Delhi District Court
Balwinder Singh vs Indian Oil Corporation Ltd on 12 December, 2022
DLND010084132017
IN THE COURT OF ADDITIONAL DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- MS. VIJETA SINGH RAWAT (DHJS)
Arbitration No. 4631/17
Balwinder Singh
S/o Sh. Bachna Ram
Proprietor M/s Girn Oil Carrier,
Vill. Mubarikpur, Meerpur,
PO Mubarikpur,
Tehsil Derebassi,
Distt. Mohali
......... Petitioner
Versus
1. Indian Oil Corporation Ltd.
IInd Floor, World Trade Centre,
Babar Road, New Delhi
Through its Chief Executive.
2. Sh. J.S. Oberoi
The Sole Arbitrator,
Indian Oil Corporation Ltd.
IInd Floor, World Trade Centre,
Babar Road, New Delhi.
........ Respondents
Arbitration No. 4631/17
M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 1 of 15
Petition presented On : 05.07.2017
Arguments Concluded On : 07.12.2022
Judgment Pronounced On : 12.12.2022
JUDGMENT
1. By way of this judgment, the Court is proceeding to decide objections filed u/s 34 of the Arbitration and Conciliation Act, 1996 (hereinafter, referred to as 'The Arbitration Act') challenging the arbitral award dated 08.03.2017 passed by respondent no.2 pursuant to reference made by the petitioner against respondent no.1.
PLEADINGS
2. Briefly stated, the facts of the present dispute are as under :-
(a) That a tender for "Road Transportation of Bulk Petroleum Products
- MS/HSD/Branded Fuel ex-Ambala Terminal" was submitted by the petitioner and was successful. Thereafter, work order dated 22.06.2017 and agreement dated 29.06.2012 was executed between the parties.
(b) That pursuant to issuance of work order, vide challan / invoice no.
656709824 dated 24.08.2012, Tank Trucks was loaded with 11KL of MS (Petrol) to be delivered to the dealer M/s Saheed Mangal Singh Filling Station, Shahtal, District-Bilaspur, Himachal Padesh (HP).
(c) That upon reaching the filling station, the dealer vide its letter dated 26.08.2012, intimated the respondent that one of the security (manifold) lock of the Tank Truck was not opening. Permission was sought to cut the said security lock which was allowed by the respondent Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 2 of 15 and the Tank Truck was unloaded. The empty Tank Truck reported back from Bilaspur (HP) to Ambala Terminal on 30.08.2012 and the security lock was deposited at Ambala Terminal.
(d) That to ensure quality and quantity of product being transported there are Industry Transport Discipline Guidelines (hereinafter referred to as 'ITDG') which were also part of the tender floated by the respondent. The respondent issued a showcause notice dated 21.09.2012 to the petitioner for tampering with security lock with malafide intention of pilfering the product, enroute and called explanation from the petitioner by 01.10.2012. The showcause notice was replied by the petitioner vide letter dated 28.09.2012.
3. Thereafter, respondent no.1 ordered for black listing of the TT no. HR 37A 6017 (hereinafter, referred to as "the TT") for a period of two years and Sh. Jagdish Singh S/o Sh. Som Nath, driver of the TT permanently, initially vide order dated 13.03.2013, (which was challenged before Punjab and Haryana High Court and was remanded back) and subsequently, vide order dated 08.10.2013.
4. By way of the reference, the petitioner sought for setting aside of the order dated 08.10.2013 and demanded Rs.19,20,000/- as compensation and Rs.80,000/- per month w.e.f. October, 2014 till its payment from the respondent.
5. The Ld. Arbitrator vide impugned award opined that the Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 3 of 15 blacklisting vide order dated 08.10.2013 was not sustainable. However, he omitted to give any compensation to the petitioner stating that it had failed to lead evidence and also relying upon clause 6 (g) of the Bulk Petroleum Products Road Transport Agreement dated 29.06.2012 (hereinafter referred to as "the agreement"). Now, vide the present petition the award has been challenged on the grounds of violation of public policy and for being patently illegal. Broadly, the award has been challenged on the following grounds :
(i) That he award is based merely upon pleadings without evaluation of the statements of the witnesses;
(ii) That the Ld. Arbitrator has mis-conducted himself for the following reasons :
(a) That the Ld. Arbitrator evolved his own procedure without consent of the parties and therefore, acted in violation of Section 13 of The Arbitration Act ;
(b) That the Ld. Arbitrator did not allow evidence to be led ;
(c) That the Ld. Arbitrator, wrongfully held that no evidence was led by the petitioner, to prove the damages by ignoring that respondent no.1's witness refused to bring the original documents and therefore, the quantum of loss which could be assessed only from the documents of respondent no.1, could not be brought on record and as such, the Ld. Arbitrator has been biased.
(d) That the Ld. Arbitrator refused the right of cross-examination to the petitioner and relied upon documents for which no opportunity for cross-examination was granted.Arbitration No. 4631/17
M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 4 of 15
(e) That the Ld. Arbitrator wrongly relied upon clause 6(g) of the agreement because the claim was for malicious acts of the respondent no.1 for wrongfully black listing the petitioner's TT and driver for two years and also for keeping the matter pending for four years.
