. 1,60,000/-already awarded as compensation would be deducted from the aforesaid amount of Rs. 1,60,000/-. The learned Assistant District Judge, on the other hand, has taken a view in the impugned order that the transmission tower covered only an area of 25' x 25' and did not cover the entire 3 kanis and 4 gondas of land and that the Arbitrators ought to have made a local inspection of the spot and considered this fact. The learned Assistant District Judge has further observed in the impugned order that late Gopal Chandra Dey had not lodged any complaint that he was not in a position to enjoy the entire 3 kanis and 4 gondas of land by the said drawal of power line and on the contrary Exhibit-2 indicated that he agreed to allow the respondents to post the Tower on his land causing minimum loss of his land. The learned Assistant District Judge has further held that the Arbitrators ought to have considered Exhibits-2 and 4 in their true perspective.
7. In the award, the arbitrators have further awarded "Rs. 49,054.20 p. and Rs. 16,014.00 as compensation for two buildings which were alleged to have been damaged by the drawing of power transmission line. But the learned Assistant District Judge in the impugned order has held that before entertaining the claim for damage of the two buildings, the Arbitrators ought to have made a local inspection of the spot in view of the allegations made in the counter-statement of the respondents that the buildings were of temporary nature having no RCC pillar and no foundation even.
8. The learned Assistant District Judge has finally held in the impugned order that all relevant documents were not considered by the Arbitrators and that the Award of the Arbitrators was grossly perverse apparent on the face of it and that the Arbitrators did not appreciate the evidence led by the parties while arriving at the decision, misconstrued some documents while giving the Award and that the appellants managed to procure the award improperly out of nothing.
9. The aforesaid discussion would show that the learned Assistant District Judge has found fault with the reasons given by the Arbitrators in awarding the compensation to the appellants and has further held that the Arbitrators have not taken into consideration the documentary evidence available before them and that the evidence before the Arbitrators did not justify the award of compensation. But, it is now settled by the decisions cited by Mr. Deb, learned senior counsel appearing for the appellants that the Arbitrators is the sole judge of the quality as well as the quantity of the evidence and it will not be for the Court to take upon itself the task of being a judge of the evidence before the arbitrator, and the reasonableness of the reasons given by the arbitrator cannot be challenged before a Court. In the cast of Bijendra Nath Srivastava v. Mayank Srivastava, (1994) 6 SCC 117 .: (AIR 1994 SC 2562), the Supreme Court after taking note of the grounds set out in Section 30 of the Arbitration Act for setting aside an Award and after considering the decisions of the Privy Council as well as the Supreme Court on the point held (at pp. 2573 and 2574 of AIR):
".................An award might be set aside on the ground of an error on the face of it when the reasons given by the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous. In the absence of any reasons for making the award, it is not open to the Court to interfere with the award. The Court cannot probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion. An award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed grave mistake in arriving at his conclusion. The arbitrator is under no obligation to give reasons in support of the decision reached by him unless under the arbitration agreement or deed of settlement he is required to give such reasons. If the arbitrator or umpire chooses to give reasons in support of his decision it would be 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 basis of the recording of such reasons. The reasonableness of the reasons given by the arbitrator cannot, however, be challenged. The arbitrator is the sole judge of the quality as well as the quantity of the evidence and it will not be for the Court to take upon itself the task of being a judge of the evidence before the arbitrator. The Court should approach an award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal. (See : Chmpsey Bhara & Co. v. Jivraj Balloo Spg. and Wvg. Co. Ltd., (AIR 1923 PC 66) (supra), Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji, (1964) 5 SCR 480 : AIR 1965 SC 214, Sudarsan Trading Co. v; Govt. of Kerala, (1989) 2 SCC 38 : (AIR 1989 SC 890); Raipur Development Authority v. Chokhamal Contractors, (1989) 2 SCC 721 : (AIR 1990 SC 1426), and Santa Sila Devi v. Dhirendra Nath Sen, AIR 1963 SC 1677)."
