Calcutta High Court
National Project Construction ... vs Aroma Universal on 19 February, 2000
Equivalent citations: (2001)2CALLT195(HC), 2001(2)CHN149
JUDGMENT P.K. Chattopadhyay, J.
1. This appeal is directed against the judgment and order dated 13th May. 1998 passed by the learned single judge while deciding the application filed by the appellant herelnunder sections 30 and 33 of the Arbitration Act challenging the award made and published by the learned Arbitrator on 13th May, 1997.
2. Learned single Judge dismissed the application for setting aside the award filed by the appellant herein and passed a decree in terms of the award with an amendment that Interest should be charged at the rate of 12% Instead of 18% as was directed by the learned Arbitrator.
3. The appellant has challenged the said judgment and order passed by the learned single Judge in the present appeal on the grounds that there was delay in preferring the claim and accordingly. Arbitrator should have rejected the claim on the ground of limitation and secondly, the Arbitrator exceeded his Jurisdiction and made an award which is a nullity. According to the appellant, arbitrator had decided the disputes and awarded the claims without considering the terms of the contract properly. Learned counsel of the appellant submitted that by disregarding the terms of contract, Arbitrator committed jurisdiction at error and the learned Arbitrator thereby travelled beyond the scope of the reference.
4. Learned counsel appearing on behalf of the appellant submitted that the parties are bound by the express terms of the contract. According to the counsel of the appellant, a number of items were not payable under the contract by the appellant but the claims have been made and was also allowed by the learned Arbitrator without considering the relevant terms of the contract and the learned Advocate of the appellant submitted that the quantification of the claims have been made by the claimant not in terms of the contract and this is not permissible.
5. The award passed by the Arbitrator is, admittedly, a non-speaking lump sum award. Mr. Dipak Basil, learned senior counsel, appearing on behalf of the appellant submitted that the arbitrator cannot go beyond the terms of the contract but while deciding this specific issue, learned Arbitrator has done that While answering the additional issue No. 1, Arbitrator held that the parties are bound by the terms and conditions of the contract as far as practicable. Mr. Basu submitted that the Arbitrator acted erroneously while answering the said additional Issue No. 1.
6. Mr. Basu referred to and relied upon the following Judgments in support of the contention that the Arbitrator cannot go beyond the terms of the contract.
1. Associated Engineering Co. V. Government of Andhra Pradesh & Anr.
2. Steel Authority of India Ltd. v. J.C. Budharaja
3. Rajasthan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises & Anr.
8. Mr. Basu referred to various documents and letters exchanged between the parties and submitted that the learned Arbitrator failed to answer the issue properly and he erroneously passed the award allowing the claims of the claimant. According to Mr. Basu, the learned Arbitrator has exceeded his Jurisdiction which according to him is apparent on the face of the record.
9. Mr. Basu further submitted that the Arbitrator while deciding the disputes disregarded the terms of the contract and thereby committed jurisdictional error as the Arbitrator travelled beyond the scope of the reference. Mr. Basu also submitted that the quantification of the claims have been made by the claimant according to the labour payments which is not permissible under the contract. Accordingly, Mr. Basu submitted that the award passed by the learned Arbitrator is liable to be set aside on the ground of Jurlsdlctlonal error as the Arbitrator has exceeded his jurisdiction.
10. Mr. Dutt. learned senior counsel, appearing on behalf of the respondent submitted that the Arbitration Clause mentioned in the agreement specifically covers the differences and disputes between the parties which had been subject matter of the arbitration proceedings. Referring to the Arbitration Clause, Mr. Dutt submitted that the scope of the Arbitration Clause is sufficiently wide to cover the disputes and differences of the parties which are the subject matter of the arbitration proceedings. According to Mr. Dutt, Arbitrator never exceeded his jurisdiction.