(f) That the Ld. Arbitrator, acted in violation to Section 28(1)(a) and Section 34(2)(b)(ii) of The Arbitration Act.
6. Per contra, by way of the reply, preliminary objections have been taken that the petition is hopelessly barred by limitation yet, no condonation of delay was ever sought by the petitioner and that the petition is not maintainable as the Court does not have the power u/s 34 of the Arbitration Act to modify the impugned award.
7. On merits, it has been denied that the Ld. Arbitrator has acted capriciously and arbitrarily. Leading through communications / order dated 25.08.2015, 30.08.2015 and 21.10.2015, it has been stated that ample opportunities for finalization of procedure to be followed as well as for leading of evidence and cross-examination of witnesses was afforded to the parties by the Ld. Arbitrator. It has been stated that the Ld. arbitrator has rightly observed that in view of Section 6 (g) of the agreement, no amount can be claimed by the petitioner.
8. Arguments have been advanced by Sh. Yogesh Das, Ld. Counsel for the petitioner and Sh. Saran Suri, Ld. Counsel on behalf of respondent no.1.
Arbitration No. 4631/17M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 5 of 15
9. The grounds agitated in the petition and reply have been reiterated.
10. The Court has considered the submissions and the material on record.
11. Before proceeding to decide on the contentions, the Court deems it appropriate to remind itself of the scope of powers U/s 34 of the Arbitration Act. It has been very recently held in Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. Civil Appeal no. 5627 of 2021, Arising out of SLP (C) no. 4115 of 2019 decided on 09.09.2021 as under:
"...22. A cumulative reading of the UNCITRAL Model Law and Rules, the legislative intent with which the 1996 Act is made, Section 5 and Section 34 of the 1996 Act would make it clear that judicial interference with the arbitral awards is limited to the grounds in Section 34. While deciding applications filed under Section 34 of the Act, courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law. (See: Uttarakhand Purv Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited.1, Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another2 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran3 ).
23. For a better understanding of the role ascribed to courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI)4 wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into 1 (2020) 2 SCC 455 2 2021 SCC OnLine SC 8 3 (2012) 5 SCC 306 4 (2019) 15 SCC 131 Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 6 of 15 account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under:-
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] .
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 7 of 15 SCC 263 : (2014) 5 SCC (Civ) 12] , as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 8 of 15 which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse."...
25. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair- minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'...
12. Reverting to the facts of the present case, the first issue that needs to be decided is whether the present petition u/s 34 of The Arbitration Act has been filed within limitation. Section 34(3) of The Arbitration Act stipulates as under :
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 9 of 15 sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
13. No arguments have been led on this aspect on behalf of the petitioner. Per contra, Ld. Counsel for the respondent has relied upon Haryana Urban Development Authority, Karnal Vs. M/s. Mehta Construction Company and Another Civil Appeal no. 2693 of 2022 decided on 30.03.2022 to urge that the petition is barred by limitation.
14. In Haryana Urban Development Authority, Karnal Vs. M/s. Mehta Construction Company and Another Civil Appeal no. 2693 of 2022 dated 30.03.2022 it has been held as under:
"10. As per sub-section (3) to Section 34 of the Act, an application for setting aside an award is to be made within three months from the date on which a party filing objections under sub- section (1) to Section 34 has received the arbitral award; or, if a request has been made under Section 33, from the date on which that request has been disposed of by the arbitral tribunal. However, the proviso states that the court may condone delay of a period up to thirty days in filing of the objections if it is satisfied that the applicant is prevented by sufficient cause from making an application under Section 34(1) of the Act."
15. If the contents of the petition are seen, it is the petitioner's own admission that the arbitral award dated 08.03.2017 was received by it on 12.03.2017. Thus, it was required to prefer the present petition within three months w.e.f. 13.03.2017. However, the petition came to be filed on 01.07.2017. At best, it could have sought further extension of 30 days on an application provided, the Court was satisfied that there was sufficient Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 10 of 15 cause to do so. However, neither an application for extension of limitation was moved nor any rejoinder came to be filed explaining the delay.
16. Hence, the present petition is barred by limitation.
17. The second contention raised is whether, the impugned award can be modified?
18. It has been argued on behalf of the respondent that the present petition is also not maintainable because the relief clause is only seeking modification of the arbitration award and it has been settled by the Apex Court that the Court does not have power to modify the award. Reliance has been placed upon Project Director, National Highways NO. 45 E and 220 National Highways Authority of India Vs. M. Hakeem and Another (2021) 9 Supreme Court Cases 1.
19. It has been further argued by Ld. Counsel for the petitioner that the Ld. Arbitrator has not remained silent on the aspect of compensation and has given his reasons for denying the compensation.