10. In the case of K. P. Poulose v. State of Kerala, AIR 1975 SC 1259, cited by Mr. P. Deb Roy, learned counsel appearing for the respondents, the Supreme Court found that the dispute between the parties was whether jetting work done by the contractor in that case was an authorised extra covered by the agreement and that Exhibits P-11 and P-16 which were communications sent by the Superintending Engineer to the Chief Engineer and the Executive Engineer to the Chief Engineer indicated that jetting was to be adopted in the interest of the Department in view of the sandy strata obtained in the site and that jetting done by the contractor could be considered as an extra item and yet the Arbitrator held in the Award that jetting was not an authorised extra covered by the agreement. On these facts, the Supreme Court took a view that even though Exhibits P-11 and P-16 were not marked as exhibits before the arbitrator but was so marked before the Subordinate Judge, and in the background of the controversy between the parties, even if the Department did not produce those documents before the Arbitrator it was incumbent upon him to get hold of the said relevant documents for the purpose of arriving at a just and fair decision to resolve the controversy between the Department and the contractor; and the Supreme Court held that by not calling for the said documents, the Arbitrator had misconducted the proceedings by ignoring the material documents which would have thrown abundant light on the controversy between the parties. In the present case, on the other hand, the learned Assistant District Judge has merely commented on the quality and the quantity of the evidence that have been relied on by the Arbitrators in awarding compensation and has also held that the Arbitrators should have taken into consideration some exhibits which were actually produced and marked before them. The learned Assistant District Judge has, in other words, held that the Arbitrators have not assessed the documentary evidence properly while awarding the compensation in favour of the appellants, which was not permissible for the Court to do as per the aforesaid decision of the Supreme Court in the case of Bijcndra Nath Srivastava, (AIR 1994 SC 2562) (supra).
11. In the case of Continental Construction Co. Ltd. v. State of M. P., AIR 1988 SC 1166, cited by Mr. Deb Roy, the Supreme Court has held that if no specific question of law is referred, the decision of the arbitrator on that question is not final, however, much it may be within his jurisdiction and indeed essential for him to decide the question incidentally because the arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. In the words of Supreme Court (at p. 1170 of AIR):
".............the arbitrator is a tribunal selected by the parties to decied their disputes according to law and so is bound to follow and apply the law, and if he does not he can be set right by the Court provided his errors, appears on the face of the award..........."
Thus, errors of law appearing on the face of the award only can be set right by the Court, but the errors which do not appear on the face of the award cannot be a ground for the Court to set aside the award. In the present case, the learned Assistant District Judge has set aside the award not on the ground that there were errors apparent on the face of the award but on the ground that the Arbitrators had committed various errors of record by ignoring the evidence which were available in the records of the Arbitrators. In our considered opinion, the learned Assistant District Judge has totally misunderstood the scope of enquiry by a Court in case where an award is challenged before the Court and has set aside the award on the basis of what he (learned Assistant District Judge) considered to be errors on the face of the, record and not on errors apparent on the face of the Award.
12. In the decision of the Supreme Court in the case of Madan Lal v. Sunderlal, AIR 1967 SC 1233, cited Mr. Deb Roy, we find that the Supreme Court has held that, if no application is made within 30 days after service of notice of filing of the award for Setting aside the aWard, the award cannot be set aside on any of the grounds specified in Section 30 of the Arbitration Act. In the said decision, the Supreme Court has not held as contended by Mr. Deb Roy, that where no objection is filed to such an application for setting aside the award, the Court could automatically set aside the award without examining as to whether or not such an award was liable to be set aside on any of the grounds specified in Section 30 of the Arbitration Act. Section 30 of the Arbitration Act, 1940, expressly states that "an award shall not be set aside except on one or more of the grounds" mentioned therein. Unless, therefore, the court comes to the conclusion that one or more ground(s) as mentioned in Section 30 of the said Arbitration Act exists/exist, the Court cannot set aside the award made by the Arbitrator. The contention of Mr. Deb Roy that the Award was liable to be set aside in the absence of any objection filed by the appellants to the application made by the respondents under Section 33 of the Arbitration Act, 1940for setting aside the Award is, therefore, misconceived,
13. Mr. S. Deb, learned senior counsel appearing for the appellants, finally submitted that in case this Court sets aside the impugned order of the learned Assistant District Judge and decrees the suit in terms of the Award, the appellants should be awarded interest from the date of decree at such rate as the Court deems reasonable in accordance with Section 29 of the Arbitration Act, 1940. We find that the Arbitrators have awarded interest at the rate of 12% per annum from 30-8-84 till the Award was made the Rule of the Court or till realisation whichever was earlier. Since we are setting aside the impugned order of the learned Assistant District Judge and making the Award the Rule of the Court and making a decree in terms of the Award, we deem it reasonable to award from the date of decree till realisation interest at the rate of 12% per annum on the principal sum of Rs. 3,66,068.20 p. as adjudged by the Award and confirmed by this decree.
14. In the result, this First Appeal is allowed and the impugned order dated 14-6-93 passed by the learned Assistant District Judge, No. 2, West Tripura, Agartala in Title Suit No. 65 (Arb) 83 is set aside and the Award dated 30-11-92 of the Arbitrators is made the Rule of the Court and the suit is decreed in terms of the aforesaid Award dated 30-11-92 with interest at the rate of 12% per annum on the principal sum of Rs. 3,66,068.20 p. as adjudged by the arbitrators from the date of decree till realisation. Considering, however, the facts and circumstances of the case, we leave the parties to bear their own costs althroughout.