11. It is well settled that the Court cannot sit on appeal on the decision of the Arbitrator nor can it re-assess and/or further evaluate the evidence adduced before the Arbitrator. The award can be challenged primarily on two grounds, namely, in the case of an error apparent on the face of the record and the other is where the Arbitrator has exceeded his jurisdiction. But in any case the Court is not entitled to scrutinise and/or re-examine the documents relied by the respective parties in the arbitration proceedings nor it can look into the evidences for the purpose of deciding the correctness of the award passed by the Arbitrator, unless the error alleged to have been committed by the Arbitrator is apparent on the face of record or it appears from the award itself that the Arbitrator had exceeded his jurisdiction while making the said award, the Court cannot set aside the same.
12. Mr. Dutt submitted that since the present award is a non-speaking award, the Court could not probe the mental process of the Arbitrator and speculate as to what impelled the Arbitrator to arrive at its conclusion. Mr. Dutt while referring to the decision submitted that the appraisement of evidence by the Arbitrator could not be a matter for consideration by this Hon'ble Court. Referring to Para 29 of the aforesaid Judgment of the Supreme Court, Mr. Dutt submitted that the Arbitrator is the sole judge of the quality as well as the quantity of the evidence and Court cannot take upon Itself the task to re-assess the evidence which were laid before the Arbitrator.
13. Referring to the decision . Mr. Dutt submitted that High Court cannot substitute its own view in place of Arbitrator's view and furthermore, High Court cannot examine the matter as a regular Appellate Court. In the case of Hindustan Construction Co. Ltd. v. Governor of Orissa , Supreme Court observed as follows:
"It is well known that the Court while considering the question whether the award should be set aside, does not examine the question as an appellate Court. While exercising the said power, the Court cannot re-appreciate all the materials on the record for the purpose of recording a finding whether in the facts and circumstances of a particular case the award in question could have been made."
14. In the matter of B. V. Radhakrishnan . Supreme Court, quoting from the earlier decisions, observed in paragraph 12 as follows:
"This Court again observed in paras 26-28 (of SCC) : (Paras 25-27 of AIR) as follows:-
"The Arbitrator is the final arbiter for the disputes 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. Government of Kerala, , 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 la 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 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."
15. On the ground of limitation Mr. Basu submitted that the claim of the claimant is barred by limitation. According to Mr. Basu, dispute arose in the year 1984 as the contract was rescinded on 13th November, 1984. According to Mr. Basu. the respondent's right to apply for arbitration would start from that day and would expire on 13th November, 1987. Mr. Basu further submitted that the appellant prepared the final bill and kept the same ready on 25th April, 1985 for singing and acceptance thereof by the respondent. The respondent's right is barred after expiry of three years thereafter i.e. after the 24th April, 1988. According to Mr. Basu, the cause of action, if any of the respondent for demanding arbitration and/or referring the disputes for arbitration arose long before 1991-92 Mr. Basu referred to and relied upon on the decision .
16. Mr. Dutt appearing on behalf of the respondent submitted that the point of limitation was never raised by the appellant on earlier occasion and so they cannot raise the point of limitation for the first time in course of hearing of the appeal. It has also been submitted that even in this appeal, no ground has been taken on the question of limitation. Mr. Dutt also submitted that the appellant herein filed counter claim before the Arbitrator wherefrom it would be established that the claim was not barred by limitation. As a matter of fact, the appellant corporation nominated Arbitrator by communication dated 16th April, 1992 though afterwards this Hon'ble Court appointed the Arbitrator pursuant to an application filed by the respondent herein.
17. Mr. Dutt further submitted that the claimant herein addressed a letter dated 9th October, 1991 demanding payment from the appellant for sum of Rs. 7 lakh against the work in question and thereafter by a subsequent letter dated 20th November. 1991 claimed the same amount towards the settlement of the claims of the respondent in the said letter the respondent also specifically mentioned that in case of default, steps would be taken as per terms of the contract since the appellant did not make payment inspite of the aforesaid demand made by the respondent herein.
18. Prayer was made by the respondent to the Chairman and Managing Director of the appellant corporation for appointment of an Arbitrator in terms of the contract by a subsequent letter dated 18.2.1992. The respondent again wrote to the Chairman and Managing Director of the appellant corporation referring to the earlier letter dated 30th December, 1991 wherein it was specifically mentioned that the appellant corporation failed and neglected to take necessary steps according to terms of agreement for appointment of Arbitrator inspite of receipt of the said earlier letter dated 30.12.91.