20. Per contra, it has been submitted that the Ld. Arbitrator should also have awarded compensation once he gave a finding that the blacklisting order dated 08.10.2013 was required to be set aside. It has also been argued on behalf of the petitioner that the aforementioned Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 11 of 15 judgment is not applicable to the facts of the present case because only a part of relief was granted and on the compensation, the arbitrator remained silent
21. In Project Director, National Highways NO. 45 E and 220 National Highways Authority of India Vs. M. Hakeem and Another (2021) 9 Supreme Court Cases 1 it has been held as under :
"42. It can therefore be said that this question has now been settled finally by at least 3 decisions of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the 'limited remedy' under Section 34 is co- terminus with the 'limited right', namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996.
43. A look at the Arbitration Acts of England, the United States, Canada, Australia and Singapore also lead to the same conclusion. In each of those legislative measures, there are express provisions which permit the varying of an award, unlike Section 34 of the present Act. In para 51, the learned Single Judge then refers to recourse to a court against an arbitral award, and argues that a statute cannot be interpreted in such manner as to make the remedy worse than the disease. As has been pointed out by us, the "disease" can only be cured in very limited circumstances thus limiting the remedy as well. Also, to assimilate the Section 34 jurisdiction with the revisional jurisdiction under Section 115 of the Code of Civil Procedure, 1908 [the "CPC"], is again fallacious. Section 115 of the CPC expressly sets out the three grounds on which a revision may be entertained and then states that the High Court may make 'such order as it thinks fit'. These latter words are missing in Section 34, given the legislative scheme of the Arbitration Act, 1996. For all the aforesaid reasons, with great respect to the learned Single Judge, it is not correct in law and therefore stands overruled."Arbitration No. 4631/17
M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 12 of 15
22. Hence, it is settled that the award cannot be modified. Even otherwise, as regards denial of compensation, it can be observed from award that on issues no. 3 to 5 , Ld Arbitrator has given a reasoned order that the petitioner failed to lead any evidence to prove his claim that he suffered a loss of Rs. 80,000/- per month w.e.f. October, 2014. Reliance is placed upon clause 6(g) of the agreement. The affidavit filed on behalf of the petitioner / claimant before the Ld. Arbitrator and cross- examination has been perused. It cannot be said that the reasoning of the Ld. Arbitrator that the petitioner / claimant failed to lead any evidence to prove his claim is by any manner perverse requiring an interference by this Court.
23. Lastly, the award has been challenged on allegations that the arbitrator has mis-conducted himself by evolving his own procedure and not affording opportunity to lead evidence.
24. It has been argued on behalf of the petitioner that the arbitrator evolved his own procedure without the consent of the parties and also did not allow evidence to be led by wrongly not allowing the application dated 13.08.2015 under Section 19 of The Arbitration Act. It has also been submitted that the opportunity to cross examine the witnesses of the respondent was not afforded.
25. Per contra, the attention of the Court was drawn to proceedings dated 04.08.2015 where an opportunity was afforded to the petitioner / Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 13 of 15 claimant to decide whether it wants to cross examine the witnesses of the respondent, mail dated 25.08.2015 where attention of the petitioner / claimant was drawn to Section 27 of the Arbitration Act, proceedings dated 07.10.2015 which records that no response was received to mail dated 25.08.2015, proceedings dated 21.08.2015 allowing for evidence to be led, mail dated 28.03.2016, mail dated 01.07.2016 fixing the date for cross examination of respondent witness, proceedings dated 12.07.2016 declining request of the respondent to dispense with cross-examination of its witness and adjournment granted on 26.07.2016 followed by cross- examination recorded on 27.10.2016, to urge that it has been wrongly alleged against the arbitrator that he has mis-conducted himself. Reliance has been placed upon Lakshmi Rauschenbach Rep. By Power of Attorney Anand Sasidharan Vs. Valuesource Technologies (P) Ltd. Rep. By its Director Christian Lippens 2020 AIR CC 2804 and PSA SICAL Terminals Pvt. Ltd. Vs. The Board of Trustees of V.O. Chidambranar Port Trust Tuticorin and others Civil Appeal nos. 3699- 3700 of 2018 decided on 28.07.2021 to define the scope of powers with Sec 34 of The Arbitration Act.
26. On considering the material on record, it cannot be said that there has been violation of principle of natural justice audi alterum partum. Onus to prove the claim was always upon the petitioner/ claimant and would only shift provided the petitioner had first discharged the onus upon him. However, the affidavit of the petitioner on record is silent on how the loss at Rs.80,000/- has been quantified. Therefore, the Court is Arbitration No. 4631/17 M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 14 of 15 of the view that the ground that the arbitrator has been unreasonable is unfounded and the award warrants no interference in this regard as well.
27. In view of the above discussions, the petition is dismissed.
28. File be consigned to records.
Pronounced in open Court (Vijeta Singh Rawat)
on 12.12.2022 Additional District Judge-01,
New Delhi District,
Patiala House Courts,
New Delhi
Arbitration No. 4631/17
M/s Girn Oil Carriers Vs. Indian Oil Corporation Ltd and Ors Page no. 15 of 15