19. The respondent in such situation appointed Shri D.P. Roychowdhury, (retd.) Chief Engineer/Commissioner, Housing Department, Government of West Bengal as the nominee of the respondent to fill up the vacant post of the Arbitrator and the appellant herein was requested to concur with the said appointment of Mr. D.P. Roychowdhury. The respondent herein thereafter filed an application under sections 5, 8, 11, & 12 of the Arbitration Act before this Hon'ble Court praying for an Order that the Hon'ble Court may appoint any person as the sole Arbitrator to adjudicate the disputes between the parties. The said application was numbered as Matter No. 1009 of 1992.
20. During the pendency of the said petition the Chairman and the Managing Director of the appellant corporation appointed Shrl J. Mazumdar, Director (retd.) NPCC. to act as sole Arbitrator. Thereafter Hazarl, J.(as is Lordship then was) by an order dated August 5, 1992 appointed Mr. Pabitra Kr. Banerjee a retired Judge of this Court as Arbitrator.
21. According to Mr. Dutt, the learned Arbitrator so appointed by this Hon'ble Court held 63 meetings and both the parties appeared before the Arbitrator and filed voluminous documents and adduced oral evidences. The parties regularly participated in the arbitration proceedings but at no point of time appellant herein raised the point of limitation before the Arbitrator nor any Issue was framed before the Arbitrator on the point of limitation.
22. Referring to the decision of this Hon'ble Court reported in AIR 1963 Cal 227. Mr. Dutt submitted that amount deducted in running bills though barred by time but should be included in final bill submitted after receipt of the certificate of completion of the work. In the Instant case, certificate of completion of the work has not yet been Issued and as such according to Mr. Dutt. question of limitation does not arise. Mr. Dutt in making those submissions referred to paragraphs 14, 15 and 18 of the aforesaid judgment of this Hon'ble Court in the case of M.L. Dalmta & Co. v. Union of India. .
23. Mr. Bnsu. however, referred to a decision wherein it has been held that section 3 of the Limitation Act is peremptory and it is the duty of the Court to notice the provisions of the Act and give effect to it even though it is not referred to in the pleadings.
24. In order to determine the starling point of limitation in the instant case, relevant documents submitted before the Arbitrator as well as the evidences adduced by the parties before the Arbitrator should be taken into consideration and so it becomes a question of fact. But this Court while deciding an application for setting aside an award cannot scrutinise and/ or re-examine and/or re-appraise the documentary and/or oral evidences adduced before the Arbitrator as this Court cannot sit on appeal to decide the correctness of the decision of the Arbitrator as has been repeatedly held by the Supreme Court.
25. Mr. Basu though referred to the decision of the Supreme Court and submitted that under section 3 of the Limitation Act, it was the duty of the Arbitrator to reject the claim as it was on the face of it, barred by limitation, but Mr. Basu could not dispute the proposition of law laid down by the Supreme Court
26. Mr. Dutt rightly referred to paragraph 5 of the said decision of the Supreme Court and submitted that the appellant in the said case appointed sole Arbitrator with reservation regarding the tenablllty, maintainability and validity of the reference as also on further grounds that the claim was barred by the period of limitation. In the instant case, appellant corporation did not raise point of limitation either before the learned Single Judge of this Court at the time of appointment of the Arbitrator nor the said point of limitation was raised before the Arbitrator. Appellant corporation participated in the arbitration proceeding without any reservation as to the maintainability of the claim on the ground of limitation.
27. Appellant corporation never contended on any earlier occasion that the claim of the claimant was barred by limitation. Even no such ground has been taken in the memorandum of appeal before this Court. Determination of starting point of limitation in the instant case is a question of fact or at least a mixed question of fact and law. Accordingly, when the determination of the point of limitation involves mixed question of law and fact the same cannot be argued for the first lime before this Court hearing an appeal in connection with a non-speaking award. So, the contention of appellant on the point of limitation is not sustainable in the eye of law. Furthermore, the award in the instant case being a non-speaking lumpsum award this Court has very limited jurisdiction.
28. Mr. Basu though referred to the decision of the Supreme Court in support of the contention that Court can set aside the award if Arbitrator acts beyond his Jurisdiction, but in the said decision Supreme Court has specifically held that if the Arbitrator has committed a mere error of fact or law in reaching his conclusion on the disputed question submitted for his adjudication then the Court cannot interfere. Relying on the decision of Hindustan Construction Co. Ltd. v. State of J&K , Supreme Court further held in the aforesaid case of Rajasthan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises that in a case of a non-speaking award the jurisdiction of a Court is limited. Relevant portion of paragraph 44 of the said judgment is quoted hereinbelow.
"44. From the resume of the aforesaid decisions. It can be stated that:
(a) It is 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.
(b) It is not open to the Court to admit to probe the mental process by which the arbitrator has reached his conclusion where it is not disclosed by the terms of the award.
(c) If the arbitrator has committed a mere error of fact or law in reaching hts conclusion on the disputed question submitted for his adjudication then the Court cannot interfere."
29. In view of aforesaid discussions, we are of the opinion that this Court has no jurisdiction to examine the validity and/or legality of the award in the manner learned counsel appearing on behalf of the appellant wanted us to do as we arc of the opinion that this Court cannot go behind the award and to examine any other documents which were filed before the Arbitrator.It is not permissible to travel beyond the award and to consider the materials not incorporated in or appended to the award. Furthermore, we do not consider that the Arbitrator has exceeded his jurisdiction and/or acted without jurisdiction particularly when a specific issue was raised before the Arbitrator relating to the claims of the claimant based on unilateral measurement of the work allegedly done by the claimant and the said issue was considered by the learned Arbitrator.
30. Learned single Judge has rightly held that the question as to the "labour payment" was within the four corners of the settled Issue before the Arbitrator and the scope of adjudication before the learned Arbitrator was as to whether "labour payment" are Included or excluded in the contract. The Arbitrator was empowered to determine the issue and in fact, determined the same and passed an award on "labour payment". Accordingly, there is no infirmity and/or Illegality and/or any error of law which warrants interference by this Court. We also do not find any error of law apparent on the face of the award.
31. After hearing was closed Mr. Basu, the learned counsel for the appellant, with the leave of the Court cited another Judgment in support of his contention that the claim in the Instant case is barred by limitation. Reliance was placed on the decision in the case of Wild Life Institute of India, Dehradun v. Vijay Kumar Garg reported in (1987) 10 SCC 528. It was held in that case, on perusal of the Arbitration Clause, that the liability of the appellant ceases if no claim of the contractor is received within 90 days of the receipt by the contractor of an Intimation that the bill is ready for payment. The learned Judges held that the said clause is not merely one proving for limitation but operates to discharge the liability of the appellant on expiry of 90 days. There is no such clause in the arbitration agreement here. The relevant clause is set out below:
"All questions relating to the meaning of the specifications, designs, drawings and Instructions herein before mentioned and as to the quality to workmanship or materials used in the work or as to any other question, claim, right matter or thing whatsoever will be referred for arbitration (Arbitrator to be appointed by the Chairman & Managing Director, NPCC Ltd., New Delhi-19 on application) and his award will be final and binding on all parties to this contract."
32. The clause in question being totally different in this case, the principle in Wild Life (supra) are not attracted here.
33. For the forgoing reasons, we are of the view that the learned single Judge rightly refused to interfere with the award passed by the Arbitrator excepting on the point of interest. We, therefore, do not propose to interfere with the judgment of the learned single Judge. The instant appeal is, therefore, dismissed.
In the facts and circumstances of the case, there will be, however, no order as to costs.
A.K. Ganguly, J.
1. I agree.
2. Appeal dismissed
3. After the judgment is pronounced the learned counsel for the appellant has prayed for a stay of the operation of the judgment for a period of fortnight. Such prayer is allowed.
4. Let the judgment remain stayed for a period of fortnight from date.
5. Xerox certified copy of this judgment and order be made available to the parties on a priority basis on the usual undertaking.